A-Tech Australia Pty Ltd v Top Pacific Construction Aust Pty Ltd

[2019] NSWSC 404

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	A-Tech Australia Pty Ltd v Top Pacific Construction Aust Pty Ltd [2019] NSWSC 404
Hearing dates:	21, 22 March; 1 April 2019
Date of orders:	12 April 2019
Decision date:	12 April 2019
Jurisdiction:	Equity - Commercial List
Before:	Parker J
Decision:	Proceedings adjourned for the entry of final orders and the hearing of any application by the defendant for a stay.
Catchwords:	BUILDING AND CONSTRUCTION – construction contracts – Building and Construction Industry Security of Payment Act 1999 (NSW) – application for recovery of “claimed amount” as a debt due – validity of payment claims - whether payment claims sufficiently identified contract work - whether email sufficiently identified contract works to constitute a payment schedule – validity of service of payment claims - service by email pursuant to s 31(1)(c) - where no direct evidence of time of receipt . BUILDING AND CONSTRUCTION – construction contracts – Building and Construction Industry Security of Payment Act 1999 (NSW) – cross-claim for breach of contract and set off for damages – contractual effect of consent orders - whether agreement by consent bore contractual force such that application for judgment could not be sought in advance of determination of cross-claim - whether notwithstanding agreement cross-claim may be used as a defence pursuant to s 15(4) - whether s 34 would otherwise invalidate an agreement purporting to contract out of the jurisdiction of the Act.
Legislation Cited:	Building and Construction Industry Security for Payment 1999 (NSW), ss 13(2), 14, 15, 31(1)(c), 34 Competition and Consumer Act 2010 (Cth), Schedule 2, The Australian Consumer Law, s 18 Trade Practices Act 1974 (Cth), s 52 Electronic Transactions Act 2000 (NSW), s13A
Cases Cited:	Barnden v Zulian; Barnden v Commissioner of Taxation [2018] NSWSC 1980 Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9; [2006] NSWCA 238 Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 Coulls v Bagot’s Executor and Trustee Co Ltd (1967) 199 CLR 460; [1967] HCA 3 Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2007) 23 BCL 292; [2006] NSWCA 259 Felton v Mulligan (1971) 124 CLR 367; [1971] HCA 39 Impero Pacific Group Pty Ltd v Bonheur Holdings Pty Ltd [2019] NSWSC 286 Morgan v 45 Flers Avenue Pty Ltd (1987) 11 NSWLR 573 Mullins v Howell (1879) 11 Ch D 763 Multiplex Constructions Pty Ltd v Luikens and Anor [2003] NSWSC 1140 National Benzole Co Ltd v Gooch [1961] 1 WLR 1489 Purcell v F C Trigell Ltd [1971] 1 QB 358 Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26 Woods v Sheriff of Queensland (1895) 6 QLJ 163
Category:	Principal judgment
Parties:	A-Tech Australia Pty Ltd (Plaintiff) Top Pacific Construction Aust Pty Ltd (Defendant)
Representation:	Counsel: FP Hicks SC/J Nathan (Plaintiff) F Santisi (Defendant)   Solicitors: Goh Lawyers (Plaintiff) KPL Lawyers (Defendant)
File Number(s):	2018/295750
Publication restriction:	Nil

Judgment

1. These proceedings arise out of a contract between Top Pacific Construction Pty Ltd (“TPC”) and A-Tech Australia Pty Ltd (“ATA”) for the supply and installation by ATA of windows and sliding doors in a building development at Wolli Creek in Sydney being constructed by TPC. ATA seeks judgment under the Building and Construction Industry Security of Payment 1999 (NSW) for $466,120.80 representing two invoices, which were issued in June and July 2018. Unless otherwise stated, statutory references in the balance of this judgment are to that Act. All figures are inclusive of GST.

2. ATA’s claim is based on s 15 of the Act, which relevantly provides:

15 Consequences of not paying claimant where no payment schedule

(1)    This section applies if the respondent:

(a) becomes liable to pay the claimed amount to the claimant under section 14(4) as a consequence of having failed to provide a payment schedule to the claimant within the time allowed by that section, and

(b)   fails to pay the whole or any part of the claimed amount on or before the due date for the progress payment to which the payment claim relates.

(2)    In those circumstances, the claimant:

(a)   may:

(i)    recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction,

…

Separate determination of ATA’s claim

3. ATA’s claim is simple. Its contention is that the invoices which it issued and which are the subject of these proceedings constituted payment claims within the meaning of the Act; that they were validly served on TPC; and that TPC failed, within the time allowed by the Act, to serve payment schedules contesting them. ATA applies for judgment in the amounts of the invoices accordingly.

4. ATA commenced these proceedings as plaintiff in September 2018. On behalf of TPC a Commercial List Response was filed complaining about the quality of the works and asserting that ATA was not entitled to payment. A cross-claim was also filed claiming damages for breach of contract and a set-off of those damages against any amounts which might be found due to ATA on its claim.

5. ATA’s response was that TPC’s cross-claim could not be used as a defence to ATA’s claim. ATA relied on s 15(4) of the Act, which relevantly provides:

(4)    If the claimant commences proceedings under subsection (2)(a)(i) to recover the unpaid portion of the claimed amount from the respondent as a debt:

(a)    judgment in favour of the claimant is not to be given unless the court is satisfied of the existence of the circumstances referred to in subsection (1), and

(b)    the respondent is not, in those proceedings, entitled:

(i)    to bring any cross-claim against the claimant, or

(ii)   to raise any defence in relation to matters arising under the construction contract.

6. In November 2018 a motion was filed on behalf of ATA seeking summary judgment. That motion came before the Court on 7 December. The motion was resolved by agreement and the Court made orders by consent for TPC to pay the amount claimed by ATA into Court and fixing a timetable for TPC to amend its cross-claim.

7. TPC notified ATA of its proposed amendments but the amendments were opposed and TPC failed to comply with the timetable for making its application for leave. On 1 February Hammerschlag J made an order fixing the plaintiff’s claim for hearing on 11 March. It was common ground before me that the effect of his Honour’s order was that the ATA’s claim was to be determined separately, and in advance, of TPC’s cross-claim.

8. On 6 February 2019 a Notice of Motion was filed on behalf of TPC. The Notice of Motion relevantly sought:

2.   That leave be granted to file the amended cross summons and associated documents as provided to the plaintiff on 26 October 2018.

3.   That the hearing date of 11 March 2019 be vacated or otherwise used to deal with this motion.

4.   An order that pursuant to section 73 of the Civil Procedure Act 2005, that the court make judgement or order that the parties on 7 December 2018 reached an agreement that the issue of whether section 15(4) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the “Act”) was enlivened and other rights under that Act were enlivened in favour of the Plaintiff, was dispensed with by way of payment into court and the parties proceed to argue the merits of any debt due and any off set in the ordinary way, such section 15(4) of the Act and the Act does not act as a bar to filing any defence and cross claim in these proceedings.

9. TPC’s application came before Ball J on 15 February. His Honour declined to vacate the hearing of ATA’s claim. Instead he pushed the hearing date back from 11 March to 21 March and fixed a timetable for the filing of evidence and submissions on the motion with a view to both the motion and ATA’s claim being listed for hearing on that date.

10. The contention raised by paragraph 4 of the Notice of Motion is that there is a contractual agreement in force between TPC and ATA which prevents ATA now from moving for judgment on its claim in advance of determination of the cross-claim. I dealt with this contention as a preliminary matter at the hearing on 21 and 22 March, receiving evidence and hearing submissions on the question from both parties. At the end of the submissions on 22 March, I dismissed the claim for relief in paragraph 4 of the Notice of Motion. I then proceeded to hear the evidence on ATA’s substantive claim for the entry of judgment. That hearing continued on 1 April.

11. When I dismissed the claim for relief in paragraph 4 of TPC’s Notice of Motion, I stated that I would give my reasons when delivering judgment on ATA’s claim. Those reasons now follow.

12. KPL Lawyers represent ATA in these proceedings. The partner responsible for the matter is Bassam Kazi. Frank Ngo of Goh Lawyers represents TPC.

13. On 29 November Mr Kazi wrote to Mr Ngo observing that his firm had not been provided with copies of the purported payment schedules relied upon by TPC, or the evidence on the cross-claim which under the then timetable had been due on 23 November. The letter stated that unless the payment schedules were provided on that day, along with or as part of TPC’s evidence, KPL would seek leave on 30 November to file a notice of motion which was enclosed with the letter and seek a hearing date for that motion before the end of the year.

14. The motion was described in KPL’s letter as a motion “seeking summary judgment and dismissal of [TPC’s] cross-claim”. The relief sought in it was:

1. Pursuant to r 13.1(1) of the Uniform Civil Procedure Rules 2005 (NSW), Order that judgment be entered in favour of the Plaintiff against the Defendant for the amount of $466,120.80 plus interest pursuant to s. 100 of the Civil Procedure Act 2005 (NSW).

2.   Order the Defendant pay the Plaintiff’s costs of these proceedings including this motion as agreed or assessed.

3. Pursuant to s. 15(4)(b) of the Building and Construction Industry Security of Payment Act 1999 (NSW), Order the Cross Summons filed by the Defendant/Cross Claimant on 27 October 2018 be struck out.

4.   Such further or other orders as this honourable Court deems fit.

15. The purported payment schedules and evidence were not provided and at the directions hearing on 30 November ATA’s Notice of Motion was filed in Court. The following Friday, 7 December, was allocated as the return date.

16. At 8.43 am on 7 December, shortly before the Motion was called on in Court, Mr Ngo sent an email to Aydn Shada, an associate at KPL assisting Mr Kazi. The email was copied to Mr Kazi. The email stated:

We note your motion for summary hearing listed tomorrow [sic] for hearing.

We are instructed to make the following offer to you to resolve the motion.

That our client pay into court the sum claimed, pending the final hearing and further order of the court.

17. According to an affidavit of Mr Ngo, two counsel attended the hearing of the Motion for ATA. Mr Ngo and counsel retained by him for TPC also attended. Negotiations took place for the resolution of the motion. Typewritten orders disposing of the motion were presented by counsel for ATA. Mr Ngo stated that:

… the document was presented with words to the effect “Your client will need to pay money into court such if it fails in its claim our client can get payment ASAP”.

18. Further handwritten short minutes which provided for the cross-claim to be amended were also negotiated. According to Mr Ngo:

10.   During the negotiations and at the signing my counsel said, “lets deal with the merits of the case we will pay funds into court we want to amend our cross claim and deal with that rather than stay any enforcement or claim an offset in other proceedings let’s just do it now”. There was no reply that the agreement was not proceeding on this basis.

19. No application was made to cross-examine Mr Ngo. An affidavit in response from Mr Kazi was read, but there was no admissible evidence to answer Mr Ngo’s account of what happened.

20. The typewritten paragraphs of the Short Minutes of Order read:

1.   Order the defendant pay into Court the amount of $466,120.80 within 7 days of the date of these orders to be kept in Court until the resolution or determination of these proceedings.

2.   Order that in the event the Defendant does not comply with 1 above, the Plaintiff shall be entitled to enter judgment against the Defendant for the amount of $466,120.80.

21. The handwritten orders provided that the costs of the motion were to be costs in the cause (paragraph (3)) and for a timetable allowing for the defendant to apply to amend its cross-summons and list statement. Any proposed amendments were to be served by 14 January, and, if objected to, any application for leave to make the amendments was to be filed by 29 January. The proceedings were to be relisted on 1 February 2019.

22. In accordance with the timetable Mr Ngo sent a proposed amended summons and cross-claim list statement to Mr Shada on 13 January. Mr Shada responded on 22 January opposing the grant of leave on the ground that the bringing of a cross-claim was prohibited by s 15(4) of the Act. The letter invited Mr Ngo, should the amendments be pressed, to file and serve a notice of motion by 29 January in accordance with the timetable.

23. No such motion was filed. When the matter came before the Court for mention on 1 February there was no appearance for TPC. Hammerschlag J made the order to which I have already referred setting the plaintiff’s claim down for hearing.

24. There was no evidence explaining why TPC was unrepresented on 1 February. It appears from subsequent correspondence that the date was overlooked by TPC’s legal representatives.

25. The following Monday, 4 February, Mr Ngo responded belatedly to Mr Shada’s letter of 22 January. Mr Ngo protested that it was contrary to the agreement reached on 7 December for ATA to rely upon s 15(4) of the Act. As I have already described, TPC’s Notice of Motion was filed on 6 February, and the application came on for hearing before me on 21 March.

26. TPC contends that the agreed resolution of ATA’s Notice of Motion, reflected in the consent orders on 7 December 2018, was a contractual settlement which prevents ATA now from proceeding to seek judgment on its claim before the cross-claim is determined. ATA’s position is that there is no contractual obstacle to its claim. But ATA also contends that if there is, it is invalidated by s 34 of the Act which prohibits contracting out of the Act’s provisions.

Contractual effect of settlement of motion and consent orders

27. It is easy to see why TPC might feel aggrieved in the present case. ATA’s application was resolved by TPC agreeing to pay the sum claimed into Court and by directions being made for TPC to pursue its cross-claim. The statements made by the parties’ counsel at the hearing, which were not disputed, do support the idea that both parties contemplated that ATA’s claim and TPC’s cross-claim would thereafter be dealt with together.

28. On the face of it, TPC’s cross-claim provided no answer to ATA’s claim for judgment. The language of s 15(4) clearly prevents a cross-claim for damages for breach of contract being made in response to a claim for judgment under the Act. But in Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9; [2006] NSWCA 238 at 16 [12] Basten JA (with whom Hodgson JA and Tobias JA agreed) pointed out that the Act, as a State law, cannot exclude a defence arising under Commonwealth law such as a defence of misleading or deceptive conduct based on contravention of the then s 52 Trade Practices Act 1974 (Cth), now s 18 of the Australian Consumer Law. It appears that TPC now wants to amend its cross-claim so as to include such a claim. Of course it does not necessarily follow that TPC would be entitled, in the face of s 15(4)(b)(i), to insist on pursuing that claim by way of cross-claim in these proceedings before resolution of ATA’s claim. But even so, TPC could still have resisted the application for summary judgment on the grounds that it had arguable defences to ATA’s claim of the type which were ultimately argued in this case. ATA’s application for summary judgment was therefore contestable and the agreed resolution of that application on 7 December involved a real element of compromise.

29. Even if ATA had succeeded in its application for summary judgment, it would not have been entitled to have TPC pay the money into Court. TPC has taken that step as part of a compromise and now finds itself facing a renewed claim for judgment which, if successful, will no doubt be followed by an application to have the money in Court paid out.

30. In Morgan v 45 Flers Avenue Pty Ltd (1987) 11 NSWLR 573 the Court of Appeal dealt with a submission concerning the contractual effect of consent orders made by the parties to proceedings. For this purpose, the Court referred to earlier authority in England on the question. I referred to this line of authority in argument. Neither counsel took it up. Nevertheless, I consider that Morgan and the authorities to which it refers give some guidance on the issues which I must decide.

31. In Morgan the appellant defaulted in complying with the timetable for the preparation and printing of the appeal books. Eventually it was agreed by the parties that the appellant should have seven days to pay to the Registrar of the Court of Appeal sufficient monies to procure the printing of the appeal books, but if the required sum was not paid within that period the appeal should be dismissed. A consent order to this effect was made by the Court.

32. The sum was not paid owing to slackness on the part of his solicitor. The self-executing order thus resulted in a judgment dismissing the appeal. The appellant sought to have the order set aside so that he could prosecute the appeal.

33. Kirby P, with whom Hope and Priestley JJA agreed, referred to authority in comparable English cases where self-executing orders had been made. In particular in Purcell v F C Trigell Ltd [1971] 1 QB 358 Winn LJ said (at 365):

“…It seems to me that, if a consent order is to be set aside, it can really only be set aside on grounds which would justify the setting aside of a contract entered into with knowledge of the material matters by legally competent persons, and I see no suggestion here that any matter that occurred would justify the setting aside or rectification of this order looked at as a contract.”

34. Kirby P acknowledged that where orders are made by consent then the Court will usually give effect to them. But the Court always retains a discretion as to whether to do so (see, Morgan at 579; Purcell v Trigell at 363-364 and National Benzole Co Ltd v Gooch [1961] 1 WLR 1489 at 1492 per Sellers LJ and 1494 per Diplock LJ). In the exercise of the discretion, the self-executing order was set aside and the appellant was permitted to continue to prosecute the appeal, subject of course to stringent conditions and costs on an indemnity basis: at 581[E]-[F].

35. This decision shows that the Court is never bound by an agreement between the parties. But it did not question the idea that the agreement could be analysed in contractual terms. It is necessary to consider whether such a contract existed in this case and whether, if so, it could in some way be enforced by TPC against ATA.

36. At first sight, an agreement for the resolution of an application to the Court by means of consent orders apparently satisfies the requirements of a valid contract. There is offer and acceptance; there is consideration in the form of an exchange of promises; and there is apparently an intention to create legal relations.

37. But a contractual analysis must take account of the unusual context in which an agreement for consent orders, and especially an agreement for interlocutory consent orders, is made. The Court is not party to the parties’ agreement and the exercise of its powers cannot directly be controlled by the parties. In particular, the Court can never be compelled to make consent orders; the Court may always choose, when presented by consent orders, to reject them, even though they are agreed by both parties.

34. The fact that the subject matter of the agreement is action by a third party who cannot directly be controlled by the parties to the contract does not, of course, necessarily prevent contractual obligations from arising. The law recognises the possibility of A and B making a contract with a view to a third party, C, doing something. Usually C is a party related to B and the arrangement involves some benefit to A such as C paying money to A. In principle, such a contract is enforceable; in some cases for damages, and in others by way of orders in the nature of specific performance: see Coulls v Bagot’s Executor and Trustee Co Ltd (1967) 199 CLR 460; [1967] HCA 3 at 501-504 (Windeyer J).

35. In such a contract B’s obligation might be defined in a number of different ways. From A’s point of view, the most beneficial is where B undertakes to procure C to take the relevant action. In that case, if C does not take the action, B is in breach. Less onerously, B may undertake to use best endeavours to have C take the action. Should B fail to take these steps and should C not take the specified action, B might be liable in damages if it were proved that C would have acted in accordance with B’s request if made. Alternatively, before C is required to take action, A might obtain a mandatory injunction to compel B to use best endeavours to have C take the relevant action.

36. In the case of an agreement to have consent orders made by the Court, it would theoretically be possible for B to agree with A to procure the Court to make the orders. In such a case if the Court refused to make the orders B would be in breach. But in view of the Court’s discretion that would be unlikely unless it was express. B’s obligation would more likely be interpreted as an agreement to co-operate with A in having the orders made; or, at least, not to oppose A’s application to have the orders made.

37. In such a case, an award of substantial damages for breach of contract is likely to be problematical in the event that the Court does not make the orders, especially if they are interlocutory orders. But there still remains the question of specific enforcement in equity.

38. Mullins v Howell (1879) 11 Ch D 763 was an easement case about access to the plaintiffs’ property through an archway under the defendant’s building. The proceedings were settled on the basis of undertakings given by the defendant. The undertakings obliged the defendant to allow the plaintiffs the right claimed by them by lowering the road under the arch and removing certain buttresses projecting into the archway. The undertaking concerning the buttresses had been a mistake on the defendant’s part. The defendant moved to set the order aside and the plaintiffs made a cross-application to have it enforced. Jessell MR said (at 766):

I have no doubt that the Court has jurisdiction to discharge an order made on motion by consent when it is proved to have been made under a mistake, though that mistake was on one side only, the Court having a sort of general control over orders made on interlocutory applications.

I also consider that the Court has a discretion as to enforcing an undertaking by attachment, that is, by sending the person to prison.

I do not think that the rules which have been laid down as the rules under which the Court will enforce agreements apply to enforcing orders of the Court, because the Court has jurisdiction over its own orders, and there is a larger discretion as to orders made on interlocutory applications than as to those which are final judgments.

43. In so far as Jessell MR stated that the court had a discretion about enforcing the undertaking, this simply reflects the state of the law as declared in Morgan v 45 Flers Avenue. But his Honour did not decide the case on that basis. Instead, he granted relief against the orders on ordinary equitable grounds, mistake being a recognised defence to an order for specific performance. Had there been no mistake, the implication is, the agreement would have been specifically enforceable as between the parties to it. In such a case only the Court’s discretion would have been available to resist the making of orders.

44. This raises the possibility of specific enforcement being available to give effect to the consent resolution of legal proceedings (interlocutory or final) if that can be done in a way which does not depend upon the exercise of the Court’s discretion. For instance, in a Morgan v Flers situation the respondent, rather than obtaining a self-executing consent order, might have insisted on an agreement that if monies for printing of the appeal books were not paid to the Registry within the relevant time, the appellant would file a notice discontinuing the appeal. If the monies were not paid, could the respondent, rather than seeking the entry of judgment dismissing the appeal, simply seek specific performance of the obligation to file a notice of discontinuance? On this approach, no question of exercising the Court’s discretion would arise and the decision in Morgan v Flers might possibly be outflanked.

45. But this was not a case of ATA agreeing to give up a substantive claim. The consent orders of 7 December related to an interlocutory aspect of the proceedings. This gives rise to difficulties from TPC’s point of view in formulating the putative contractual obligation.

46. The orders did not provide for ATA’s Notice of Motion to be withdrawn or dismissed, but that was their effect. However such an order is not a final judgment. In Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46 McLelland J said that an order disposing of an interlocutory application could not give rise to an issue estoppel. I discussed the subsequent authorities in Barnden v Zulian; Barnden v Commissioner of Taxation [2018] NSWSC 1980 at [17]-[39]. In my view, having regard to the present state of Court of Appeal authority, the consent resolution of ATA’s Notice of Motion could not give rise to an issue estoppel strictly binding on the parties. At most it would be a matter for the Court to take into account in the event of a later application covering the same ground.

47. In Woods v Sheriff of Queensland (1895) 6 QLJ 163 at 164, Griffith CJ said:

when a judgment or order is pronounced or made after hearing both sides, it is a general rule that the court which pronounced the judgment or made the order cannot reverse or vary it.

48. His Honour stated that this general rule:

applies equally to all judgments and orders, whether final or interlocutory, and whether pronounced by the Full Court or by a single judge, and whether he is sitting in court or in chambers.

49. But, as his Honour went on to point out, this rule does not prevent reversal or variation where there has been a relevant change in circumstances. And in the present case the Court did not embark on the hearing of ATA’s application but merely disposed to it pursuant to the agreement of the parties. The result is that the orders made on 7 December 2018 were not a barrier (or not necessarily a barrier) to a further application by ATA for judgment in the future.

50. TPC could thus only prevent ATA from making such a further application if the consent resolution of ATA’s summary judgment application involved some sort of agreement on ATA’s part that its claim and TPC’s cross-claim would be conducted together. That is, ATA would have to have undertaken not to make any further application for judgment before the determination of the cross-claim.

51. It was not suggested that any such express promise had been made by ATA in the course of the negotiations. It would have to be spelt out as a matter of implication. That has its difficulties.

52. The first difficulty is that on an interlocutory issue an absolute agreement to such an effect would be an unlikely implication. In the present case, the threat which preceded the filing of ATA’s Notice of Motion was to move to judgment before the end of 2018. The consent orders provided a timetable for amendments to the cross-claim. Could these circumstances really be seen as giving rise to a promise never to apply for judgment no matter how long the process took? It would seem more reasonable to understand any obligation only as an obligation not to apply for judgment so long as TPC complied with the Court’s directions as to the timetable.

53. A second difficulty is related. When the matter came before the Court on 1 February, TPC was (if it still wished to amend its cross-claim) in breach of the timetable. There was no evidence before the Court as to the course of events on 1 February. For all the Court knows, Hammerschlag J may have made the order of his own motion. If that was the case, there would have been no breach on ATA’s part.

54. What these points show is that, particularly in an interlocutory context, an agreement to consent orders may be so conditional or inherently uncertain that the initial appearance of the exchange of promises and an intention to create legal relations is illusory. But it is unnecessary to pursue that idea further in this case.

55. The claim to relief in paragraph 4 of TPC’s Notice of Motion was in effect a claim for a declaration. TPC did not seek any substantive relief, and in particular did not seek any injunctive relief against ATA. The order fixing ATA’s claim for separate hearing was made by Hammerschlag J before TPC’s Notice of Motion was filed. The Court was not asked (and could not reasonably have been asked) to vacate this order. It would not have been easy to formulate an injunction against ATA, either in prohibitory or mandatory form, which would have prevented the hearing from going ahead. In any event, TPC did not attempt to do so. If (which I doubt) ATA’s conduct involved a breach of contract sounding in damages, that claim might still be pursued separately. But that would not affect the resolution of ATA’s claim to have judgment entered in its favour.

Operation of s 34

56. Section 34 provides:

34   No contracting out

(1)   The provisions of this Act have effect despite any provision to the contrary in any contract.

(2)    A provision of any agreement (whether in writing or not):

(a)   under which the operation of this Act is, or is purported to be, excluded, modified or restricted (or that has the effect of excluding, modifying or restricting the operation of this Act), or

(b)   that may reasonably be construed as an attempt to deter a person from taking action under this Act,

is void.

57. Counsel for ATA relied upon sub-paragraph (a) of subsection (2). Counsel pointed out that the agreement in question did not need to be in writing. His submission was that any agreement which prevented ATA from relying on s 15(4) was one which excluded, modified or restricted the operation of the Act and was rendered void.

58. Provisions which prohibit contracting out of statutory rights are not infrequently enacted. Such a prohibition may also be an implicit part of the statutory scheme. In Felton v Mulligan (1971) 124 CLR 367; [1971] HCA 39 Barwick CJ said (at 376):

It is not the law, as I understand it, that a person who has a right under a statute to seek the aid of a court cannot in any case agree not to exercise that right: cf. Admiralty Commissioners v. Valverda (Owners) (1938) AC 173, at p 185 per Lord Wright. But it is true that some statutory rights may not be so foregone. Whether or not the right in question is a right which may not be validly bargained away must depend on the subject matter to which it relates and the terms of the statute from which it is derived. The construction of the statute will be influenced by the principles as to public policy which have been developed by the courts. No doubt it may readily be decided that a statute creating a right to an order of a court for maintenance, upon its proper construction does not intend to allow the right it creates to be foregone. But whether the wife in such a case can validly agree not to enforce the right the statute gives her must be answered by a consideration of the statute itself.

59. Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26 concerned an anti-discrimination complaint to the Equal Opportunity Tribunal. Qantas contended that before the complaint was made the complainants had agreed to release any anti-discrimination claims. The Tribunal concluded that Qantas by its conduct in the course of the negotiations had estopped itself from relying on that provision. Qantas appealed.

60. The relevant legislation contained no express provision which outlawed contracting out. Gleeson CJ & Handley JA, who gave the leading judgment, concluded that such an arrangement arose by implication. They said (at 31):

It is clear that persons affected by discriminatory practices prohibited by the Act are not free to bargain away in advance their rights to seek relief under the Act. The Act forbids those practices and seeks to eradicate them from the life of the State. The evident policy of the statute is that such practices should cease. Contracting out of the statute in advance would be directly contrary to this policy.

61. But their Honours considered that there was a limitation to the scope of this implicit prohibition. They said (at 31):

The position is otherwise once disputes have arisen. The Act encourages the settlement of disputes by conciliation and the president of the Anti-Discrimination Board and the tribunal are directed to attempt to achieve settlements: see s 92 and s 106. It is clear then that the Act does not prohibit complainants from compromising or releasing accrued claims for damages.

62. In many cases the distinction drawn by Gleeson CJ & Handley JA would mark the boundary between what is excluded by a provision which prohibits contracting out and what is not. In particular, that would usually be so for a provision creating a statutory right enforceable in courts of general jurisdiction such as s 15(2)(a). Proceedings brought to enforce statutory rights of that type are the same as other private law proceedings. Generally such proceedings are conducted on an adversarial basis and the Court will give effect to agreements reached between the parties, acting through their legal representatives. This reflects the important public interest in the settlement of disputed claims referred to in Gubbins.

63. But the effect of any prohibition against contracting out depends ultimately on the terms of the Act. In the present case, the provision is express. And the Act does not stop at the creation of substantive rights. It expressly goes on to deal with a matter of procedure, namely whether a cross-claim can be maintained against a claim under s 15(4). Thus the “operation of the Act” extends to the conduct of proceedings under s 15(4) and specifically to the bringing of cross-claims.

64. An agreement made prior to the institution of proceedings that, should ATA make a claim for judgment under s 15(2)(a), TPC would be entitled to bring a cross-claim for damages for breach of contract, would clearly be caught by s 34. It is hard to see how an agreement in these terms made after the commencement of proceedings could be in a different position.

65. Had I considered that there was an otherwise enforceable contractual obligation on ATA preventing ATA from proceeding to judgment on its claim, such an obligation would have been nullified by s 34.

Further conduct of proceedings

66. For these reasons, TPC’s claim for the relief in paragraph 4 of its Notice of Motion had to be dismissed. The proper avenue for TPC to complain about departure from any agreed basis on which the proceedings were to be conducted is by applying for a stay of enforcement of any judgment ATA might obtain.

67. At the end of the hearing on 1 April, I made orders granting leave to ATA to amend its cross-claim and providing for a timetable for the further conduct of the proceedings on the cross-claim. I assume that in consenting to these orders the parties took the view that now that the Court will proceed to deliver judgment on ATA’s claim, the further conduct of the cross-claim proceedings does not infringe s 15(4)(b)(ii). In substance, the further proceedings constitute a separate claim by TPC. It appears that ATA’s amendments will include claims under the Australian Consumer Law, but counsel for ATA disclaimed any suggestion that this prevented the Court from proceeding to determine TPC’s claim.

Issues for determination on ATA’s claim

68. TPC resists the entry of judgment against it on two grounds. First, TPC contends that the invoices served on it were not payment claims for the purposes of the Act. Alternatively, TPC contends that the effect of correspondence sent by it after receipt of the payment claims is that, albeit informally, it served a payment schedule denying liability.

69. There was no challenge to the payment claims on any other basis. In particular no point was taken about the reference dates of the claims.

Summary and analysis of evidence

70. Evidence was given by way of affidavit on behalf of both ATA and TPC. On behalf of ATA, evidence was given by John George, ATA’s Chief Financial Officer, and Shahab Karimi, known as Shaun Karimi, a Project Manager for ATA. On behalf of TPC, evidence was given by Wesley Wei, a director of TPC.

71. The contract appears to be a standard form of subcontract used by TPC. It was dated 7 November 2016 and provided for the commencement of works on 4 July 2017 and for substantial completion to take place by 25 May 2018. The contract value was just over $1 million. The contract was one of two contracts under which ATA was carrying out work at Wolli Creek. It related to a development at Arncliffe Street. The other contract related to a development at Levey Street.

72. Clause 7.3 of the contract between the parties dealt with progress claims. It provided:

Each month on the date specified in Schedule 2 Contract Sum and Payments or as otherwise nominated by Top Pacific Construction, the Contractor must submit to Top Pacific Construction a claim by email to [email] / [email] addressed to [street address], Sydney NSW 2000, for progress payment showing:

(a)   a description of the work to which the progress claim relates;

(b)   the Contractor’s valuation of the Works to the date stated in the claim;

(c)   the Contractor’s valuation of unfixed materials or goods intended to be incorporated in the Works;

(d)   the total amount previously paid to the Contractor;

(e)   other amounts payable to the Contractor under the Contract Documents;

(f)   the amount currently claimed by the Contractor for payment.

(g)   All necessary insurances are provided with each claim.

(h)   Statutory declaration or subcontractor statement is provided with each claim – see Annexure B

(i)   All necessary Work Health and Safety documentation is provided (including weekly toolbox records)

(j)   Fully filled in and completed “Subcontract invoice Payment Checklist” – see Annexure G

73. The schedule referred to in cl 7.3 provided space for sixteen numbered stages but was left blank.

74. There was a slippage in the construction schedule. By mid-May 2018 TPC’s construction manager, Peter Maroun, was threatening to terminate the contract unless ATA would provide a completion date. On 23 May Mr Karimi submitted a program which would result in the work being finished by 29 June. Mr Maroun responded that this was not quick enough and that the 22nd not the 29th of June had been agreed. The evidence before me does not provide written confirmation of this, but it at least appears from correspondence to have been Mr Wei’s understanding in mid-June that 22 June was the agreed finish date.

75. On 22 June ATA issued the first of the invoices which are the subject of these proceedings. It was numbered 1037 and was addressed to TPC identifying the project as the Arncliffe Street development at Wolli Creek. The narrative was:

Window Glazing – GA,B & Levels 1A, B; 2A,B; 3A,B & 4A,B and

Door Glazing – GA, B; & Levels 1A,B; 5A,B; 6A,B; & 7A,B.

76. The invoice was issued by Mr George. His evidence made it clear that the invoice was issued by him as a result of information and instructions received from others in ATA and he had no personal knowledge of the work.

76. Mr George emailed the invoice to Crystal He and Brian Song of TPC. Mr George sent the invoice to Ms He and Mr Song because the previous November he had received an email from Ms He, a contract administrator at TPC, stating that the person with whom Mr George had been dealing had resigned, and asking for invoices to be sent to her (Ms He) and Mr Song in the future.

77. Mr George’s email stated:

Attached is the latest invoice for Arncliffe Street Wolli Creek with the required documents.

79. The evidence before me included only the invoice and did not indicate what the “required documents” were. But no point was taken about this on behalf of TPC.

80. Mr George also sent a copy of the email to his colleague, Mr Karimi. The email is recorded as having been sent at 12.27 pm on 22 June, which was a Friday.

81. At 11.25 am on the following Monday, 25 June, Mr Maroun sent an email to Elie Ibrahim, another employee of ATA who appears to have been senior to Mr Karimi. The email stated:

As discussed we will pay the full amount to you without back charge and you will give me certificate by tomorrow. Please have the work done by 29th as agreed. Thanks

82. Mr Maroun sent copies of the email to (among others) Mr Wei, Ms He, Mr Song and Mr Karimi of ATA. At 11.57 am Mr Karimi responded, with copies to the recipients of the earlier emails, as follows:

Thanks for your email, I’ll send you the certificate today, just wanted to ask for a week extension to finish up all locks and finalise the job. We will have all materials on site as agreed, so crane can be removed on time, but boys will stay on site until job is finished. We are aiming to finalise all locks by Fri 6th July as we lost a lot of time due to raining and weather condition. Thanks.

83. At 3.03 pm that afternoon Mr Maroun responded:

As long as all panels are in by 29th and locks by 6th.

84. On 10 July ATA issued the second invoice which is the subject of these proceedings. The invoice was numbered 1061 and was dated the previous Friday, 6 July. The invoice amount was $184,571.32. The narrative stated:

GLAZING – Level 2A,B; Level 3A,B; Level 4A,B; & LOCKS – All Levels form [number] Arncliffe St, Wolli Creek

85. The invoice was sent to Ms He and Mr Song as an attachment to an email which was in the same form as the 22 June email except that it also made enquiry about a cheque which had not arrived. The email was sent at 1.17 pm.

86. On Friday 13 July Mr Wei wrote to Mr Karimi, Mr Ibrahim and Mr George complaining about ATA’s performance under the two contracts. Mr Wei complained about incomplete repairs, incomplete work, and lack of communication from ATA in the course of the contract. He stated that the contract had been terminated earlier that morning and that ATA was not allowed to enter the property in the future.

87. At 11.44 am the following Monday, 16 July, Mr Karimi replied to Mr Wei rejecting his claims against ATA. Mr Maroun then sent a response. At 11.12 am Mr Wei sent a further email to Mr George, Mr Karimi and Mr Ibrahim with copies to Ms He and Mr Song, among others. The email reiterated Mr Wei’s position that ATA had breached the contract and failed to honour agreements which had been made. It continued:

●   Your invoice labelled 1007 of a value of 187,230.4 + retention will be paid immediately. That leaves $442,814.57 left to pay. This also does not include retention which is valued at $50,053.24.

…

88. Mr Wei then stated that $120,000 was owing in liquidated damages at the contractual rate as a result of delays by ATA. He also stated that problems with ATA’s workmanship had to be rectified and quotes had been obtained from another firm. He stated that the cost of the work had been approved and was valued at $250,000. The email continued:

●   Thus, a total of $370,000 will be taken off Atech’s contract.

●   Invoice number 1037 with a claim value of $267,472.01 has been formally rejected on grounds that the description of door glazing finished on levels 1, 5, 6, 7 are in fact were not finished on the date of the invoice sent. Further proof has been sent in previous emails and proof will again be attached in this email.

●   The remaining value of Atech’s contract comes down to $72,814.57.

●   You will be able to send an invoice at anytime claiming the rest of these works.

…

89. Later that afternoon Mr Wei followed this up with emails attaching invoices raised by TPC for $120,000 for liquidated damages and $250,000 for defective and uncompleted works. This was the last communication which was the subject of evidence before me. The proceedings were commenced on 27 September.

Payment claims by ATA?

90. The requirements for a payment claim are prescribed by s 13(2) of the Act, which provides:

(2)    A payment claim:

(a)    must identify the construction work (or related goods and services) to which the progress payment relates, and

(b)    must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount), and

(c)     if the construction contract is connected with an exempt residential construction contract, must state that it is made under this Act.

91. It was not suggested that the contract in this case was connected with an “exempt residential construction contract” and accordingly there was no requirement that ATA’s invoices contained a statement that the invoice was a payment claim under the Act. The claimed amount was clearly specified. The only question is whether the invoices sufficiently identified the construction work to which the claimed progress payment related.

92. In Multiplex Constructions Pty Ltd v Luikens and Anor [2003] NSWSC 1140, Palmer J made the following observations about the form of payment claims and payment schedules (at [76]):

A payment claim and a payment schedule are, in many cases, given and received by parties who are experienced in the building industry and are familiar with the particular building contract, the history of construction of the project and the broad issues which have produced the dispute as to the claimant’s payment claim. a payment claim and a payment schedule must be produced quickly; much that is contained therein in an abbreviated form which would be meaningless to the uninformed reader will be understood readily by the parties themselves. A payment claim and a payment schedule should not, therefore, be required to be as precise and as particularised as a pleading in the Supreme Court. Nevertheless, precision and particularity must be required to a degree reasonably sufficient to apprise the parties of the real issues in the dispute.

93. Counsel for TPC referred to the requirements of cl 7.3 concerning progress claims under the contract. But these requirements are irrelevant for present purposes. ATA’s claim is under the Act and the only question for the purpose of these proceedings is whether its invoices met the requirements of the Act.

94. The invoice narratives were very brief, indicating only that the works related to glazing and locks and the relevant levels of the building. No breakdown was provided. But Mr Maroun’s correspondence in response did not profess any difficulty in understanding what ATA was claiming for. Nor did Mr Wei. His point was that the work in question had not been completed when the invoice was issued. Counsel for TPC did not really contest the point. I am satisfied that the invoices constituted valid payment claims under the Act.

95. Counsel for TPC referred to the provisions of cl 7.3 concerning the service of payment claims. Counsel pointed out that the invoices in question were not sent to the email addresses specified in that clause.

96. This is a very unattractive submission. In the light of the evidence (which was uncontested) that Ms He of TPC had asked Mr George to send the invoices to her, she would appear to have been “otherwise nominated” on TPC’s behalf for the purposes of cl 7.3. But in any event the provisions of cl 7.3 are not relevant. ATA relies upon service under the Act.

97. Section 31 of the Act is the relevant provision. Section 31(1)(c) provides for service by email. Counsel for ATA relied upon service by Ms He for this purpose. Counsel also relied on the following statement by Hodgson JA (with whom Handley JA and Hunt AJA agreed) from Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2007) 23 BCL 292; [2006] NSWCA 259 at [58]:

58 … in my opinion it is clear that if a document has actually been received and come to the attention of a person to be served or provided with the document, or of a person with authority to deal with such a document on behalf of a person or corporation to be served or provided with the document, it does not matter whether or not any facultative regime has been complied with: see Howship Holdings Pty. Limited v. Leslie (1996) 41 NSWLR 542; Mohamed v. Farah [2004] NSWSC 482 at [42]-[44]. In such a case, there has been service, provision and receipt.

98. Mr Wei’s affidavit referred to the invoices. He acknowledged that each invoice “was received”. In my view this is a clear admission that the payment claims were served in accordance with the Falgat principle. But Mr Wei’s acknowledgement did not specify when the invoices were received. At another point in his affidavit he described them as having been “issued” on 22 June and 10 July. Counsel for ATA submitted that this was an acknowledgement that the invoices had been received on those dates, but I cannot agree. The term “issued”, in its usual meaning, would only convey that the invoices were sent out on those dates. I do not think it is an admission they were received on those dates.

99. There is no direct evidence of receipt of the 22 June email by Ms He, or when it was received. The Electronic Transactions Act 2000 (NSW) provides:

13A Time of receipt

(1)   For the purposes of a law of this jurisdiction, unless otherwise agreed between the originator and the addressee of an electronic communication:

(a)    the time of receipt of the electronic communication is the time when the electronic communication becomes capable of being retrieved by the addressee at an electronic address designated by the addressee, or

(b)    the time of receipt of the electronic communication at another electronic address of the addressee is the time when both:

(i)    the electronic communication has become capable of being retrieved by the addressee at that address, and

(ii)    the addressee has become aware that the electronic communication has been sent to that address.

(2)    For the purposes of subsection (1), unless otherwise agreed between the originator and the addressee of the electronic communication, it is to be assumed that the electronic communication is capable of being retrieved by the addressee when it reaches the addressee’s electronic address.

(3)    Subsection (1) applies even though the place where the information system supporting an electronic address is located may be different from the place where the electronic communication is taken to have been received under section 13B.

100. There was no evidence before me of when the emails attaching the invoices became “capable of being retrieved” by Ms He. But it is clear from the email sent by Mr Maroun on Monday 25 June that he was aware of the 22 June invoice at that point. Counsel for TPC ultimately accepted that the email must have come to the attention of the relevant person at TPC by Monday morning at the latest.

101. There was no equivalent evidence before me of correspondence following the 10 July invoice which referred to it and would allow the date to which it came to the attention of the officers of TPC to be fixed. The evidence did establish that earlier communications reached Ms He, and it might be possible to infer from the fact that the line of communication was working that the 10 July invoice would have been received within, at most, an hour or so of being sent. But it is unnecessary to pursue this further.

102. Counsel for TPC argued that Mr Wei’s email of 16 July amounted to a payment schedule in response to ATA’s 10 July invoice. As I have noted, there was no later correspondence in evidence. Given Mr Wei’s admission that the second invoice had been received, if the email of 16 July is not a valid payment schedule for the purposes of that invoice, then there is no evidence of any other communication before the proceedings were commenced which could operate as a payment schedule. Accordingly the exact date of receipt does not matter.

Payment schedules from TPC?

103. The requirements for a payment schedule under the Act are set out in ss 14(2) and (3) which provide:

(2) A payment schedule:

(a)    must identify the payment claim to which it relates, and

(b)    must indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount).

(3)    If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent’s reasons for withholding payment.

104. I have already referred above to the statement of Palmer J about the requirements of the Act concerning payment schedules.

105. Mr Wei’s email of 16 July stated that the first invoice “[had] been formally rejected” on the ground that the door glazing described as having been finished on levels 1, 5, 6 and 7 in fact were not finished. Counsel for ATA appeared willing to accept that, although informal, this amounted to a payment schedule. In fact Mr Wei’s email did not deal with the window and door glazing work on the ground floor and the window glazing work on levels 2, 3 and 4. In any event, given the fact that the first invoice was served, at the latest, by Monday 25 June, any payment schedule had to be served, at the latest, by Monday 9 July. Mr Wei’s email came too late for this purpose.

106. The only correspondence to which I was referred and which fell within the period for a payment schedule to be served in response to the 22 June invoice was the 25 June correspondence involving Mr Maroun which I have set out above. That correspondence was concerned with the timing of works which Mr Maroun considered at that stage were incomplete. Mr Maroun was not refusing to pay ATA for the work described in the invoice. At best from ATA’s point of view he was saying that payment would only be made if certain works were completed by 29 June.

107. It may be that some or all of the works claimed in the first invoice had not been completed on 22 June when the invoice was issued. If so, that might have given rise to a contention that the invoice included works which post-dated any relevant reference date: cf Impero Pacific Group Pty Ltd v Bonheur Holdings Pty Ltd [2019] NSWSC 286 at [18]-[19]; [23]-[25]; [31]. But Mr Maroun’s correspondence did not take this point. In my view the correspondence falls far short of constituting a clear refusal to pay the amount claimed in the invoice or some defined part of it, together with grounds for that refusal.

108. As I have already noted, TPC’s contention was that Mr Wei’s email of 16 July was a payment schedule which effectively refused payment of the 10 July invoice. Mr Wei’s email rejected invoice 1037; undertook to pay invoice 1007; stated that $442,814.57 was “left to pay”; asserted set-offs $370,000; and stated that an invoice could be sent claiming the balance of $72,814.57. But Mr Wei’s email did not refer to the 10 July invoice at all. It was not clear whether the amount “left to pay” was supposed to include that invoice, but even if it did, it was left completely unclear what parts of the invoice were objected to and on what grounds. In my view, the email did not operate as a payment schedule so far as the 10 July invoice was concerned.

Conclusions and orders

109. I have concluded that:

(1) ATA was entitled at the hearing before me to pursue its claim for judgment under the Act despite the consent orders made on 7 December;

(2) both invoices were valid payment claims under the Act;

(3) neither invoice was the subject of a payment schedule from TPC within the time allowed by the Act.

110. It follows that ATA is entitled to judgment on its claim. But TPC has foreshadowed that, should the Court reach this conclusion, it will apply for a stay. I will therefore stand the proceedings over for a short time to allow that application to be made. Any debate about interest or costs can be dealt with at the same time.

111. The order of the Court is:

1.   Adjourn the proceedings to a date to be fixed by arrangement with my Associate for the entry of final orders and the hearing of any application by the defendant for a stay.

**********

Amendments

10 May 2019 - amend typographical error

Decision last updated: 10 May 2019