BCS Infrastructure Support Pty Ltd v Jones Lang Lasalle (NSW) Pty Ltd

[2020] VSC 739

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL COURT

TECHNOLOGY, ENGINEERING AND CONSTRUCTION LIST

S ECI 2020 02433

BCS INFRASTRUCTURE SUPPORT PTY LTD (ABN 61 097 441 873)	Plaintiff
v
JONES LANG LASALLE (NSW) PTY LTD (ABN 37 002 851 925)	Defendant

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JUDGE:	Stynes J
WHERE HELD:	Melbourne
DATE OF HEARING:	29 & 30 September 2020
DATE OF JUDGMENT:	10 November 2020
CASE MAY BE CITED AS:	BCS Infrastructure Support Pty Ltd v Jones Lang Lasalle (NSW) Pty Ltd
MEDIUM NEUTRAL CITATION:	[2020] VSC 739

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BUILDING CONTRACTS — Trial — Application for judgment after principal failed to provide payment schedule —Whether contract was a construction contract under the Act — Whether payment claim was served in accordance with the Act — Whether payment claim was served in accordance with the contract — Whether payment claim was served in accordance with s 13A of the Electronic Transactions Act 2000 (Vic) — Whether the payment claim was served when it was available to the defendant or when the defendant became aware of it — Whether payment schedule was served within the prescribed time under the Act — Whether payment schedule was valid under s 15 of the Act — Building and Construction Industry Security of Payment Act 2002 (Vic) ss 4, 5, 15, 16 and 50 — J & D Rigging Pty Ltd v Agripower Australia Ltd (2013) 1 Qd R 562, applied — Aquatec-Maxcon Pty Ltd v Barwon Region Water Authority [2006] VSC 117, applied — Australian Gaslight (1940) 14 LGR (NSW) 126, applied — Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd (2010) 30 VR 141, applied — Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd (2009) 26 VR 112, applied — Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd (No 2) [2015] VSC 500, applied — Brookhollow Pty Ltd v R & R Consultants Pty Ltd [2006] NSWSC 1, applied — Howship Holdings Pty Ltd v Leslie (2010) 30 VR 141, applied — Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259, applied — Taylor Projects Group Pty Ltd v Brick Dept Pty Ltd [2005] NSWSC 439, applied — Vannella Pty Ltd atf Capital Family Trust v TFM Epping Land Pty Ltd [2019] NSWSC 1379, applied — Style Timber Floor Pty Ltd v Krivosudsky (2019) 100 NSWLR 133, applied — Façade Designs International Pty Ltd v Yuanda Vic Pty Ltd [2020] VSC 570, applied — Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248, applied — Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, applied — Façade Treatment Engineering Pty Ltd (in liq) v Brookfield Multiplex Constructions Pty Ltd [2016] VSCA 247, applied — Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA) Pty Ltd [2007] QSC 333, applied — Leighton v Arogen [2012] NSWSC 1323, applied — Denham Constructions Pty Ltd v Islamic Republic of Pakistan (No 2) (2016) 311 FLR 187, applied ­— Barclay Mowlem v Tesrol Walsh Bay [2004] NSWSC 1232, applied — T & T Building Pty Ltd v GMW Group Pty Ltd [2010] QSC 211, applied.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Twigg QC with Mr C Dawlings	Thomson Geer
For the Defendant	Mr A Downie	Gadens Lawyers

HER HONOUR:

Introduction

1. This proceeding arises in relation to a contract between the parties for the operation and maintenance of baggage handling equipment and the maintenance of aerobridges and nose guidance systems at various airports around Australia (the Contract).

1. Specifically, it arises in relation to a payment claim issued by the plaintiff under the Contract dated 15 January 2020 (the Payment Claim).

1. The plaintiff says that the defendant failed to pay the amount claimed and failed to provide a payment schedule in response to the Payment Claim as required by the  Building and Construction Industry Security of Payment Act 2002 (Vic) (the SOP Act). Consequently, the plaintiff seeks an order that the defendant pay to the plaintiff the sum of $471,449.86 (including GST) as a debt due under s 16(2)(a) of the SOP Act.

1. The defendant disputes the plaintiff’s entitlement to seek an order under s 16(2)(a) of the SOP Act as set out in its document entitled ‘Grounds of Opposition’ dated 7 August 2020.

1. The following issues arise for determination: 

(a) Is the Contract a construction contract? Specifically, is the plaintiff’s scope of work under the Contract ‘construction work’ within the meaning of s 5 of the SOP Act?

(b)       If the Contract is a construction contract, when did service of the Payment Claim occur:  16 January 2020 or 11 February 2020?

(c) If the Payment Claim was served on 11 February 2020 was a payment schedule served within 10 business days? Specifically, does the defendant’s letter dated 18 February 2020 satisfy the requirements of s 15 of the SOP Act?

(d)       If the Payment Claim was served on 16 January 2020, does the conduct of the plaintiff prevent it from obtaining judgment?

1. For the reasons that follow, I find that:

(a) The Contract is a construction contract for the purpose of the SOP Act;

(b)       Service of the Payment Claim by uploading it to a cloud based information system was not effective until the Payment Claim was identified and read by the defendant on 11 February 2020;

(c) The defendant’s letter dated 18 February 2020 was delivered within 10 business days of the service of the Payment Claim and satisfied the requirements of s 15 of the SOP Act; and

(d) In light of my findings that service occurred on 11 February 2020, it is not necessary for me to determine the availability of other defences to the plaintiff’s claim arising under the Australian Consumer Law and in equity.

Background

The Contract

1. On around 9 October 2010, the plaintiff and Qantas Airways Ltd (Qantas) entered into the Contract.

1. From 9 October 2010 to 30 April 2017, the plaintiff performed works for Qantas under the Contract at airports around Australia.

1. On around 1 May 2017, Qantas novated the Contract to the defendant.

1. The Contract has been varied on around 7 occasions, the most recent variation being identified as NAT-CPP-2010-013590-7,[1] which describes the rates applicable to work performed under the Contract as at the date of novation.[2]

   [1]Exhibit (2) to Affidavit of JJ Cachia sworn 1 June 2020 at 337–40 of the Court Book.

   [2]Agreed Statement of Facts at 2315 [2] of the Court Book.

1. Following novation, the plaintiff performed services under the Contract for the defendant at the following airports:

(a)        Sydney Airport;

(b)       Melbourne Airport;

(c)        Perth Airport;

(d)       Brisbane Airport;

(e)        Adelaide Airport;

(f)        Darwin Airport;

(g)       Canberra Airport; and

(h)       Ayres Rock Airport.

1. The services to be provided by the plaintiff under the Contract include, but are not limited to, maintenance of:[3]

   [3]Ibid [3]; Affidavit of JJ Cachia sworn 1 June 2020 at 46–7 [32] of the Court Book.

(a)        Check-in kiosks;

(b)       Baggage conveyor systems;

(c)        Motors for baggage conveyor systems;

(d)       Replacement of sections of baggage return carousels;

(e)        Aerobridges;

(f)        Aircraft nose in guidance systems; and

(g)       Late baggage conveyors or chutes.

1. Photographs depicting examples of each asset and details of how they are affixed to the airport terminal are included in the affidavit of Mr Cachia, the plaintiff’s Commercial Manager, sworn 1 June 2020.[4]

   [4]Agreed Statement of Facts at 2316 [4]–[5] of the Court Book.

The Rate Dispute

1. In around October or November 2017, the parties commenced negotiating a formal written agreement to replace the Contract and was referred to as the Specialist Services Agreement (the SSA).[5]

   [5]Ibid.

1. The following representatives were involved in the negotiations:

(a)        For the defendant:

(i)         Paul Egan, Procurement Manager, who left JLL in or around April 2018;

(ii)       Gyan Raniga, National Sourcing Manager for the Qantas account, who took over negotiations in April 2018 from Mr Egan;

(iii)      Hounaine Fadli, Executive Director and Head of Supply Chain and Procurement, who took over negotiations from Mr Raniga when he left JLL; and

(iv)      Michael Raphael, Chief Procurement Officer Asia Pacific, to whom all of the above reported;

(b)       For the plaintiff:

(i)         Dean Durban, Executive General Manager of Safety & Operations;

(ii)       Jason Cachia, Commercial Manager Australasia; and

(iii)      Mark Buggy, Group Contracts Manager.

1. The negotiations between the parties were directed, in part, to rates applicable to the plaintiff’s services.

1. A dispute exists between the parties about whether or not an agreement was reached on around 7 December 2017 that the price for the plaintiff’s services would be reduced commencing, retrospectively, from 1 October 2017 (the Rate Dispute). It is the position of the defendant that such an agreement was reached and is contained in an email from Mr Durban of the plaintiff to the defendant dated 8 December 2017 (the 2017 Durban Email).[6] The plaintiff disputes that an agreement was reached[7] and says that the rates set out in NAT-CPP-2010-013590-7 apply.

   [6]Affidavit of H Fadli sworn 7 August 2020 at 1383 [11] of the Court Book; Exhibit to Affidavit of H Fadli sworn 7 August 2020 at 1394 of the Court Book.

   [7]Affidavit of JJ Cachia sworn 24 August 2020 at 1828–30 [25]–[34] of the Court Book; Exhibit (26) to Affidavit of JJ Cachia sworn 24 August 2020 at 1872 of the Court Book.

1. Negotiations of the terms of the SSA between the parties continued throughout 2018.

1. In November 2018 a copy of the SSA was signed by the defendant and sent to the plaintiff. However, it was not executed by the plaintiff.

1. Notwithstanding the terms of the 2017 Durban Email, the defendant did not immediately reduce payments made to the plaintiff. 

1. On 15 January 2019, the defendant informed the plaintiff that having regard to the 2017 Durban Email, the defendant had overpaid the plaintiff in the sum of $852,443.62 and would withhold payments for services performed in December 2018 and January 2019 and would thereafter adjust payment for future work orders in line with the 2017 Durban Email.[8]

   [8]Affidavit of H Fadli sworn 7 August 2020 at 1386 [26] of the Court Book.

1. The plaintiff disputes the defendant’s entitlement to do so. 

Corrigo

1. Corrigo is a cloud based facilities management platform that amongst other things facilitates the issuing of work orders and the service of invoices.[9]

   [9]Affidavit of JJ Cachia sworn 1 June 2020 at 47–8 [34] of the Court Book.

1. In June 2017, the defendant requested the plaintiff to connect to Corrigo and informed the plaintiff that invoicing for services rendered would no longer be in the form of a traditional PDF invoice submitted to an email address, but would be entered directly into Corrigo and managed via that portal.[10]

   [10]Agreed Statement of Facts at 2317 [11] of the Court Book; Exhibit (14) to Affidavit of JJ Cachia sworn 1 June 2020 at 637–41 of the Court Book; Exhibit (17) to Affidavit of JJ Cachia sworn 24 August 2020 at 1832–7 of the Court Book.

1. Thereafter, the defendant used Corrigo to direct work orders to the plaintiff. The plaintiff used Corrigo to provide invoices in response to those work orders.

1. It was noted that the parties used different versions of Corrigo, which is of no consequence to this decision.[11]

   [11]The defendant used Corrigo Enterprise and its suppliers, including the plaintiff, used CorrigoPro.

1. Corrigo operates by allowing:

(a)        the defendant to raise and track work orders for tasks to be performed by the plaintiff. Each work order is a discrete page on Corrigo, which records the pricing of the work order and logs inputs such as communications between the parties via Corrigo in relation to that work order and documents that may be uploaded in relation to that work order. The defendant created different types of work orders through Corrigo;

(b)       the plaintiff to check in to the raised work order and create an electronic invoice for the amount of the work order by entering invoice details directly into Corrigo.[12]

[12]Affidavit of RG Timmermans sworn 7 August 2020 at 653 [12] of the Court Book.

1. In relation to specific items of work, work orders were assigned a code associated with the location of the proposed work — eg ‘MEL’ or ‘SYD’.[13]

   [13]Ibid 653–4 [13].

1. In relation to regular work carried out over a longer period of time across multiple sites, the defendant created monthly work orders identified by the prefix ‘DUMMY’.

1. DUMMY work orders are created for billing purposes only.[14] The performance of the works and their compliance with requirements is the subject of a separate ‘activity’ work order, which does not deal with pricing and payment.[15] These activity work orders are closed off by the defendant entering a value of ‘A’ against that work order, meaning it is finalised and it is authorised as ‘no charge’ because the billing of it is dealt with in the DUMMY work order to which it corresponds.[16]

   [14]Affidavit of RG Timmermans sworn 14 September 2020 at 1879–80 [17] of the Court Book.

   [15]Ibid 1880 [18]–[20].

   [16]Ibid.

1. In relation to each work order, the defendant set the price for the work to be done by the plaintiff.[17]

   [17]Agreed Statement of Facts at 2317 [15] of the Court Book.

1. In each DUMMY work order the defendant input a sum designated ‘NTE’ (for ‘Not TO Exceed’) representing the limit on the amount of the invoice that could be entered in response to that work order. [18]

   [18]Ibid [16].

1. If the plaintiff wanted to enter an invoice more than the NTE, it was required to first ask the defendant to increase the NTE. The plaintiff could and did make such requests in a number of ways:

(a)        By email;[19]

(b)       By Cruchats, a messaging system within Corrigo facilitating communication between the parties in relation to work orders.[20] Messages between the parties were recorded in Corrigo against the work orders that they related to;

(c)        By a note added into Corrigo as part of the invoice details. This was used by the plaintiff if the plaintiff wanted the matter drawn to the defendant’s attention.[21]

[19]Exhibit (6) to Affidavit of A Aalam sworn 24 August 2020 at 1815–20 of the Court Book.

[20]Transcript at T134.7–10.

[21]Transcript at T134.2–6.

1. Invoices were created in Corrigo by the plaintiff entering the required information directly into Corrigo in response to the relevant work order. It could enter a price for work done at or below the NTE.[22]

   [22]Affidavit of RG Timmermans sworn 7 August 2020 at 654 [15] of the Court Book.

1. In addition to entering invoice details manually into Corrigo, Corrigo permits documents to be uploaded by the supplier as attachments to the work order.  Attachments were not required for the purpose of payment. However, it was the plaintiff’s practice to always attach a PDF invoice on its own letterhead in addition to manually entering invoice details.[23]

   [23]Transcript at T150.15–18, T152.3–11.

1. It is important to note that the existence of an NTE value associated with a work order did not prevent the plaintiff attaching an invoice in PDF form for a sum greater than the NTE.[24]  

   [24]Agreed Statement of Facts at 2318 [18] of the Court Book.

1. Up until 2 December 2019, the invoice value of the PDF attachment to a work order or DUMMY work order matched the manually entered invoice data and NTE.[25]

   [25]Transcript at T157.25–T158.6.

1. Once invoices were uploaded, the defendant could then either review, dispute or authorise the invoice. Authorised invoices were then paid.[26] According to the oral evidence of Mr Aalam, the defendant always responded promptly ‘within one minute sometimes, sometimes within one hour’.[27]

   [26]Affidavit of RG Timmermans sworn 7 August 2020 at 654 [15] of the Court Book.

   [27]Transcript at T183.25.

1. Mr Timmermans, who was responsible for authorising payment of the plaintiff’s invoices, did not review attachments for DUMMY work orders where the invoice details entered matched the NTE.[28] It was his practice to review any non-invoice attachments to the ‘activity’ work orders (referred to in paragraph 30 above, whether associated with a DUMMY work order or not) because they related to compliance and the status of the works. He also reviewed financial documents such as quotes and reconciliations before creating the NTE. However, he did not review invoices before creating an NTE because an invoice can only be submitted after an NTE is created.[29]

   [28]Affidavit of RG Timmermans sworn 7 August 2020 at 658 [37] of the Court Book; Transcript at T226.9–12; Affidavit of RG Timmermans sworn 14 September 2020 at 1882 [25] of the Court Book.

   [29]Affidavit of RG Timmermans sworn 14 September 2020 at 1882 [24] of the Court Book.

1. During 2018 and 2019, the plaintiff would follow up unpaid invoices with the defendant by email.[30]

   [30]Transcript at T102.17–T103.6, T108.31–T109.8.

The accumulation of unpaid invoices

1. From December 2018 to March 2019, the defendant continued to issue work orders with NTE amounts matching the amount the plaintiff expected to be paid based on the rates under the Contract.[31] In response, the plaintiff manually entered invoice details and attached PDF invoices at or below the NTE values.[32] However, for this period the defendant paid less than the NTE value to the plaintiff. Instead, the defendant paid an amount representing the rate the defendant says was agreed and recorded in the 2017 Durban Email.

   [31]These DUMMY work orders were DUMMY10156, DUMMY10196, DUMMY10233 and DUMMY10267.

   [32]These invoices were QAN002, QAN003, QAN004 and QAN005.

1. From April to December 2019, the defendant issued monthly DUMMY work orders for NTE amounts representing the rate the defendant says was agreed and recorded in the 2017 Durban Email. During this period the plaintiff uploaded invoices to Corrigo in relation to each DUMMY work order. However, as the invoice details it entered exceeded the NTE value, the invoice could not be submitted. The plaintiff knew its invoices were not submitted to the defendant but remained in draft.[33]

   [33]Transcript at T135.10–17, T165.18–28, T166.19–22, T167.25–9.

1. On 2 December 2019, Mr Aalam, as instructed by Mr Cachia, did the following in relation to each DUMMY work order for the period between April and December 2019:

(a)        included a note as a part of the invoice details requesting an increase the NTE to match the attached invoice;

(b)       copied the request into a Cruchat message;

(c)        marked the DUMMY work orders as completed; and

(d)       submitted manually entered invoice details matching the NTE value so that the invoice could be submitted to the defendant.[34]

[34]Transcript at T168.4–24, T169.6–15, T172.25–31.

DUMMY10562

1. The defendant created Work Order DUMMY10562 on 1 November 2019.

1. It was created automatically by the Corrigo system as part of a series of recurring monthly work orders for the work performed by the plaintiff under the Contract. The initial NTE was set at $98,660.63.[35]

   [35]Exhibit to Affidavit of RG Timmermans sworn 14 September 2020 at 1955–7 of the Court Book.

1. On 5 November 2019, the plaintiff requested the NTE be increased and that the amount should be calculated in accordance with the ‘Qantas rates’ which I understand to mean the rates the plaintiff understood were applicable under the Contract.

1. On 2 December 2019, the plaintiff again requested that the NTE be increased ‘to match attached invoice QAN013 as per contract $108,474.12’.[36]

   [36]Ibid 1955–6.

1. On 2 December 2019, at 4:15pm, the plaintiff manually entered in DUMMY10562 invoice details for the sum of $98,660.63. At the same time the plaintiff also uploaded to DUMMY10562, the following PDF documents: [37]

   [37]Ibid.

(a)        QAN013;

(b)       QAN014;

(c)        QAN016;

(d)       QAN017; and

(e)        QAN018.

1. QAN013 is a tax invoice dated 15 November 2019 in the sum of $108,474.12.[38] It responds to DUMMY100562 and is for services performed in Canberra, Ayers Rock, Darwin, Melbourne and Adelaide. The sum claimed is equal to the increased NTE requested by the plaintiff in advance of the invoice being issued.

   [38]Exhibit (1) to Affidavit of RG Timmermans sworn 7 August 2020 at 706 of the Court Book.

1. Each of the other documents are:

(a)        marked ‘tax invoice’;

(b)       claim unpaid amounts in relation to numerous invoices previously entered into Corrigo; and

(c)        unrelated to DUMMY10562.

1. QAN014 relates to works performed at Sydney airport and claims a total sum of $1,113,805.59.[39]

   [39]Ibid 754.

1. QAN016 relates to works performed at Brisbane airport and claims a total of $233,906.59.[40]

   [40]Ibid 775.

1. QAN018 relates to works performed at Darwin airport and claims a total of $9,290.89.[41]

   [41]Ibid 787.

1. QAN017 relates to works performed at Perth airport and claims a total of $278,756.87.[42]

   [42]Ibid 780.

1. The upload of these claim documents was the first time the plaintiff had used the Corrigo system to upload documents of this type, that is, unpaid invoice reconciliations.

1. Mr Aalam didn’t see a quick response from the defendant to those documents and reported that to Mr Cachia, who sat next to his desk, in around mid-December 2019.[43]

   [43]Transcript at T183.29–T184.5.

DUMMY1000600 and the Payment Claim

1. The defendant created work order, DUMMY1000600, on 1 December 2019.

1. It was created automatically by the Corrigo system as part of a series of recurring monthly work orders for the work performed by the plaintiff under the Contract.[44]

   [44]Agreed Statement of Facts at 2318 [19] of the Court Book.

1. The initial NTE for DUMMY1000600 was automatically set for the sum of $98,660.63. That NTE value was changed by the defendant on 10 December 2019 to $3,447.13.[45] 

   [45]Ibid [20].

1. DUMMY1000600 was for maintenance work under the Contract. By the time DUMMY1000600 was created, the defendant had removed from the scope of its work under the Contract the works at Melbourne and Sydney airports.[46]

   [46]Ibid [21].

1. On 16 January 2020, at 5:19pm, the plaintiff made a request in Corrigo, in relation to DUMMY1000600, for an increase to the NTE from $3,447.13 to $3,790.01 by stating ‘please increase NTE to match attached invoice QAN 023 as per contract $3,790.01’.[47]

   [47]Ibid [22].

1. On 16 January 2020, at 5:20pm, the plaintiff manually entered into Corrigo, in relation to DUMMY1000600, invoice details for the sum of $3,447.13. At the same time the plaintiff also uploaded to Corrigo, in relation to DUMMY1000600, the following PDF documents:[48]

   [48]Ibid [23].

(a)        QAN020 (the Payment Claim);

(b)       QAN022;

(c)        QAN021; and

(d)       QAN023.

1. QAN023 is a tax invoice dated 15 December 2019 in the sum of $3,790.01.[49] It responds to DUMMY1000600 and is for services performed in Canberra, Ayers Rock, Darwin and Adelaide. The sum claimed is equal to the increased NTE requested by the plaintiff in advance of the invoice being issued. Like QAN013 it was a PDF invoice automatically generated by the plaintiff’s accounting system, MYOB.[50]

   [49]Exhibit (1) to Affidavit of RG Timmermans sworn 7 August 2020 at 727 of the Court Book.

   [50]Transcript at T136.15–7, T142.19–T143.1.

1. The plaintiff entered the sum of $3,447.13 into Corrigo because, as noted, it is not possible for a sum to be entered that exceeds the NTE.

1. QAN020 is the Payment Claim the subject of this proceeding.[51] It is marked ‘Tax Invoice’ and is endorsed with: ‘This is a payment claim made under the Building and Construction Industry Security Payment Act 2002 (Vic).’ It does not respond to DUMMY1000600. It is a claim for a total of $616,517.64 comprising:[52]

(a)        amounts outstanding for works performed at Melbourne Airport for the months December 2018 to November 2109 (inclusive); and

(b)       unpaid amounts under work orders MELDTB013700, MELDTB013591 and MELDTB013848 for works at Melbourne airport, which have since been paid by the defendant.

[51]Exhibit (1) to Affidavit of RG Timmermans sworn 7 August 2020 at 690 of the Court Book.

[52]Agreed Statement of Facts at 2319 [28] of the Court Book.

1. The balance remaining unpaid under the Payment Claim is $471,449.86 (inclusive of GST).[53] That sum represents the credit applied by the defendant against the plaintiff by reason of the Rate Dispute.[54]

   [53]Ibid [29].

   [54]Affidavit of RG Timmermans sworn 7 August 2020 at 659 [44] of the Court Book.

1. The works claimed under the Payment Claim are unrelated to work order DUMMY1000600. The work orders referenced in the invoices referred to in the Payment Claim were:

(a)        DUMMY10156 (for invoice QAN002);

(b)       DUMMY10196 (for invoice QAN003);

(c)        DUMMY10233 (for invoice QAN004);

(d)       DUMMY10267 (for invoice QAN005);

(e)        DUMMY10310 (for invoice QAN006);

(f)        DUMMY10335 (for invoice QAN007);

(g)       DUMMY10369 (for invoice QAN008);

(h)       DUMMY10407 (for invoice QAN009);

(i)         DUMMY10446 (for invoice QAN010);

(j)         DUMMY10483 (for invoice QAN011);

(k)       DUMMY10524 (for invoice QAN012);

(l)         MLEDTB013700 (for invoice QM325);

(m)      MELDTB013591 (for invoice QM324); and

(n)       MELDTB013848 (for invoice QM327).

1. Other documents attached to DUMMY1000600 with the Payment Claim were:

(a)        QAN021 which was marked ‘Tax Invoice’ and endorsed with ‘This is a payment claim made under the Building and Construction Industry Security Payment Act 2009 (ACT).’[55] It does not respond to DUMMY1000600. It is a claim for a total of $5,126.65 comprising amounts outstanding for works performed at Canberra Airport that had been previously invoiced;

(b)       QAN022 which was marked ‘Tax Invoice’ and endorsed with ‘This is a payment claim made under the Building and Construction Industry Security Payment Act 2009 (SA).’[56] It does not respond to DUMMY1000600. It is a claim for a total of $6,968.47 comprising amounts outstanding for works performed at Adelaide Airport that had been previously invoiced.

[55]Exhibit (1) to Affidavit of RG Timmermans sworn 7 August 2020 at 710 of the Court Book.

[56]Ibid 728. 

1. The Payment Claim (QAN020), QAN021 and QAN022 were not automatically generated. Unlike the invoice responding to the work order (QAN023), they were prepared by Mr Cachia.[57]

   [57]Transcript at T105.19–29.

1. QAN020 is the first document uploaded by the plaintiff to a work order in Corrigo that contains the endorsement that it was made under the SOP Act.[58]

   [58]Agreed Statement of Facts at 2318–9 [25] of the Court Book.

1. Mr Cachia was cross examined about his understanding of a payment claim. His evidence was inconsistent. He was initially reluctant to concede his understanding of a payment claim under the SOP Act.[59] 

   [59]Transcript at T103.28–T104.11.

1. A short time later he confirmed that:

(a)        he had prepared the Payment Claim;

(b)       had a basic understanding of what a payment claim was;

(c) added the SOP Act endorsement to the bottom of it; and

(d)       prior to 16 January 2020 when the Payment Claim was uploaded to Corrigo, he took advice from external lawyers about the importance of that endorsement.[60]

[60]Transcript at T106.31–T107.5.

1. Both Mr Aalam and Mr Cachia were cross examined about whether or not it would have been appropriate to request an increase to the NTE for the DUMMY work orders to which invoices QAN 014, 016, 017, 018, the Payment Claim (020), 021 and 022 were attached so that it matched the value of those invoices. Mr Cachia explained that he did not do this because it would operate to duplicate the NTE requests that had previously been made in relation to the invoices the subject of those claims.[61]

   [61]Transcript at T113.3–18.

1. As soon as the Payment Claim had been uploaded as an attachment to DUMMY1000600, it was available to the defendant to access, download and read.

1. No one at the defendant opened and read the Payment Claim until 11 February 2020.[62]

   [62]Affidavit of RG Timmermans sworn 7 August 2020 at 659 [45]–[47] of the Court Book.

1. On 10 February 2020, at about 3:54pm, Mr Cachia, the plaintiff’s Commercial Manager, emailed Mr Fadli of the defendant a letter of demand.[63] By that letter of demand, Mr Cachia informed Mr Fadli, amongst other things:

   [63]Exhibit (1) to Affidavit of RG Timmermans sworn 7 August 2020 at 748–9 of the Court Book.

(a)        on 2 December 2019 and 16 January 2020, the plaintiff had issued payment claims in each of the States and Territories pursuant to the applicable security of payment legislation for the collective sum of $1,976,324.94 (including GST);

(b)       as the defendant had failed to issue any payment schedules within the time required under the applicable legislation and failed to pay the entire amount claimed, the defendant had become liable to pay the outstanding amount in the sum of $1,292,364.69; and

(c)        if the defendant failed to comply with the plaintiff’s demands for payment, the plaintiff would take steps necessary to protect its interests including, applying for summary judgment to recover the debt.

1. On 18 February 2020, the defendant sent a letter to the plaintiff in response to the letter of demand.[64] It is this letter that the defendant relies on as a payment schedule (the Alleged Payment Schedule).

   [64]Ibid 1111–2.

Issue 1:  Is the Contract a construction contract? 

The issue to be determined

1. The SOP Act applies to construction contracts.[65]

   [65]SOP Act s 7.

1. The courts have found that the existence of a construction contract between a claimant and respondent is a ‘basic and essential requirement’ to be met as a precondition to a valid adjudicator’s determination.[66] 

   [66]Fifty Property Investments Pty Ltd v O’Mara [2006] NSWSC 428, [17] (Brereton J); Olbourne v Excell Building Corp Pty Ltd [2009] NSWSC 349, [19]–[21] (Rein J); Brodyn Pty Ltd (t/as Time Cost & Quality) v Davenport (2004) 61 NSWLR 421, 441 [53(1)] (Hodgson JA).

1. If the contract is not a construction contract, then a contractor will have no entitlement to make a payment claim under the SOP Act.

1. ‘Construction contract’ is defined to mean ‘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’.[67]

   [67]SOP Act s 4.

1. ‘Construction work’ is defined in s 5 of the SOP Act. The specific issue that arises for determination is whether the plaintiff’s scope of work under the Contract is ‘construction work’ within the meaning of that section.

Defendant’s submissions

1. The defendant submits, in summary that:

(a)        the subject of the plaintiff’s maintenance services are not buildings,[68] industrial plant,[69] or structures[70] but rather machines or parts of machines;[71] and

(b) the purpose of the SOP Act is directed to the building and construction industry. The maintenance of the machines the subject of the plaintiff’s services has nothing to do with the building and construction industry.[72]

[68]Defendant’s Submissions dated 7 August 2020 at 2219 [7] of the Court Book.

[69]Ibid 2220 [14].

[70]Ibid 2219–20 [8]–[11].

[71]Ibid 2219 [8].

[72]Ibid 2220–1 [16].

Plaintiff’s submissions

1. In response, the plaintiff submits that:

(a) the definition of ‘construction work’ for the purpose of the SOP Act is broadly defined;[73]

[73]Plaintiff’s Submissions dated 24 August 2020 at 2244 [22] of the Court Book.

(b) the Contract between the plaintiff and the defendant is for the maintenance of buildings and structures under s 5(1)(a);[74]

[74]Ibid 2245 [25].

(c) that work will fall within the definition of s 5(1)(a) if it is maintenance of a part of a building. If it were otherwise, specialised trades that form part of the construction industry would not fall within the SOP Act unless contracted to maintain the whole of a building;[75]

[75]Ibid 2246 [33].

(d)       all of the maintenance work performed by the plaintiff was on things, parts or works affixed to the building and thereby creating ‘the rather complex building that is the airport terminal’ and so was maintenance of the building;[76]

[76]Ibid 2246–7 [33]–[34].

(e) further and alternatively, services performed by the plaintiff is the maintenance of works under s 5(1)(b) on the basis that:

(i)         some of the items maintained by the plaintiff under the contract are industrial plant, specifically:

(A)       those parts of the works which are internal to the building and not public facing such as the internal conveyor system, motors and aircraft nose guidance systems being plant necessary for the airline or air transport industry;[77]

[77]Ibid 2248 [41].

(B)       check-in kiosks and the late baggage conveyors or chutes;[78] and

(f)        to succeed on this ground, the defendant must establish that no part of the work carried out by the plaintiff involved construction work as defined.[79] This is not disputed by the defendant.

[78]Ibid.

[79]Ibid 2245 [29].

Applicable Principles

1. The plaintiff primarily relies on s 5(1)(a) of the SOP Act to establish that the Contract is a construction contract. That section provides that ‘construction work’ means ‘the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures forming, or to form, part of land (whether permanent or not).’[80]

   [80]SOP Act s 5(1)(a).

1. The plaintiff submits that its scope of work includes the maintenance of buildings or structures forming, or to form, part of land and therefore constitutes construction work.

1. ‘Buildings’ and ‘structures’ are not defined in the SOP Act.

1. The SOP Act should be interpreted so that it is capable of being applied in a practical way by parties to a construction contract or a proposed construction contract.[81]

   [81]J & D Rigging Pty Ltd v Agripower Australia Ltd (2013) 1 Qd R 562, 568–9 [20], 569–70 [25] (Applegarth J) (J & D Rigging).

1. Moreover, the SOP Act ‘should not be construed so as to produce haphazard and apparently unintended consequences’.[82]

   [82]Ibid 575 [52].

1. In Aquatec-Maxcon Pty Ltd v Barwon Region Water Authority, Byrne J considered the definition of ‘building’ stating:

In its ordinary sense, the word refers to structures which are enclosed and which accommodate or are used by people. In the Macquarie Dictionary it is defined as “things which are built or constructed”. The definition in the Oxford English Dictionary is in these terms: “that which is built; a structure, edifice: now a structure of the nature of a house built where it is to stand”. The statutory enlargement in s. 3 extends the meaning to include a “structure”. Nearly 40 years ago in O’Brien v Shire of Rosedale, Gillard J identified three characteristics which are associated with a structure in popular usage. First, it is the product of the assembly of a number of component parts to produce something which is different from those parts and which is of practical value. Second, this thing is commonly attached to the land on which it is erected, but this is not a necessary characteristic. Third, it has a degree of permanence.[83]

[83][2006] VSC 117, [346] (Byrne J).

1. The case of Australian Gaslight Co v Valuer-General, considered the definition of structure, albeit in the context of the interpretation of the Valuation of Land Act 1916 (NSW).[84] A structure was defined as a ‘substantial erection necessarily constructed in situ and forming and intended to form a permanent feature of the land, having substantially the characteristics of a building or of a permanent framework affixed to the land and not being a machine.’[85]

   [84](1940) 14 LGR (NSW) 126 (Australian Gaslight).

   [85]Ibid 140.

1. Machines alone are unlikely to be deemed structures,[86] and instead should be considered separate units.[87] Having said this, machines may form ‘part of’ a structure if removal would cause structural damage to the premises.[88]

   [86]Ibid.

   [87]Ibid 154–5 (Davidson J).

   [88]Ibid, 153.

1. Whether a building or structure forms or is to form part of the land calls for a practical assessment of the physical relationship between the thing and the relevant land and without the importation of common law rules about fixtures. As stated by Applegarth J in J & D Rigging:

It is not immediately apparent why, in the context of a statute which relates to interim payments for the carrying out of construction work, and not real property, rules about the ownership of fixtures are imported.

…

If the ordinary meaning is used, then the relevant inquiry is about the physical relationship between the thing and the land. That inquiry may involve some of the considerations that apply in the context of the law of real property, including the degree of annexation and the functions served by that annexation.

…

… the greater the degree of annexation the stronger the case for concluding that a structure forms part of the land according to the ordinary meaning of the word “form” when used in conjunction with the ordinary meaning of land or the extended definition of “land” in the Acts Interpretation Act.[89]

[89]J & D Rigging (2013) 1 Qd R 562, 567 [13], 569 [24], 572 [37] (Applegarth J).

1. In determining the degree of annexation, it is useful to consider the following factors:

(a)        whether the removal would cause damage to the land or buildings to which the item is attached;

(b)       the mode and structure of annexation;

(c)        whether removal would destroy or damage the attached item of property; and

(d)       whether the cost of renewal would exceed the value of the attached property.[90]

[90]National Australia Bank Ltd v Blacker (2000) 104 FCR 288, 295–6 [14]-[16] (Conti J) citied in J & D Rigging (2013) 1 Qd R 562, 567 [15] (Applegarth J).

Consideration

1. The scope of work that the plaintiff has undertaken to perform is described in cl 3.1 of the Contract and includes providing:

Comprehensive Labour Maintenance Services as outlined in the Scope of Works (Schedule 2A) for all assets at Australian leased and owned facilities as listed in Annexure 1.[91]

[91]Exhibit (1–Pt 1) to Affidavit of JJ Cachia sworn 1 June 2020 at 58, 60–1, 81 of the Court Book.

1. ‘Comprehensive Maintenance Labour Services’ is defined to mean ‘all maintenance, operating consumables and labour necessary to ensure the equipment, plant and assets, described in this document, operate and function to their optimum level of intended service and performance … [but] excludes the cost of parts and material and asset replacement. These costs will be borne directly by Qantas.’[92]

   [92]Ibid 80.

1. I share the defendant’s concern about the characterisation of work comprising maintenance of machines as construction work. Had the plaintiff’s scope been limited to the maintenance of some of the smaller assets (eg the contemporary check-in kiosks[93] or the automatic bag drops[94]) close scrutiny of that scope of work and the relationship between that asset and the land would be required to determine whether the definition of construction work had been satisfied or whether these assets might properly be called appliances which are not part of the building. However, having regard to the sheer size, extent of attachment and function of some of the larger assets, specifically the aerobridges,[95] baggage conveyor systems[96] and baggage return carousels,[97] it is plain to me that the Contract was a contract under which the defendant had undertaken to carry out construction work comprising the maintenance of a building or structure.

   [93]Exhibit (7A) to Affidavit of JJ Cachia sworn 1 June 2020 at 613–4 of the Court Book.

   [94]Exhibit (7B) to Affidavit of JJ Cachia sworn 1 June 2020 at 615–6 of the Court Book.

   [95]Exhibits (11A, 11B, 12) to Affidavit of JJ Cachia sworn 1 June 2020 at 626–34 of the Court Book.

   [96]Exhibit (8) to Affidavit of JJ Cachia sworn 1 June 2020 at 617–9 of the Court Book.

   [97]Exhibit (10) to Affidavit of JJ Cachia sworn 1 June 2020 at 623–5 of the Court Book.

1. The plaintiff’s case can be made good by reference to the aerobridges alone. This is the asset that connects the terminal building to aircraft allowing passengers to board and disembark aircraft. It is a large piece of kit, integral to the function of the terminal building.

1. Evidence is given of two types of aerobridges, which are the subject of the Contract:

(a)        the static aerobridges and extend-retract aerobridges. Both are permanently fixed to the exterior walls of the airport terminal and excavated through into the airport terminal;

(b)       both types are, in the ordinary sense of the word, structures. They:

(i)         are a product of the assembly of a number of component parts which is different from those parts and which is of practical value;

(ii)       have the characteristics of a building being enclosed and used by people; and

(iii)      are permanently attached to the terminal building.[98]

[98]Affidavit of JJ Cachia sworn 24 August 2020 at 1826 [14]-[15] of the Court Book.

1. Similarly the baggage conveyor systems and baggage return carousels are significant structures, permanently attached to the terminal building.

Conclusion

1. I am satisfied that the plaintiff has undertaken to carry out construction work under the Contract and it is therefore a construction contract for the purpose of the SOP Act.

Issue 2:  When did service of the Payment Claim occur:  16 January or 11 February 2020?

Submissions

1. The defendant says that the service of the Payment Claim was not effective until 11 February 2020.[99] The defendant submits, in summary:

   [99]Defendant’s Closing Submissions dated 5 October 2020 at [32].

(a) for the purpose of the SOP Act, service requires:[100]

[100]Defendant’s Submissions dated 7 August 2020 at 2221 [18] of the Court Book; Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd (2010) 30 VR 141, 160–1 [88]–[93] (Vickery J) (Metacorp); Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd (2009) 26 VR 112, 140 [124]–[126] (Vickery J) (Hickory).

(i)         delivery into the possession of the intended recipient; and

(ii)       receipt, in this case comprising the observation and opening of the Payment Claim by the defendant;

(b)       these requirements are subject to any effective statutory or contractual modifications that deem service to be anything other than receipt;[101]

[101]Defendant’s Submissions dated 7 August 2020 at 2221 [20] of the Court Book.

(c) section 50(1)(e) of the SOP Act permits service in the manner specified in the Contract;[102]

[102]Defendant’s Submissions dated 7 August 2020 at 2222 [21] of the Court Book; Metacorp (2010) 30 VR 141, 173 [162]; Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd (No 2) [2015] VSC 500, [116] (Vickery J).

(d)       sub-clauses 34.4 and 34.5 of the Contract prescribe the manner of service and deem when it is to have occurred.[103] Specifically, sub clause 34.5 operates to deem the Payment Claim received when it came to the attention of the defendant;

[103]Defendant’s Submissions dated 7 August 2020 at 2222 [22] of the Court Book; Defendant’s Reply Submissions dated 14 September 2020 at 2287 [9] of the Court Book.

(e)        clause 13 of the Contract is not relevant to the service of the Payment Claim:[104]

[104]Defendant’s Reply Submissions dated 14 September 2020 at 2287 [11]–[12] of the Court Book.

(i)         it mandates delivery of invoices to an addressee that was not relevant following novation;

(ii)       it was not varied in accordance with the requirements of the Contract concerning variation;

(iii)      it is therefore inoperative and invalid and must be severed;

(iv)      in any event, the Payment Claim is not an invoice within the meaning of the Contract but a notice[105] or document[106] to which clauses 34.4 and 34.5 apply;

[105]Ibid 2289–90 [23].

[106]Ibid 2290 [25].

(f)        if cl 13 is valid and has been varied (which is denied), cl 34.5 remains applicable to deem when a Payment Claim delivered in accordance with cl 13 has been received;

(g)       section 13A of the Electronic Transactions Act 2000 (Vic) (ETA) is not applicable to determine when service has been achieved:

(i)         it does not apply where there is agreement as to these matters;[107]

[107]Ibid 2291 [30].

(ii)       it only applies where there is an electronic address;[108]

[108]Ibid 2291 [31].

(iii)      Corrigo is not an electronic address but a cloud-based application for which there are no prescriptions for the timing of receipt;[109]

[109]Ibid 2292 [35(a)].

(iv)      alternatively, the electronic address designated by the defendant was the relevant work order to which the invoice must relate and QAN020 was not uploaded to any work order to which it related;[110] and

(h)       service was only effective on 11 February 2020 when the Payment Claim came to the attention of the defendant.[111]

[110]Ibid 2291 [35(b)].

[111]Defendant’s Submissions dated 7 August 2020 at 2222 [25] of the Court Book; Affidavit of RG Timmermans sworn 7 August 2020 at 657–8 [33]–[36], 659 [45]–[47] of the Court Book; Defendant’s Closing Submissions dated 5 October 2020 at [32].

1. The plaintiff submits, in summary:

(a)        clauses 34.4 and 34.5 of the Contract are not applicable to the service of the Payment Claim.[112] They speak only to the notification process between the parties under the Contract;

[112]Plaintiff’s Submissions dated 24 August 2020 at 2253 [57]–[58], 2255 [69] of the Court Book.

(b)       billing and invoicing is dealt with under cl 13 of the Contract;[113]

[113]Ibid 2253 [60].

(c)        in June 2017, the defendant requested the plaintiff commence invoicing through Corrigo which varied the Contract as to the proposed billing address for the purpose of cl 13.4;[114]

[114]Ibid 2254 [66].

(d)       there being no agreement between the parties as to when electronic service of invoices (as opposed to notices) is deemed to be received under the contract, s 13A of the ETA regulates the position;[115]

[115]Ibid 2255–6 [70].

(e)        Corrigo is an electronic address under the ETA having been designated by the defendant by email on 7 June 2017;[116]

(f)        the Payment Claim became capable of being retrieved by the defendant on Corrigo at the time it was uploaded;[117] and

(g)       accordingly the Payment Claim was served on 16 January 2020.[118]

[116]Ibid 2256 [71].

[117]Ibid 2256 [72].

[118]Ibid 2257–8 [78].

Applicable principles

Service under the SOP Act

1. The SOP Act allows for the rapid determination of progress claims under construction contracts.

1. The means by which the SOP Act seeks to ensure that a person entitled to a progress payment receives that progress payment is by granting a statutory entitlement to it in accordance with the procedure provided for.[119] The starting point for that procedure is the service of a payment claim.[120]

   [119]Metacorp (2010) 30 VR 141, 149 [18] (Vickery J).

   [120]SOP Act s 14(1); Brookhollow Pty Ltd v R & R Consultants Pty Ltd [2006] NSWSC 1, [41] (Palmer J).

1. Service of a payment claim on a respondent has serious consequences. First, it triggers the respondent’s obligation to serve a payment schedule within a limited time frame.[121] If the respondent fails to do so, then:

   [121]SOP Act s 15(4).

(a)        the respondent will be become liable to pay the claimed amount;[122]

(b)       the claimant will be entitled to recover the unpaid portion of the claimed amount as a debt due;[123]

(c)        the claimant may serve a notice of intention to suspend works under the construction contract.[124]

[122]Ibid.

[123]SOP Act s 16(2)(a)(i).

[124]SOP Act s 16(2)(b)(a).

1. However, a natural inclination to require precise compliance with requirements of the SOP Act must be balanced with the legislative intention of the SOP Act. As stated by Vickery J in Hickory:

The submissions made by Hickory to which I have referred, smack of excessive technicality. The legislature did not intend, in my view, that precise compliance with all of the more detailed requirements of the Act is essential to the existence of a valid determination. To approach the matter in the manner suggested by Hickory would not accord with the legislative intention disclosed in the Act that adjudication determinations should be made and given effect to with minimum delay and therefore should be approached with minimal technicality and court involvement.

True it is that the Act places the claimant in a privileged position in the sense that it acquires rights that go beyond its contractual rights. However, it is artificial to elevate this consideration to the point where it operates to insist on strict compliance with every procedural requirement with the attendant risk of the process being declared a nullity in the event of non-compliance, as the price for the privilege. In my view, it is not of sufficient weight to displace the legislative intention which I have described.[125]

[125](2009) 26 VR 112, 145–6 [162]–[163] (Vickery J).

1. Section 50 of the SOP Act describes how notices or documents under the Act may be served.

1. Section 50 is facultative and not mandatory. That is, the methods of service provided for are in addition to and do not limit or exclude the common law or the provisions of any other applicable legislation with respect of the service of notices.[126] 

   [126]Metacorp (2010) 30 VR 141, 173 [162] (Vickery J).

1. Service of a payment claim by uploading it to a cloud based application such as Corrigo is not expressly provided for in s 50.

Service at Common Law

1. As stated by the Lord Chancellor in Hope v Hope:

The object of all service is of course only to give notice to the party to whom it is made so that he may be made aware of and may be able to resist that which is sought against him; and when that has been substantially done, so that the court may feel perfectly confident that service has reached him, everything has been done as is required.[127]

[127](1854) 43 ER 534, 539–40; Metacorp (2010) 30 VR 141, 159 [84] (Vickery J).

1. It is therefore unsurprising that authorities considering the requirements of service are more concerned with the timing of receipt of notice rather than the mode of delivery. For example:

(a)        Vickery J stated in Metacorp:

Service of a payment claim under s 14(1) of the Act may therefore include delivery into the possession of the intended recipient, by whatever means, which may be taken to be effected upon receipt of the document by that person.

…

Mr Wood had to take a number of steps before it could be said that he had received the payment claim. Mr Wood would have to observe on his computer the notification of the email sent from his email server; he would then have to gain access to the email on his computer; and then open its attachment which comprised Payment Claim 15. Until at least these steps had been taken by Mr Wood, it could not be said that the email and its attachment had been “received” at the place of business of the Superintendent and the email remained merely accessible to the intended recipient.[128]

[128](2010) 30 VR 141, 160–1 [88]–[93] (Vickery J).

(b)       Young J stated in Howship Holdings Pty Ltd v Leslie:

The question I am asked is whether service through the document exchange is good service. The short answer to that question is no.

… without special contractual provisions service through a document exchange is not personal service. However, that is not the ultimate question. The ultimate question is whether the document was received by the addressee within the 21 days. If it was, then in my view no matter how it got to the addressee the addressee has been served within 21 days.

…

The ordinary meaning of “service” is personal service, and personal service merely means that the document in question must come to the notice of the person for whom it is intended. The means by which that person obtains the document are usually immaterial. This is clear in cases that have been considered good law over the centuries, including Hope v Hope (1854) 4 De GM & G 328 ; [1843–60] All ER Rep 441 ; 43 ER 534 , 539-40; R v Heron (1884) 10 VLR 314 , 315 ; Pino v Prosser & Hassan [1967] VR 835 , 838 . Some of those cases were complicated by the requirement in the former statutes that a person serving initiating process had to endorse the initiating process, but the principle is clear from them.

If this were not so, one would get the absurd situation referred to by McInerney J in Pino’s case at VR 837, that the conclusion would be one which is:

“… remarkable to the point of seeming absurdity, in that the defendant who, on his own affidavit admits that he received the writ … should be held not to have been served.”[129]

(c)     Hodgson JA stated in Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd:

In the first place, in my opinion it is clear that if a document has actually been received and come to the attention of a person to be served or provided with the document, or of a person with authority to deal with such a document on behalf of a person or corporation to be served or provided with the document, it does not matter whether or not any facultative regime has been complied with: see Howship Holdings Pty Ltd v Leslie (1996) 41 NSWLR 542; Mohamed v Farah [2004] NSWSC 482 at [42]–[44]. In such a case, there has been service, provision and receipt.[130]

[129](1996) 41 NSWLR 542, 544–5 (Young J).

[130][2006] NSWCA 259, [58] (Hodgson JA).

Consideration

1. Having regard to the authorities addressing service identified above and the emphasis placed by them on receipt by the addressee rather than the mode of delivery to the addressee, I find that Corrigo was an available means of electronic delivery of the Payment Claim to the defendant. So much is accepted by the defendant who concedes that service of the Payment Claim was effective albeit some 26 days after it was uploaded to Corrigo.

1. The critical issue in dispute between the parties is not how the Payment Claim was delivered but when it was received by the plaintiff.

1. However, before I determine that issue, it must be said that uploading the Payment Claim to Corrigo was, in this case, a very poor method of delivery, for the following reasons:

(a)        Corrigo did not provide for the upload of a document independent of a work order. As the Payment Claim was not associated with any one particular work order, Corrigo was not the obvious choice for delivery of it;

(b)       the plaintiff had not employed Corrigo for the delivery of a payment claim under any security of payment legislation until it did so, unannounced, on 2 December 2019 and 16 January 2020;[131]

(c)        it could have been emailed. The plaintiff had previously emailed the defendant in relation to unpaid invoices;[132] and

(d)       the plaintiff was already seeking to recover payment for work that had been withheld as a result of the Rate Dispute.[133] The parties were in discussions about that dispute and it is likely that the Payment Claim could have been delivered or raised by Mr Cachia, as a participant in those discussions, in that context.

[131]See dates for payment claims specified in Exhibit (1) to Affidavit of RG Timmermans sworn 7 August 2020 at 748–9 of the Court Book.

[132]Transcript T108.4–7.

[133]See Affidavit of RG Timmermans sworn 7 August 2020 at 659 [44] of the Court Book; Affidavit of H Fadli sworn 7 August 2020 at 1389 [38] of the Court Book; Affidavit of JJ Cachia sworn 1 June 2020 at 42 [16] of the Court Book and Exhibit (2) at 337–40 of the Court Book.

1. The choice to employ Corrigo as a mode of service was made worse by the following acts or omissions of the plaintiff which operated to obscure the delivery of the Payment Claim:

(a)        the plaintiff attached the Payment Claim seeking the sum of $616,517.64 to an invoice in the sum of only $3,447.13;

(b)       the plaintiff entered that invoice into Corrigo in response to work order DUMMY1000600 and the Payment Claim was unrelated to that work order;

(c)        the plaintiff could have drawn attention to the Payment Claim by including a note in the invoice details entered into Corrigo as it had done so on other occasions,[134] but it did not;

(d)       the plaintiff could have drawn attention to the payment claim through the Corrigo messaging system, Cruchat, but did not do so; and

(e)        the plaintiff could have named the Payment Claim in a manner that was more descriptive of what was contained therein as it was accustomed to doing for other documents, instead it chose to name it simply as QAN020.[135]

[134]Transcript T134.2–6.

[135]See, eg, Affidavit of A Aalam sworn 24 August 2020 at 1760 [14] of the Court Book and Exhibit (3) at 1789–90 of the Court Book and the names of attachments uploaded to invoice QM322.

1. Mr Cachia directed Mr Aalam to deliver the Payment Claim by Corrigo. He sought to justify this approach by stating, on numerous occasions during the course of evidence, words to the effect that the only way for the plaintiff to get paid was for invoices to be uploaded to Corrigo.[136] That evidence was not persuasive for the following reasons:

   [136]See, eg, Transcript T104.3–7, T107.23–5, T110.2–5, T116.25–8.

(a)        the Payment Claim was not of the same character as the invoices required by the defendant to be entered into Corrigo for payment. Each such invoice responded to a particular work order and was required by the defendant to be created in Corrigo. The Payment Claim did not respond to any particular work order but instead claimed the outstanding balance of a number of invoices each of which had already been entered into Corrigo for payment;

(b)       Mr Cachia understood the difference between entering invoice details into Corrigo for payment and chasing up unpaid invoices;[137] and

(c)        Mr Cachia understood the significance of the Payment Claim at the time he directed Mr Aalam to upload it to Corrigo. Mr Cachia first denied he knew what the term ‘payment claim’ meant when he prepared the Payment Claim[138] before admitting that he had a basic understanding of what it meant.[139] He then gave evidence that he had received legal advice about the importance of the following words before adding them to the Payment Claim: ‘This is a payment claim made under the Building and Construction Industry Security of Payment Act 2002 (Vic).’[140]     

[137]Transcript T110.9–11.

[138]Transcript T103.28–T104.1.

[139]Transcript T106.5–8.

[140]Transcript T106.31–T107.5.

1. Having made these findings, I now turn to the critical issue in dispute, that is, the time at which the defendant received the Payment Claim.

The timing of service at Common Law

1. Having regard to the purpose of service as described in Hope v Hope,[141] I find the requirement that the Payment Claim be served was not satisfied by the Payment Claim being uploaded to Corrigo on 16 January 2020 even though it may have been available for the defendant to retrieve from that date.

   [141](1854) 43 ER 534, 539–40.

1. What is required for there to be service is that the defendant receive the Payment Claim. 

1. A number of steps were required before it could be said that the defendant had received the Payment Claim. Specifically the defendant would have had to:

(a)        log on to Corrigo;

(b)       open a work order unrelated to the Payment Claim; and

(c)        open the relevant attachment. The plaintiff urged me to see the failure to open attachments as a failing on the part of the defendant. I reject that submission.  Attachments were not required for payment to be attended to. The amount entered into Corrigo by the plaintiff matched the NTE. While there had been a request to increase the NTE to $3,790.01, there was nothing to indicate the attachment of an unrelated claim in the sum of $616,517,64.

1. The attachment was not opened by the defendant until 11 February 2020. This is not unreasonable in the circumstances described in paragraphs 115 and 116 above, but a consequence of the manner in which the plaintiff chose to deliver the Payment Claim.   

1. The question which now arises is whether the common law position is displaced by any manner of service specified in the Contract or the provision of any other applicable legislation.

Is timing of service of the Payment Claim governed by the Contract?

1. Clause 34 of the Contract addresses the service of notices between the parties. The defendant submits it applies to the service of the Payment Claim. Relevantly it provides:

34       General

…

34.4 Notices:  A party notifying or giving notice under this Agreement must give notice:

(a)       in writing;

(b) addressed to the address of the other party specified in this Agreement or other address as notified in writing by the other party from time to time; and

(c) by either:

(i) leaving at or sending by prepaid post or by fax to that address; or

(ii) in the case of notices, other than those notifying of default or termination under this Agreement, sending by electronic form such as email to that address.

34.5 Service of Notice: A notice given in accordance with clause 34.4 is deemed received:

(a)       if left at the recipient’s address on the date of delivery;

(b)       if sent by prepaid post, 5 days after the date of posting;

(c)       if sent by fax, when the sender’s facsimile system generates a message confirming successful transmission pf the total number of pages of the notice; and

(d)       if sent in electronic form, when the electronic communications comes to the attention of the recipient.[142]

[142]Exhibit (1–Pt 1) to Affidavit of JJ Cachia sworn 1 June 2020 at 75 of the Court Book.

1. ‘Notice’ is not defined for the purpose of the Contract. However, it is a word capable of encompassing a payment claim.[143]

   [143]Taylor Projects Group Pty Ltd v Brick Dept Pty Ltd [2005] NSWSC 439, [16] (Einstein J).

1. Clause 34.5 deems when a notice is received. It does not do so in a vacuum. It only operates to deem receipt of a notice given in accordance with cl 34.4, a mandatory provision. 

1. The Payment Claim was not given in accordance with cl 34.4 and therefore cl 34.5 does not apply.

1. To be given in electronic form in accordance with cl 34.4 it is necessary that the notice be sent to ‘the address of the other party specified in this Agreement or other address as notified in writing by the other party from time to time’.[144] Corrigo was not an address for notices identified in the Contract or notified by either party. This was not in dispute between the parties.[145] If I am wrong about this, which is a matter I consider further below, then cl 34.5 will operate to deem the Payment Claim received when it came to the attention of the defendant, that is, 11 February 2020. 

   [144]Exhibit (1–Pt 1) to Affidavit of JJ Cachia sworn 1 June 2020 at 75 of the Court Book.

   [145]Plaintiff Closing Submissions dated 7 October 2020 at [50]; Defendant’s Closing Submissions dated 5 October 2020 at [16]; the defendant submits that it was Mr Timmerman’s email that was notified as the address for service of notices.

1. The plaintiff says that the delivery of invoices is governed by cl 13.4 of the Contract. 

1. Clause 13.4 states:

13.      PRICE AND PAYMENT

13.4     Invoicing:  The Supplier must send the invoices to the billing address specified in Schedule 7. Each invoice must clearly identify:

(a)       the Deliverables to which the invoice relates;

(b) the manner of calculating the amount payable by Qantas under the invoice;

(c) this Agreement and relevant Qantas contact person, and is addressed to the billing address specified in Schedule 7; and

(d)any other information that may reasonably be required by Qantas from time to time.[146]

[146]Exhibit (1–Pt 1) to Affidavit of JJ Cachia sworn 1 June 2020 at 64 of the Court Book.

1. As cl 13 refers to Qantas and not the defendant, it was not readily applicable following novation of the Contract from Qantas to the defendant. The plaintiff says cl 13 was varied by the defendant’s request that invoicing be managed by Corrigo.

1. The parties are in dispute about:

(a)        whether cl 13 was varied; and

(b)       whether the Payment Claim is an invoice for the purpose of cl 13.

1. However, whether varied or not, cl 13 does not address the timing of receipt of a document delivered via Corrigo. That is not disputed.

Is timing of service of the Payment Claim governed by the ETA?

1. It is the plaintiff’s position that in the absence of a contractual provision to the contrary, the ETA puts in place a statutory form of the postal acceptance rule. It further submits that by operation of the ETA, the time of receipt of the Payment Claim is deemed to be when the electronic communication is capable of being retrieved by the addressee, not when a recipient is actually in possession of the information.[147] The plaintiff relies specifically on s 13A(1)(a).

   [147]Plaintiff’s Closing Submissions dated 7 October 2020 at [5(b)], [68]; Plaintiff’s Submissions dated 24 August 2020 at 2255–6 [70] of the Court Book.

1. Section 13A of the ETA states:

13A     Time of receipt

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

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

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

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

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

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

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

1. I reject the plaintiff’s submission and find that s 13A(1)(a) has no application to the service of the Payment Claim by Corrigo.

1. Section 13A(1)(a) will only apply to deem receipt where the electronic communication is capable of being retrieved at ‘an electronic address designated by the addressee’. The issues to be determined therefore are:

(a)        Is Corrigo an electronic address?

(b)       If so, was it designated by the defendant?

Is Corrigo an electronic address?

1. Both parties agree that Corrigo was an information system as defined in the ETA being ‘a system for generating, sending, receiving, storing or otherwise processing electronic communications’.[148] Consistent with that definition, there was evidence that Corrigo is capable of generating work orders, generating invoices, receiving documents and storing documents uploaded to it, sending email notifications to users and facilitating communication between users in relation to particular work orders.[149]

   [148]ETA s 3(1).

   [149]See, eg, Agreed Statement of Facts at 2317 [9]–[18] of the Court Book; Transcript T131.19–134.17.

1. In relation to the Payment Claim, it was uploaded to Corrigo as an attachment to an invoice. It was stored and available for the defendant to retrieve from Corrigo, from the time it was uploaded. An email was sent by Corrigo to the defendant, notifying of a change to the work order, but the Payment Claim did not leave Corrigo.

1. The ETA draws a distinction between an ‘electronic address’ and an ‘information system’. However, while ‘information system’ is defined, ‘electronic address’ is not.

1. For the following reasons, I find that Corrigo is an electronic address for the purpose of the ETA:

(a)        it is apparent from the words used in s 13A that the electronic address is a location to which an electronic communication can be delivered and from which it can be retrieved;

(b)       it is also apparent from the words used in s 13 (as clarified by the note to s 13(1)) that the ETA recognises electronic communications may be exchanged (and therefore delivered and received) through an information system without the communication leaving the information system. This therefore suggests that there may be some overlap between what is an electronic address and what is an information system for the purpose of the ETA; and

(c)        there is no dispute that Corrigo is a location to which communications can be directed and from which they can be retrieved. Indeed it was used for the purpose of delivering and receiving information in electronic form about work orders and invoices.

Was Corrigo an address designated by the defendant?

1. I reject that Corrigo was an electronic address designated by the defendant for the purpose of payment claims.

1. The manner in which an electronic address may be designated is not described in the ETA.

1. In June 2017, the defendant designated Corrigo, for the purpose of raising and delivering an invoice in response to a work order.

1. However, that direction by its terms was limited to the entry of invoice details against completed work orders.[150] Consistent with that limited designation, Corrigo did not permit:

(a)        the uploading of documents unrelated to a specific work order; and

(b)       the entry of an invoice for a sum exceeding the NTE applicable to the specific work order.

[150]Exhibit (17) to Affidavit of JJ Cachia sworn 24 August 2020 at 1836 of the Court Book.

1. I therefore find that Corrigo is not a designated address for the receipt of the Payment Claim or any other payment claim. As a consequence, s 13A(1)(a) of the ETA is not applicable. However, as I have found that Corrigo is an electronic address, s 13A(1)(b) of the ETA will apply to deem the time of receipt of the Payment Claim by the defendant to the time when the defendant became aware that the Payment Claim had been sent to Corrigo. As stated above, I accept that the defendant did not become aware that the Payment Claim had been uploaded to Corrigo until 11 February 2020.

1. If I am wrong and Corrigo is a designated address for the receipt of the Payment Claim then the ETA would not apply in any event. Section 13A is subject to any agreement between the parties and, if Corrigo is such a designated address, then cl 34.5 of the Contract would apply.

1. In conclusion, the Payment Claim was served on 11 February 2020, which is the date when it came to the attention of the defendant.

Issue 3:  Is the defendant’s letter dated 18 February 2020 a valid payment schedule under the Act?

1. On 10 February 2020, the plaintiff sent a letter of demand to the defendant.[151]

   [151]Exhibit (1) to Affidavit of RG Timmermans sworn 7 August 2020 at 748–9 of the Court Book.

1. On 18 February 2020, the defendant responded to the letter of demand.[152] The defendant submits that this response constitutes a valid payment schedule under the SOP Act. I agree.

   [152]Exhibit (1) to Affidavit of RG Timmermans sworn 7 August 2020 at 1111–2 of the Court Book

Applicable Principles

1. Section 15 of the SOP Act prescribes the elements for a valid payment schedule. A payment schedule:

(a)        must identify the payment claim to which it relates;[153]

(b)       must indicate the amount of the payment (if any) that the respondent proposes to make (Scheduled Amount);[154] and

(c)        must identify any amount of the claim that the respondent alleges is an excluded amount.[155]

[153]SOP Act s 15(2)(a).

[154]SOP Act s 15(2)(b).

[155]SOP Act s 15(2)(c).

1. The third element is not in contention.

1. Further, in the event that the Scheduled Amount is less than the claimed amount, the payment schedule must indicate why the Scheduled Amount is less and give reasons for withholding payment.[156]

   [156]SOP Act s 15(3).

1. The following principles are relevant in determining whether the Alleged Payment Schedule complies with the requirements under s 15 of the SOP Act:

(a)        the fundamental purpose of a payment schedule is for the respondent to sufficiently inform the claimant of the ‘metes and bounds’ of the dispute to enable it to decide whether to engage in adjudication;[157]

[157]Vannella Pty Ltd atf Capital Family Trust v TFM Epping Land Pty Ltd [2019] NSWSC 1379, [143] (Henry J); Style Timber Floor Pty Ltd v Krivosudsky (2019) 100 NSWLR 133, 142 [45] (Leeming JA) (Style); Façade Designs International Pty Ltd v Yuanda Vic Pty Ltd [2020] VSC 570, [38(b)] (Riordan J) (Façade Designs).

(b)       a particular degree of precision and particularity is required to appraise the claimant of the case they must meet at adjudication,[158] which is arguably a higher threshold than that required in a payment claim;[159]

[158]Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248, [28]–[29] (Finkelstein J) (Protectavale); Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, [60], [69]–[70], [76] (Palmer J) (Multiplex); Façade Treatment Engineering Pty Ltd (in liq) v Brookfield Multiplex Constructions Pty Ltd [2016] VSCA 247, [255]–[256] (Warren CJ, Tate and McLeish JJA) (Façade Treatment).

[159]Façade Designs [2020] VSC 570, [38(b)] (Riordan J).

(c)        at the same time, a practical approach is to be adopted when undertaking this analysis.[160] This extends to accepting some lack of formality in the putative payment schedule and not casting an unduly critical eye over its form.[161] In the words of Palmer J in Multiplex, it is ‘not … required to be as precise or as particularised as a pleading in the Supreme Court’;[162] and

(d)       the payment schedule is to be examined objectively,[163] though the interpretation of the document is to be informed by the context, background and prior dealings between the parties;[164]

(e)        whether or not a document is a payment schedule must be something which is capable of ascertainment readily, and, at least ordinarily, without the assistance of a lawyer.[165]

[160]Style (2019) 100 NSWLR 133, 153 [74] (Leeming JA).

[161]Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA) Pty Ltd [2007] QSC 333, [21] (Chesterman J) (Minimax); Protectavale [2008] FCA 1248, [11] (Finkelstein J).

[162]Multiplex [2003] NSWSC 1140, [76] (Palmer J).

[163]Protectavale [2008] FCA 1248, [29] (Finkelstein J); Façade Treatment [2016] VSCA 247, [262] (Warren CJ, Tate and McLeish JJA).

[164]Façade Treatment [2016] VSCA 247, [256] (Warren CJ, Tate and McLeish JJA); Leighton v Arogen [2012] NSWSC 1323, [69]–[70] (McDougall J).

[165]Style (2019) 100 NSWLR 133, 142 [44] (Leeming JA); see also Façade Designs [2020] VSC 570, [36(e)] (Riordan J).

Does the letter identify the relevant payment claim?

1. Section 15(2)(a) of the SOP Act states that a payment schedule ‘must identify the payment claim to which it relates’. According to Mossop AsJ in Denham Constructions Pty Ltd v Islamic Republic of Pakistan (No 2), this requires the payment schedule to be directed to the payment claim.[166] Further, where the payment schedule does not refer directly to the payment claim but to other documents, there must be a coincidence between the document referred to and the contents of the claim.[167]

   [166](2016) 311 FLR 187, 195 [34] (Mossop JA) (Denham).

   [167]Denham (2016) 311 FLR 187, 195 [34] (Mossop JA).

1. As noted by the plaintiff, the Alleged Payment Schedule does not identify the Payment Claim, or in fact any other payment claim specified in the letter of demand.[168] However, having regard to the principles outlined in paragraph 155 above, I do not consider this fatal to the validity of the Alleged Payment Schedule.

   [168]Plaintiff’s Submissions dated 24 August 2020 at 2260 [87] of the Court Book.

1. The Alleged Payment Schedule:

(a)        is expressly directed to the letter of demand and refers generally to the payment claims issued by the plaintiff to the defendant in accordance with the security of payment legislation in each relevant jurisdiction. The subject of the letter of demand is the five different alleged payment claims specifically identified as: QAN014 (NSW), QAN020 (Vic), QAN016 (Qld), QAN022 (SA) and QAN021 (ACT);[169] 

(b)       refers specifically to the sum claimed of $1,292,364.69.[170] That is the total sum claimed in the letter of demand in relation to the five alleged payment claims; and

(c)        takes issue with all five payment claims listed in the letter of demand.

[169]Exhibit (1) to Affidavit of RG Timmermans sworn 7 August 2020 at 748 of the Court Book.

[170]Ibid 1111.

1. The reference to the letter of demand, the payment claims contained within it, as well as the figure of $1,292,364.69 make it sufficiently clear that all five payment claims are disputed.

1. Therefore, the requirement under s 15(2)(a) of the SOP Act is satisfied.

Does the letter indicate a scheduled amount?

1. Section 15(2)(b) of the SOP Act states that a payment schedule ‘must indicate the amount of the payment (if any) that the respondent proposes to make’.

1. The Alleged Payment Schedule does not expressly identify the amount of payment that the defendant proposed to pay in relation to the Payment Claim. Again, this is not fatal to the validity of the Alleged Payment Schedule. Relevantly, the Victorian, Queensland and New South Wales Supreme Courts have all held that a ‘nil’ amount can be inferred from a payment schedule by way of expressing an intention not to accept the invoice and by not paying the claimant any amount.[171]

   [171]Façade Treatment [2016] VSCA 247, [14], [255] (Warren CJ, Tate and McLeish JJA); Minimax [2007] QSC 333, [23]–[24] (Chesterman J); Barclay Mowlem v Tesrol Walsh Bay [2004] NSWSC 1232, [9], [15] (McDougall J).

1. It is evident from reading the Alleged Payment Schedule that the defendant did not accept the validity of the claim and did not intend to pay the plaintiff. I am satisfied that the payment schedule thereby indicated the amount of the payment it proposed to make, specifically, nil.

1. The plaintiff submits that the defendant made part payment of amounts in response to the Payment Claim both prior to and following the Alleged Payment Schedule and that therefore a nil amount cannot be inferred.[172]  

   [172]Plaintiff’s Closing Submissions dated 7 October 2020 at [82]–[84]; T & T Building Pty Ltd v GMW Group Pty Ltd [2010] QSC 211, [42] (Martin J); Minimax [2007] QSC 333, [27], [29] (Chesterman J).

1. It was admitted by the defendant that the following invoices were paid by it:[173]

   [173]Exhibit to Affidavit of RG Timmermans sworn 24 September 2020 at 2217 of the Court Book.

(a)        QM325 — $13,619.57 on or about 17 January 2020;[174]

[174]Exhibit (6) to Affidavit of JJ Cachia sworn 1 June 2020 at 597–8 of the Court Book; Defendant’s Closing Submissions dated 5 October 2020 at [21].

(b)       QM324 — $31,866.31 on or about 17 January 2020;[175]

(c)        QM327 — $4,369.20 on or about 3 February 2020;[176] and

(d)       QAN013 — $95,213.51 on or about 18 March 2020.[177]

[175]Ibid.

[176]Exhibit (6) to Affidavit of JJ Cachia sworn 1 June 2020 at 599–600 of the Court Book; Defendant’s Closing Submissions dated 5 October 2020 at [21].

[177]Affidavit of JJ Cachia sworn 1 June 2020 at 52 of the Court Book.

1. Those invoices are expressly included in the Payment Claim.

1. The sum of the three payments made before the Alleged Payment Schedule was served is $49,855.08. 

1. Having regard to the letter of demand, specifically the table setting out the calculation of the sum claimed, it is apparent that in relation to the Payment Claim, payments in the sum of $49,855.08 have been accounted for and therefore do not form part of the total claimed of $1,292,364.69. Therefore, contrary to the plaintiff’s submissions:

(a)        the sum claimed in the Payment Claim has accounted for the payments made; and

(b)       there is no inconsistency, as at the date of the Alleged Payment Schedule, between the defendant’s denial of the sum claimed and the three amounts paid prior to that date. 

1. The payment of QAN013 was made after the Payment Schedule was sent to the plaintiff and has no bearing on whether, at the time it was served, it satisfied the requirements of s 15 of the SOP Act. To find otherwise would create an absurd situation where a respondent to a Payment Claim who had initially denied it could not then have a change of heart and make a part payment under it in fear that the payment schedule would be invalidated.

Does the letter give sufficient reasons for withholding payment?

1. Section 15(3) of the SOP Act states that ‘[i]f the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and … the respondent’s reasons for withholding payment’. As stated above at paragraph 155, the purpose of a payment schedule is to ‘identify, at an early stage, the parameters of a dispute about payment for the quick and informal adjudication process for which the Act provides’.[178]

   [178]Minimax [2007] QSC 333, [27] (Chesterman J); see also Façade Treatment [2016] VSCA 247, [259] (Warren CJ, Tate and McLeish JJA).

1. The Alleged Payment Schedule provides two reasons for withholding payment:

(a) the inapplicability of the SOP Act; and

(b)       the substantive dispute between the parties (ie the Rate Dispute).[179]

[179]In addition to summarising the basis of the dispute, the defendant attached the 2017 Durban Email; Exhibit (1) to Affidavit of RG Timmermans sworn 7 August 2020 at 1111–2 of the Court Book.

1. The first of those reasons may be regarded as a procedural hurdle rather than a concern about the substance of the payment claim and therefore may not satisfy the requirement of s 15(3) of the SOP Act.[180] However, for the following reasons, I am satisfied that by the inclusion of the second reason, the Alleged Payment Schedule satisfies the requirements of s 15(3).

   [180]Façade Treatment [2016] VSCA 247, [260] (Warren CJ, Tate and McLeish JJA).

1. Firstly, as identified in paragraph 158, it is plain that the Alleged Payment Schedule responds to each of the payment claims and, in the absence of words to the contrary, it is reasonable to infer that the substantive reason for withholding payment was applicable to all five payment claims listed in the letter of demand.

1. Secondly, the substantive reason is described with some particularity. It is clear that the scope of the dispute related to whether an agreement had been reached as to a variation to the pricing regime. Further, an email chain was provided as an annexure relating to the pricing negotiations the subject of the substantive dispute. On the spectrum provided in the case law, the reasons provided in the Alleged Payment Schedule have a sufficient degree of specificity and detail. In any event, it is well established that ‘absolute precision is not required, and cannot be expected given the reasonably short period within which a respondent is required to prepare a payment schedule (being at most 10 days)’.[181]

   [181]Façade Treatment [2016] VSCA 247, [256] (Warren CJ, Tate and McLeish JJA); SOP Act s 15(4)(b).

1. Thirdly, contrary to the submission of the plaintiff,[182] it is irrelevant that the plaintiff believed there was no dispute about the applicable pricing agreement. Section 15(3) of the SOP Act requires a respondent to indicate their reasons for withholding payment. It is not required that the reasons provided by the defendant prevail over the plaintiff in fact.

   [182]Plaintiff’s Submissions dated 24 August 2020 at 2264–5 [99]–[101] of the Court Book.

1. The Alleged Payment Schedule was sufficient to comply with s 15(3) of the SOP Act.

Issue 4:  If the Payment Claim was served on 16 January 2020, does the conduct of the plaintiff prevent it from obtaining judgment?

1. In very short summary, the defendant submitted that if service of the Payment Claim was completed on 16 January 2020, the plaintiff’s conduct of delivering the Payment Claim by the Corrigo system in the circumstances described in paragraphs 115 and 116 above ought to prevent it from obtaining judgment. 

1. The defendant sought relief on 2 bases:

(a)        under the Australian Consumer Law, and specifically:

(i)     an order under s232(1) restraining the plaintiff from moving to obtain judgment in the proceeding (alternatively restraining the plaintiff from enforcing any judgment it obtains in this proceeding) because an essential element of the cause of action that would entitle the plaintiff to judgment (ie the defendant’s failure to produce a payment schedule) was created by misleading conduct on the part of the plaintiff (specifically its conduct in relation to the service of the payment claim);

(i)         a compensatory order under s237(1) and (2)(b) to prevent the defendant from suffering loss by reason of the misleading or deceptive conduct of the plaintiff;

(b)       in equity, specifically the defendant asserts that the plaintiff is estopped from relying on the service of the Payment Claim on 16 January 2020.

1. In light of my findings that service of the Payment Claim occurred on 11 February 2020, it is not necessary for me to determine this issue.

Conclusion

1. The Contract is a construction contract for the purpose of the SOP Act.

1. Service of the Payment Claim was not effective until the Payment Claim was identified and read by the defendant on 11 February 2020.

1. The defendant’s letter dated 18 February 2020 was delivered within 10 business days of the service of the Payment Claim and satisfied the requirements of s 15 of the SOP Act.

Orders

1. I shall order that the plaintiff’s Originating Motion be dismissed.

1. The plaintiff pay the defendant’s costs of and incidental to this proceeding, to be taxed on a standard basis if not agreed.