The concepts of work, contract and contract price

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This is a part of The Worker’s Liens Casebook, by Robert Fenwick Elliott. Copyright © 2010

Copies of text of no more than 500 words may be made, provided they are accompanied by due attribution.

  1. The rights of contractors and subcontractors are dependent on the existence of three things:
  • A “contract price”, which is dependent on the existence of
  • a “contract”, which is in turn dependent on
  • “work”, which, for the purpose of a lien has to be done “to the land or to any fixture thereon”.
  1. Each of these is defined at section 2 of the Act[1], and is discussed below in inverse order. Where the claimant is a subcontractor, the concepts of contract and contract price need to be considered separately in respect of each link in the contractual chain; the court will not assume the existence of such a chain in the absence of evidence[2].

What is “work”?

  1. In modern times, the Act has been used almost exclusively as a means of securing payment in respect of construction work, but that is not how the term is defined. Section 2 defines work as “every description of manual work or personal service”. In one sense, that is a very wide category and would include, for example, the servicing of cars, waiting at table in a restaurant or hairdressing. But these activities are not done “to the land or to any fixture thereon”, and so cannot found a lien[3].
  2. It is to be noted that a contractor’s lien does not necessarily needed to be founded on work done by the contractor: it is sufficient that the contractor has procured or agreed to pay for the work to be done by another[4].
  3. In The Artificer’s Lien, RD Elliott gives the following list of types of work that would support a lien; from a modern perspective, it has a distinctly pastoral flavour:

(a)              Clearing trees, scrub, bushes, undergrowth and rocks from land:

(b)              Levelling land, or ploughing, harrowing, spreading organic or inor­ganic manures on land, or sowing it to pasture or planting a crop of any kind thereon:

(c)               Preparing land and planting a timber plantation, ornamental garden, ornamental trees or hedge thereon or landscaping a garden or park on land, creating and planting a garden, or laying down paths or walks of any kind or a paved area or patio:

(d)              Scooping out a dam for water, digging a well or putting down a bore for water, scooping out a drain, creating an artificial lake, cutting new banks on a river or stream which flows through land, building a reservoir, or clearing a stream or watercourse of debris, grass or weeds:

(e)               Clearing land of vermin or of weeds or noxious growth:

(f)               Making a roadway or earthworks on land, or raising the level of land, terracing it or making a depression in it for some useful purpose:

(g)              Laying out a grass, earth or other type of tennis court, or laying out and planting a golf course (or altering it) or a race track of any kind or a tan practice track, or levelling, laying out and seeding (or re-seeding) an oval or sports area of any type and raising spectators’ mounds:

(h)              Marking out a tennis court, oval or sports arena, or marking out with lines a car parking area:

(i)               Laying out and constructing roads, drains or footpaths on land being subdivided into smaller allotments, and laying water, gas electricity or sewer mains thereon or excavating for pipes or mains of any kind, or effecting repairs to any such road, drain, footpath, pipes or mains:

(j)                Laying out and levelling a tow path at the side of a canal:

(k)              Making raised mounds or embankments for a drive-in theatre:

(l)               Digging a mine shaft (or extending existing shafts) or approaches to or digging a tunnel for a mine, or removing overburden to facilitate open cut mining or quarrying operations:

(m)             Dusting pasture lands or a growing crop with insecticides and like substances or spreading manures of any kind on land:

(n)              Demolishing a building, structure or fixture on land, or clearing a slag-heap from it:

(o)              Building a permanent structure on land, or extending repairing or renovating an existing structure, or fixing new fixtures of any kind (including fences) to land or to any fixture already on it, or doing work to an existing building, fixed structure or fixture on the land.

It is suggested that the harvesting of a cereal or other crop growing on land or the harvesting of an apple crop from an orchard, will not amount to work done to the land or to the apple trees (which are fixtures), as each operation merely severs something from the land which is its fruit or produce. The same principle applies, it is suggested to the digging of ores, minerals, stone or chemicals from the land because these substances, although not fruit or produce of the land, are taken from the land for their own intrinsic value and not for the benefit of the land, and that digging and removal therefore constitute something done on the land and not to it. That which is severed from the land in all these instances becomes personalty on its severance. It is true that where a building is demolished the bricks and other materials resulting from the demolition also become personalty on their severance from the land, but a demolition is not in the nature of a gathering of the fruits or produce of the land or like the digging and removal of metals and ores for their own intrinsic values from the land, but rather is an operation which has for its object the levelling and clearing of the land and rendering the land itself useful for some other purpose and accordingly would constitute work done to the land.

  1. No authority is given for the list, but all the categories of work would appear to qualify, provided tha the work is done manually and not by mechanised process[5]. What is more relevant is the type of work that is not included, and in particular:
  • Design work
  • Project management
  • Construction management.
  1. There is authority to show that design work is not included, but what of other borderline activities? These remain open for argument on the basis of principle. For the purpose of such argument, the burden of proof rests with the claimant[6].

Manual work

  1. “Manual” means “by hand”, and in ordinary usage, the term “manual work” usually means work done by a man “on the tools”, using the physical strength in his hands, either in a skilled or unskilled way, but in any event to be distinguished from work which is clerical, administrative or professional in nature. That is the sense in which the term has been used in very many judgments involving personal injuries. But in another context, manual work has been construed as including the work of clerks[7], and it is clear that the use of personal tools does not deprive his activity of its manual nature[8].
  2. In argument in Rutt v Joseph[9], counsel for the defendant bank relied on the English case of Emden v Carte, which considered whether fees due to a bankrupt architect were the “earnings of personal labour” for the purposes of the Bankruptcy Act 1869. If so, the architect was entitled to keep them; if not, he was obliged to hand them over to his trustee in bankruptcy. The Court of Appeal, upholding the decision of Fry J at first instance, held that they were not. The Master of the Rolls, Lord Jessel, said:

I entirely agree with Mr. Justice Fry… It is said that the daily wages of an artisan do not pass to the trustee, because the bankrupt must live. But that has no application to a case like the present. The Plaintiff is an architect carrying on his business in the usual way, with an office and clerks, and he claims a large sum of money for plans and specifications prepared in his office. Is it to be supposed that he can get all this money and keep it, being an uncertificated bankrupt? I am sure no Judge has ever thought of such a thing. In the case of the medical practitioner, it was argued that this money was earned by his personal skill as a medical man, and that it made no difference that he sold medicines. But the Judges held that he could not recover. In the present case it is impossible to suppose that the Plaintiff can recover…

  1. Lord Justice Lush agreed:

I am of the same opinion. The Act made all the property acquired after the adjudication pass to the trustee. It has been held that what the bankrupt earns by daily labour to support life does not vest in the trustee. But if he earns a margin, that is a profit and goes to the trustee. Two cases have been referred to; one was that of a medical practitioner, and the other a furniture broker, and in both cases the money earned was held to belong to the trustees.

  1. The distinction being drawn here is apparently between the activity of a working man whereby he is paid for his labour, and activities which earn a commercial or professional profit. A reading of the Hansard reports show that the intention of the legislature was focused in a very similar way: the Act was intended to provide protection for working men. However, the decision in Rutt v Joseph was based, not on the status of the claimant as a professional man, but on the point that the work of design does not represent work done[10].
  2. It is perhaps surprising that relatively little judicial attention has been drawn to the limitations of the “manual work” formula. But is it notable that the court in Bourne v Kneebone (1896) emphasised that it is only “manual” work that is covered[11].
  3. What of work involving the operation of large machines, such as road making machines and the like? It seems that such work is not included; in Pegasus Gold v Metso[12] Mildren J said:

The second matter raised in the respondent’s notice of contention is an argument that the gold mining process as a whole was work done to the land for the purposes of s5 of the Workmen’s Liens Act. I am unable to accept that submission. The definition of “work” in s2 of the Act is that “’work’ means every description of manual work or personal service”. I do not see how a large mechanised mining operation can possibly fall within the definition of “work”.

  1. This dictum may not have received the attention it warrants. When the Act was passed in 1893, almost all construction work was manual, such that the Act had a wide application. But now much construction work is mechanised. In light of the “always speaking” rule, it may well be that the scope of the work covered by the Act is rather less than often assumed. Pegasus Gold shows that a “large mechanised mining operation” is well outside the scope of the Act. Similarly, presumably, a large road building project, which is also mechanised. But what of a large concrete pour? Or groundworks performed by means of diggers or other tracked vehicles? There is no comprehensive authority on where the line between manual work and mechanised work should be drawn.

Personal Services

  1. The term “personal services” has been the subject of just one reported dictum in the context of the Act. In Rutt v Joseph, Murray CJ said:

Personal service” is not defined, but seems to mean service to be rendered by a workman in person.

  1. That adds little to the words in the Act, save perhaps to suggest that personal services rendered by people who are not “workmen” do not qualify[13].
  2. The term is used in other legal contexts, in which it has been defined:
  • In terms of taxation, “personal services income” is construed to mean income which is mainly a reward of an individual’s efforts or skill, and excludes income produced mainly by a physical asset or business structure. Computer programming is given as an example[14].
  • In terms of the criminal law “personal service” means any labour or service, including a sexual service, provided by a person[15].

Done to the land or to any fixture thereon

  1. For the purpose of a lien of a contractor or subcontractor under section 5, the work has to be done to the land or to any fixture thereon. Accordingly, it is not enough for a lien that the work falls within the definition of “work” in section 2; if it is not work done to the land or to a fixture, then it will not be sufficient to found a claim.
  2. Construction work is plainly work “done to the land”, as is the work of the types referred to at paragraph 37 above. But note that work done to the land will not qualify as “work” if it is not also either manual work or personal services.
  3. Neither design work nor supervision is work done to the land; see Rutt v Joseph[16].
  4. The term “fixture” is defined by section 2 to mean “such a fixture upon land as, having been attached to such land by the vendor, would pass to the purchaser upon the sale of the fee simple of the land”; see page 147 below. In Pegasus Gold v Metso Minerals[17], the definition was held to exclude large mining equipment.
  5. Similarly, in AW Baulderstone v Mill Hill Holdings[18], it was held that putting up demountable partitions was not “work done to the land or any fixture thereon”, since there was no sufficient fixture of the partitions as to transmogrify them from chattels into realty.

What land is lienable?

  1. In AW Baulderstone v Mill Hill Holdings, it was found that a lien was available only against the title of the land on which the work was done, and not any contiguous land. Thus, where the work is done on a part of an overall project then covered by several titles, it seems only the title for the part worked on is susceptible of a lien. It is not obvious how a contract sum for work done across land subject to several titles is to be approached – is the claimant entitled to a lien over all the titles for all the amount due, or only to the relevant part in respect of each title? The point is not clear [1].

Charges – no need for the work to be done to land

  1. However, for the purposes of the charge under section 7, there is no such requirement that the work must be work done to any land or to any fixture, and so in principle that appears, on the wording of the Act, that charges might well be available to subcontractors, or even workers, in respect of work that has no connection to land at all. Thus, for example, if the owner of a car, takes his car to a garage for repair, and the garage subcontracts part of the repair work to an auto electrical specialist, then that auto electrical specialist may be entitled to serve notice of a charge on the owner of the car. In the commercial context, there are many examples of chains of supply where such charge might be available, in industries such as food production, computer programming, the production of films and television programmes, the defence industry, and many others. However, it seems that there are no reported cases of the Act being invoked in such circumstances. The mere fact that the Act was apparently not intended to cover such circumstances, as judged from the Hansard reports, is perhaps of little materiality, since it is apparent from those reports that the way the Act has been used in practice does not reflect the way that the Act was originally intended to be used in any event.

Work – part only of a contract deliverable

  1. It is sometimes assumed that the question of whether work qualifies under the Act or not is to be decided by reference to the subject matter of a contract or subcontract as a whole, but in Pitt v Glenelg[19], the court showed otherwise: in some cases a part only of what is contracted for will qualify.
  2. Probably, this principle is of wider application than usually realised. Thus, for example, where a contractor undertakes work which consists partly of manual work, and partly of mechanised or other non-manual work[20], then it seems likely that only the former part qualifies. Separating out which part of a contract sum qualifies and which does not is potentially be problematic in many cases. There are a number of reported decisions in which this point might have been brought into issue, but was not.

Part use of materials

58A        For the purpose of section 5, the lien accrues for work done to the land, or materials are used or intended to be used in work on the land. In the case of work done, the position is ordinarily fairly straightforward: if work is done on the land, that work is done exclusively on the land. But in the case of materials, the position can be more complex. But what is the position where, pursuant to the lienor’s contract, some of the materials are used and the land in question, and some are not? This situation is by no means unusual; suppliers often provide materials under a single contract which are intended to be used on a number of different projects.

58B         Unlike section 6, which prescribes the extent of the lien[1], section 5 looks like a “yes or no” test. Does the claimant have a lien or doesn’t he?[2] However, in Calabrese v Najar [2012] SADC 146 the position was that the claimant provided stone, only part of which was used on the defendant’s land. It was conceded on the plaintiff’s behalf that the lien could only relate to the materials used and the land, which in that case amounted to about half of the total contract price. Albeit not required by the express wording of the Act, that concession accords with common sense.

[1] sections 6 limits the extent of the lien to the amount payable by the owner, but contains no words limiting the extent of the lien to work down or materials supplied for the land.

[2] Under section 5, the lien only arises for the contract price so far as accrued due. But that is not the quantitative issue being considered here.

Conclusion – Examples of Qualifying and Non-qualifying work

Building a brick wall Qualifying
Supply only of bricks for a wall Qualifying for a lien, but not for a charge
A large mechanised mining operation Not qualifying, because mechanised and thus not manual work; see Pegasus Gold v Metso
A large road building project Probably not qualifying, since modern road building is highly mechanised, not manual
Demountable partitioning Not qualifying; see AW Baulderstone v Mill Hill Holdings[21]
Air-conditioning system Not qualifying because not building work, per D G Australia Pty Ltd v Alexander[22]
Design work Not qualifying; see Rutt v Joseph
Supervision Not qualifying; see Rutt v Joseph
Construction management Probably[23] not qualifying, on the basis of Rutt v Joseph
Management contracting Probably qualifying, in part[24], on the basis that a management contractor procures and agrees to pay for qualifying work[25].

What is a “contract”

  1. For the purposes of the Act “contract” means any agreement, whether written, oral,[26] or implied, to do work or to procure work to be done, or to furnish materials in connection with work, or to pay for work, or for materials furnished or to be furnished in connection with work.
  2. As noted at paragraph 36 above, this definition is only partially linked into the definition of work. When a typical modern head contractor enters into a construction contract, he is likely to have neither the intention nor the means to do any manual work, and arguably to provide no personal service at all. Everything the contractor does is by way of management from an office. But it seems that the definition of “contract” is wide enough to encompass arrangements where manual work or personal services are delivered by way of subcontractors, or even agency or perhaps even construction management means. The test will therefore likely be, not whether a contractor is himself performing something in the nature of manual work or personal services, but whether manual work is done or personal services are performed at the lowest level of the contractual or procurement hierarchy. If that lowest level involves the operation of large machines, as in Pegasus v Metso[27], then it is probable that none of the arrangements above that level will constitute a contract for the purposes of the Act.

Formal Requirements

  1. Statute requires certain contracts to be in certain forms. Thus for example section 28 of the Building Work Contracts Act 1995 sets out formal requirements for domestic building contracts[28]. But where these set out criminal sanctions but without providing for unenforceability, contracts made in breach are not unenforceable[29]. Thus, not only is such a non-compliant contract a “contract” for the purpose of the Act, but a sum payable in accordance with its terms will be “payable”. Contrast the matters set out at paragraph 75 et seq below.

Is a right to a quantum meruit a contract?

  1. Can the contractor be entitled to a lien if he has no contract, but merely an equitable right to be paid in quantum meruit? It seems not.
  2. In 1893, it was understood that a right to a quantum meruit arose as a matter of quasi-contract, that is to say an implied contract. Thus, when a contractor did work for and at the request of an owner, there was thought to be an implied contract obliging the owner to pay a reasonable price notwithstanding that the normal prerequisites of offer and acceptance may have been missing. However, since Pavey & Mathews v Paul[30] it has been understood that there is in fact no contract to be implied in these cases, and that instead the right to be paid arises as a matter of restitution, an equitable remedy based on the notion of unjust enrichment.
  3. Thus, in days when the implied contract theory of quantum meruit prevailed, such an implied contract would have sufficed under the Act, but now the implied contract theory has been discarded, the reference to an implied contract in the definition of contract has become worthless.
  4. The same result obtains if there is a contract, and if the contractor is not licensed. In these circumstances, he is likely to be precluded from recovery under the contract by section 6(2) of the Building Work Contractors Act 1995, which provides as follows:

(2)              A person required by this Act to be licensed as a building work contractor is not entitled to any fee, other consideration or compensation under or in relation to a contract with another on whose behalf the person performed work as a building work contractor unless—

(a)           the person was authorised to perform the work under a licence; or

(b)           a court hearing proceedings for recovery of the fee, other consideration or compensation is satisfied that the person’s failure to be so authorised resulted from inadvertence only.

However, the contractor is entitled in these circumstances to a quantum meruit.

  1. In Cubelic v Civil Works Group[31], the District Court found that there was no entitlement to a lien in these circumstances, and removed the lien that had been registered under its section 32 power. With respect, this conclusion appears correct. It matters not whether the claimant advances his claim under the old implied contract theory or the new theory based on the equitable doctrine of restitution. If the former, he is barred by section 6(2) of the BWCA. If the later, his claim is not based on an “agreement”.
  2. The position is likely to be otherwise in the case of a contractual quantum meruit, arising for example where a contract contains no express mechanism for ascertaining the price[32].

Does a contract include a contract of service?

  1. This matter appears never to have been tested, but in principle there seems no reason why a contract within the meaning of the Act might not include a contract of employment.

Contract for “work”

  1. By section 2, contract means any agreement, whether written, oral, or implied, to do work or to procure work to be done, or to furnish materials in connection with work, or to pay for work, or for materials furnished or to be furnished in connection with work;

What is the “contract price”

  1. The term “contract price” is defined by section 2 to mean

the money payable to any contractor or sub-contractor for any work, or materials furnished or to be furnished in connection with work, under any contract, and whether such price has been fixed by express agreement or not;

  1. Contract price is limited to money payable under a contract for work and materials. It does not mean “the amount specified in the contract,” but “the money payable under” the contract, which might be more or less than the amount stated in the contract, by reason of additional work and other matters[33].

Contract price as a moveable feast

  1. Is the contract price something that remains static throughout the contract, or is it a moveable feast that can increase or decrease as the work proceeds? It follows from the preceding proposition that it must be the latter, such that the answer to the question, “How much is the contract price?” must depend on when the question is asked. Typically, the amount payable for construction work under a construction contract is subject to adjustment, by way of example, upwards for additional work and downwards for liquidated damages. In such circumstances, the “contract price” for the purposes of the Act means the amount payable as so adjusted.

Certification of Contract Price

  1. What is the effect of a contractual provision that the amount payable under the contract is the amount so certified from time to time by the superintendent or other certifier? It seems clear that the “contract price” for the purposes of the Act is the amount so certified[34].
  2. The position would change, of course, if
  • the amount certified were later to be superseded by a determination by a court or arbitrator, or
  • the contractor were otherwise to become entitled to recovery without a certificate, where, for example, the certifier
  • becomes disqualified, or there is an act of prevention by the owner or a breakdown in contractual machinery[35].

Statutory modification of contractual rights

  1. There are several respects in which statute interferes by way of modification of what would otherwise be payable. In particular:
  2. By section 6(2) of the Building Work Contractors Act 1995, an unlicensed contractor is not entitled to any contractual payment:

A person required by this Act to be licensed as a building work contractor is not entitled to any fee, other consideration or compensation under or in relation to a contract with another on whose behalf the person performed work as a building work contractor unless—

(a) the person was authorised to perform the work under a licence; or

(b) a court hearing proceedings for recovery of the fee, other consideration or compensation is satisfied that the person’s failure to be so authorised resulted from inadvertence only.

  1. By section 29(3) and (4) of the Building Work Contractors Act 1995, the enforceability of fluctuations clauses is limited:

(3) A building work contractor is not entitled to the benefit of a rise-and-fall clause in relation to any part of the building work performed after the end of the period stipulated for completion of the building work.

(4) However, a building work contractor is entitled to the benefit of a rise-and-fall clause in respect of a part of the building work performed after the end of the period stipulated for completion of the building work if—

(a) the contract provides for extension of the stipulated period; and

(b) the delay in completing the building work was the fault of the building owner or due to some cause beyond the control of the contractor that the contractor could not reasonably be expected to have foreseen at the time the contract was made; and

(c) the contractor, as soon as reasonably practicable after becoming aware of the likelihood of delay in the completion of the building work, gave notice in writing to the building owner or an agent authorised to act on behalf of the building owner extending the period for completion and specifying the cause of the delay; and

(d) the building work was completed as soon as reasonably practicable in the circumstances.

  1. By section 30(3) of the Building Work Contractors Act 1995, a domestic contractor is not entitled to payment unless he has given notice (there seems to be no reason why this notice may not also be the section 10(2)(a) notice under the Act):

(3) The building owner under a domestic building work contract is not obliged to make a progress payment in respect of building work performed under the contract unless the building work contractor has requested the payment by notice in writing given to the building owner or an agent authorised to act on behalf of the building owner.

Damages

  1. Sometimes, a contractor (or subcontractor) is entitled to a recovery for his efforts, not by way of entitlement under the contract, but by way of damages for breach of express or implied term, for example where the owner (or head contractor) is in breach of an obligation to provide timeous design details or access to the work. It is clear that such entitlements to damages are not part of the “contract price” and are not lienable[36].

Set-offs against contract price

  1. What is the position where the owner is entitled to a set-off, not by virtue of an express contractual adjustment mechanism, but by way of common law or equitable right? It seems clear that the “contract price” is to be calculated after deduction of such set-off:
  • As a matter of principle, a set-off affords a pro tanto defence in law. Where a party has such a defence in law against a claim for money that would otherwise be payable, it could hardly be asserted that that money is nevertheless “payable”;
  • As a matter of authority:

o  In Bourne v Kneebone (1896), the court noted that a lien is “subject to any right of set-off which the defendant might set up if they (sic) were legally entitled to do so “[37]

o  In Packer v Ashka (1995)[38], it was not seriously denied that a set-off was to be so treated;

o  In De Cesare v De Luxe (1996)[39], the court was more concerned with the quantification of the amount allowable by way of deduction by reason of the claimant’s failure to complete than its categorisation, it appears to have been by way of set-off of a damages claim[40];

o  In Sarah v Phillips (2007)[41] the court allowed an offset in respect of cross claims.

  1. Thus what is sauce for the goose is not sauce for the gander: the claimant is not allowed to bring in his damages claims to augment his contractual entitlement, but the owner is entitled to bring in his damages claims to reduce his contractual obligation to pay. The reason for this apparent anomaly is that a claimant must satisfy two tests: he must show that his claim arises pursuant to a contract, and he must also show that it is payable. If he fails either test, the claim is not lienable.
  2. Conversely, where an owner is entitled to a cross claim which is not available by way of set-off, then it seems unlikely that such cross claim should be taken into account for the purpose of calculating the “contract price”.

Interest

  1. The contract price does not include interest[42], even if the interest is payable pursuant to the contract[43].

Termination of contract

  1. It is clear that termination of a contractor’s employment under a construction contract does not of itself mean that the contractor’s entitlement ceases to be “contract price”[44]. But the position may be slightly more complex if the contractor elects for a quantum meruit. The point arises in this way:
  • If an owner is in repudiatory breach of contract, the contractor can elect to rescind the contract, or to affirm it.
  • If the contractor elects to rescind, he has a further election to claim a quantum meruit for what he has done, or to claim for the work done to at contract rates to that point, and damages for loss of bargain in respect of the balance.
  1. Probably (but not certainly) such a quantum meruit falls to be treated as a contractual entitlement, such as to qualify as “contract price”: there appears to be no direct authority on the point.

The time issue

  1. Is the contract price the whole of the amount that will contingently be payable, or it is just the amount that is payable from time to time? In bilateral cases, it plainly means the later. In tripartite cases, it plainly means the later in terms of the contract price payable by the head contractor to the claimant subcontractor[45], but the point is not clear in terms of the contract price payable by the owner to the head contractor. There is judicial difference as to whether the word “payable” in section 6 means “presently payable” or “payable now or at some time in the future”[46]. But even if the view be taken that the test is what will be payable at some later time than the time when the lien is claimed, then this same test falls to be applied at the later time.

[1] See page 45 below.

[2] Wormald v Altrevor; see page 597 below.

[3] But see paragraph 56 as to the apparently different position concerning charges under the Act.

[4] See the definition of “contract” at section 2 of the Act; see page 106 below.

[5] See paragraph 46

[6] See paragraph 5 of the judgment in Rutt v Joseph at page 674 below.

[7] In Australian Insurance Staffs’ Federation v Accident Underwriters’ Association [1923] HCA 61; (1923) 33 CLR 517 (13 December 1923), Isaacs and Rich JJ. said:

The Court of Appeal in England in Morgan v London General Omnibus Co[3] has held that an omnibus conductor at daily wages and paid daily was not engaged in manual labour, because he did not lift the passengers into and out of the omnibus: he merely invited passengers to enter and he took their fares. It was the confidence in his honesty, said the Court, that was the real source of his wages. Another Court, in Cook v North Metropolitan Tramways Co[4], has held that the driver of a tram-car is not engaged in manual labour. And a very eminent Judge held that there was a distinction between manual labour and manual work. “Telegraph clerks, and all persons engaged in writing,” did manual work in his view, but they did not do manual labour. We presume he would have held that bank clerks and insurance clerks did manual work, but not manual labour. Again, in Hunt v Great Northern Railway Co[5] the Court held that the guard of a goods train was engaged in manual labour. The Court said[6] that the duty of a guard is “a duty requiring care, skill, and experience, and the labour which it involves is mental rather than physical. No doubt it would occasionally be his duty, where necessary, to assist the porters in the transhipment of goods to or from his train; but that is not enough to make him a person engaged in manual labour. His primary duty was to use his intelligence, not his hands.” In Bound v Lawrence[7] the Court of Appeal held that a grocer’s assistant was not engaged in “manual labour” because, though he had to use his hands in considerable physical exertion in showing goods and making up parcels, his principal function was “selling to the customers across the counter.” In Bagnall v Levinstein Ltd.[8] two out of three eminent appellate Judges held that a scientific man employed by a dye and chemical manufacturing company was not engaged in manual labour, though engaged in an employment involving manual labour and for five-sixths of his time he was working as an ordinary though skilled workman. The acceptance of the first contention would no doubt attract the great body of judicial decision on the subject, and probably would lead to the utter annihilation of the major part of Commonwealth arbitration as it exists to-day.

[8] See Kitto, Taylor, Menzies and Owen JJ in Marshall v Whittaker’s Building Supply Co (1963) 109 CLR 210; [1963] ALR 859; (1963) 37 ALJR 92;

In Australia certain work such as timber getting and sleeper cutting is normally carried out under contracts providing for payment by results under which the contractor, within the limits of his contract, works as he thinks fit rather than in accordance with the directions of the person for whom the work is being performed; and it is common to find in workers’ compensation legislation limited provisions for bringing such contractors within the scope of the legislation. The definition with which we are here concerned is clearly enough such a provision and its effect is that in the cases specified, where there is a contract for services providing for remuneration which appears in reality to be payment for manual labour, the person providing the services is a worker for the purposes of the Act. The words “in substance” do not mean, as the Board appears to have thought, “to any substantial extent”. Their function is to enlarge the description which the words immediately following provide, so that the definition may apply not only where the remuneration is a return for manual labour bestowed by a person upon the work in which he is engaged and for nothing else, but also where, although the remuneration is a return for something else also, the something else is comparatively so insignificant that in reality, or as one might say to all intents and purposes, it is a return for manual labour so bestowed. For instance, the definition could cover a tradesman who provides his hand tools to do the manual work required of him by his contract or a man whose work in performing his contract is not wholly manual.

[9] See page 671 below.

[10] See paragraph 6 of the judgment at page 672 below. Work by way of supervision was excluded on essentially the same basis; see paragraph 11 of the judgment.

[11] See paragraph 6 et seq of the judgment at page 241 below.

[12] See page 664 below, for paragraph 30 of the judgment.

[13] But note that in that case, the court was careful to say that it excluded architectural services, not on the basis that the architect was not a workman, but on the basis that the work was not work done to the land.

[14] Section 84.5 of the Income Tax Assessment Act 1997 contains this definition:

Meaning of personal services income

(1)  Your ordinary income or statutory income, or the ordinary income or statutory income of any other entity, is your personal services income if the income is mainly a reward for your personal efforts or skills (or would mainly be such a reward if it was your income).

Example 1: NewIT Pty. Ltd. provides computer programming services, but Ron does all the work involved in providing those services. Ron uses the clients’ equipment and software to do the work. NewIT’s ordinary income from providing the services is Ron’s personal services income because it is a reward for his personal efforts or skills.

Example 2: Trux Pty. Ltd. owns one semi‑trailer, and Tom is the only person who drives it. Trux’s ordinary income from transporting goods is not Tom’s personal services income because it is produced mainly by use of the semi‑trailer, and not mainly as a reward for Tom’s personal efforts or skills.

Example 3: Jim works as an accountant for a large accounting firm that employs many accountants. None of the firm’s ordinary income or statutory income is Jim’s personal services income because it is produced mainly by the firm’s business structure, and not mainly as a reward for Jim’s personal efforts or skills.

(2)  Only individuals can have personal services income.

(3)  This section applies whether the income is for doing work or is for producing a result.

(4)  The fact that the income is payable under a contract does not stop the income being mainly a reward for your personal efforts or skills.

[15] The Criminal Code, as amended by section 270.4 of the Criminal Code Amendment (Trafficking in Persons) Act 2005 (Cth)

[16] [1917] SASR 243 at page 513 below.

[17] See page 583 below.

[18] See page 231 below.

[19] See page 674 below.

[20] Such as planning the works, preparing working drawings and the like (Rutt v Joseph).

[21] See page 231 below.

[22] [2003] SASC 176. See page 357 below.

[23] But perhaps at least part of a construction manager’s functions might just be treated as “procuring”, albeit that the construction manager does not ordinarily pay the trade contractors himself.

[24] Management contractors typically engage to perform a variety of task, such as planning (scheduling), design coordination, supervision, certification etc which would fail the Rutt v Joseph test. Note that, on the basis of the Ambir v Paspalis approach, a demand which includes anything in respect of these activities would fatally wound the claimant’s lien.

[25] See paragraph 36 above.

[26] For an example of a registration based on an alleged oral contract, see Vineyard Estate Management v Aberdine at page 705 below. In that case, at least some of the provisions relied upon were alleged implied terms.

[27] See page 595 below.

[28] Viz:

(1) The following requirements must be complied with in relation to a domestic building work contract:

(a) the contract must be in writing;

(b) the contract must set out in full all the contractual terms;

(c) the contract must set out the name in which the building work contractor carries on business under the contractor’s licence, the contractor’s licence number and the names and licence numbers of any other persons with whom the contractor carries on business as a building work contractor in partnership;

(d) the contract must comply with any requirements of the regulations as to the contents of domestic building work contracts;

(e) the contract must be signed by the building work contractor and the building owner personally or through an agent authorised to act on behalf of the contractor or building owner;

(f) the building owner must be given a copy of the signed contract as soon as reasonably practicable after it has been signed by both parties together with a notice in the prescribed form containing the prescribed information;

(g) the copy of the contract and the notice given to the building owner must (apart from signatures or initials) be readily legible.

(2) If any of the requirements of subsection (1) is not complied with, the building work contractor is guilty of an offence. $5,000.

[29] Corradini v O’Brien Lovrinov Crafter P/L [2000] SASC 224. This was a case decided under the Builders Licensing Act 1986 but the principle is equally applicable to the corresponding Building Work Contractors Act 1995 provisions. See also DG Australia v Alexander at paragraph 52 (noted at page 355 below) for a concession noted to the same effect, and Howland v Michalski [2004] SADC 71 in which Kitchen J said at paragraph 32:

The magistrate, on the evidence before him, concluded it was likely the contract between the parties did not comply with section 28. In that case, as he observed, the respondent would be guilty of an offence (section 28(2) of the BWC Act). However, as the magistrate held (correctly in my view) citing Corradini v Lovrinov Crafter Pty Ltd [2000] SASC 224; (2000) 77 SASR 125, although it is an offence for the building contractor to be a party to a contract which does not comply with section 28, the contract is not rendered illegal or unlawful. Therefore, it was open to the applicant to enforce the contract, or to terminate it for a breach entitling her to terminate or to accept a repudiation of it by the respondent.

[30] [1987] HCA 5; (1987) 162 CLR 221

[31] [2008] SADC 41, see page 223 below.

[32] See headnote to Cubelic below.

[33] Pitt v Glenelg [1927] SASR 501 at 508, see page 679 below.

[34] See Badge v Rule Chambers (2007), paragraph 62, at page 234 below.

[35] See for example Keating Chapter 5 section 3 for a review of circumstances in which a contractor may recover notwithstanding the absence of a contractually required certificate.

[36] See examples of application of this principle, see Badge v Rule Chambers at page 236 below and paragraph 47 of the decision in Henry Walker v Pegasus Gold at page 370 below.

[37] See paragraph 3 of the judgment at page 297 below. The court regarded it as unnecessary to decide what set-off was in fact deductable.

[38] See page 558 below.

[39] See page 335 below.

[40] Had the court examined the basis of the deduction, it might have concluded that it was available either by way of common law set-off, or abatement, whereby the builder’s entitlement is treated as reduced per se, or by way of equitable set-off, whereby the builder’s entitlement is reduced by the amount of damages recoverable by the owner way of cross claim. The use of the term “damages” in the judgment suggests that the court had in mind the later type of set-off.

[41] See page 673 below, and in particular paragraph 220 of judgment at page 675 below.

[42] See paragraph 20 of the decision in Packer v Aksha (1995) at page 561 below.

[43] Sarah Homes v Phillips [2007] SADC; see page 409 below. The judgment does not refer to the Supreme Court authority in Packer, but the conclusion is the same.

[44] See paragraph 27 et seq of the decision in Henry Walker v Pegasus Gold at page 364 below.

[45] It is clear that “payable” in section 10(2) means “presently payable”

[46] See the discussion at paragraph 141 below.

1. See MSP Group v Fernleigh at paragraph 5 (page 615 below); the question may be one of fact (Bank of New Zealand v Farrier-Waimak [1964] NZLR 9, quoted at paragraph 12 of MSP). The general rule appears to be that the lien attaches to each title to land that is worked on, and if work is treated as a whole, perhaps to other titles where the land in question has benefited.

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