City Builders Pty Ltd v Lachlan John Bannear & Stacey Bannear - [2021] SADC 138

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Interlocutory Application)
CITY BUILDERS PTY LTD v LACHLAN JOHN BANNEAR & STACEY BANNEAR
[2021] SADC 138
Reasons for Decision of his Honour Judge O'Sullivan
8 December 2021
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - OTHER MATTERS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - ENDING PROCEEDINGS EARLY - SUMMARY DISPOSAL - GENERALLY
On 13 October 2017, the applicant and respondents entered into a domestic building work Contract for the construction of a two-storey house.
On 4 April 2019, the respondents, by their solicitors, terminated the Contract on the basis that the applicant had not obtained a policy of Building Indemnity Insurance, had not proceeded with due diligence and that there were a number of defects in the Works.
On 27 August 2021, the applicant's solicitors sent a letter to the respondents' solicitors requesting payment of $134,002.86 as per an invoice enclosed with a letter. The letter was marked "without prejudice save as to costs".
The applicant relied on the letter and enclosed invoice as a Notice of Demand for the purposes of s 10(2)(a) of the Worker's Liens Act 1893. The applicant registered a Lien on the title of the property on 7 September 2021. The property was subsequently sold and the applicants paid the sum of $134,002.86 into Land Services SA for removal of the Lien.
By interlocutory application filed 29 October 2021, the applicants sought declarations that:
1. The Worker's Lien is invalid on the basis of non-compliance with s 10(2)(a) of the Worker's Liens Act 1893;
2. That the sum of $134,002.86 deposited with Land Services SA be refunded to the respondents; and
3. In the alternative, summary judgment against the applicant with respect to those paragraphs of the Statement of Claim seeking enforcement of the Lien.
Held:
1. The letter from the applicant's solicitors, although marked "without prejudice save as to costs", is not, in truth, without prejudice correspondence and the letter from the applicant's solicitors dated 27 August 2021 enclosing the applicant's invoice is a Notice of Demand for the purposes of s 10(2)(a) of the Worker's Liens Act 1893;
2. The Notice of Demand demands payment part of of the Contract price;
3. The claim for profit contained in the invoice is, in the particular circumstances of this case, not properly the subject of a Worker's Lien;
4. The respondents are entitled to a refund of the sum of $6,7081.76 for the improperly claimed profit;
5. The respondents interlocutory application is otherwise dismissed.
Worker's Liens Act 1893 (SA); Building Work Contractors Act 1995 (SA); Workmen's Liens Act 1998 (NT) (NT), referred to.
Miller's Lime Limited v Royal Agricultural & Horticultural Society of South Australia & Ors [1936] SASR 306, 314; Marriott Industries Pty Ltd v Mercantile Credits Ltd [1991] 160 LSJS 288; Longreef Pty Ltd v Leighton Contractors (South Australia) Pty Ltd [1991] SASC 160 LSJS 270, 275-276; Excelsior Land Holdings Pty Ltd & Ors v Alan Sheppard Constructions Pty Ltd [2012] SASCFC 84; Davies v Nyland (1975) 10 SASR 76, 89-91 ; Ambir Pty Ltd v Paspalis Hotel Investments Pty Ltd [2003] NTSC 22; Equuscorp Pty Ltd v Haxton [2012] 246 CLR 498, 513 [23], considered.

CITY BUILDERS PTY LTD v LACHLAN JOHN BANNEAR & STACEY BANNEAR
[2021] SADC 138
Introduction

This is the first and second respondents' interlocutory application filed 29 October 2021[1] by which they seek a declaration that:
(i)a worker's lien ("Lien") for an alleged debt the subject of this action is invalid on the basis of non-compliance with s10(2)(a) of the Worker's Liens Act 1893 ("Act"); and
(ii) that the sum of $134,002.86 deposited with Land Services SA by the respondents to have the Lien removed from the title of the property in question be refunded to the respondents.
(iii)in the alternative the respondents seek summary judgment against the applicant with respect to paragraphs 15, 16 and 17.3 (sic 16.3) of the statement of claim and/or that paragraphs 12-16 and 17.3 (sic 16.3) be struck out.
[1] FDN3
Documents relied upon
The respondents read and rely on:
1.The affidavit of Stacey Bannear sworn 29 October 2021 and filed on 4 November 2021 ("First Bannear Affidavit");[2]
2.The affidavit of Stacey Bannear sworn and filed 21 November 2021 ("Second Bannear Affidavit"),[3] save for paragraphs 3 and 4 which contain submissions and which I did not receive; and
3.Their written submissions.
[2] FDN4
[3] FDN9
The applicant reads and relies on:
1.The affidavit of Ameen Farah sworn and filed 18 November 2021 ("Farah Affidavit");[4] and
2.Its written submissions.
[4] FDN8
Background
The respondents entered into a domestic building work contract ("Contract") with the applicant on 13 October 2017 for the construction of a two-storey house with iron roof ("Works") on land at Stonyfell, South Australia ("Property").
The Contract is a Master Builders Association of South Australia Inc ("MBA") plain English contract.
On 4 April 2019, the respondents, by their solicitors, wrote to the applicant enclosing a Notice of Termination of the Contract.[5] Paragraph 9 of that Notice asserts a failure by the applicant, as builder, to obtain Building Indemnity Insurance and alleges the applicant is in breach of the Contract by commencing work under the Contract without having a policy of Building Indemnity Insurance in place. The respondents allege that Building Indemnity Insurance is required pursuant to the Building Work Contractors Act Regulations 2011 made pursuant to the Building Work Contractors Act 1995.
[5] First Bannear Affidavit; Exhibit SB-2
I can find nothing in the regulations current as at the time the Contract was entered into that requires a policy of Building Indemnity Insurance. However. there is no doubt that under the Building Work Contractors Act 1995, a building work contractor must not perform building work of the type required by the Contract unless a policy of insurance that complies with s 35 of the Building Works Contractors Act is in force in relation to that building work.[6] The type of insurance required is known as Building Indemnity Insurance.
[6] Building Work Contractors Act 1995; s 34
Building Indemnity Insurance, amongst other things, provides a benefit to each person who is, or may become, entitled to the benefit of a statutory warranty in respect of building work, against the risk of being unable to enforce or recover under the statutory warranty by reason of insolvency, death or disappearance of the building work contractor.[7]
[7] Ibid s 35
At exhibit SB-6 to the First Bannear Affidavit, Ms Bannear deposes to the investigations she had conducted as to whether the applicant had in place a policy of Builders Indemnity Insurance. She deposes to information from QBE Insurance informing her that although "a job" was raised for Builders Indemnity Insurance for the applicant and the Property, the request for Builders Indemnity Insurance was declined by QBE.[8] Ms Bannear exhibits copies of the relevant correspondence.[9]
[8] Ibid at Exhibit SB-6
[9] Ibid at Exhibit SB-3-SB-6
An alternative ground for termination is contained in paragraph 11 of the Notice of Termination, in which the respondents give notice to the applicant pursuant to clause 18.1.2 of the Contract that it is in breach by having failed to produce a certificate of currency for a Building Indemnity Insurance policy for the period immediately before the commencement of the Works by the applicant.
In the further alternative, in paragraph 12 of the Notice of Termination, the respondents give notice to the applicant that it has breached clause 18.1.2 of the Contract in that it has failed to carry out the Works with due diligence or in a competent manner, particulars of which are set out in the Notice of Termination.
The alleged defects in the Works are contained in building inspection reports from Mr Martin Stuart-Skinner dated 30 March 2019, Contour Building Group dated 26 April 2019 and a report by Detailed Building Inspections dated 31 March 2019.[10]
[10] First Bannear Affidavit; Exhibit SB-2
Ms Bannear also deposes in the First Bannear Affidavit as to alleged defective building work performed by the applicant.[11]
[11] Ibid at [8]
On 6 September 2021, some two years after the Notice of Termination was served, the applicant lodged the Lien over the Property.[12] None of the affidavits filed in this matter exhibit the Lien.
[12] Ibid at Exhibit SB-7
Mr Farah deposes that he is the sole director and company secretary of the applicant and has authority to swear the affidavit on its behalf.[13] He deposes further that in or about February 2018, a representative of the applicant, Ms Omanovic applied through the applicant's insurance broker for Building Indemnity Insurance to be issued in relation to the Works. On or about 14 February 2018, a quote was issued to the applicant and on 20 February 2018, a payment was made by the applicant through its insurance broker for Building Indemnity Insurance.[14]
[13] Farah Affidavit at [1]
[14] Ibid at [6]-[8]
Mr Farah deposes that the applicant commenced the Works without being informed a certificate of Building Indemnity Insurance had not been issued and it did not come to his attention until in or about August 2018 that it had not been issued. He deposes that he told the respondents that he had not yet received a copy of the certificate of currency but would look into it.[15]
[15] Ibid at [9]-[10]
He deposes further that he was unaware that the applicant had received a refund of fees paid to QBE in early March 2018. He continues that upon becoming aware that a refund had been received the respondents agreed that the applicant would continue with the Works on the condition that it resolved any issue with QBE and obtained a certificate as evidence of a policy of Building Indemnity Insurance prior to Practical Completion.[16]
[16] Ibid at [11]
In paragraph 12 of his affidavit, Mr Farah deposes that he understood that the respondents had waived any requirement for the applicant to have Building Indemnity Insurance at the time. He then deposes that in the alternative he understood that a subsequent agreement was reached whereby the applicant was allowed additional time to obtain a certificate of currency for Building Indemnity Insurance.[17]
[17] Ibid at [10]-[12]
I note immediately that there are three points about what Mr Farah deposes in paragraph 12 of his affidavit:
1.The first is that the requirement for Building Indemnity Insurance is a requirement imposed by s 34 of the Building Work Contractors Act 1995. In my view that requirement cannot be waived;
2.Second, the question of waiver is a legal question and not one upon which Mr Farah is able to depose; and
3.Third, his alternative position that he understood that a subsequent agreement was reached whereby the applicant was allowed additional time to obtain a certificate of Building Indemnity Insurance is contrary to his previously deposed understanding that the respondents had waived any requirement for the applicant to have Building Indemnity Insurance.
At paragraphs 14-18 of the Farah Affidavit, Mr Farah deals with the alleged defects.
As to the Lien, Mr Farah deposes at paragraphs 19-26 that the respondents unlawfully terminated the Contract. Again, that is a question of law to which Mr Farah is unable to depose and I give it no weight. Further, I note that the Statement of Claim[18] does not allege the respondent's termination was unlawful. Still further, during argument, Mr Graham, who appeared for the applicant, conceded the applicant does not contend the Notice of Termination was unlawful.
[18] FDN1
Mr Farah continues that the applicant had incurred costs during the construction of the Works but had not issued an invoice for those costs because:
1.There were informal attempts to resolve the matter through his solicitors;
2.The respondents refused to engage in any meaningful negotiations or make a payment for any sum above the monies already paid, which at that stage totalled $166,940.94;
3.He was running his business and looking to start a new business venture; and
4.He didn't have the time to commence proceedings against the respondents and chose to focus his time and energy on other projects.[19]
[19] Farah Affidavit [19]
On 27 August 2021, on Mr Farah's instructions, the applicant's solicitors, Commercial and Legal (Legal Services) Pty Ltd ("Commercial and Legal") sent a letter to the respondent's solicitors, Johnson Lawyers seeking payment of $134,002.86 as per an invoice enclosed with the letter.[20] The letter was marked "without prejudice save as to costs".
[20] Ibid at [22]
The applicant submits the letter from Commercial and Legal, exhibit AF-4 is a Notice of Demand for the purpose of s 10(2)(a) of the Act which was signed by the applicant's solicitor who had authority to issue the Notice of Demand on behalf of the applicant.
On 7 September 2021, the Lien was registered on the title for the Property. A Statement of Claim was filed in these proceedings on 15 September 2019, however Mr Farah deposes that it has not yet been served pending attempts to resolve the matter informally with the respondents.[21] Mr Farah is clearly wrong when he refers to a Statement of Claim being filed on 15 September 2019 and it is apparent that he is referring to 15 September 2021.
[21] Ibid at [26]
The Statement of Claim[22] pleads, in summary, that the Contract price was $508,950, the Contract was terminated by the respondents on 4 April 2019, the applicant carried out a portion of the Works in accordance with the Contract and there is a balance outstanding for work carried out pursuant to the Contract in the sum of $134,002.86 (including GST).
[22] FDN1
In a letter from the respondents' solicitors to Commercial and Legal dated 30 September 2021, the respondents put the applicant on notice that they consider the lien to be invalid.
The Property has been sold. As I understand the position, the respondents deposited the sum of $134,002.86 with Land Services SA to effect the removal of the Lien from the title.
Respondents' submissions
The respondents identify the two issues arising in this matter as follows:
1.Can a letter from solicitors marked "without prejudice save as to costs" accompanied by an unsigned invoice and sent by email amount to a notice of demand in writing for the purposes of s 10 of the Workers Liens Act; and
2. Does the Notice of Demand demand payment of the Contract price.
During the course of submissions the respondents raised further issues.
Issue 1- can a letter from solicitors marked "without prejudice save as to costs" accompanied by an unsigned invoice and sent by email amount to a notice of demand in writing for the purposes of s 10 of the Worker's Liens Act.
Section 10
Section 10 of the Act is in the following terms:
10—Lien to be registered
(1) A lien under this Act with regard to land shall be available only if registered before the expiration of twenty-eight days after the wages or contract price in respect of which such lien has arisen shall for the purposes of this section have become due.
(2) Any wages or contract price shall for the purposes of this section be deemed to have become due—
(a) if unpaid for seven days after the same (being payable) shall have been demanded by notice in writing, signed by the person claiming the same and given to the person liable to pay the same, or posted in a registered letter addressed to him at his usual or last known place of abode in South Australia:
(b) if either before or after the same shall have become payable, the person liable to pay the same shall have called a meeting of his creditors, or committed an act of bankruptcy, or executed a deed of assignment within the meaning of the Bankruptcy Act 1924 of the Commonwealth, or shall have taken or attempted to take the benefit of any law relating to bankrupts or insolvent debtors, or shall have suffered his goods to be taken in execution or seized under legal process or distress for rent.
(3) A lien shall be registered by the person claiming the same lodging in the General Registry Office a notice executed by the person in a form approved by the Registrar-General, containing the prescribed information and accompanied by the prescribed fee.
(4) A lien may be registered after the wages or contract price have become payable, although the seven days mentioned in subsection (2) shall not have commenced to run.
(5) Notices of lien under this Act shall state the court in which action will be brought to enforce the same, and any person to whom notice is given may deposit the amount claimed in such court to abide the event of such action, and thereupon the lien shall be deemed to cease.
The respondents submit that a Notice of Demand is a pre-requisite to registering a lien and that s 10 constitutes a complete code. They refer to Miller's Lime Limited v Royal Agricultural & Horticultural Society of South Australia & Ors[23] which was approved by the Full Court of the Supreme Court of South Australia in Marriott Industries Pty Ltd v Mercantile Credits Ltd.[24] In Marriott Industries, King CJ examined the provisions of the Act in some detail. His Honour observed:[25]
[23] [1936] SASR 306, 314
[24] [1991] 160 LSJS 288
[25] Ibid at p291- 293
It is no easy task to understand the various provisions of this Act and their relationship to one another. They have given rise to a variety of opinions in this Court and in the Supreme Court of the Northern Territory. I have read carefully the authorities which have been cited to us and have gained assistance from them. So great is the variety of judicial opinions, however, that I have been unable to gain any definitive guidance and have been forced back to the provisions of the Act itself and to the necessity of placing my own interpretation on them.
The obvious purpose of the Act is to confer protection on contractors, sub-contractors and workers who do work or supply materials for use on land. That purpose is accomplished by the creation of a statutory lien on the land and a statutory charge on moneys payable.
…
The contractor's lien is created by section 5 for "the contract price, so far as accrued due". The lien therefore arises when the contract price or part thereof has accrued due under the contract. That occurs, in my opinion, when work has been done or materials supplied and when, in addition, all conditions precedent to the contractor's entitlement to the moneys claimed have been satisfied. The Act in a number of provisions makes a distinction between "due" and "payable" and I think, therefore, that moneys may be regarded as accrued due if all the contractual requirements of entitlement have been complied with, although the date for payment has not yet arrived.
The difficult point in the case is the relationship of section 10 with section 5. It is plain from section 10 that the lien, although it has in some sense a prior existence, is not "available" unless it "shall for the purpose of this section have become due" and unless it is registered within 28 days of so becoming due.
…
In Pitt Limited and Others v. The Corporation of the Town of Glenelg and Another [1927] SASR 37; 1927 SASR 501 Richards J thought that section 10(1) did not affect the existence of the lien created by section 5 but that "the natural meaning of this sub-section seems to be that the step thereby prescribed is necessary in order to obtain any benefit from an existing right" (p.515). In Miller's Lime Limited v. Royal Agricultural and Horticultural Society of South Australia and Others [1936] SASR 57; 1936 SASR 306 Murray CJ, with whose view Angas Parsons J agreed, took the view that the acquisition of a lien required the occurrence of one or other of the events stipulated in subsection (2). In Albert Del Fabro Pty Ltd v. Wilckens and Burnside Pty Ltd (Receiver and Manager appointed) and Anor 1970 SASR 277 Bright J pointed out that "become due" under section 10 was a different concept from "accrued due" under section 5. He considered that, although the lien came into existence when the contract price or part thereof "accrued due", it was not available as a charge on the land unless it had "become due" pursuant to section 10.
…
Scrutiny of the section itself discloses that it is expressed in restrictive terms. That which otherwise exists is "available" only if the contract price "shall for the purposes of this section have become due" and there is registration within 28 days. Moreover, the natural construction of subsection (2) is as a definition of what is meant by "become due" in subsection (1). It seems to me, with all respect to those who hold contrary views, that to construe the section as "facilitative" is to strain if not ignore the language used.
It is to be noted that the contract price will "become due" by virtue of the notice procedure only if it is "payable". That implies that the price has already accrued due in the section 5 sense. As Napier J pointed out in Metropolitan Brick Company v. Hayward and Anor [1938] SASR 57; 1938 SASR 462 at 466, there is a sense in which money can be "due" although not yet "payable" but the converse cannot be true. To say that money is payable is to say that it must be paid, that is to say that it is due and the time for payment has arrived. To say that money is payable in the future is, as Napier J also pointed out, an elliptical way of saying that it is not yet payable but will or may become so in the future. The expression "being payable" in section 10(1)(a) therefore implies that the contract price or part thereof has accrued due in the section 5 sense, but that more is needed to make it "become due" within the meaning of section 10. It is quite inconsistent with the view that money which has "accrued due" has ipso facto "become due" for the purpose of section 10.
A lien may be registered pursuant to subsection (4) after the contract price has become payable, although the seven days mentioned in subsection (2) has not commenced to run, that is to say before the lien is "available". Until the seven day period expires, the lien as it is not available cannot be enforced, in my opinion, and does not operated as a security. Until it is available, it can only operate as a caveat pursuant to section 12.
…
If a lien is registered under section 10(4) before it becomes available, it is not capable of enforcement until the section 10(2)(a) notice has been given and the seven day period has expired or one of the events specified in section 10(2)(b) has occurred. I think that it is clear that the lien must be in an enforceable condition before legal proceedings for its enforcement are instituted.

In Longreef Pty Ltd v Leighton Contractors (South Australia) Pty Ltd,[26] King CJ said:
The notice under section 10(2)(a) cannot be given until the amount claimed is payable. An amount is payable only when it must be paid, that is to say when it is due under the contract and the time for payment has arrived. An amount which is not due at the date of the notice or is not payable until a future date is not payable at the date of the notice. To say that an amount is payable in the future is simply to say, elliptically, that it is not yet payable but will or might become so in the future; Metropolitan Brick Company v. Hayward and Another supra per Napier J at 466. It follows that the concept of becoming due for the purpose of section 10 is a different concept from that of accruing due under section 5; Albert Del Fabro Pty Ltd v. Wilckens and Burnside Pty Ltd (Receiver and Manager Appointed) and Arndale (Marion) Pty Ltd 1970 SASR 277 at 284. It also follows that a contract price or part thereof cannot "become due" under section 10 until it has first "accrued due" under section 5. I cannot subscribe to the view that a notice under section 10 can alter the contractual relations of the parties to the extent that a party becomes liable, by force of the notice, to pay an amount which he is not at the time liable to pay under the terms of the contract. There is nothing in the statutory provisions to suggest that so drastic an interference with contractual rights and liabilities was intended.
I apprehend the relationship of the sections under discussion and the scheme of the Act with respect to liens to be as follows.
It seems to me that a contractor's or sub-contractor's lien can only arise when the lienor's title to the debt has accrued under the terms of his contract[27] (section 5), although it may arise notwithstanding that the debt, having arisen, is payable in the future. The extent of the lien is limited by section 6 to the amount due and presently payable by the owner or occupier under the contract for the purpose of which the work was done or the materials supplied. In a situation in which a lien which has arisen because an amount has accrued due under the contract, but there is no amount presently payable by the owner or occupier, the lien is dormant until an amount becomes so payable.
Although a lien has arisen by reason of the contract price or part thereof having accrued due under the terms of the contract, it is not available, that is to say not capable of enforcement or valid as a security, until it has "become due" for the purposes of section 10. That will occur if one or other of the events enumerated in section 10(2)(b) has occurred, or if the price is unpaid for seven days after notice has been given under section 10(2)(a). That notice can only be given validly after the price is payable, that is to say after the entitlement has arisen under the contract, thereby bringing the lien into existence, and the time for payment has arrived. The lien, if it has acquired a valid existence by reason of the price having accrued due, may be registered pursuant to section 10(4) prior to the section 10(2)(a) notice, but the action to enforce it cannot be commenced until the lien is "available" under section 10(1).
It follows from what I have said that the appellant had a valid lien only if at the time of registration it was entitled to some part of the contract price under the terms of its contract with the respondent. If it was not so entitled, the giving of the purported section 10(2)(a) notice can not provide a foundation for the lien.
[26] [1991] SASC 160 LSJS 270, 275-276
[27] The reference to "his" is an historical artefact.
I accept the respondents' submissions that a Notice of Demand is a pre-requisite to enforcing a lien and that s 10 constitutes a complete code.
The applicant's solicitor's letter enclosing the applicant's invoice is dated 27 August 2021[28] and is in the following terms:
[28] Exhibit SB7
Without prejudice save as to costs
Dear Mr Bellman
26 Mingara Avenue, Stonyfell, SA
Your clients: Stacey Bannear and Lachlan Bannear
We confirm that we continue to act for City Builders Pty Ltd and refer to previous correspondence.
We understand you act for Mr and Mrs Bannear with respect to the property at 26 Mingara Avenue, Stonyfell SA. Should you no longer have instructions to act, please let us know.
Please find enclosed our client's final invoice for your client's attention.
We will issue a copy to your clients' email address pursuant to the building contract dated 13 October 2017, being [email protected]. Should you have updated contract details, we would be pleased if you could provide those to us.
We await your clients' prompt payment.
Should payment not be made, we will seek instructions to pursue the matter further.
Kind regards
Yours faithfully
Commercial and Legal
Genessa Dubbioso
The invoice is not signed by the applicant, however the covering letter which encloses the invoice has been signed by the applicant's solicitor. No point is taken about the invoice not being signed by the applicant. The respondent, quite properly with respect, accepted that the signed letter from the applicant's solicitors enclosing the invoice was sufficient to meet the requirements in s 10(2) of the Act that there be a Notice in writing signed by the person claiming the unpaid sum.[29]
[29] Excelsior Land Holdings Pty Ltd & Ors v Alan Sheppard Constructions Pty Ltd [2012] SASCFC 84
The respondents submit that a document that purports to be "without prejudice" is a document that is not intended by the author to be relied upon in legal proceedings, such that it cannot fulfill the criteria of satisfying the pre-requisite step of a notice of demand for the purposes of s 10. They submit that the letter indicates a positive intention, against a background of a dispute as to whether the respondents had a right to terminate the Contract and whether work was defective, that the applicant did not want to rely on the letter in proceedings except for the purposes of costs so that it cannot be used in the proceedings, other than for that limited purpose. So it is that the respondents submit that the letter and accompanying invoice cannot fulfill the requirements of s 10 as being a demand as required by s 10(2)(a) of the Act.
The respondents accept that whether a document is the subject of without prejudice privilege or not depends on the nature of the document itself. The respondents also concede that the letter does not contain an offer of settlement.
It is trite that the words "without prejudice" do not of themselves confer upon any document an immunity from production in court.[30] The purpose of the statement, "without prejudice save as to costs", is that the document and its contents are without prejudice to the determination of substantial issues between the parties but may be used for the purposes of deciding the incidence of costs.[31]
[30] Davies v Nyland (1975) 10 SASR 76, 89-91 per Wells J
[31] Cross on evidence [25360]
The fundamental question is whether or not the correspondence itself is, in reality, without prejudice. If it is not, then the addition of the words "save as to costs" is meaningless.
The letter from Commercial and Legal contains a statement of acting, a query as to whether or not Johnson Lawyers still act for the respondents, encloses the applicant's final invoice for the respondents' attention and requests payment. There is also a warning that should payment not be made, the applicant's solicitors would seek instructions from the applicant to pursue the matter further. When the letter is considered, it is quite clear to me that there is no material within the letter which is capable of attracting without prejudice privilege.
As such, I do not accept that the statement "without prejudice save as to costs" in these circumstances is such that the document cannot be a notice of demand for the purposes of s 10 of the Act and I conclude that the letter and accompanying invoice comprise a notice of demand for the purpose of s 10(2)(a) of the Act.
Issue 2: Is the lien for the contract price
The respondents refer to s 5 of the Act which provides:
5—Lien of contractor or sub-contractor
A contractor or sub-contractor shall have a lien for the contract price, so far as accrued due, on the estate or interest in land of any owner or occupier in each of the following cases:
(a) Where the work is done, with the assent, express or implied, of the owner or occupier to the land or to any fixture thereon:
(b) Where the materials are, with the assent, express or implied, of the owner or occupier, used or intended to be used in or about work done, or intended to be done, to the land or to any fixture thereon.
They refer to Ambir Pty Ltd v Paspalis Hotel Investments Pty Ltd.[32] In that matter, Martin CJ was dealing with proceedings seeking to enforce certain liens under the Workmen's Liens Act 1998 (NT).
[32] [2003] NTSC 22
That Act was repealed on 1 August 2006, however the legislation in force at the time of his Honour's judgment is identical to the provisions in the Act, insofar as sections 5 and 10 are concerned.
The plaintiff had served a notice of demand within the meaning of s 10(2)(a) of the Act and at the same time lodged with the Registrar General three notices for registration of a lien, each one over a separate lot of land. In each case the amount claimed was $725,778.50 which was the total amount particularised in the demand.
The plaintiff issued proceedings to support the lien on 24 December 2002.
On 14 January 2003, the plaintiff discontinued that action and on 21 January 2003 served another notice of demand claiming $737,521.73 said to be for the balance owing in respect of Works completed and material supplied by it for the purposes of building work on the lots in question.
On the same day, a second batch of notices for registration of liens were lodged with the Registrar General. On this occasion, there were two notices of lien. The first over the same lots as the prior notices claiming $706,455.20. The second notice of lien was in respect of a separate lot claiming $31,066.53.
The plaintiff commenced proceedings on 3 February 2003 and filed an amended Statement of Claim on 24 February 2003. The Statement of Claim pleaded three separate contracts and raised pleas in conversion and detinue in relation to plant equipment and materials which the plaintiff says it took on to one of the lots.
In considering the matter, his Honour observed:[33]
22.The statutory lien is for the contract price, accrued due, on the estate or interest of the owner of the land where work is done to the land. A coincidence between the contract price and the land over which the lien is claimed must be established. The contract price becomes due after the same shall have been demanded by notice given to the person liable to pay. The first demand included a sum, which was not coincidental with the land over which the lien was claimed.
23. The second demand regarding lots 7266, 7287 and 7288 included a sum not being a contract price, as did the second notice over those lots. The contract price becomes due under the statutory scheme when payment has been demanded of “the same”. The contract price means money payable for work done to land by the owner. In my opinion, a demand for a sum other than the contract price is not a demand within the meaning of s 10(2)(a). It must correctly identify the contract price. The amount demanded in relation to the Blue Heeler contract in both the first and second demands was reflected in the amount claimed in the notice in respect of the Blue Heeler property.
[33] Ibid at [22]-[23]
In its written submissions, the respondent refers to part of his Honour's judgment set out above in paragraph 23.
Insofar as the respondents submit that the demand was for a sum other than the Contract price, in the sense that the invoice accompanying the applicant's solicitors' letter dated 27 August 2021 claims a figure less than the total Contract price, I reject that submission. It is clear from the applicant's tax invoice that the amount claimed comprises the value of the Works it alleges it completed, costs incurred by the applicant including unfixed materials and a profit margin reduced to reflect that portion of the Works performed and materials supplied. Subject to two matters which I raise below, the claim for the Contract price, insofar as it is accrued due as at the date of termination of the Contract is an amount which, on the face of the documents, is a sum accrued due within the meaning of s 5 of the Act.
The first qualification is that the invoice refers to unfixed materials. There is nothing before me to suggest those unfixed materials were not available on Site for the subsequent use by the respondents.
The second qualification is that I do not consider that a claim for profit forms part of the work or materials supplied under the Contract in the circumstances of this matter. The Contract is silent as to any profit percentage to be added to variations, or indeed at all. On that basis, I infer the profit on the Contract is included in the Contract price of $508,950. I have no evidence of the percentage of profit included within the Contract sum and on that basis I infer the cost of work and materials claimed in the invoice includes profit. Under those circumstances in the exercise of the court's discretion under s 32 of the Act, the effect of the Lien may be reduced by the sum of $6,165.24 plus GST. The result is that the respondents are entitled to a refund of the sum of $6,781.76 from Land Services SA.
Other submissions
Quantum meruit, unjust enrichment
The respondents submit that:
1. The Statement of Claim pleads that the Contract price is payable in stages;[34]
2.The Contract was terminated;[35]
3.A portion of the Works were performed;[36]
4.The Works were performed for the benefit of the owners;[37] and
5.The outstanding amount is calculated to include a profit margin.
[34] Statement of Claim [4.1]
[35] Ibid at [8]
[36] Ibid at [9]
[37] Ibid at [13]
The respondents seek to characterise this claim as a quantum meruit plea or unjust enrichment plea. I do not accept that submission.
Although the respondents submit that there is no reference to payment by milestones as the Contract requires, nevertheless clause 18 of the Contract deals with the situation when the owners terminate the Contract.
The relevant provisions are clauses 18.5 and 18.6 of the Contract which read as follows:
18.5If the reasonable cost of finishing the Work by a new builder hired by the Owner is more than the price left to pay under this Contract (as adjusted under this Contract), the original Builder must pay the Owner the difference;
18.6If the reasonable cost of completing the Work by the new builder is less than the price left to pay under this Contract (as adjusted under this Contract), the Owner must pay the original Builder the difference.
There is no pleading by the applicant that the termination by the owners was unlawful and the claim proceeds as an entitlement to payment under the terms of the Contract. Under those circumstances, the process for determining how much, if any, is owed by the respondents to the applicant under the terms of the Contract depends on the reasonable costs of finishing the work by a new builder and how whether that amount is greater or less than the original Contract price.
There is no evidence before me of what it cost to complete the Works, although there is a statement by Ms Bannear in the Second Bannear Affidavit[38] that the amount of loss the respondents have suffered in engaging another builder exceeds the amount the applicant claims. There is no detail to support that statement, nor is it the measure of what is required pursuant to clause 18.5 of the Contract. What is required is evidence of any cost excess over and above the original Contract price with the applicant.
[38] FDN9
In my view, the builder is entitled to claim what it says is an accrued Contract sum which the owners can defend in accordance with the terms of the Contract. Whether the applicant succeeds will have to be determined at trial.
Illegal contract
Finally, the respondents submit the Contract is an illegal Contract because the applicant commenced work without there being a policy of Building Indemnity Insurance in place.
Section 34 of the Building Work Contractors Act prohibits a building work contractor from performing building work unless the required policy of Building Indemnity Insurance is in place. It imposes a maximum penalty of $20,000. It does not, however, say that the Contract is illegal or unenforceable.
In Equuscorp Pty Ltd v Haxton,[39] French CJ, Crennan and Kiefel JJ said:
As appears from the joint judgment in this Court in Miller v Miller, and the decisions of this Court cited in that judgment, an agreement may be unenforceable for statutory illegality where:
(i) the making of the agreement or the doing of an act essential to its formation is expressly prohibited absolutely or conditionally by the statute;
(ii) the making of the agreement is impliedly prohibited by statute. A particular case of an implied prohibition arises where the agreement is to do an act the doing of which is prohibited by the statute;
(iii) the agreement is not expressly or impliedly prohibited by a statute but is treated by the courts as unenforceable because it is a "contract associated with or in the furtherance of illegal purposes".
In the third category of case, the court acts to uphold the policy of the law, which may make the agreement unenforceable. That policy does not impose the sanction of unenforceability on every agreement associated with or made in furtherance of illegal purposes. The court must discern from the scope and purpose of the relevant statute "whether the legislative purpose will be fulfilled without regarding the contract or the trust as void and unenforceable." As in the case when a plaintiff sues another for damages sustained in the course of or as a result of illegal conduct of the plaintiff, "the central policy consideration at stake is the coherence of the law." (Citations omitted)
[39] [2012] 246 CLR 498, 513 [23], per French CJ, Crennan and Kiefel JJ
This is not a contract entered into with the object of committing an illegal act.[40] Further, on the face of the evidence before the court, the applicant paid for a policy of Building Indemnity Insurance which was ultimately not issued. Still further, had the applicant obtained a policy of Building Indemnity Insurance, the Contract, if it had been illegal, would no longer be illegal.
[40] Generally see Contract Law in Australia, Seventh Ed. JW Carter at [25-04]
There is nothing in the legislation which suggests that a contract, during which the building work contractor performs building work without holding a policy of Building Indemnity Insurance is illegal or otherwise unenforceable.
In my view, it is clear from s 34 of the Building Work Contractors Act that the Contract is not illegal but that a building work contractor who commences work without having a policy of Building Indemnity Insurance in place is liable to a maximum penalty of $20,000.
Having considered the terms of s 34 of the Building Work Contractors Act 1995 and for the reasons set out above, I do not consider that the Contract is illegal.
Other orders sought
In view of my decision on the issues above, it follows that application for orders seeking summary judgment with respect to part of the claim also fails.
Conclusion
Under the circumstances, the Lien has been properly lodged and supported by the proceedings, subject to a modification to the effect of the Lien in that pursuant to s 32 of the Act I reduce the sum secured by $6,781.76. I order that Land Services SA pay this sum to the respondents.
Save for this modification to the effect of the Lien, the respondents' application is dismissed.

I will hear the parties as to the question of costs.