APR Structural Steel Pty Ltd v Devco Project & Construction Management Pty Ltd
[2021] VCC 1048
•3 August 2021
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
BUILDING CASES LIST
Case No. CI-21-01908
| APR Structural Steel Pty Ltd | Plaintiff |
| v | |
| Devco Project & Construction Management Pty Ltd | Defendant |
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JUDGE: | Judge Burchell | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF JUDGMENT: | 3 August 2021 | |
CASE MAY BE CITED AS: | APR Structural Steel Pty Ltd v Devco Project & Construction Management Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2021] VCC 1048 | |
REASONS FOR JUDGMENT
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Subject: CONTRACTS
Catchwords: Building contract – payment claim – where defendant failed to issue payment schedule in response to payment claims – contractual defences – excluded amounts – reference dates – calculation of amounts due
Legislation Cited: Building and Construction Industry Security of Payment Act 2002 (Vic) ss 4, 9, 10A, 10B, 12, 14(2), 15, 16(2) and 48.
Cases Cited:Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; Vanguard Developments v Promax [2018] VSC 386; Pearl Hill Pty Ltd v Concorp Construction Group (Vic)Pty Ltd [2011] VSCA 99; Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor (2009) 26 VR 112; Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2005) 62 NSWLR 385; 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674; SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449; 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674; John Beever (Aust) Pty Limited v Paper Australia Pty Ltd [2019] VSC 126; Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106; Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391; MPA Construction Pty Ltd v Profine Construction Pty Ltd [2020] VCC 1035; Cool Logic Pty Ltd v Citi-Con (Vic) Pty Ltd [2020] VCC 1261; Spirito Development Pty Ltd v Sinjen Group Pty Ltd [2020] VCC 1368; Yuanda Vic Pty Ltd v Façade Designs International Pty Ltd [2021] VSCA 44; Roar Fire Systems Pty Ltd v The Construction Studio [2020] VCC 1576; SG Investment Group Pty Ltd v K&K Industries Pty Ltd [2019] VCC 1341.
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms C Jones | Level Playing Field |
| For the Defendant | - | Piper Alderman |
HER HONOUR:
1 In this proceeding, the plaintiff (“APR”) applies for judgment against the defendant (“Devco”) pursuant to s 16(2) of the Building and Construction Industry Security of Payment Act2002 (Vic) (“SOP Act”). APR makes the application by summons on originating motion dated 11 May 2021. The application arises out of steel works that APR performed at 15 Cool Store Road, Hastings.
2 APR submits that it is entitled to judgment because Devco failed to issue a payment schedule in response to its payment claims.
3 Devco filed a notice of appearance in the proceeding on 27 May 2021.Timetabling orders were made for the proceeding to be determined on the papers. Devco opposes judgment on four basis:
(a) since APR failed to serve statutory declarations with its payment claims, some of the payment claims are invalid (being Payment Claims 1, 2, 3, 4 and Shop Drawings Payment Claim);
(b) some of the works were performed prior to a reference date arising;
(c) APR has failed to establish that some of the payment claims (being Payment Claims 5, 10, 11 and 12) do not contain excluded amounts;
(d) APR has not properly recognised amounts paid by Devco against the contract sum included in the partial retention release on 9 February 2021.
4 In its written submissions, APR says it no longer presses for judgment on Payment Claims 1 and 2 as it concedes that these claims had been satisfied by the payment from Devco received in February 2021.
5 Devco says that it paid the amounts sought by APR in these proceedings plus a partial retention released under cl 10.3 of the contract on 9 February 2021, in excess of APR’s entitlements under the Act.
6 In my view, APR has satisfied the preconditions to judgment under s 16(2) in relation to payment claims 3 and 10. The other payment claims do not satisfy the formal requirements of the Act.
7 Accordingly, I order that there is judgment for APR in the sum of $7,728.59 (including GST), together with interest. I order that Devco pay APR’s costs of and incidental to the proceeding on the standard basis, in default of agreement (unless either party has a basis for a different costs order). I invite the parties to prepare draft orders to give effect to these reasons. I will determine any issue concerning costs on the papers.
The facts
8 APR relies upon two affidavits of Andrew Robson (“Mr Robson”) dated 10 May 2021, and 8 July 2021.
9 Devco relies on the affidavit of Romando Nascarella sworn on 22 June 2021.
10 Unless otherwise stated, the facts of the proceeding are not materially in dispute.
11 By a written contract dated 16 November 2018, Devco engaged APR to fabricate, supply, deliver, and install structural steel at 15 Cool Store Road, Hastings.
12 Pursuant to the contract:
(a) payment claims were to be submitted “by the 25th day of each calendar month,” or where that date is not a business day, the preceding business day provided that it was accompanied by a statutory declaration (clause 9.1(a) and annexure A);
(b) payment claims were to include work carried out up to the date for submitting the payment claim (cl 9.1(b))
(c) for payment claims submitted in December, the reference date was the first working day in January in accordance with the MBAV working calendar (cl 9.1(a));
(d) within 10 business days of receiving a payment claim, Devco’s representatives were to issue a payment schedule (cl 9.2(a)); and
(e) Devco was to make payment within 30 days from the end of the month in which the payment claim was submitted (cl 9.2(e) and annexure A).
13 In or about early November 2018, APR commenced the works.
14 On 18 December 2018, APR emailed a purported payment claim to Devco in the sum of $18,150.00 (including GST) (“Payment Claim 1”). Mr Robson deposes that he did not receive a payment schedule within 10 business days of issuing the claim.
15 Mr Robson deposes that on 14 February 2019, APR received an envelope by post containing a Devco payment certificate dated 18 December 2018, scheduling an amount of $17,242.50 (including GST). Accompanying the letter was a cheque for that amount. This left an outstanding balance of $907.50.
16 On 25 February 2019, APR emailed a purported payment claim to Devco in the sum of $308,000.00 (including GST) (“Payment Claim 2”). Mr Robson deposes that he did not receive a payment schedule within 10 business days of issuing the claim.
17 Mr Robson deposes that on 5 April 2019, APR received an envelope by post containing a Devco payment certificate dated 25 February 2019, scheduling an amount of $292,600.00 (including GST). Accompanying the letter was a cheque for that amount. This left an outstanding balance of $15,400).
18 On 23 April 2019, APR emailed a purported payment claim to Devco in the sum of $182,600.00 (including GST) (“Payment Claim 3”). Mr Robson deposes that he did not receive a payment schedule within 10 business days of issuing the claim.
19 Mr Robson deposes that on 15 May 2019, he received an email from Tony Alex (“Mr Alex”) of Devco attaching a payment certificate scheduling an amount of $173,470.00 (including GST). Accompanying the letter was a cheque for that amount. This left an outstanding balance of $9,130.
20 Mr Robson deposes that on 3 June 2019, APR received the scheduled amount into its bank account.
21 On 27 May 2019, APR emailed a purported payment claim to Devco in the sum of $121,550.00 (including GST) (“Payment Claim 4”). Mr Robson deposes that he did not receive a payment schedule within 10 business days of issuing the claim.
22 On 24 June 2019, Mr Robson received an email from Mr Alex attaching a payment certificate dated 25 May 2019 scheduling an amount of $115,474.50 (including GST). This left an outstanding balance of $6,077.50.
23 Mr Robson deposes that on 4 July 2019, APR received the scheduled amount into its bank account.
24 On 27 May 2019, APR emailed a purported payment claim to Devco in the sum of $40,700.00 (including GST) (“Shop Drawing Claim”). Mr Robson deposes that he did not receive a payment schedule within 10 business days of issuing the claim.
25 On 24 June 2019, Mr Robson received an email from Bill Plant (“Mr Plant”) of Devco attaching a payment certificate scheduling an amount of $27,431.25 (including GST).
26 Mr Robson deposes that on 5 August 2019, APR received the scheduled amount into its bank account.
27 On 9 August 2019, Mr Robson received an email from Mr Plant attaching a further payment certificate dated 9 August 2019, scheduling an amount of $11,825.00 (including GST).
28 Mr Robson deposes that on 5 October 2019, APR received the scheduled amount into its bank account. This left an outstanding balance of $1,443.75.
29 On 27 May 2019, APR emailed a purported payment claim to Devco in the sum of $148.50 (including GST) (“Payment Claim 5”).
30 Mr Robson deposes that he did not receive a payment schedule within 10 business days of issuing the claim.
31 On 24 June 2019, Mr Robson received an email from Mr Alex attaching a payment certificate dated 25 May 2019, scheduling an amount of $141.07 (including GST). This left an outstanding balance of $7.43.
32 Mr Robson deposes that on 4 July 2019, APR received the scheduled amount into its bank account.
33 On 27 May 2019, APR emailed a purported payment claim to Devco in the sum of $1,738.00 (including GST) (“Payment Claim 6”). Mr Robson deposes that he did not receive a payment schedule within 10 business days of issuing the claim.
34 On 24 June 2019, Mr Robson received an email from Mr Alex attaching a payment schedule dated 25 May 2019, scheduling an amount of $1,651.10 (including GST). This left an outstanding balance of $86.90.
35 Mr Robson deposes that on 4 July 2019, APR received the scheduled amount into its bank account.
36 This purported payment claim included claims for variations: “Additional drafting #1 due to changing base plates as per consultants mark ups,” in the sum of $1,580.00 (excluding GST).
37 On 18 March 2020, APR emailed a purported payment claim to Devco in the sum of $6,600.00 (including GST) (“Payment Claim 10”). Mr Robson deposes that he did not receive a payment schedule within 10 business days of issuing the claim.
38 On 4 May 2020, APR received an envelope by post containing a payment certificate dated 18 March 2020, scheduling an amount of $6,270.00 (including GST). Accompanying the letter was a cheque for that amount. This left an outstanding balance of $330.00.
39 On 26 August 2020, APR emailed a purported payment claim to Devco in the sum of $66,000.00 (including GST) (“Payment Claim 11”). Mr Robson deposes that he did not receive a payment schedule within 10 business days of issuing the claim.
40 On 6 October 2020, APR received an envelope by post containing a payment certificate dated 3 September 2020, scheduling an amount of $44,935.00 (including GST). Accompanying the letter was a cheque for that amount. This left an outstanding balance of $21,065.
41 On 28 September 2020, APR emailed a purported payment claim to Devco in the sum of $16,500.00 (including GST) (“Payment Claim 12”). Mr Robson deposes that he did not receive a payment schedule within 10 business days of issuing the claim, or at all.
42 APR now claims the sum of $52,909.17 (including GST) under s 16(2) of the SOP Act, being the total balance said to be outstanding.
The legal context
43 The SOP Act seeks to ensure that people who undertake to carry out construction work can recover progress payments for the performance of that work.[1]
[1]Building and Construction Industry Security of Payment Act2002 (Vic) (“SOP Act”), s 3.
44 Section 4 defines a construction contract as a “contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services for another party”. The SOP Act applies to any construction contract whether written or oral, or partly written and partly oral.[2] “Construction work” is defined in s 5.
[2]Ibid s 7.
45 Section 16(2)(a) provides that a claimant may recover from a respondent any unpaid portion of an amount claimed in a payment claim where the respondent fails to submit a payment schedule within time (or at all) in response to the payment claim.
46 Section 14 concerns the form and content of payment claims. Sections 14(2) and (3) provide that a payment claim:
(a) must be in the prescribed form (if any) and contain the prescribed information (if any) – neither is prescribed;
(b) must identify the construction work or related goods and services to which it relates;
(c) must indicate the amount of a progress payment that the claimant claims to be due;
(d) must state that it is made under the SOP Act; and
(e) must not include any “excluded amounts”.
47 Section 14(4) addresses when a payment claim can be served, where it is not a payment claim in respect of a final, single or one-off progress payment. It provides that such a payment claim may only be served within:
(a) the period determined in accordance with the construction contract “in respect of the carrying out of the item of construction work or the supply of the item of related goods and services to which the claim relates”; or
(b) the period of 3 months after the “reference date referred to in s9(2) that relates to the progress payment”.
48 Section 14(5), (6) and (7) concern payment claims claimed in respect of a final, single or one-off progress payment and are not relevant for present purposes. Section 14(8) provides that a claimant “cannot serve more than one payment claim in respect of each reference date under the construction contract”. Section 14(9) provides that this limitation does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous payment claim if the amount has not yet been paid.
49 Another important provision informing the formal requirements for payment claims is s 9. Section 9(1) provides that “on and from each reference date under a construction contract” a claimant is “entitled to a progress payment under this Act calculated by reference to that date”.
50 Section 9(2)(a) provides that a reference date is a date determined by or in accordance with the construction contract as:
(a) a date on which a claim for a progress payment may be made; or
(b) a date by reference to which the amount of a progress payment is to be calculated,
in relation to a specific item of construction work “carried out or to be carried out” or a specific item of related goods and services “supplied or to be supplied” under the contract. The rest of s 9 concerns situations where the contract makes no express provision for reference dates.
51 It is now well established in Victoria that unless a payment claim answering the description in s 14(1) of the SOP Act is served, there can be no application to a court under s 16(2)(a)(i). Although dealing with the alternative option of an adjudication application referred to in the New South Wales equivalent of s 16(2)(a)(ii), this follows inexorably from the decision of the High Court in Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd[3] (“Southern Han”). On the other hand, the available defences to a payment claim are very limited.
[3](2016) 260 CLR 340 at [44].
52 Generally speaking, the available defences concern either the nature of the underlying contract or the form and service of the purported payment claim, and thus whether the payment claim is effective to trigger the procedures established by Part 3 of the SOP Act.[4] More particularly, the defences to a payment claim enlivened by the formal requirements of the SOP Act are, in substance, that the payment claim:
[4]Ibid at [62].
(a) does not relate to a “construction contract” (including because it does not involve carrying out “construction work”), or it relates to a construction contract excluded from the operation of the Act under s 7 (for example, a construction contract that forms part of a loan agreement, or one that is a domestic building contract under the Domestic Building Contracts Act1995);
(b) fails to satisfy the formal requirements of s 14(2) (for example, by failing to identify the construction work or failing to state that it is made under the SOP Act);
(c) was made when no valid reference date existed,[5] including where it is served before an applicable reference date or relies on a reference date that has already been used up by an earlier payment claim;[6]
[5]Ibid at [61] - [62]; Vanguard Developments v Promax [2018] VSC 386 at [121] (Kennedy J).
[6]SOP Act s 14(8).
(d) includes variations that are “excluded amounts” under s 10B; and
(e) was not validly served on the respondent under either the terms of the contract or under s50.
53 Under s 47, nothing in Part 3 of the SOP Act precludes bringing or continuing proceedings under the construction contract, including where those proceedings deal with the same issues in dispute in the proceeding relying on Part 3. Thus, a judgment under ss 16 and 17 is a provisional judgment in what it grants and what it refuses.[7] The statutory context both contemplates and permits inconsistent judgments.[8] This section is, in effect, the statutory manifestation of the “pay now, argue later” description often given to the policy behind the SOP Act and its counterparts in other states.[9]
[7]Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor (2009) 26 VR 112 at [2] and [43]-[46] (Vickery J), cited with approval in Pearl Hill Pty Ltd v Concorp Construction Group (Vic)Pty Ltd [2011] VSCA 99 at [11].
[8]Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2005) 62 NSWLR 385 at [22] (Handley JA, with whom Santow JA and Pearlman AJA agreed).
[9]Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor (2009) 26 VR 112 at [2] and [43]-[46].
54 Further, in considering any purported defences to a payment claim, it is important to be mindful of s 48 of the SOP Act. This section provides that the provisions of the SOP Act have effect despite any contractual provision to the contrary. It further provides that any provision in any contract purporting to exclude, restrict or modify the operation of the SOP Act or that may reasonably be construed as an attempt to deter a person from taking action under the Act, is void.
55 This court has endorsed the hearing of applications under the SOP Act on a summary basis by summons on originating motion with affidavit evidence.[10] Such claims are properly assessed on the balance of probabilities,[11] with the quality of the evidence weighed having regard to the fact that the legislation seeks to facilitate a swift but temporary remedy.[12]
Are the requirements of the SOP Act satisfied?
[10]3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674 at [39]-[54]. See also SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805 at [26].
[11]Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449, 449-450 (Mason CJ, Brennan, Deane and Gaudron JJ).
[12]3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674 at [51]-[54].
56 The contract at issue is a construction contract because the fabrication, supply, delivery, and installation of structural steel is plainly “construction work” (s 4).
57 In relation to the identification requirement, whether a payment claim sufficiently identifies the construction work is an objective test.[13] The test is whether a reasonable person in the position of Devco can comprehend the basis of the claim.[14] The test is not overly stringent; the court cannot adopt an unduly technical approach.[15] The context of the payment claim is relevant, including industry conventions and earlier contractual dealings.[16] The background knowledge of the parties from their past dealings and prior exchanges of information (including correspondence) are also relevant.[17] Thus, the court may transcend the face of the payment claim.
[13]John Beever (Aust) Pty Limited v Paper Australia Pty Ltd [2019] VSC 126 at [83] (Lyons J).
[14]Ibid.
[15]Ibid; Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 at [51] (Vickery J).
[16]Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391 at [40].
[17]John Beever (Aust) Pty Limited v Paper Australia Pty Ltd [2019] VSC 126, Lyons J at [83]; Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 at [51] (Vickery J).
58 In my view, each of the payment claims adequately identifies the construction work to which they relate. Each contains a somewhat detailed description and breakdown of the works. A reasonable person in the position of Devco would readily comprehend the work to which they relate. The identification requirement is not a pedantic, onerous or technical one.
59 Each of the purported payment claims indicates amount claimed to be due (s 14(2)(d)). Each claim states it is made under the Act (s 14(2)(e)).
Statutory declarations
60 Devco submits that since APR failed to provide statutory declarations with its payment claims, the claims are invalid.
61 APR responds that any failure to provide a statutory declaration does not invalidate a payment claim and relies on recent decisions of Judge Woodward made in this court in Cool Logic Pty Ltd v Citi-Con (Vic) Pty Ltd[18] (“Cool Logic”) and Spirito Development Pty Ltd v Sinjen Group Pty Ltd (“Spirito”).[19]
[18][2020] VCC 1261 at [90].
[19][2020] VCC 1368.
62 In particular, APR cites Judge Woodward in Spirito (at [38]), in which his Honour examined recent authorities considering whether a payment claim is invalidated by the failure to satisfy a contractual precondition, including as to the provision of a statutory declaration, stating:
“... I am satisfied that the weight of authority now favours the view that provisions of this kind do not operate to invalidate a payment claim, regardless of the utility or onerousness of the condition. In my view, unless the failure to satisfy any such condition is (in substance) a failure to meet the pre-requisites for a valid payment claim in s4 of the Act or (arguably) a pre-condition to a reference date arising under s9(2) of the Act, it should be disregarded.”
63 I agree with APR that this argument should be rejected on the basis that it constitutes a contractual pre-condition to the making of a valid payment claim other than those set out in the SOP Act as leading to a finding that the payment claim is a nullity. Further such argument constitutes a contractual defence, contrary to s 16(4)(b)(ii) of the Act and may offend the prohibition against contracting out of the Act pursuant to s48 of the Act. The “pay now argue later” policy of the SOP Act compels that such defences be ventilated at trial.
64 This ground is rejected.
Excluded Amounts
65 Payment claims 5, 10, 11 and 12, do not contain excluded amounts (s 14(3)(b)). This issue only arises in respect of claim 6, which APR admitted contained a variation. The variation is the item: “Additional drafting #1 due to changing base plates as per consultants mark ups.”
66 The plaintiff bears the onus, under s16 of the Act, of establishing the absence of excluded amounts.[20] Before the decision in Yuanda Vic Pty Ltd v Façade Designs International Pty Ltd[21] (“Yuanda”), there was some dispute as to whether the court:
[20]SOP Act s16(4)(a)(ii); John Beever at [44], [131] and [132].
[21][2021] VSCA 44.
(a) must only consider the “face of the payment claim,” or whether it can consider extrinsic evidence of the claim item; and
(b) whether the impugned portion of a payment claim can be severed.
67 In Yuanda, McLeish and Niall JJA held that the court must only examine the “face of the payment claim”.[22] Their honours reasoned that:
“…the interpretation which best accords with the policy of the Act should be preferred. In our opinion, that is the more limited construction on which the primary judge relied. The enforcement process is not intended to be an inquiry into the merits of the claim. That is obvious from the prohibition on the respondent advancing a cross-claim or raising a defence. It is also apparent more generally from the ‘pay now, argue later’ scheme of the Act as a whole and, within that scheme, the provision for adjudication (and adjudication review) in respect of disputed excluded amounts. An interpretation which gives the Court a limited role is to be encouraged as consistent with the Act’s preference for adjudication to resolve disputes about the contents of a payment claim.”
[22]Ibid at [44].
68 Sifris JA agreed, holding that that the contrary interpretation is antithetical to the purpose of the Act (the timely resolution of payment disputes).[23] His Honour reasoned that:
“The structure, intent and purpose of the Act and the procedure for payment and objections to payment in relation to excluded amounts are predicated on a relatively quick summary procedure for allocation of risk pending any final determination. A full investigation of alleged excluded amount or the suggested digging exercise are entirely contrary to the intended purpose. Rather, it is up to the respondent to identify, in the manner provided for, the excluded amount and set in train the adjudication process. If the respondent fails to do so, it is not open to the respondent to later contest and request a full investigation or digging exercise (a suggested lesser review) in relation to an alleged excluded amount that it should have raised earlier, particularly in circumstances where the enquiry is not directed to a final determination of the rights of the parties, but rather what interim accommodation is appropriate and indeed required based on a face of the claim consideration.”
[23]Ibid at [120].
69 Accordingly, I must consider whether, “on the face of the payment claim”, the plaintiff has established the absence of excluded amounts.
70 Mr Robson deposes that the revision was only required because Devco’s engineers requested a change to the base plates. However, this is a bare assertion. There is nothing on the face of the payment claim to that effect (including the supporting documents, or any references to those documents). It is thus not apparent that:
(a) the parties agreed that the doing of the work constituted a variation (s 10A(2)(c) – first class variation); or
(b) that Devco requested or directed the works (s 10A(3)(b) – second class variation).
71 Devco submits that Payment Claim 5 contains an excluded amount as it refers to a variation that is not a claimable variation under s10A(2)(a) of the Act. It denies that Mr Teny gave a direction as referred to on the face of Payment Claim 5, and says APR has not provided any further evidence of such a direction.
72 In my view, Payment Claim 5 does not contain an excluded amount as it refers to an alleged direction on the fact of the payment claim. The works are described as “Trimming support angles as requested by TENY,” - a clear direction by Mr Teny of Devco. According to the reasoning in Yuanda, all the claim required was that the payment claim stipulate, on its face, that there was a direction. There need not be corroborative evidence. Accordingly, the work is a claimable variation under s 10A of the Act.
73 Devco claims the works the subject of Payment Claim 10 describe the installation of a temporary structure. It submits that the Scope of Works are not expressed in this way, and that there is no relevant contract sum for temporary works. Devco submits that this is an unapproved variation under s 10B(2)(a) of the Act, and otherwise, that it is in the nature of damages or compensation for costs incurred by APR under s10B(2)(d) of the Act. Devco concludes that Payment Claim 10 contains an excluded amount, and relief cannot be claimed under the Act.
74 In my view. the works are described as “external temporary stair installed”, which are works that fall under the category of works described as “Stairs” on page 48 of the Subcontract. Accordingly, these works fall within the initial scope of the contract, and are not a variation within the meaning of s 4. Nor are the works in the nature of damages or compensation for costs incurred by APR under s 10B(2)(d). Payment Claim 10 does not contain an excluded amount.
75 Devco further alleges that Payment Claims 11 and 12 contain excluded amounts, as the description of the works is not referable to contract works under the Subcontract. Each of these claims refer to “Stage 3” works. Clause 1.1, Annexure A and the Staging Annexure of the Contract referred to therein clearly indicate that the Contract Sum for Stage 3 is $nil. Neither of these claims refer to any direction being made and so are excluded amounts under s10B(2)(a) of the Act. Further, Payment Claim 11 refers to “Stage 3 steel fabricated and put on hold”. Any charge for materials “put on hold” is a time-related cost under s10B(2)(b)(ii) of the Act or otherwise a charge in the nature of damages or compensation for costs incurred by the Plaintiff under s 10B(2)(d) of the Act.
76 In my view, both parties refer to “Stage 3” and “Stage lC” - which works related to the dialysis building - interchangeably. Accordingly, Payment Claims 11 and 12 do not contain excluded amounts.
Reference dates
77 The next contention of Devco is that the payment claims do not have a reference date.
78 The contract determined the reference date as follows:
(a) payment claims were to be submitted “by the 25th day of each calendar month,” or where that date is not a business day, the preceding business day (clause 9.1(a) and annexure A); and
(b) for progress claims submitted in December, the reference date was the first working day in January in accordance with the MBAV working calendar (cl 9.1(a)).
79 The purported payment claims were issued on the following dates:
(a) claim 1: 18 December 2018;
(b) claim 2: 25 February 2019;
(c) claim 3: 23 April 2019;
(d) claim 4: 27 May 2019;
(e) shop drawing claim: 27 May 2019;
(f) claim 5: 27 May 2019;
(g) claim 6: 27 May 2019;
(h) claim 10: 18 May 2020;
(i) claim 11: 26 August 2020;
(j) claim 12: 28 September 2020.
80 The key issue in dispute is whether the construction of clause 9.1 and Annexure A of the Contract, permits a reference date to arise before, on or after the 25th day of each month.
81 This Court considered a similar contractual provision and its effect in Roar Fire Systems Pty Ltd v The Construction Studio.[24] In that case, the plaintiff relied on the phrase in item 16 of the Contract that the date for claims is ‘by the 25th day of each month’ to contend that a valid reference date may arise on any date between the first to the 25th day of each month. It submitted that a reasonable businessperson would not construe ‘by’ to mean ‘on’, and to interpret the clause in any other way which detracts from its plain language meaning would not be consistent with the ordinary rules of contractual interpretation.
[24][2020] VCC 1576 at [38].
82 Similarly, in Cool Logic, Judge Woodward held that, on their proper construction, the contracts the subject of that proceeding allowed for a payment claim to be issued from the 26th day of the month before, up to the 25th of the relevant month in providing for the following:[25]
·“by the 25th day of the month projected to end of month”;
·“by the 25th day of the month with payments no later than 45 days after the end of the month in which the claim is made”; and
·“no later than the 25 [sic] day of the month”
[25][2020] VCC 1261 at [7].
83 It follows that APR was to issue its payment claims by 4.00pm on a date by the 25th of the relevant month. In my view, the term ‘by’ indicates the last day on which something may be done or completed. It is also noted that nothing in the SOP Act compels a builder to complete the works before the reference date when accruing a right to make a progress claim by reason of the phrase "... undertaken to carry out [to supply]" (s 9(1)). Therefore the payment claim can include works referable to a future date.[26]
[26]MPA Construction Pty Ltd v Profine Construction Pty Ltd [2020] VCC 1035 at [79].
84 Payment claims 4, 5, 6, 11, 12, and the shop drawing claim were issued after that reference date. Accordingly, payment claims 4, 5, 6, 11, 12, and the shop drawing claim are invalid.
85 Devco otherwise failed to issue a payment schedule within 10 business days of receiving the valid payment claims.
86 An incidental contention of Devco is that it has paid the amount of $715,342.10 (including GST) against the contract sum. Accordingly, says Devco, any amount found to be owing against them must take into account payments made in excess of APR’s entitlements under the Act.
87 However, the Court need not be satisfied that the claimed amount is calculated in accordance with the contract. There is a procedure for determining whether a payment claim is calculated in accordance with the contract: an adjudication by an adjudicator under s 23 of the Act. It is not the role of the Court, in determining an application under s 16(2) of the Act, to determine whether the payment claim was calculated in accordance with the contract.[27]
[27] SG Investment Group Pty Ltd v K&K Industries Pty Ltd [2019] VCC 1341 at [43]-[44] per JR Tran (as she then was)
88 Accordingly, APR can recover the unpaid portion of the claimed amounts in payment claims 3 and 10 ($7,728.59 (including GST)) as a debt due.
Conclusion
89 For the foregoing reasons, there is judgment for APR in the sum of $7,728.59 (including GST), together with interest and costs.
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Certificate
I certify that these 16 pages are a true copy of the judgment of her Honour Judge Burchell delivered on 3 August 2021.
Dated: 3 August 2021
Simon Bobko
Associate to Her Honour Judge Burchell
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