Aalborg CSP A/S v Ottoway Engineering Pty Ltd - [2017] SASCFC 158

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
AALBORG CSP A/S v OTTOWAY ENGINEERING PTY LTD
[2017] SASCFC 158
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, The Honourable Justice Blue and The Honourable Justice Bampton)
1 December 2017
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS - PAYMENT CLAIMS
CORPORATIONS - LEGAL CAPACITY AND RELATIONS WITH OUTSIDERS - SERVICE OF DOCUMENT ON COMPANY
Appeal against summary judgment in favour of the plaintiff.
The parties entered into a construction contract within the meaning of the Building and Construction Industry Security of Payment Act 2009 (SA). The appellant is a Danish company. Clause 3 of the contract required all relevant documentation to be provided by the respondent to the appellant in one hard copy and one electronic copy.
The respondent sent to the appellant 22 invoices by email and in addition delivered some or all of them to the appellant in Denmark. The invoices generally comprised payment claims under the Act.
In May 2016 the respondent sent to the appellant certain formal notices and proceedings in two Supreme Court actions by email and also apparently by delivery to Aalborg’s registered office, being the office of its accountants BDO in Adelaide.
In August 2016 the respondent issued a further invoice/payment claim to the appellant which it delivered only to the appellant’s registered office in Adelaide.
After the appellant did not respond within the requisite 15 days, the respondent instituted the action and sought summary judgment. The appellant relied on three grounds to oppose summary judgment. The Master granted summary judgment. The Master held that section 109X of the Corporations Act 2001 (Cth) empowered service of documents on the registered office and clause 3 of the contract did not affect the position. The Master held that reliance by the appellant on estoppel and misleading conduct was precluded by section 15(4)(b) of the Act and in any event any continuing representation by the respondent was negated by its conduct in May 2016 in serving documents upon the appellant’s registered office.
Held by the Court (allowing the appeal):
1. The Master erred in holding that the decision of the New South Wales Court of Appeal in Falgate Constructions Pty Ltd v Equity Australia Corporation Pty Ltd determined the issue of service under section 109X against the appellant. However, it is unnecessary and undesirable to decide on this appeal constructional issues relating to sections 109X and 601CX of the Corporations Act and clause 3 of the contract and their interaction (at [52]-[54]).
2. The Master erred in holding that the appellant’s answers based on estoppel and misleading conducted were precluded by section 15(4)(b) of the Act (at [67]).
3. The Master erred in finding that there was no arguable case for estoppel or misleading conduct to arise on the facts of the dispute (at [78] and [82]).
4. Appeal allowed, summary judgment set aside and matter remitted to proceed to trial (at [83]).
Building and Construction Industry Security of Payment Act 2009 (SA) ss 13, 14, 15 and 34; Competition and Consumer Act 2010 (Cth) sch 2 (Australian Consumer Law) ss 232 and 237; Corporations Act 2001 (Cth) ss 109X and 601CB, referred to.
Lucas Stuart Pty Ltd v Council of the City of Sydney [2005] NSWSC 840, not followed.
Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9; Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259; Hill as Trustee for the Ashmore Superannuation Benefit Fund v Halo Architectural Design Services Pty Ltd [2013] NSWSC 865; Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd [2011] 2 Qd R 114, discussed.

AALBORG CSP A/S v OTTOWAY ENGINEERING PTY LTD
[2017] SASCFC 158
Full Court: Kourakis CJ, Blue and Bampton JJ
THE COURT:

This is an appeal against a judgment of a Master granting summary judgment in favour of the plaintiff.
The appellant Aalborg CSP A/S (Aalborg) and the respondent Ottoway Engineering Pty Ltd (Ottoway) entered into a construction contract within the meaning of the Building and Construction Industry Security of Payment Act 2009 (SA) (the Act). Aalborg is a Danish company based in Denmark which became registered as a foreign company in Australia after entry into the contract. The contract contained a term (clause 3) requiring all relevant documentation to be provided by Ottoway to Aalborg in one hardcopy and one electronic (email) copy.
Between April 2015 and April 2016 Ottoway sent to Aalborg 22 invoices by email and in addition delivered some or all of the invoices to Aalborg’s head office in Denmark. All but the first invoice comprised payment claims within the meaning of section 13 of the Act.
In May 2016 Ottoway sent to Aalborg certain formal notices and proceedings in two actions instituted in the Supreme Court by Ottoway against Aalborg. These documents were sent by email and in addition it appears that they were delivered to Aalborg’s registered office, being the office of its accountants BDO in Adelaide.
In August 2016 Ottoway issued a 23rd invoice and payment claim to Aalborg which it delivered to Aalborg’s registered office in Adelaide but did not send to Aalborg by email. Aalborg did not provide a payment schedule in response within the period of 15 business days specified by section 14 of the Act.
Ottoway instituted the action against Aalborg seeking judgment for the amount of the August 2016 payment claim pursuant to section 15(2)(a)(i) of the Act. Ottoway applied for summary judgment. Aalborg opposed summary judgment on the grounds that the August payment claim had not been served in accordance with clause 3 of the terms of the contract, Ottoway was estopped by its conduct from asserting service and Ottoway had engaged in misleading conduct.[1]
[1] Aalborg also contended that there was no valid payment claim within the meaning of section 13 of the Act but this contention is not advanced on appeal and can be ignored.
The Master rejected Aalborg’s contentions and granted summary judgment in favour of Ottoway. Aalborg appealed against that order.
On the hearing of the appeal, the Court allowed the appeal, set aside the Master’s orders and remitted the matter to proceed to trial. These are our reasons for making those orders.
Background
The facts set out below are based on the evidence adduced on and in the context of the application for summary judgment. Obviously the facts found at the trial of the action based on comprehensive evidence may differ.
Aalborg is a company incorporated in Denmark having its head office in Aalborg, Denmark. Svante Bundgaard was at all material times its Chief Executive Officer.
Ottoway is a company having its head office in Wingfield, South Australia. Bryan Tidswell was at all material times its Chief Executive Officer. Stephen Young and Mark Vartuli were at all material times two of its directors.
John Holland Pty Ltd was engaged by Sundrop Farms Pty Ltd to design and supply a solar-thermal-desal-energy system at Port Augusta. Aalborg was in turn engaged by John Holland Pty Ltd to design and supply the solar field and solar power station for the project.
In March 2015 Aalborg and Ottoway entered into a contract for the supply and fabrication of tubular steel towers for the project (the contract). The contract was later varied amongst other things to incorporate the provision by Ottoway of labour at specified rates.[2]
[2] It may be that the parties entered into a separate contract in respect of labour supply rather than varying the original contract and this may be an issue at trial. However, for the purpose of this appeal both parties proceeded on the assumption that all work by Ottoway was performed pursuant to the contract.
The contract comprised a formal instrument executed by the parties containing variable terms together with several schedules, one of which was Aalborg’s General Terms and Conditions for Purchase (the Terms). The Instrument showed Aalborg’s address as Hjulmagervej 55, DK-9000 Aalborg, Denmark (Aalborg’s head office) and Ottoway’s address as 61-67 Plymouth Road, Wingfield, South Australia.
Clause 3 of the Terms (clause 3) addressed Documentation. Clause 3 provided:
3. Documentation
3.1 Together with the goods, Supplier shall deliver original invoice and full OC-documentation within 8 days after delivery of goods. All invoices must be marked with purchase order numbers, name of Aalborg CSP contact person and project number.
3.2The Supplier is responsible for all faults and defects in drawings, calculations, packing lists and other information supplied by him whether or not approved by Aalborg CSP.
3.3If shipment is required, the Supplier shall transmit to Aalborg CSP by email copies of shipping invoice, packing list, and certificate of origin on the day of shipment.
3.4For all goods to be lifted or displaced using lifting tools or machineries, the Supplier shall provide installation manual with description of procedures.
3.5All documentation must be in English, unless otherwise agreed.
3.6Documents and drawings need to be in accordance to Aalborg CSP and/or the client color code, numbering system, drawing specification etc. (to be clarified in the technical specification).
3.7All relevant documentation shall be provided by Supplier in one hard copy and one electronic copy; the electronic copy shall be supplied as one pdf File, containing all relevant documentation in the order specified by Aalborg CSP.
3.8The Supplier acknowledges that any documentation submitted to Aalborg CSP shall not be considered as approved and shall not relieve the Supplier from its responsibility.
3.9If a party becomes aware or reasonably should have been aware of an inconsistency in the documents, the party shall promptly inform the other party thereof.
The Supplier shall store project information for at least 10 years.
Aalborg maintained a site office at Port Augusta. However all contract administration was undertaken from its head office in Denmark.
Between 2 April 2015 and 21 July 2015 Ottoway issued three tax invoices addressed to Aalborg at its head office in Denmark. Each invoice except the first was indorsed with a statement at the bottom in relatively fine print that it was a claim for payment under the Act. Each invoice was emailed to Aalborg personnel in Denmark at their email addresses at aalborgcsp.com.
On 28 July 2015 Aalborg was registered as a foreign company in Australia under section 601CB of the Corporations Act 2001 (Cth) (the Corporations Act). Its registered office in Australia was c/- BDO, Level 7, 420 King William Street Adelaide (BDO’s office).
Between 29 July 2015 and 26 April 2016 Ottoway issued a further 19 tax invoices addressed to Aalborg at its head office in Denmark. Each invoice was indorsed with the same statement that it was a claim for payment under the Act. Each invoice was emailed to Aalborg personnel in Denmark at their email addresses at Aalborgcsp.com.
Mr Young swore an affidavit in the debt action referred to below that the five invoices the subject of the debt action were delivered to Aalborg at its head office in Denmark by international courier. The evidence is unclear as to the other 17 invoices but it is possible if not likely that all 22 invoices were delivered by international courier as well as being sent by email.
On 18 May 2016 Ottoway by its director Mr Vartuli issued two notices of demand under the Workers Liens Act 1893 (SA) (the Liens Act) for amounts totalling $2,619,192[3] and a notice of intention to suspend carrying out construction work pursuant to section 15(2)(b) of the Act each addressed to Aalborg c/-BDO’s office (the notices).
[3] All dollar figures referred to herein are rounded to the nearest whole dollar and are inclusive of GST.
On 19 May 2016 Mr Vartuli on behalf of Ottoway wrote a letter addressed to Aalborg c/-BDO’s office attention Mr Bundgaard enclosing the notices in service upon Aalborg. The letter and its enclosures were sent by Ottoway by email to Mr Bundgaard’s email address at aalborgcsp.com. They were also apparently served at BDO’s office.[4]
[4] Mr Young in his first affidavit said that the three notices were served on Aalborg at BDO’s office but he did not say that he served them or identify the source of a belief that they had been served, nor did he say when they were served, nor did he refer to Mr Vartuli’s letter. It appears that no objection was taken by Aalborg to Mr Young's affidavit in this respect.
On 23 May 2016 Ottoway instituted an action (the debt action) in the Supreme Court against Aalborg in respect of five invoices rendered in December 2015 and January, February and March and April 2016 together with an application for summary judgment supported by an affidavit sworn by Mr Young deposing to service of the five invoices by both email and international courier.
On the same date, Ottoway’s general counsel wrote a letter addressed to Aalborg c/-BDO’s office attention Mr Bundgaard enclosing in service upon Aalborg the documents filed in the debt action. The letter and its enclosures were sent by Ottoway by email to Mr Bundgaard’s email address at aalborgcsp.com. They were also apparently served at BDO’s office.
On 27 May 2016 Aalborg filed a notice of address for service in the debt action.
On 31 May 2016 Ottoway instituted an action (the lien action) in the Supreme Court against Aalborg seeking enforcement of liens and charges under the Liens Act together with claims for variations and damages.
On the same date, Ottoway’s general counsel wrote a letter addressed to Aalborg c/-BDO’s office attention Mr Bundgaard enclosing in service upon Aalborg the documents filed in the lien action. The letter and its enclosures were sent by Ottoway by email to Mr Bundgaard’s email address at aalborgcsp.com. They were also apparently served at BDO’s office.
On 8 June 2016 Aalborg filed a notice of address for service in the lien action.
On 8 June 2016 Ottoway and Aalborg entered into an agreement pursuant to which the debt and lien actions were discontinued, Aalborg made a payment to Ottoway on account and the parties agreed to negotiate in good faith with a view to resolving their differences. Between June and August 2016 there were negotiations between the parties, including between Mr Bundgaard and Mr Tidswell.
On 9 August 2016 Mr Bundgaard sent an email to Mr Tidswell saying that he was travelling to Australia the following week and proposing a meeting in Adelaide on 16 August 2016. Despite a follow-up email, Mr Tidswell did not respond.
On 12 August 2016 Ottoway issued an invoice for $1,854,635 to Aalborg (the invoice). Like previous invoices, the invoice was indorsed with a statement that it was a payment claim under the Act. Unlike previous invoices, the invoice was addressed to Aalborg c/- BDO’s office rather than its head office in Denmark.
On 12 August 2016 Ottoway’s Chief Financial Officer wrote a letter addressed to Aalborg, Mr Svante Bundgaard, C/- BDO’s office enclosing the invoice. The letter and the invoice were delivered by courier to BDO’s office. Unlike previous invoices, the invoice was not sent by email to Aalborg. Nor was it sent to Aalborg in Denmark by international courier.
On 7 September 2016 Ottoway instituted the action together with an application for summary judgment supported by an affidavit sworn by Mr Young deposing to service of the invoice at BDO’s office by a local courier on 12 August 2016.
On 19 September 2016 Aalborg was served with the documents filed in the action. Aalborg had not been informed before that time that Ottoway had discontinued or withdrawn from the negotiations.
On 7 October 2016 Mr Bundgaard swore an affidavit in opposition to the application for summary judgment. He deposed to many of the facts summarised above. He said that Aalborg’s assessment was that the only amount payable to Ottoway the subject of the invoice was $15,394. He said that, if Aalborg had received an electronic copy of the invoice when it was purportedly served on Aalborg, he would have ensured that an assessment of the claim was undertaken for the purpose of providing a payment schedule as required under section 14 of the Act.
On 12 January 2017 Mr Young swore a second affidavit which was in response to Aalborg’s allegations of misleading conduct and estoppel.
On 13 January 2017 Mr Bundgaard swore a second affidavit in opposition to the application for summary judgment.
On 17 January 2017 the Master heard the application for summary judgment. Mr Young and Mr Bundgaard were not cross-examined on their affidavits.
On 26 May 2017 the Master delivered reasons for judgment and granted summary judgment.
The Master’s reasons
Aalborg’s first contention before the Master was that there had been no service of the invoice/payment claim in accordance with the provisions of the Act.
The Master observed that subsection 34(1) of the Act enables a notice authorised or required to be served under the Act to be served in one of several specified ways, none of which includes service on a company’s registered office. However, subsection 34(3) provides that the section does not exclude or limit the provisions of any other law with respect to the service of notices. The Master observed that section 109X of the Corporations Act is such an “other law”.
Aalborg contended first that clause 3 required invoices and other documents to be served by hard copy on it at its head office in Denmark and by email and secondly that on the proper construction of section 109X it permits a law requiring service of a document or parties to a contract to confine methods of permissible service so as to exclude service in a manner provided for by section 109X. Aalborg relied on Hill as Trustee for the Ashmore Superannuation Benefit Fund v Halo Architectural Design Services Pty Ltd[5] in which the construction contract required service of notices at a party’s address specified in the contract but Hill served a payment schedule under section 14 of the Building and Construction Security of Payment Act 1999 (NSW) (the NSW Act) on Halo at its registered office. Stevenson J held by way of obiter dictum that the provision of the construction contract entailed that service on the registered office under section 109X was not effective for the purpose of that Act.[6]
[5] [2013] NSWSC 865.
[6] At [45]-[55].
The Master rejected the second limb of Aalborg’s contention. The Master referred to the earlier decision of the New South Wales Court of Appeal in Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd[7] in which the Court of Appeal held by way of obiter dictum that section 109X of the Corporations Act applied so as to authorise the providing of a payment schedule notwithstanding that section 14 of the NSW Act referred to “providing” rather than “serving”, “giving” or “sending” the payment schedule.[8]
[7] [2006] NSWCA 259.
[8] At [52] per Hodgson JA (with whom Handley JA and Hunt AJA agreed).
The Master concluded:
Here the payment claim was delivered to the registered office of the defendant. That is service in compliance with the provisions of s.109X of the Corporations Act. I propose to follow the approach adopted in Falgat Constructions and not read down the effect of s 34(3). There was valid service of the payment claim.
Aalborg’s second contention was that Ottoway was estopped from asserting that the invoice/payment claim was served in accordance with the Act. Aalborg contended that it had a reasonably arguable defence of estoppel because Ottoway by its conduct in serving the first 22 invoices by email and hard copy in Denmark represented to Aalborg that, unless it gave notice otherwise, all invoices would be served in this manner.

Aalborg’s third contention was that Ottoway had engaged in misleading conduct in contravention of the Australian Consumer Law by the same conduct as was relied on for the estoppel defence.
The Master dealt with Aalborg’s second and third contentions together. The Master held that Aalborg’s reliance on estoppel and misleading conduct was precluded by section 15(4)(b) of the Act. The Master said:
The defences put forward by the defendant are as a consequence of the prohibition in s 15 in respect of defences of a contractual nature.
The Master referred to and followed the decision of Einstein J in Lucas Stuart Pty Ltd v Council of the City of Sydney[9] in which it was held that the defence of estoppel advanced in that case was precluded by section 15(4)(b)(ii) and the defence of misleading conduct under the Trade Practices Act 1974 (Cth) and Fair Trading Act 1987 (NSW) advanced in that case was precluded by section 15(4)(b)(i) of the NSW Act.[10] The Master said:
I also accept that the claim for misleading or deceptive conduct is a prohibited cross-claim.
[9] [2005] NSWSC 840.
[10] At [21]-[25].
The Master found that in any event there was no arguable basis for a claim of misleading conduct or estoppel. The Master referred to the evidence of Ottoway that since May 2016 Ottoway had served the notices and the debt and lien action documents (the May documents) on Aalborg’s registered office in Adelaide. The Master referred to a finding by Einstein J in Lucas Stuart Pty Ltd v Council of the City of Sydney[11] that no arguable case of estoppel or misleading conduct was made out on the merits in that case. The Master said:
In my opinion, the same situation arises here. It is not the conduct of the plaintiff that has caused the problem. There had been a history of serving court-related and other documents at the registered office with no evident complaint from the defendant. The source of the defendant’s problem here is that staff at the registered office did not deal with the payment claim after it was received. In my view, there is no arguable basis for a claim of misleading or deceptive conduct or for an estoppel to arise on the facts of this dispute.
[11] [2005] NSWSC 840 at [36].
Effective service
Aalborg submits that the decision of the New South Wales Court of Appeal in Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd[12] did not address a situation in which the construction contract mandated service in a manner otherwise than at the registered office. The issue that arose in the present case and in Hill as Trustee for the Ashmore Superannuation Benefit Fund v Halo Architectural Design Services Pty Ltd[13] did not arise and was not addressed by the Court of Appeal. Aalborg has not identified any other decision that addresses the issue addressed in Hill. This is a complex legal issue not suited to determination on a summary judgment application and in any event the decision in Hill, albeit obiter, is correct. In any event the relevant provision of the Corporations Act is section 601CX addressing service on foreign companies which applies to the exclusion of section 109X and unlike section 109X is not expressed to apply to “any law”.
[12] [2006] NSWCA 259.
[13] [2013] NSWSC 865.
Ottoway takes issue with each of these contentions. Ottoway also contends that on its proper construction clause 3 does not apply to a payment claim under the Act and does not operate to exclude the operation of section 109X or section 601CX of the Corporations Act if that is permissible.
We accept Aalborg’s submission that the decision in Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd[14] did not address a situation in which the construction contract provided for service otherwise than at the registered office. On the contrary, in that case the contract provided for the service of notices at the address of the parties identified in the contract which in Falgat’s case was its registered office. The Court of Appeal did not address the issue that was later addressed by Stevenson J in Hill as Trustee for the Ashmore Superannuation Benefit Fund v Halo Architectural Design Services Pty Ltd.[15]
[14] [2006] NSWCA 259.
[15] [2013] NSWSC 865.
During argument on appeal, the following issues of construction emerged:
1.On the proper construction of sections 109X and 601CX of the Corporations Act, does section 601CX apply to the exclusion of section 109X to service of documents on a foreign company?
2.On the proper construction of section 601CX, does it apply for the purpose of laws other than the Corporations Act?
3.On the proper construction of section 109X and/or section 601CX (as applicable), do they permit or preclude the other law for the purposes of which they apply requiring service of a document other than in a manner specified in subsection (1) or (2) thereof or a contract that is the subject of the other law so requiring?
4.On the proper construction of clause 3, does it apply to an invoice that comprises a payment claim within the meaning of section 13 of the Act and does it operate (if permitted to do so) to require service of such a document other than on the registered office of Aalborg?
Because of the conclusion we have reached below in relation to estoppel and misleading conduct, is not necessary to determine these issues. As the parties did not address these issues in the fulsome manner in which they would be addressed on an appeal against judgment after trial and because the matter is to proceed in any event to a trial, it is not only unnecessary but also undesirable to determine these issues on this appeal.
Preclusive effect of section 15(4)(b)
Aalborg contends that the Master erred in holding that its estoppel and misleading conduct answers on the issue whether Ottoway served the invoice on it were precluded by section 15(4)(b).
Sections 13 and 14 of the Act address payment claims and payment schedules. They relevantly provide:
13—Payment claims
(1)A person referred to in section 8 who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the contract concerned, is or may be liable to make the payment.
(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)     must state that it is made under this Act.
…
(3)A payment claim may be served only within—
(a)    the period determined by or in accordance with the terms of the construction contract; or
(c)     the period of 6 months after the construction work to which the claim relates was last carried out (or the related goods and services to which the claim relates were last supplied),
whichever is the later.
(5)A claimant cannot serve more than 1 payment claim in respect of each reference date under the construction contract.
(6)However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim.
14—Payment schedules
(1)A person on whom a payment claim is served (the respondent) may reply to the claim by providing a payment schedule to the claimant.
(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.
(4)If—
(a)     a claimant serves a payment claim on a respondent; and
(c)    the respondent does not provide a payment schedule to the claimant—
(i)within the time required by the relevant construction contract; or
(ii)within 15 business days after the payment claim is served,
whichever time expires earlier,
the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.
Section 15 of the Act 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 a 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 a court of competent jurisdiction; or
…
(3)     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 a cross‑claim against the claimant; or
(ii)to raise a defence in relation to matters arising under the construction contract.
It is to be observed that the entitlement of a claimant under section 15(2)(a)(i) to recover as a debt the unpaid portion of the claimed amount is conditioned (amongst other things) by section 15(1)(a) on the operation of subsection 14(4) which in turn is conditioned (amongst other things) on the claimant having served a payment claim in accordance with section 13 on the respondent. The question whether the payment claim was served in accordance with section 13 must necessarily be determined in accordance with the general law. The general law for this purpose includes the law of estoppel. This is conceded by Ottoway on appeal.
Thus, if a respondent contends that the claimant is estopped from asserting that the payment claim was served, a court in which an action under section 15(2)(a)(i) is brought must necessarily determine the estoppel issue as much as it must determine the legal meaning of service for the purpose of section 13 or whether a document was in fact delivered to a particular person or a particular address.
Section 15(4)(b)(ii) does not preclude a respondent relying on estoppel on the issue whether the payment claim was served. First the estoppel issue will need to be determined as part of determining whether the claimant has brought itself within subsection 14(4) and section 15(1)(a). Secondly the raising of such an estoppel does not comprise a “defence in relation to matters arising under the construction contract” within the meaning of section 15(4)(b)(ii).
To the extent that Einstein J in Lucas Stuart Pty Ltd v Council of the City of Sydney[16] held otherwise, we decline to follow that decision. The Master erred in holding that Aalborg was precluded by section 15 from putting forward the defence of estoppel.
[16] [2006] NSWSC 840.
Turning to Aalborg’s answer based on misleading conduct, the question of the preclusive effect of section 15(4)(b) on an answer based on misleading conduct has been addressed by the Courts of Appeal of New South Wales and Queensland.
In Bitannia Pty Ltd v Parkline Constructions Pty Ltd,[17] the New South Wales Court of Appeal held that a respondent could rely on misleading conduct under sections 80 and 87 of the Trade Practices Act 1974 (Cth) as an answer to a claim under section 15(2)(a)(i) of the NSW Act without bringing a cross-claim or substantive proceedings.[18] The Court held that such reliance was not precluded by section 15(4)(b)(ii) because it was not a “defence in relation to matters arising under the construction contract”. Basten JA (with whom Hodgson JA and Tobias JA relevantly agreed) said:
The next question is whether the Building and Construction Industry Security of Payment Act sought to preclude such a defence. Section 15(4)(b)(ii) precludes a respondent from raising “any defence in relation to matters arising under the construction contract”. But in truth, the defence raised did not arise under the contract, nor was it in relation to a matter arising under the contract: rather it was in relation to misleading or deceptive conduct on the part of the claimant which could lead to injunctive relief under s 87 of the Trade Practices Act (Cth). While it is true that the phrase “in relation to” may identify any rational connection between the prohibited defence and a matter arising under the construction contract, and while the entitlement to a progress payment depends in part upon the construction contract and conduct in execution thereof, this language should not be construed so broadly as to prohibit a defence based upon conduct undertaken in service of a payment claim for the purpose of creating a statutory right.[19]
[17] [2006] NSWCA 238, (2006) 67 NSWLR 9.
[18] At [7]-[9] per Hodgson JA and [78]-[95] per Basten JA (with each of whom Tobias JA relevantly agreed).
[19] At [96].
In Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd,[20] Traspunt contended amongst other things that Neumann’s payment claim was precluded by subsection 17(5) of the Building and Construction Industry Payments Act 2004 (Qld) (the Queensland Act), being the equivalent of subsection 13(5) of the Act, because it was a second payment claim in respect of the same reference date. Neumann contended in turn that this submission was precluded by subsection 19(4)(b)(ii) of the Queensland Act, being the equivalent of subsection 15(4)(b)(ii) of the Act. The Queensland Court of Appeal rejected Neumann’s contention and followed the decision of the New South Wales Court of Appeal in this respect. Muir JA (with whom Holmes and Chesterman JJA agreed) said:
It is essential, in my respectful opinion, to have regard to the words of s 19(4) in determining whether or not it prevents a defence being raised. It prohibits a respondent to a payment claim, who has failed to duly serve a payment schedule, from bringing a counterclaim against the claimant, or from raising "any defence in relation to matters arising under the construction contract". The prohibition is not against the raising of any defence whatsoever.
…
In my view, s 19(4)(b)(ii) prohibits the raising of a defence only if it can fairly be described as one which relates to matters arising under the relevant construction contract. Counsel for Neumann argue, partly in reliance on observations in Brookhollow, that having regard to the width of the expression "in relation to", there is a sufficient connection between Traspunt's defence and matters arising under the contract. To my mind the connection is tenuous. I do not consider that a defence that the payment claim relied on by the claimant is virtually identical in all relevant respects to a previous one made by the claimant meets the description in s 19(4)(b)(ii), at least, where, as is the case here, the merits of the defence stand to be determined essentially by the comparison of one document with another.
Had the provision been intended to catch all defences having a connection with the construction contract, however remote, all words in s 19(4)(b)(ii) after "to raise any defence" would have been otiose: all payment claims are necessarily concerned with "matters arising under the construction contract". The aim of the provision would appear to be to prevent respondents to claims relying on allegations that the moneys claimed are not owing for reasons referable to the terms of the construction contract and/or to the parties' performance or failure to perform thereunder. If such matters are to be relied on as a defence to a payment claim, they must be included in a payment schedule. This approach to the construction of s 19(4)(b)(ii) is consistent with that taken by Basten JA in Bitannia Pty Ltd v Parkline Constructions Pty Ltd.[21]
[20] [2010] QCA 119, [2011] 2 Qd R 114.
[21] At [45], [47]-[48]. (Citation omitted)
We should follow these decisions on section 15(4)(b)(ii) in counterpart legislation unless we think that they are plainly wrong. On the contrary, their reasoning in the context of answers based on misleading conduct and a second payment claim in respect of the same reference date is essentially the same as our reasoning above in the context of estoppel.
Section 15(4)(b)(ii) does not preclude a respondent relying upon misleading conduct as an answer on the issue whether the payment claim was served. We greatly doubt that section 15(4)(b)(i) precludes a respondent relying upon misleading conduct by way of cross-claim on the issue whether the payment claim was served, but in the circumstances it is unnecessary to decide that question.
The Master erred in his conclusion that Aalborg was precluded by section 15(4)(b) from relying on estoppel or misleading conduct as an answer to Ottoway’s assertion that it had served the invoice on Aalborg.
Reasonably arguable defence of estoppel
Aalborg contends that the Master erred in finding that there was no arguable case for an estoppel to arise on the facts of the dispute.
The elements of estoppel in pais (estoppel by representation) are:
1.the plaintiff makes a representation or engages in other conduct which is capable of occasioning the formation by the defendant of the assumption the subject of the second element;
2.the defendant forms an assumption as to the legal relationship between the defendant and the plaintiff;
3.the conduct of the plaintiff is a material cause of the formation of the assumption by the defendant;
4.the defendant takes or omits to take action in change of his or her position in reliance on the assumption;
5.the defendant would suffer detriment if the plaintiff were permitted to depart from the assumption;
6.it would be unjust or unconscionable for the plaintiff to depart from the assumption.[22]
[22] Thompson v Palmer (1933) 49 CLR 507 at 547 per Dixon J; Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674-676 per Dixon J (with whom McTiernan J agreed). Dixon J’s formulations in Thompson and Grundt have been referred to with approval in Legione v Hateley (1983) 152 CLR 406 at 430-432 per Mason and Deane JJ; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 404 per Mason CJ and Wilson J and 443-445 per Deane J and The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 434 per Deane J and 500-501 per McHugh J.
The elements of equitable estoppel (promissory estoppel) are:
1.the plaintiff makes a representation or engages in other conduct which is capable of occasioning the formation by the defendant of the assumption the subject of the second element;
2.the defendant forms an assumption as to the manner in which rights will be exercised or enforced;
3.the conduct of the plaintiff is a material cause of the formation of the assumption by the defendant;
4.the defendant takes or omits to take action in change of his or her position in reliance on the assumption;
5.the defendant would suffer detriment if the plaintiff were permitted to depart from the assumption;
6.it would be unjust or unconscionable for the plaintiff to depart from the assumption.[23]
[23] Hughes v Metropolitan Railway Co (1877) 2 App Cas 439 at 448 per Lord Cairns LC (with whom Lord O’Hagan, Lord Selborne and Lord Blackburn agreed); Legione v Hateley (1983) 152 CLR 406 at 419-420 per Gibbs CJ and Murphy J and 434-436 per Mason and Deane JJ.
Although estoppel in pais and promissory estoppel historically developed separately, the underlying rationale is similar and their elements are largely the same except as to the nature and subject matter of the assumption formed by the defendant of which the plaintiff’s conduct is a material cause.

The Master found in effect that any continuing representation comprising the first element of estoppel was negated by Ottoway’s conduct in May 2016 in serving the May documents at Aalborg’s registered office in Adelaide. However, the Master did not advert to the fact that each of those documents was also sent by email by Ottoway to Aalborg. Indeed on the face of Mr Bundgaard’s affidavit it appears that it was the receipt of the May documents by email that led to Aalborg responding by filing notices of acting in each action.
Given the service of the May documents by email, it was impossible for the Master on a summary judgment application to be satisfied that there was no ongoing representation by Ottoway that invoices would be served by email. The error by the Master in overlooking service of the May documents by email vitiates his decision.
The summary judgment hearing was necessarily constrained compared to the evidence that would be adduced at trial. At trial it may be expected that extensive evidence will be given by officers of both Ottoway and Aalborg as to their actions and states of mind. It may be expected that Mr Young and any other Ottoway witnesses will be cross-examined, as will Mr Bundgaard and any other Aalborg witnesses. On the evidence adduced on the summary judgment application, Aalborg established a reasonably arguable defence of estoppel. Whether all of the elements of an estoppel will be established at trial can only be determined after all of the evidence is adduced at trial.
On appeal, Ottoway seeks to contend that Aalborg did not establish the fourth element of the estoppels being reliance. Ottoway refers to paragraph 40 of Mr Bundgaard’s first affidavit in which he said that, if Aalborg had received an electronic copy of the invoice when it was purportedly served on Aalborg, he would have ensured that an assessment of the claim was undertaken for the purpose of providing a payment schedule as required under section 14 of the Act. Ottoway points to the fact that Mr Bundgaard does not identify what different action would have been taken by Aalborg if Ottoway had given notice that it intended to serve invoices and other documents only upon Aalborg’s registered office in Adelaide and not by email.
Ottoway concedes that it did not advance this contention before the Master and it has not filed a notice of contention pursuant to rule 285(4) of the Supreme Court Civil Rules 2006 (SA). If Ottoway had advanced this contention before the Master, it is likely that Aalborg would have sought to rely on a further affidavit by Mr Bundgaard identifying action that would have been taken if Ottoway had given such notice. Ottoway should not be permitted to advance this contention for the first time on appeal.
In any event, if such notice had been given by Ottoway to Aalborg, the response by any rational businessperson in the position of Aalborg would have been to give a direction to BDO that the receipt of any document at Aalborg’s registered office was to be immediately notified to Aalborg and the document transmitted by email to Aalborg. In the context of a summary judgment application, it would be appropriate to draw an inference that Aalborg would have responded in this rational manner and to conclude that Ottoway has not discharged its onus of establishing that the reliance element could not be established.
The Master erred in finding that a defence of estoppel was not reasonably arguable.
Reasonably arguable answer of misleading conduct
Aalborg contends that the Master erred in finding that there was no arguable case for misleading conduct to arise on the facts of the dispute.
The elements of an answer to an action by reason of misleading conduct are:
1.an action is brought by the plaintiff against the defendant;[24]
2.the plaintiff makes a representation or engages in other conduct which is capable of being misleading;[25]
3.the plaintiff’s conduct is objectively misleading;[26]
4.the plaintiff’s conduct is a material cause of the action or omission by the defendant;[27]
5.the action or omission would cause loss in the absence of the defendant being able to rely on the answer;[28]
6.the Court in the exercise of its discretion should make an order under section 232 or 237 of the Australian Consumer Law[29] effectively preventing the plaintiff from succeeding in the action.[30]
[24] Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9 at [7]-[9] per Hodgson JA and [78]-[95] per Basten JA (with each of whom Tobias JA relevantly agreed).
[25] Competition and Consumer Act 2010 (Cth) sch 2 (Australian Consumer Law) s 18. See Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at [32] per French CJ and at [102] per Gummow, Hayne, Heydon and Kiefel JJ.
[26] Australian Consumer Law s 18. See Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198-199 per Gibbs CJ and at 209 per Mason J.
[27] Australian Consumer Law s 18. See Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60, (2004) 218 CLR 592 at [37] per Gleeson CJ, Hayne and Heydon JJ.
[28] Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9 at [7]-[9] per Hodgson JA and [78]-[95] per Basten JA (with each of whom Tobias JA relevantly agreed).
[29] Sections 282 and 287 are the equivalent of sections 80 and 87 considered by the New South Wales Court of Appeal in Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9. See [XXX] above.
[30] Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9 at [7]-[9] per Hodgson JA and [78]-[95] per Basten JA (with each of whom Tobias JA relevantly agreed).
The Master found in effect that any continuing representation comprising the second element of the misleading conduct answer was negated by Ottoway’s conduct in serving the May documents at Aalborg’s registered office in Adelaide. This conclusion is vitiated for the same reasons as the Master’s conclusion in respect of estoppel, namely the Master did not advert to the fact that each of the May documents was sent by email by Ottoway to Aalborg.
On the evidence adduced on the summary judgment application, Aalborg established a reasonably arguable answer of misleading conduct and the Master erred in finding otherwise. Whether all of the elements of such an answer will be established at trial can only be determined after all of the evidence is adduced at trial.
Conclusion
For the above reasons we allowed the appeal, set aside the orders made by the Master and remitted the matter to proceed to trial. We will hear the parties as to costs.