Actif Concrete Pty Ltd v Design Builders Vic Pty Ltd
[2025] VCC 294
•19 March 2025
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
BUILDING CASES LIST
Case No. CI-24-06461
| Actif Concrete Pty Ltd (ACN 619 535 885) | Plaintiff |
| v | |
| Design Builders Vic Pty Ltd (ACN 623 191 551) | Defendant |
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JUDGE: | HIS HONOUR JUDGE LAURITSEN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 18 February 2025 | |
DATE OF JUDGMENT: | 19 March 2025 | |
CASE MAY BE CITED AS: | Actif Concrete Pty Ltd V Design Builders Vic Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2025] VCC 275 | |
REASONS FOR JUDGMENT
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Subject:CONTRACTS - Building and Construction Industry Security of Payment
Catchwords: Payment claims under Building and Construction Industry Security of Payments Act 2002 (Vic) – contract for building works at development of property in Warrnambool – revision of drawings – altering scope of works in original contract – difference between drawings and installation – whether contents of email is a payment schedule.
Legislation Cited: Building and Construction Industry Security of Payments Act 2002 (Vic).
Cases Cited: Façade Treatment Engineering Pty Ltd v Brookfield Multiplex
Constructions Pty Ltd [2016] VSCA 247.
Judgment: Judgement for the plaintiff against the defendant.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr L Hogan | Taits Legal |
| For the Defendant | Ms L Filkin (Solicitor) | Madgwicks Lawyers |
HIS HONOUR:
Introduction
1Through process dated 6 November 2024, Actif Concrete Pty Ltd (Actif) seeks $81,906 together with interest and costs from Design Builders Pty Ltd (Design). It does so under the Building and Construction Industry Security of Payment Act 2002 (the Act). Actif has one director, Grant Scoble, who supports the claim through two affidavits[1]. Design opposes the claim and its opposition is supported by the affidavit of its sole director, Stephen Hope-Johnson[2].
[1] Affirmed on 28 January and 12 February 2025.
[2] Affirmed on 28 January 2025.
Circumstances
2Actif provides concreting services while Design is a builder. On 25 May 2023, the parties contracted for Actif to provide certain building works at the development of a property in Warrnambool. This was done by Mr Hope-Johnson signing a quotation provided by Actif.
3On about 19 May 2023, Design requested Actif to remove a fence on the property, which it did a few days later.
4The contract was based on drawings provided by Design called “Revision A”. According to Mr Scoble, a few weeks after Actif commenced work, Mr Hope-Johnson advised him the engineering drawings needed changing and, on 6 June 2023, the external perimeter footings had to be changed. Actif stopped working on the project awaiting the changed engineering drawings. On 17 July 2023, they were provided and are called “Revision C”. They significantly altered the scope of the works contemplated by the original contract.
5As a result, Actif produced another quotation dealing with these revised drawings, 3042a. According to Mr Scoble, there were several exchanges with Mr Hope-Johnstone to define the precise scope of the work before Mr Hope-Johnstone, on behalf of Design, signed this revised quotation. Actif restarted work on 19 July 2023. Apart from his signature, Mr Hope-Johnstone added to the quotation the following at the bottom of the quote and printed in red:
“Charge propping pads on linear metres dug as most will not need to be 800 deep & adjust at the end. Crossover permit fee of $280 approx to be added to the bill”.
6Pausing there. Mr Hope-Johnstone explained his version of the events[3].
[3] At [13].
7According to Mr Hope-Johnstone, in about July 2023, he met Mr Scoble at the site. He pointed out Actif had erred installing the footings in that it used different footing size than that specified in the drawings prepared by the engineers, Simon Anderson Consultants. The difference between what had been installed and the drawings was significant.
8Still at this meeting, and in response to what Mr Hope-Johnstone said, Mr Scoble said words to the effect: “If we want to fix all the footings I have already prepared, we will need to pull the mesh out, re-excavate the footing and take away the spoil”. To which, Mr Hope-Johnstone replied with words to the effect: “Let’s not do that. I will see if I can get the engineer to alter the drawings to what you prepared to save the cost of correcting it”.
9In his second affidavit, Mr Scoble denies the footings were installed incorrectly. He denies any conversation with Mr Hope-Johnstone where he suggested Actif was at fault. He refers to Mr Hope-Johnstone’s email sent on 6 June 2023 at 3.31pm. He asserts this email responded to an email from the project’s engineer advising the current design could not be used for fire safety reasons. He quoted this sentence from the engineer’s email sent earlier that day:
“I understand there may be a cost variation from the original quote but in this case, unfortunately that means it was quoted incorrectly”.
10Unsurprisingly, Mr Hope-Johnstone’s email confirms the need to adhere to the drawings, that no one is at fault, that Actif should quote for the additional works as a variation/extra, perhaps at cost.
11It took more than a month and much more correspondence before the drawings were revised and Actif re-quoted.
12I will return to this issue later.
13On about 26 July 2023, Actif issued a payment claim for $95,700 (including GST). It describes this claim as the first payment claim. The claim covered Actif’s work up to 24 July 2023. The claim was sent by email and paid in full on 28 August 2023.
14On about 26 July 2023, Actif sent a payment claim for $1,633.50 to Design for the fencing work, which it describes as the fencing payment claim. In the claim, it charged $75 per hour for labour without a machine and $100 per hour with one.
15Actif continued working but needed to stop temporally because of timing issues caused by other trades needing to complete work.
16On about 3 January 2024, Design directed Actif to remove a large amount of spoil left on the property by other tradespersons. It calls this the spoil removal variation. Design removed the spoil on the day of the direction and resumed its other work on 12 January 2024.
17After Actif restarted work, it was discovered other tradespersons damaged steel reinforcements, Z-bars. The parties agreed Actif should repair the bars for a fee calculated on a “costs-plus” basis. It calls this the Z-bar rectification variation. It did.
18On about 25 January 2024, Actif made a payment claim for $258,500 (including GST) for works performed up to 25 January 2024. This is called the second payment claim or payment claim 2.
19On the same day, Actif made a payment claim for $3,784 (including GST) for the spoil removal variation and the Z-bar rectification variation. It described this claim as the additional work payment claim.
20The due date for payment of these two payment claims was 9 February 2024. Actif submits Design did not issue a payment schedule for either within the time allowed for by the Act. However, on 16 February 2024, Design paid $180,378, leaving $78,122 owing on both claims. As Actif submits, this is the difference between quote 3042 and 3042a. Despite demands, the difference remains unpaid.
21Although Actif submits Design did not serve a payment schedule to these claims, Design submits it did in the form of an email from Mr Hope-Johnstone sent on 31 January 2024. It read:
“Subject: Quote 3042 & 3042a
Hi Grant,
Could you expand on the difference between these 2 quotes as the first item has gone from 332,130 to 388,550 against the same wording – the boys in Melbourne have asked me to check it & need a few more words against the new value”.
22Putting aside the question of timing, the issue in this application is whether the email is a payment schedule for the purposes of the Act.
Legal considerations
23The Act establishes a process for the fast recovery of progress payments. It is intended to avoid protracted litigation over such payments.
24The following propositions apply:
(a) a contractor under a “construction contract” has an entitlement to progress payments for “construction work”. For a valid progress claim there must be a “reference date”.
(b) to recover a progress payment, the contractor must serve a “payment claim”. This claim need not be overly formal or approached in an overly technical manner.
(c) the recipient of a payment claim may serve a “payment schedule”. This must be served within the time specified in the construction contract or within 10 business days, whichever is the earlier. Failure to do so means the recipient is liable to pay the claimed amount. The claimed amount becomes a debt due and is recoverable in any court of competent jurisdiction.
(d) where recovery of a debt is sought, the court must be satisfied a valid payment claim and payment schedule were issued.
(e) for a valid payment schedule, the following must occur –
(i)It must indicate the amount of the payment, if any, the respondent proposes to make;
(ii)If payment is withheld, there must be reasons of sufficient particularity to enable the claimant to understand, at least in a broad sense, what is the issue between it and the respondent;
(iii)The document need not say it is a payment schedule. Whether it is depends on its satisfaction of the requirements of s15.
Discussion
25As I said earlier, this dispute is whether the contents of Mr Hope-Johnstone’s email sent on 31 January 2024 is a payment schedule. There is no issue as to the validity or timing of the payment claims. Moreover, Design accepts the invoice INV-0803 (described as payment claim 2) and invoice INV-00804 (described as additional works claim) are payment claims under s14 of the Act. Invoice INV-0803 refers to quote 3042a. It describes itself as ‘Progress claim 12’. It describes the work performed as ‘completion of SFI & 2’s, completion of 18 storage unit slabs & all saw cuts, completion of all bored piers propping pads.’ Invoice INV-0804 describes itself as a payment claim under the Act and for ‘Additional items from quoted works’.
26By referring to the two quotes, I am prepared to accept the email refers to payment claim 2. It is less arguable it refers to the additional work payment claim. In view of my ultimate conclusion, it is unnecessary to determine whether the email satisfies s15(2)(a) of the Act.
27In terms of s15, the defendant analysed the legislated content and timing of a payment schedule and submitted Mr Hope-Johnstone’s email sent on 31 January 2024 constituted a payment schedule.
28Putting aside the question of timing, is this a payment schedule for the purposes of the Act? Design submits the contents of this email when examined objectively through the lens of previous dealings between the parties ought reasonably informed Actif of Design’s intention to dispute the payment claim and proposing a lesser amount was payable.
29If Mr Hope-Johnstone’s evidence of his conversation with Mr Scoble on site in about July 2023 is correct, the content of the email is a strange response to quote 3042a. If Mr Hope-Johnstone considered the difference between the quotes was due Actif’s fault, he would have said so, while, perhaps, pointing out his view of why Actif was at fault (misunderstanding the original drawings). He would not have said: “the boys in Melbourne have asked me to check it & need a few more words against the new value”.
30Those words imply neither Mr Hope-Johnstone nor “the boys in Melbourne” understood why there was an increase in the second quote. This ignores the very words in bold in quote 3042a:
“***Revised price as per engineer’s drawings received by email on 17/07/2023 – Revision C drawings”.
31It also ignores the extensive dealings between Mr Scoble and Mr Hope-Johnstone in June and July 2023.
32Mr Hope-Johnstone has sworn an affidavit. The fact of deposing on oath to matters of fact means there must be considerations of some weight for me to reject parts of his evidence. However, for the reasons set out above, I do not accept there was a conversation between the men in about July 2023 where Mr Hope-Johnstone stated his belief in the fault of Actif leading ultimately to the revised quote 3042a.
33It is difficult to accept Mr Hope-Johnstone did not understand the reason for the change in light of his acceptance of quote 3042a and its revised price. His note at the base of the quote is consistent with his attempts to minimise the costs arising from the revised drawings. It is a last ditch suggestion. It is only a suggestion because he accepted the revised quotation and the revised price. If the suggestion could be implemented, then the savings could be accounted for later. The email of 31 January gives no hint as to the reason for the revision. His acceptance of the revised price is contrary to his belief the fault for the revision lay with Actif. On its face, the email is a request for information on behalf of unidentified third parties about the work described in quote 3042a. It does not specifically dispute the amount sought or gives a reason or reasons for doing so.
34As it turns out, Design paid $180,378 towards the second payment claim, leaving $78,122 owing. Quote 3042 was for $365,343 including GST. Quote 3042a was $443,465 including GST. The difference is $78,122. This fact cannot convert a request for more information into a payment schedule. Bearing in mind paragraph 255 of Façade’s[4] case, the email requests, it does not object. It does not indicate the amount Design proposes to make. Assuming a scheduled amount can be read into the words of the email, it does not indicate the reason or reasons for the lesser amount. At the very least, the email does not satisfy the requirements of s15(2)(b) or s15(3) of the Act. I do not accept the contents of the email is a payment schedule for the purposes of the Act.
[4]Façade Treatment Engineering Pty Ltd v Brookfield Multiplex Constructions Pty Ltd [2016] VSCA 247.
35Since Design did not provide Actif with a payment schedule by 9 February 2024, being 10 business days after both payment claims were served, then it cannot raise a defence to matters arising under the construction contract[5].
[5] s 16(4).
Conclusion
36Actif is entitled to an order on its claim. I will hear the parties on the questions of interest and costs.
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Certificate
I certify that these 8 pages are a true copy of the judgment of His Honour Judge Lauritsen delivered on 19 March 2025.
Dated: 19 March 2025
Rachel Galik
Associate to His Honour Judge Lauritsen
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