Arc3 Pty Ltd v Gold Road No 2 Pty Ltd
[2021] VCC 390
•7 April 2021
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
BUILDING CASES LIST
Case No. CI-20-04834
| Arc3 Pty Ltd | Plaintiff |
| V | |
| Gold Road No. 2 Pty Ltd | Defendant |
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JUDGE: | His Honour Judge Woodward | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers, latest submissions filed 24 February 2021 | |
DATE OF JUDGMENT: | 7 April 2021 | |
CASE MAY BE CITED AS: | Arc3 Pty Ltd v Gold Road No 2 Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2021] VCC 390 | |
REASONS FOR JUDGMENT
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Subject: CONTRACTS
Catchwords: Building contract – payment claim – whether plaintiff elected to amend payment claim rather than seek judgment – whether further revised payment schedule issued in time – whether payment claim withdrawn or abandoned and replaced – whether payment claim superseded
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:Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; Arrow International AustraliaLtd v 77 Bouverie Pty Ltd [2009] VCC 1503; State Asphalt Services Pty Ltd v Leighton Contractors Pty Ltd [2013] NSWSC 528; Amasya Enterprises Pty Ltd& Anor v Asta Developments (Aust) Pty Ltd & Anor (No 2) [2015] VSC 500 Valeo Construction v Pentas [2018] VSC 243; Promax Building Developments v 167 Lower Heidelberg Road [2016] VCC 1960; Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602; Abigroup Contractors Pty Ltd v River Street Developments Pty Ltd [2006] VSC 425 Spirito Development Pty Ltd v Sinjen Group Pty Ltd [2020] VCC 168.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Morrison | KCL Law |
| For the Defendant | Mr L Hogan | Sladen Legal |
HIS HONOUR:
Summary and outcome
1 In this proceeding, the plaintiff (“Arc3”) applies for judgment against the defendant (“Gold Road”) pursuant to s 16(2) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (“SOP Act”). Arc3 makes the application by summons on originating motion dated 29 October 2020. The application arises out of construction works that Arc3 performed at 116 Watton Street, Werribee (“the Site”).
2 Arc3 submits that it is entitled to judgment because Gold Road failed to make payment in response to its payment claim. Gold Road argues in opposition to the claim that:
a) Arc3 elected to amend the payment claim rather than seek judgment;
b) a payment schedule was issued in time;
c) the payment claim was withdrawn or abandoned and replaced;
d) the payment claim was superseded.
3 In my judgment, Gold Road’s arguments in opposition to the claim must be rejected. My reasons are set out below. I will give judgment for Arc3 in the sum of $378,841.94 plus interest at the rate of 10% per annum, calculated as submitted by Arc3 at paragraph 35 of its primary submissions. I will also order that Gold Road pay Arc3’s costs of and incidental to the proceeding (including reserved costs) on the standard basis, in default of agreement (unless either party has a basis for a different order as to costs). 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
4 Arc3 relies upon three affidavits of Thomas Craig, its general manager, affirmed 29 October 2020, 18 December 2020, and 1 February 2021. In opposition, Gold Road relies upon one affidavit of Michael Elliott, its director, sworn 2 December 2020.
5 The facts of the proceeding are not materially in dispute. By a written contract dated 28 September 2017, Gold Road engaged Arc3 to design and construct a multi-story, mixed use development at the Site. Pursuant to the contract:
a) the contractor was to claim progress payments in accordance with item 33 (cl. 37.1);
b) the time for progress claims was the “last day of each month for WUC for work done to the last day of that month” (item 33);
c) within 10 business days of receiving a payment claim, the superintendent was to issue a progress certificate (cl. 37.2);
d) Gold Road was to make payment “within 14 days after receiving the progress certificate, or within 28 days after the Superintendent receives the progress claim” (cl 37.2);
e) in the event of default, interest accrued at 10% per annum (cl. 37.5).
6 On 31 July 2019, Arc3 issued progress claim 19 in the sum of $372,105.40 excluding GST ($409,315.94 including GST) (“payment claim 19”). Arc3 served the payment claim by way of an electronic mail system called Aconex. Despite an early indication to the contrary, Gold Road does not dispute that it was duly served with payment claim 19 on 31 July 2019, or that it was obliged under the terms of the contract to issue any payment schedule within 10 days of service of a payment claim.
7 Gold Road failed to issue a payment schedule within 10 days of receiving payment claim 19. However, it did issue a purported payment schedule on 16 August 2019, accepting liability to pay $118,698.95 (including GST). Michael Elliott served the payment schedule upon Peter Doyle by email.
8 Between 19 August 2019 and 27 August 2019, the parties engaged in correspondence regarding revisions to payment claim 19 and the payment schedule, as follows:
a) on 19 August 2019, Mr Doyle of Arc3 sent Mr Elliott an email requesting an amendment to the payment schedule in relation to two variations (VO066 and VO069);
b) on 20 August 2019, Mr Doyle sent Mr Elliot an email requesting further amendments in relation to other variations (VO037 and VO067);
c) on 22 August 2019, Mr Lai of Arc3 sent Mr Elliott an email indicating that VO062 (rev 1) had been increased by $112.50 (excluding GST);
d) on 22 August 2019, Sherene Hartland of Gold Road sent Mr Lai and Mr Doyle an email indicating she disagreed with the proposed amount for VO20062 (rev 1);
e) on 22 August 2019, Ms Hartland sent Mr Lai an email attaching a revised payment schedule in the sum of $121,358.68 (including GST), which accounted for Mr Doyle's and Mr Lai's requests;
f) on 26 August 2019, Ms Hartland sent Mr Lai an email attaching a final payment schedule, certifying an amount of $121,358.68 (including GST) to account for Arc3’s revised variation claims;
g) on 26 August 2019, Mr Lai sent Ms Hartland an email (copied to Mr Elliot) attaching tax invoice no. 000902 dated 26 August 2019 in the sum of $121,358.68 (including GST), which reflected the amount in Evergrande’s final payment schedule also dated 26 August 2019 (“26 August invoice”).
h) the 26 August invoice included the endorsement: “This is a payment claim made under the Building and Construction Industry Security of Payments Act 2002” and sought payment by 28 August 2019, being also the due date for payment of payment claim 19; and
i) Mr Craig deposes that Arc3 issued invoices for “accounting purposes only”, so that Gold Road could process payments to Arc3 and that (in contrast to the payment claims sent by Arc3) Gold Road did not issue any payment schedule for any of the invoices, including invoice 000902.
9 Mr Craig deposes that any unspecified “requests” in this correspondence were not payment claims and did not contain any endorsement under s 14(2)(3) of the SOP Act. He says payment claim 19 was neither withdrawn nor re-issued at any time.
10 On 13 September 2019, Gold Road made a payment of $30,474.00 (including GST). Arc3 asserts that this was part payment of payment claim 19, and that the balance of $378,841.94 (including GST) owing on payment claim 19 remains outstanding. Arc3 claims the sum under s16(2) of the SOP Act. Gold Road argues that $30,474.00 was part payment of the 26 August invoice, which it says was a payment claim issued in substitution for payment claim 19.
The legal context
11 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] Section 4 defines 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 by s5. There is no dispute that the works the subject of this proceeding is “construction work” within the meaning of s5.
[1]s3
[2]s7.
12 Section 16(2)(a) of the SOP Act 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. Section 17(2)(a) provides that where a respondent provides a payment schedule within time, a claimant may recover from the respondent any unpaid portion of the amount which the payment schedule states the respondent proposes to pay to the claimant.
13 Section 14 of the SOP Act concerns the form and content of payment claims. Sections 14(2) and (3) relevantly 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 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” (being amounts referable to particular categories of variations).
14 Section 14(4) of the SOP Act 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”.
15 Section 14(5), (6) and (7) of the SOP Act concern payment claims claim 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.
16 Another important provision informing the formal requirements for payment claims under the Act is s9. 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”.
17 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,
c) 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 s9 concerns situations where the contract makes no express provision for reference dates.
18 It is now well established in Victoria that unless a payment claim answering the description in s14(1) of the SOP Act is served, there can be no application to a court under s16(2)(a)(i). Although dealing with the alternative option of an adjudication application referred to in the New South Wales equivalent of s16(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] On the other hand, the available defences to a payment claim are very limited.
[3](2016) 260 CLR 340 [44].
19 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]Southern Han [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 SOP Act under s7 (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 Act 1995);
b) fails to satisfy the formal requirements of s14(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]
d) includes variations that are “excluded amounts” under s10B; and
e) was not validly served on the respondent under either the terms of the contract or under s50 of the SOP Act.
[5]Southern Han [61]-[62]; Vanguard Developments v Promax [2018] VSC 386 [121] (Kennedy J).
[6]SOP Act s14(8).
20 Under section 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 ss16 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 [2] and [43]-[46] (Vickery J), cited with approval in Pearl Hill Pty Ltd v Concorp Construction Group (Vic)Pty Ltd [2011] VSCA 99 [11].
[8]Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2005) 62 NSWLR 385 [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 [2] and [43]-[46].
21 Further, in considering any purported defences to a payment claim, it is important to be mindful of s48. 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.
22 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] Occasionally, a plaintiff nevertheless applies for relief under s16 by bringing a proceeding commenced by writ and statement of claim, then issuing a summons seeking summary judgment pursuant to s61 of the Civil Procedure Act 2010 (Vic) (“CPA”).[13] This can add an additional layer of complexity in determining the test to be applied to any defences raised.[14] However, the present proceeding was commenced by summons on originating motion, so questions of the application of the test under CPA ss61 and 63 do not arise.
[10]3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674 [39]-[54]. See also SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805 [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 [51]-[54].
[13]John Beever v Roads Corporation [2018] VSC 635; see also Best Fab Pty Ltd v Australian High Bay Installations Pty Ltd [2018] VCC 1053.
[14]SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805 [31].
Did Arc3 elect to amend rather than seek judgment?
23 The first ground on which Gold Road resists judgment is that Arc3 elected to amend its payment claim rather than seeking judgment. It claims Arc3 did so by issuing the revision requests and the August 15 invoice.
24 In support of those propositions, Gold Road first relies on Agricultural & Rural Finance Pty Ltd v Gardiner (“Gardiner”).[15] In Gardiner, Gummow, Hayne and Keifel JJ held that an innocent party to a breach of contract or repudiation must elect to terminate or affirm the contract.[16] Gold Road next refers to Arrow International AustraliaLtd v 77 Bouverie Pty Ltd (“Arrow”)[17], in which Shelton J applied Gardiner to a claim under s16 of the SOP Act. His Honour held that the claim under s16(2)(a)(i) in that case could not succeed as the plaintiff elected to rely on its “adjusted” payment claims. Gold Road submits that this proceeding is analogous to Arrow.[18]
[15](2008) 238 CLR 570.
[16]Ibid [56] (Gummow, Hayne and Keifel JJ).
[17][2009] VCC 1503.
[18]Ibid.
25 Arc3 responds that Gold Road’s contention is “a complete non sequitur”. The plaintiff notes that the doctrine of election does not apply to the present proceeding. Rather, it applies in a contractual context (such as electing to affirm or accept a repudiation), or at judgment (when electing between remedies). It does not apply when a party merely foreshadows alternative rights which it may pursue. In support of those propositions, Arc3 cited the following excerpt from Gardiner:
“But if, as is the case here, there was no election between inconsistent rights, there was no variation of the contract, and there was no detrimental reliance upon the representation, no reason is given for holding the party concerned to its earlier expressed attitude beyond the fact that the representation was made. To hold that the making of the representation, without more, suffices to alter the rights and obligations for which the parties stipulated by their contract is a step that should not be taken.” [95]
26 Arc3 next relies on StateAsphalt Services Pty Ltd v Leighton Contractors Pty Ltd (“State Asphalt”).[19] In StateAsphalt, Stevenson J held that where a claimant had accrued an entitlement to judgment on a first payment claim as a result of a respondent’s failure to serve a payment schedule in time, it did not lose that right simply because it later served an identical payment claim to which a schedule was served. I discuss State Asphalt further below.
[19][2013] NSWSC 528.
27 Arc3 submits that even if the doctrine of election applied, the correspondence does not evince a “clear and unequivocal election to abandon or withdraw the payment claim”.[20] Arc3 contends that the “revision requests” merely discuss discrete items in the payment schedule and request a higher valuation. Arc3 compares this situation to usual pre-litigation negotiations. In relation to the 26 August invoice, Arc3 submits that this is not a payment claim, but rather a tax invoice issued in the ordinary course of its business, for accounting purposes only. It notes that Gold Road did not treat any of the numerous preceding tax invoices as payment claims.
[20]Valeo Construction Pty Ltd v Pentas Property Investments Pty Ltd [2018] VSC 243 [35].
28 Finally, Arc3 addresses the submission of Gold Road that Shelton J in Arrow relied on Gardiner to dismiss an analogous case. Arc3 says this misconstrues the decision in circumstances where:
a) The plaintiff in Arrow had adjusted its payment claims in response to a quantity surveyor’s assessment. It had in each case properly re-issued a complying payment claim, rather than simply submitting a tax invoice as has occurred in the present case.
b) The defendant in Arrow made payment of the amount claimed in the re-issued payment claims. This is unlike the present case where Gold Road relies on its “Second Payment Schedule” but has nevertheless failed to pay the scheduled amount
c) The defendant in Arrow relied on Gardiner as a defence of “settled accounts” arising from the fact of payment. Therefore, the case concerned an accord and satisfaction, rather than an election.
d) The decision was decided under the higher threshold Fancourt test for summary judgment. The present case is being decided under a different test. Therefore, the failure of a claim in one setting does not mean it should similarly fail here.
29 I agree with the submissions of Arc3. In my view, neither Gardiner nor Arrow stand for the proposition that the doctrine of election applies to payment claims under the SOP Act. The authorities (discussed further below) consistently examine second or subsequent payment claims covering the same subject matter as an earlier payment claim, by reference to whether the claimant unequivocally conveyed that the earlier payment claim was withdrawn and replaced.
30 Thus, unlike the circumstances under contract law discussed in Gardiner, two purported payment claims will not give rise to two co-existing but inconsistent rights that a claimant must choose between. Rather, the validity of each payment claim is simply a question of fact to be determined in all the circumstances of the case. If the claimant unequivocally conveyed that the earlier claim was withdrawn or replaced by a later one, then any later claim will prevail. However, if this did not occur, the earlier claim remains on foot and any later one will stand to be considered on its own terms. Having said this, I cannot presently think of a circumstance in which the putative later claim will survive, given that (among other things) it will invariably rely on the same reference date as the earlier one.[21]
[21]See my recent discussion of these issues in Spirito Development Pty Ltd v Sinjen Group Pty Ltd [2020] VCC 168 [37].
31 I am satisfied that Arrow does not support a contrary conclusion. It was a summary judgment application in which Shelton J merely held that the defence was “arguable”, and that there was a “real question to be tried”.[22] His Honour did not express a view as to whether the defence would succeed. Accordingly, no question of election arises and I reject Gold Road’s first ground.
[22]Ibid [18].
Was the further revised payment schedule issued in time?
32 The next ground on which Gold Road opposes judgment is that Arc3 “supplemented” the payment claim with additional materials (the revision requests), such that the effective date of the payment claim was 19, 20 or 22 August 2020. In this context, Gold Road relies on the decision of Vickery J in Amasya Enterprises Pty Ltd& Anor v Asta Developments (Aust) Pty Ltd & Anor (No 2) (“Amasya”).[23] In that case:
[23][2015] VSC 500.
a) a contractor served a purported payment claim on one (of two) proprietors on 7 October 2014, in respect of three invoices (dated 10 July, 1 August and 30 September 2014);
b) on 9 October 2014, the payment claim was sent to both proprietors, in respect of the same amount claimed and the same invoices (and was deemed served on 10 October 2014); and
c) the payment claim issued on 9 October 2014 enclosed trade invoices which were not previously provided.
33 The issue was whether the plaintiff served two payment claims on 7 and 10 October 2014 (in breach of s14(8) of the SOP Act), or one payment claim on 10 October 2014. The defendant submitted that there were two payment claims. The plaintiff submitted that the payment claims were one and the same with an effective service date of 10 October 2014, when the supplementary material was provided.
34 Gold Road noted that Vickery J held that:
a) section 14(8) seeks to prevent multiple claims being issued in respect of the same reference date;
b) re-sending a payment claim, even if reasonably supplemented with additional information, is not contrary to that purpose;
c) it is contrary to the purpose of the Act to inhibit reasonable corrections to a payment claim;
d) a realistic degree of tolerance is required to adjust for such shortcomings or mistakes in payment claims;
e) "the requirements for a payment claim should not be approached in an unduly technical manner”;[24] and
f) accordingly, on a common-sense approach, the payment claims dated 7 and 10 October 2014 constituted one payment claim under the SOP Act.
[24]Citing Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248 [10] – [11] (Finkelstein J).
35 Gold Road submits that although Amasya considered a different issue (s14(8)), the reasoning is apposite. It notes that, as in Amasya, the third revision request in this case included a request for payment of an invoice issued by a third party. It follows, says Gold Road, that by issuing one or all of the revision requests, Arc3 submitted one payment claim with an effective date of either 19, 20 and 22 August 2019.
36 Consequently, Gold Road submits that it provided Arc3 with a payment schedule in time, within 10 business days of all the revision requests (s15(4)).
37 In response, Arc3 argues that Amasya does not stand for the proposition that by issuing the so-called revision requests, the effective date of the service of the payment claim should be postponed. In particular, Arc3 submits as follows:
a) On the very specific facts of the case, Vickery J accepted that two nearly identical payment claims (save for the addition of some trade invoices and the correction of the name of the respondent) for the same amounts, which were served three days apart, should be construed asone and the same payment claim.
b) In the later decision of Valeo Construction v Pentas (“Valeo”)[25], Digby J described it as “crucial” to Vickery J’s decision that there was no discrepancy in the claimed amounts.
c) The present case is distinguishable. After the date for a payment schedule, Arc3 made requests for alterations to the valuation of individual items within Gold Road’s assessment. If Gold Road’s argument were valid, one would expect to see the defence raised repeatedly in these applications to defeat Arc3’s claims for judgment under the SOP Act.
[25][2018] VSC 243.
38 In my view, Arc3’s submissions should be preferred. The facts of this case are clearly distinguishable from Amasya. This is not a case of a claimant supplementing or clarifying its own payment claim with further information shortly after serving the payment claim. Rather, some 15 days after serving the payment claim, Gold Road issued a purported payment schedule. Arc3 thereafter engaged in exchanges with Gold Road about aspects of that payment schedule, no doubt with a view to securing prompt payment of a sum that Gold Road appeared to accept was payable. On no view could any of these exchanges be regarded as supplementary to or in clarification of payment claim 19. I therefore reject this ground essentially for the reasons advanced by Arc3.
Was the payment claim withdrawn, abandoned, and replaced?
39 The third ground on which Gold Road resists judgment is that Arc3 withdrew or abandoned and replaced the payment claim by issuing the revision requests or the 26 August invoice. Gold Road principally relies in support of this ground on the decision of Digby J in Valeo, being one of the authorities referred to in my discussion of the first ground above. In Valeo, Digby J held that a payment claim is withdrawn and replaced where the plaintiff clearly and unequivocally communicates that fact.[26]
[26]Valeo Construction Pty Ltd v Pentas Property Investments Pty Ltd [2018] VSC 243 [35].
40 Gold Road contends that Arc3 unequivocally expressed an intention to withdraw or abandon and replace payment claim 19. Gold Road refers to:
a) the emails and documents issued by the parties after payment claim 19 was issued (including the revision requests, revised payment schedule, further revised payment schedule, and the 26 August invoice);
b) the fact that the 26 August invoice expressly stated that it was issued under the SOP Act, and that its value mirrored the amount scheduled for payment in Gold Road’s further revised payment schedule; and
c) the fact that Arc3 issued a revised amount for “variation 62,” which matched the value provided in the further revised payment schedule.
41 Gold Road also referred me to the decision of this court in Promax Building Developments v 167 Lower Heidelberg Road (“Promax”).[27] In Promax, following an inspection and assessment of the works by a quantity surveyor(a practice adopted by the parties) the plaintiff issued a revised payment claim. Anderson J held that a payment claim was withdrawn and replaced by a second payment claim because that was the clear intention of the plaintiff.
[27][2016] VCC 1960.
42 Gold Road contrasted this with the decision of the New South Wales Supreme Court in Kitchen Xchange v Formacon Building Services (“Kitchen”).[28] In Kitchen, the plaintiff issued a payment claim followed by a fundamentally different payment claim. The court held that the payment claim was not withdrawn or replaced.
[28][2014] NSWSC 1602.
43 Anderson J followed the reasoning in Kitchen but reached a different conclusion. The basis was the following factual distinction:
“In the present case, the Owner was fully involved in the process by which the revised invoice was submitted; it being the process which had been followed for the course of the project in relation to all progress claims. In the circumstances, the Owner was entitled to assume that the revised claim served upon it was intended as a valid replacement claim, in respect of which the Owner had the right to respond with a payment schedule in accordance with the Act.”
44 Gold Road argues that Promax is analogous to this proceeding on the basis that Arc3’s representatives were “fully involved in the process by which the revised invoice was submitted” (as evinced by the email correspondence, the documents, and the issuing of the second payment claim).
45 For its part, Arc3 argues that Kitchen highlighted the practical consequences of allowing earlier claims to be unilaterally withdrawn without clear language. These included that the nature and extend of permissible change to a payment claim, and whether a payment schedule is required.[29] Arc3 says that those concerns are apposite here in circumstances where:
[29][63]-[63].
a) Gold Road has not positively contended whether it is the date of one of the three “Revision Requests” or the “Second Payment Claim” (that is, the 26 August invoice) which sets the start of the 10-business day period by which it was to respond by way of payment schedule to the payment claim;
b) Gold Road’s purported construction of the SOP Act will generate uncertainty; and
c) a clear distinguishing factor is that on the date Gold Road alleges the payment claim was withdrawn, the 10-business day period for a payment schedule had already expired.
46 I agree. As noted above, I recently discussed at some length the circumstances in which a payment claim will be taken to be withdrawn, including by reference to the decision in Valeo in Spirito Development Pty Ltd v Sinjen Group Pty Ltd.[30] In my view, the circumstances of this case fall a long way short of amounting to such a withdrawal or replacement. As I have said, the so-called revision requests and the 26 August invoice all related to (and were initiated by) the (late) service by Gold Road of its purported payment schedule and subsequent revisions to that schedule. There is nothing in the exchanges about those matters that could be said to amount to even a qualification or revision of payment claim 19, let alone an unequivocal withdrawal of that payment claim. I therefore reject Gold Road’s third ground.
[30][2020] VCC 168 [37].
Was the payment claim superseded?
47 Gold Road’s final ground in opposition to payment claim 19, is that the 26 August invoice was itself a payment claim that superseded payment claim 19. Gold Road refers again to Arrow, in which Shelton J refused judgment under s16 because a payment claim was superseded by two amended payment claims. Gold Road submits that Shelton J relied upon the decision of Habersberger J in Abigroup Contractors Pty Ltd v River Street Developments Pty Ltd.[31]
[31][2006] VSC 425.
48 Arc3 argues that neither authority explores this issue in detail. Rather, the authorities raise the possibility that a later claim may “supersede” an earlier one because (among other reasons) it raises a real question to be tried. Arc3 also noted that both cases were applications for summary judgment.
49 Arc3 notes that, in contrast, the issue was examined in detail in State Asphalt. Arc3 notes that Stevenson J in State Asphalt considered it a “strange result” that a plaintiff could serve a valid payment claim in response to which no payment schedule is served, later serve an identical (and valid) payment claim in response to which a payment schedule is served, and then eschew pursuing the second payment claim (by adjudication), and instead seek to enforce its accrued rights under the first payment claim (at [28]).
50 However, his Honour nevertheless found that such a course was open on the proper construction of the NSW Act. He held that nothing in the wording of the NSW Act meant that the service of the second payment claim would result in the claimant’s accrued rights in respect of the first payment claim expiring or becoming unenforceable. Arc3 submits (and I agree) that there is no material difference in the wording of the SOP Act. Finally, Arc3 reiterates that the 26 August invoice is not a payment claim, but a tax invoice sent for accounting purposes.
51 In my view, regardless of whether the 26 August invoice can be characterised as a payment claim, the analysis of Stevenson J in StateAsphalt is correct for the reasons his Honour gives. I am satisfied that nothing that happened in the correspondence or other exchanges between the parties on or after the date that Gold Road was required (but failed) to serve a payment schedule in response to payment claim 19, operated to remove or otherwise compromise Arc3’s accrued rights subsisting at that time.[32]
[32]StateAsphalt [49]
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Certificate
I certify that these 16 pages are a true copy of the judgment of His Honour Judge Woodward delivered on 7 April 2021.
Dated: 7 April 2021
Sean Bricknell
Associate to His Honour Judge Woodward
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