A Statutory Declaration is a written statement which a person swears, affirms or declares to be true in the presence of an authorised witness.
In the case of 470 St Kilda Road Pty Ltd v Robinson, the Federal Court found the declarant of a Statutory Declaration as to a contractor’s payment of subcontractors, workmen and insurances, personally liable under the Australian Consumer Law for the amount of the payment claim.
At the relevant time, Glenn Roy Robinson was employed by Reed Constructions Australia Pty Ltd (Reed) – a company now in liquidation – as its Chief Operating Officer. Reed Construction was in the business of constructing medium to large buildings and other construction projects.
In or around October 2010, the applicant in the principal proceeding, 470 St Kilda Road Pty Ltd, and Reed entered into a written design and construct contract titled “Design and Construction Contract for Major Domestic Building Projects in Victoria AS4902- 2000 As Amended” (the D&C Contract). It related to a construction project known as the ‘Leopold Project’ located at 470 St Kilda Road in Melbourne. Under the D&C Contract, 470 St Kilda Road Pty Ltd was the ‘Principal’ and Reed was the ‘Contractor’. Reshape Development Pty Ltd (Reshape) was appointed as the Principal’s Representative under the said Contract. The Building and Construction Industry Security of Payments Act 2002 (Vic) applied to the D&C Contract. Under the terms of the D&C Contract:
(a) Reed was required to claim payments for work performed under the Contract on a progressive basis (progress claims); and
(b) 470 St Kilda Road Pty Ltd could request that Reed provide documentary evidence in support of progress claims. From time to time, Mr. Robinson signed Statutory Declarations in support of progress claims that included particulars of payments made to subcontractors.
In the course of preparing and issuing a payment claim by Reed to the Principal, Mr. Robinson swore a Statutory Declaration in relatively standard terms as to the payment of workers, subcontractors, suppliers and insurances. The Statutory Declaration included the statement that:
“…to the best of my knowledge and belief having made all reasonable enquiries… all sub-contractors or suppliers of materials who are or at any time have been engaged on the work under the Contract have been paid in full all monies which have become payable to the sub-contractor under terms of the sub-contract or to the supplier of materials under the terms of agreement for supply.”
When Reed went into liquidation, like the other unsecured creditors, the Principal recovered nothing. The Principal successfully pursued a claim against Mr. Robinson that incorrect statements in the Statutory Declaration breached section 18 of the Australian Consumer Law – misleading or deceptive conduct. Justice O’Callaghan found that Mr. Robinson was personally liable for the amount of the payment made in respect of the Payment Claim, being AU$1.49 million.
One of the key matters discussed was whether Mr. Robinson had made all reasonable enquiries. On the presented evidence, Justice O’Callaghan found that he had not done so. It was found that Mr. Robinson:
- Did have knowledge of Reed’s cash flow problems, that it had recently failed to pay subcontractors and suppliers in full, and critical path subcontractors had recently threatened to cease supply to the project;
- Failed to make any up to date enquiries of anyone who had access to Reed’s accounting software, to look at any actual invoices or recent monthly reports and/or make enquiries of the actual trading terms of all relevant subcontractors and suppliers.
Another key disputed issue was whether the Statutory Declaration was an ‘absolute statement’ that all subcontractors and suppliers had been paid. The Court found that it was, and because there were unpaid debts due and payable to subcontractors and suppliers at the time it was made, found that the Statutory Declaration was materially deceptive.
It validates that, given the exposure to claims under the Australian Consumer Law, declarants can no longer take statutory declarations required to accompany payment claims for granted.