Civil & Civic Corporation Pty Ltd v Nova Builders Pty Ltd
[2023] ACTCA 30
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: | Civil & Civic Corporation Pty Ltd v Nova Builders Pty Ltd |
Citation: | [2023] ACTCA 30 |
Hearing Date: | 17 May 2023 |
DecisionDate: | 18 July 2023 |
Before: | Mossop, O’Sullivan JJ and Curtin AJ |
Decision: | 1. The cross-appeal is dismissed with costs. |
Catchwords: | BUILDING AND CONSTRUCTION – PAYMENT CLAIM – Allegation that payment claim under the Building and Construction Industry (Security of Payment) Act 2009 (ACT) is invalid where it is entirely referrable to work already the subject of a previous payment claim – absence of contractual regime between the parties for timing of progress claims – whether a party which has made a payment claim under s 15 of the Act may submit a further payment claim for the same contractor work relying on a new reference date – it can – cross-appeal dismissed |
Legislation Cited: | Building and Construction Industry (Security of Payment) Act 2009 (ACT), ss 6, 10(3)(b)(i), 13(5), 15, 19 Building and Construction Industry Security of Payment Act1999 (NSW), ss 8(2)(a), (b), 13, 15 Legislation Act 2001 (ACT), ss 139, 140 |
Cases Cited: | Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27 All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289 Veer Build Pty Ltd v TCA Electrical and Communication Pty Ltd [2015] NSWSC 864 |
Parties: | Civil & Civic Corporation Pty Ltd ( Appellant/Cross-Respondent) Nova Builders Pty Ltd ( First Respondent/Cross-Appellant) Jonathan H Sive (Second Respondent) |
Representation: | Counsel A Greinke ( Appellant/Cross-Respondent) R Arthur ( First Respondent/Cross-Appellant) |
| Solicitors Chamberlains Law Firm ( Appellant/Cross-Respondent) Lexicon Lawyers (First Respondent/Cross-Appellant) | |
File Number: | ACTCA 43 of 2022 |
Decision under appeal: | Court/Tribunal: Supreme Court of the ACT Before: Associate Justice McWilliam Date of Decision: 19 August 2022 Case Title: Nova Builders Pty Ltd v Civil & Civic Corporation Pty Ltd Citation: [2022] ACTSC 209 |
MOSSOP AND O’SULLIVAN JJ:
On 19 August 2022, the Primary Judge allowed an appeal from the determination of an adjudicator appointed pursuant to the Building and Construction Industry (Security of Payment) Act 2009 (ACT) (the Act) and remitted the matter to the adjudicator for further determination, according to law: Nova Builders Pty Ltd v Civil & Civic Corporation Pty Ltd [2022] ACTSC 209.
An appeal against the decision by Civil & Civic was discontinued on 29 November 2022. However, relevantly for the purposes of this matter, the Primary Judge found that the adjudicator had not erred in the determination by finding that a payment claim made 20 July 2021 was not invalid by reason of there being prior payment claims claiming the same work. The effect of the Primary Judge’s finding was that the fact there were prior payment claims claiming the same work but which relied on different reference dates did not contravene the prohibition in s 15(5) of the Act.
It is against that finding that Nova Builders cross-appeal.
The second respondent is the adjudicator and takes no part in this cross-appeal.
The sole issue in the cross-appeal concerns whether a contractor:
(a)who has the benefit of reference dates fixed in accordance with s 10(3)(b) of the Act; and
(b)has submitted a payment claim for construction work pursuant to s 15 of the Act relying on one reference date,
is precluded from submitting a further payment claim for the same construction work but relying on a different reference date fixed in accordance with the Act.
It is for the reasons which follow that the cross-appeal is dismissed.
History
The history of the matter is somewhat complicated.
Nova Builders is the owner of a site at Greenway, Australian Capital Territory, upon which it is carrying out a Development
As from 3 March 2020, Civil & Civic was the bulk excavation contractor on the site (Works). Prior to Civil & Civic, Beno Excavations Pty Ltd was the bulk excavation contractor on the site. There was no written contract between Nova Builders and Beno and it seems that whatever contract that existed between Beno and Nova Builders was novated to Civil & Civic from on or about 3 March 2020. There was no written contract between Nova Builders and Civil & Civic either.
By way of a general summary, on 20 July 2021 Civil & Civic made a payment claim under the Act against Nova Builders. The payment claim comprised four invoices, numbered 0039, 0040, 0089 and 3391, each of which was dated 20 July 2021, contained an endorsement under s 15(2) of the Act and which together totalled $462,003.93 (including GST) (disputed sum). The payment claim did not specify a reference date.
Civil & Civic referred the payment claim to adjudication and on 31 August 2021, the Adjudicator, relying on a reference date of 30 June 2021, determined that Nova Builders was liable to pay to Civil & Civic the disputed sum and that the date upon which any amount became payable was 3 August 2021.
Civil & Civic claimed payment from Nova Builders on the basis of the determination.
In the meantime, Beno also claimed to be entitled to the disputed sum.
Since Nova Builders made no initial claim to the disputed sum but does not know which of Civil & Civic or Beno should be paid, it commenced interpleader proceedings and ultimately paid the disputed sum into court.
The interpleader argument was heard on 19 July 2021 and judgment delivered on 18 November 2021: Nova Builders Pty Ltd v Beno Excavations Pty Ltd [2021] ACTSC 295.
Nova Builders appealed against the determination and as we have noted at [1] above, was successful in that appeal.
Civil & Civic initially appealed against the Primary Judge’s decision but discontinued it. Nova Builders now presses its cross-appeal against the Primary Judge’s finding in the course of her Honour’s reasons that the adjudicator had not erred in the determination by proceeding on the basis the payment claim was valid. By doing so, it seeks an even more favourable result than that it in fact achieved in the appeal to the Primary Judge. If its argument on the cross appeal was successful, there would be no remittal of the matter to the adjudicator as there was no valid payment claim.
The Primary Judge’s Reasons
The Primary Judge’s reasons (Reasons) refer to various sections of the Act.
Section 10 provides:
(1)On and from each reference date under a construction contract, a person is entitled to a payment (a progress payment) if the person has undertaken, under the contract, to—
(a)carry out construction work; or
(b)supply related goods and services.
(2)A progress payment may include—
(a)the final payment for construction work carried out, or for related goods and services supplied, under a construction contract; or
(b)a single or one-off payment for carrying out construction work, or for supplying related goods and services, under a construction contract; or
(c)a milestone payment.
(3)In this section—
milestone payment means a payment that is based on an event or date.
reference date, for a construction contract, means—
(a)a date stated in, or worked out under, the contract as the date when a claim for a progress payment is to be made in relation to work carried out or undertaken to be carried out, or related goods and services supplied or undertaken to be supplied, under the contract; or
(b)if the contract does not provide a date mentioned in paragraph (a)—
(i) the last day of the calendar month in which the construction work was first carried out, or the related goods and services were first supplied, under the contract; and
(ii) the last day of each subsequent named month.
Sections 15(5) and (6) provide:
(5)A claimant must not give more than 1 payment claim for each reference date under the construction contract.
(6)However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim.
Since there was no written contract between Nova Builders and Civil & Civic, the Primary Judge referred, at [80], to her Honour’s reasoning at first instance in Canberra Drilling Rigs Pty Ltd v HaidesPty Ltd [2018] ACTSC 282 as to how a reference date is to be determined under s 10(3) of the Act in the absence of a contractual regime giving the contractor an entitlement to make progress claims.
In Canberra Drilling her Honour concluded at [74]-[83] that the applicable principle is that stated in Brodyn Pty Ltd t/as Time Costs and Quality v Davenport [2004] NSWCA 394; 61 NSWLR 421 at [63]-[64] where Hodgson JA (Mason P and Giles JA agreeing) said in relation to the then s 8(2)(b) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (NSW Act), which at the relevant time was substantially in the same terms as s 10(3)(b) of the Act:
63However, s 8(2) of the Act does not provide that reference dates cease on termination of a contract or cessation of work. This may be the case under s 8(2)(a) if the contract so provides but not otherwise; while s 8(2)(b) provides a starting reference date but not a concluding one. In my opinion, the only non-contractual limit to the occurrence of reference dates is that which in effect flows from the limits in s 13(4): reference dates cannot support the serving of any payment claims outside these limits.
64In my opinion, … this view is supported by s 13(6), which indicates that successive payment claims do not necessarily have to be in respect of additional work; and especially by s 13(3)(a), which provides for inclusion in payment claims of amounts for which the respondent is liable under s 27(2A). Losses and expenses arising from suspension of work could arise progressively for a substantial time after work has ceased on a project, and s 13(3)(a) expressly contemplates that further payment claims for these losses and expenses may be made progressively.
The Primary Judge also referred to the decision of Mossop AsJ (as his Honour then was) in Denham Constructions Pty Ltd v Islamic Republic of Pakistan (No 2) [2016] ACTSC 215; (2016) 311 FLR 187, noting that was a case dealing with a contractually generated reference date. In Denham, the contractor had made a progress claim (endorsed as a payment claim) which included amounts claimed in previous payment claims. The defendant asserted that the payment claim was invalid because it related to previous reference dates and no new reference date had arisen such that it contravened the prohibition in s 15(5). His Honour held that the contract did not tie the entitlement to make progress claims (and consequently payment claims) to the continuation of work on-site nor limit the existence of reference dates in a manner that would prevent them from arising within the 12-month period after construction work had been completed: Denham [51]-[52].
Nova Builders had contended before the Primary Judge that Canberra Drilling and Denham should not be followed as both are inconsistent with Southern Han Breakfast Point Pty Ltd (In Liquidation) v Lewence Construction Pty Ltd [2016] HCA 52, 260 CLR 340 and All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289.
The Primary Judge observed that in order to succeed in the appeal before her, Nova Builders had to succeed in establishing that both Canberra Drilling and Denham should not be followed. Civil & Civic had submitted that Canberra Drilling had followed decisions by intermediate courts of appeal in Brodyn and Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd [2006] NSWCA 259; (2007) 23 BCL 292 and that her Honour should not depart lightly from decisions of this Court which had followed those decisions.
The Primary Judge held that no part of the reasoning in either Southern Han or All Seasons challenged what had been found in Brodyn and Falgat and consequently there was no basis to depart from either Canberra Drilling or Denham: Reasons [68]-[73].
Grounds of cross-appeal
There is one ground of cross-appeal in Nova Builders’ Amended Notice of Cross-Appeal which is that the Primary Judge erred in law. The three particulars to that ground focus on ss 10(3)(b) and 15(5) of the Act.
The three particulars by which Nova Builders contends the Primary Judge erred are:
(a)By holding that a fresh reference date for particular work carried out may arise at the end of each month, provided that the payment claim was given before the end of the period of 12 months after the construction work to which the claim relates was last carried out: Reasons [86];
(b)That 30 June 2021 was an available reference date for each payment claim: Reasons [68]; and
(c)Consequently, the payment claim made on 20 July 2021 was not a payment claim prohibited by s 15(5) and was valid: Reasons [87].
There is no issue:
(a)That the payment claim was submitted within the period of 12 months after the construction work to which the claims relate was last carried out;
(b)That Civil & Civic applied for adjudication of the payment claim on 16 August 2021 pursuant to s 19 of the Act;
(c)There had been no prior application for adjudication for the construction work in question; and
(d)Since there was no written contract between the parties, the determination of a “reference date” was governed by s 10(3)(b) of the Act.
Nova Builders contend her Honour erred by holding that a payment claim with a reference date of 30 June 2021 was not prohibited by s 15(5) and was valid notwithstanding an earlier payment claim for the same work but with a reference date of 31 March 2020 had been made: Reasons [68].
In its written submissions, Nova Builders set out the various invoices rendered by Civil & Civic during the course of the works. There is no dispute that the invoices the subject of the payment claim were sent to Nova Builders on the following dates:
(a)Invoice 3391 - 17 March 2020, 24 July 2020, 11 September 2020, 20 July 2021;
(b)Invoice 0039 - 24 July 2020, 11 September 2020, 20 July 2021;
(c)Invoice 0089 - 24 July 2020, 11 September 2020, 20 July 2021; and
(d)Invoice 0040 - 30 April 2021, 20 July 2021.
Each of the invoices contained an endorsement in accordance with s 15(2) of the Act that the invoice was a payment claim under the Act. At the outset, it should be noted that although there were four invoices issued, there was no dispute that the payment claim of 20 July 2021 was a single payment claim comprised of the four invoices.
The parties’ submissions and consideration
The adjudicator had determined that the payment claim with a reference date of 30 June 2021 was valid. Nova Builders submits that the payment claim relied upon the same work date as an earlier payment claim was therefore prohibited by s 15(5).
Nova Builders points to Invoice 3391 and submits that that invoice, together with Invoices 0039 and 0089, reveal that the Works had been completed as at 24 July 2020 and that no further work was done. On that basis, Nova Builders submit by reference to the invoice history set out above, that the payment claim could only have been in respect of work which had been identified in invoices forming prior payment claims made on 17 March 2020, 24 July 2020 and 11 September 2020 and in the case of Invoice 0040, on 30 April 2021.
As we understand Nova Builders’ submissions, the significance of there being no further work done is that the invoices and consequent payment claims can only have one reference date and that a payment claim for identified construction work which relies on one (earlier) reference date cannot be submitted again relying on that same identified construction work but with a different reference date.
It is on that basis that Nova Builders submits the payment claim was invalid as being a claim prohibited by s 15(5) of the Act and that the Primary Judge erred in not finding that to be the case.
The essence of Civil & Civic’s submissions in response is that Nova Builders’ proposition that construction work the subject of a progress payment and the subject of payment claim is ‘tied’ to a single reference date so that for the purpose of s 10(3)(b) there can only ever be a single reference date for that work is contrary to settled law and is not supported by the legislative text.
The authorities
Nova Builders refer to a series of authorities in support of its submissions. At the core of Nova Builders’ case is that when considering the issue of whether the payment claim was valid, the Primary Judge at Reasons [61]-[87] did not accept Nova Builders’ proposition that the reasoning in Southern Han, All Seasons and The Trustee for Allway Unit Trust v R&D Airconditioning Pty Ltd [2018] SASC 46 was such that there can only be one reference date in respect of particular work done under a construction contract and instead applied the statement in Brodyn at [63] (Hodgson JA with whom Mason P and Giles JA agreed) that s 8(2)(b) of the NSW Act (which as we have noted was, apart from some minor differences, in the same terms as s 10(3)(b) of the Act) has the effect that “… reference dates that are calculated [(under s 10(3)(b))] … do not cease on termination of a contract or cessation of work” (Canberra Drilling at [74]).
Nova Builders also relied on the reasoning of Allsop P (as his Honour then was) in Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69; 74 NSWLR 190.
Nova Builders submits there is no dispute on the authorities that a claimant is not able to give more than one payment claim for each reference date: Dualcorp at [14] (Allsop P); The Trustees for the Roman Catholic Church Diocese of Lismore v T F Woollam & Son Pty Ltd [2012] NSWSC 1559 at [48] (McDougall J); Grid Projects NSW Pty Ltd v Proyalbi Organic Set Plaster Pty Ltd [2012] NSWSC 1571 at [39] (Stevenson J); Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602 at [21] (McDougall J); Falco’s Pty Ltd v AB Developments Pty Ltd [2017] NSWSC 1320 at [14]-[15] (McDougall J); Valeo Construction Pty Ltd v Pentas Property Investments Pty Ltd [2018] VSC 243 at [47] (Digby J); Civil & Allied Technical Construction Pty Ltd v Resolution Institute [2019] SASC 193 (CATCON) at [55]-[57] (Kourakis CJ).
We accept that the authorities cited by Nova Builders leave no room for doubt that pursuant to s 15(5) of the Act there cannot be more than one payment claim for each reference date.
Each of the authorities cited by Nova Builders involve multiple payment claims relying on the same reference date and save for Grid Projects, all had contractual regimes giving an entitlement to make progress claims. That is an important consideration.
In Southern Han, which involved the NSW Act, the contract between the parties contained a regime for making progress payments. The High Court said at [61]-[62] (noting that the reference to s 13 of the NSW Act is the equivalent to s 15 of the Act):
The construction of s 13(1) consonant with the structure of the Act is accordingly that advanced by Southern Han. The description in s 13(1) of a person referred to in s 8(1) is of a person whom s 8(1) makes entitled to a progress payment. Section 8(1) makes a person who has undertaken to carry out construction work or supply related goods and services under a construction contract entitled to a progress payment only on and from each reference date under the construction contract. In that way, the existence of a reference date under a construction contract within the meaning of s 8(1) is a precondition to the making of a valid payment claim under s 13(1).
That construction of s 13(1) affords to s 13(1) an operation that is harmonious with s 13(5). Section 13(1) operates to require that each payment claim be supported by a reference date and s 13(5) operates to require that each reference date support no more than one payment claim. Section 13(5) has been held to produce the result that “a document purporting to be a payment claim that is in respect of the same reference date as a previous claim is not a payment claim under the [Act]”. Section 13(1) correspondingly produces the result that a document purporting to be a payment claim that is not in respect of a reference date is not a payment claim under the Act. The document is ineffective in either case to trigger the procedure established by Pt 3.
(Citations omitted.)
However, that is not the issue here. In this matter, the issue is whether the same construction work can be claimed in a subsequent payment claim but with a different reference date in circumstances where there is no contractual provision regulating the right to make progress claims and hence payment claims.
It is against that background that we consider the authorities upon which Nova Builders relies, however first it is necessary to deal with the New South Wales Court of Appeal decision in Falgat and some of the authorities which have followed both Brodyn and Falgat.
Falgat was decided after Brodyn but before Dualcorp. In Falgat, Hodgson JA at [36], for relevant purposes, repeated the views he expressed in Brodyn at [63]-[64].
In Broadview Windows Pty Ltd v Architectural Project Specialists Pty Ltd [2015] NSWSC 955, which was delivered after Dualcorp, McDougall J at [49]-[50] considered he was bound to follow the views expressed in Brodyn and Falgat as to the construction of s 8(2)(b) of the NSW Act such that even though no work was done under a construction contract from, in that case 31 August 2014, nonetheless, reference dates continued to accrue under the section with the result that a payment claim relying on a subsequent reference date was valid.
Brodyn was also followed by Darke J in Veer Build Pty Ltd v TCA Electrical and Communication Pty Ltd [2015] NSWSC 864, which was also after Dualcorp. That was a case involving a written construction contract but the contract made no provision with respect to the date upon which progress payments may be claimed such that s 8(2)(b) of the NSW Act applied. After referring to Brodyn, his Honour considered he was not required to follow Dualcorp on the proper construction of s 8(2)(b) and accordingly followed Brodyn.
Dualcorp was a case involving s 8(2)(a) of the NSW Act. Dualcorp undertook the work under a written construction contract which contained provisions regulating the right to make progress claims. Dualcorp claimed to have substantially completed the Works in November 2007. On or about 29 January 2008, Dualcorp served a payment claim under the NSW Act attaching six invoices (January payment claim). No reference date was identified on the documentation. The principal served a payment schedule in answer to the January payment claim, conceding two of the six invoices. Dualcorp applied for adjudication of the January payment claim in respect of the remaining four invoices. On 3 March 2008, Dualcorp made a further payment claim under the NSW Act (March payment claim), based upon the same six invoices the subject of the January claim. Once again, no reference date was identified on the documentation. The total of the March payment claim was the same as that of the January claim.
On 11 March 2008, the adjudicator made a determination on the January payment claim.
On 3 April 2008, Dualcorp obtained judgment in the District Court based upon the adjudicator’s determination.
Since the principal had not served a payment schedule in answer to the March payment claim, Dualcorp applied for summary judgment for the amount of the March payment claim relying on s 15 of the NSW Act. That application was refused and Dualcorp sought leave to appeal.
In granting leave to appeal, but dismissing the appeal, Macfarlan JA and Handley AJA decided the issue by applying principles of issue estoppel. Allsop P decided the issue on a different basis, observing at [2] that Dualcorp “should not be able to re-ignite the adjudication process at will in order to have a second or third or fourth go at the process provided by the Act merely because it is dissatisfied with a result of the first adjudication.”
After considering the provisions of the NSW Act and the contractual provisions relating to the making of progress claims, Allsop P said at [12]-[14]:
12Whether or not this was a final claim or a progress claim does not matter. The claim represented by the six invoices must have been in respect of only one reference date – either 15 December 2007 or 15 January 2008, if pursuant to Annexure A, Item 11 or the reference date pursuant to the operation of cl 8.13, if a final payment claim. In either case, there must have been one reference date under the contract or the last day of the month as provided for by the Act, s 8(2)(b).
13I see no warrant under either the contract or the Act, s 8 for permitting a party in Dualcorp’s position to create fresh reference dates by lodging the same claim for the same completed works in successive payment claims. That is not the intended operation of the last phrase of s 8(2)(b) (“and the last day of each subsequent named month”).
14Here, the work had been done; Dualcorp, the subcontractor, had left the site; it claimed payment by six invoices; six weeks later it repeated that claim by reference to the same invoices and, in my view, in respect of the same reference date. Dualcorp was prevented from serving the second payment claim. The terms of s 13(5) are a prohibition. The words “cannot serve more than one payment claim” are a sufficiently clear statutory indication that a document purporting to be a payment claim that is in respect of the same reference date as a previous claim is not a payment claim under the Act and does not attract the statutory regime of the Act.
Allsop P found that the January payment claim and March payment claim were both in respect of only one reference date and on that basis contravened the prohibition in s 13(5) of the NSW Act.
Nova Builders relies upon Allsop P’s observations in [13] that a party in Dualcorp’s position cannot create fresh reference dates by lodging the same claim for the same completed works in successive payment claims.
A number of observations may be made about Allsop P’s observation at [13].
First, although the Court of Appeal in Dualcorp dismissed the appeal, Macfarlan JA and Handley AJA did so on quite different grounds from that identified by Allsop P such that his Honour’s observations are not those of a majority of the Court.
Second, there was a contractual regime in place between the parties that dealt with progress claims. Accordingly, his Honour’s reference to the operation of the last phrase of s 8(2)(b) in [13] had no role to play in the appeal and may therefore be seen as obiter dicta. Further, if by that statement his Honour meant to say that it is not open to a party to make a fresh payment claim relying on different reference dates in circumstances where there is no contractual regime such that the provisions of s 8(2)(b) operate, with respect we are unable to agree. It seems to us that such a construction is not only contrary to the clear terms of s 8(2)(b) of the NSW Act as it then existed, (the equivalent of s 10(3)(b) of the Act) but it is also contrary to the effect of s 13(6) of the NSW Act which is the equivalent of s 15(6) of the Act.
Third, his Honour’s judgment must be seen in the context of multiple payment claims based on a single reference date which had been ascertained in accordance with the terms of the contract between the parties and referred to adjudication. That was the basis upon which his Honour found that the payment claim was invalid as being contrary to the prohibition in s 13(5) of the NSW Act.
Fourth, the circumstances of Dualcorp were somewhat unusual because there had already been one adjudication and Dualcorp attempted a further adjudication on the same issues using the same reference date, hence the focus on issue estoppel by Macfarlan JA and Handley AJA.
The clear point to be taken from Allsop P’s judgment in Dualcorp is found in [14] of his Honour’s judgment which deals with the prohibition against multiple payment claims relying on the same reference date. It is for that principle which the authorities relied upon by Nova Builders in turn rely upon Dualcorp. In view of the High Court’s observations in Southern Han, that principle is not in doubt.
Southern Han involved a contract between the parties which governed the making of progress claims. The principal had taken the work out of the hands of the contractor utilising the provisions of the contract and under those circumstances the risk allocation regime within the contract provided for no further right for the contractor to make progress claims until such time as, in effect, an accounting had been done to determine how much, if any, the contractor was entitled to receive after the principal had offset any costs due to it under the terms of the contract. It was against that background that the High Court said what we have set out above at [43] and referred with apparent approval to the observations of Allsop P in Dualcorp at [14].
Under the circumstances, Southern Han and Dualcorp may be distinguished on their facts and neither case assists Nova Builders.
Nova Builders also rely on Allway and All Seasons.
Allway concerned an application for judicial review of a determination made by an adjudicator under the Building and Construction Industry Security of Payments Act 2009 (SA) (SA Act). The plaintiff (Westside) was a subcontractor to Lendlease who was the Head Contractor on a project for the Department of Defence at Edinburgh, South Australia. Westside in turn subcontracted part of its work to the defendant, R & D.
The subcontract between R & D and Westside was a written lump-sum contract containing provisions that governed the making of progress claims. Westside and R & D came into dispute over the non-payment of amounts R & D maintained were due. R & D ceased carrying out work on the site in October 2017 which was before the subcontract Works had been completed. In December 2017, R & D served Westside with a payment claim pursuant to the SA Act. Westside responded with a payment schedule in which it denied liability. R & D referred the dispute to adjudication. The adjudicator subsequently determined that R & D was due the sum claimed, finding that R & D had not renounced the contract in October 2017 and that R & D’s payment claim had a valid reference date of 23 December 2017.
Westside challenged the determination on judicial review contending jurisdictional error on the part of the adjudicator.
Contrary to the basis upon which the adjudicator had proceeded, Doyle J found the contract had come to an end by late October 2017. Following Southern Han, his Honour held R & D’s entitlement to serve a payment claim was conferred only on and from the contractually generated reference dates such that the reference date was determined in accordance with s 4(a) of the SA Act, which is in the same form as s 8(2)(a) of the NSW Act as it existed in Dualcorp and Southern Han. By adopting a later reference date which had not, in fact, arisen under the contract, his Honour found the adjudicator had fallen into jurisdictional error.
Allway does not assist Nova Builders.
In All Seasons there was a written contractual procedure in place by which the contractor was entitled to make progress claims. All Seasons submitted a progress claim endorsed as a “payment claim” under the provisions of the NSW Act ahead of the contractually entitled date. That being the case, the Court of Appeal held there was no entitlement to make a progress claim and so no entitlement to make a payment claim consequent upon that progress claim.
Leeming and Payne JJA (with whom White JA agreed) observed that the legislative regime turned on two things. Relevantly for the purposes of this cross-appeal, the reference date operated only “on and from" a particular date. It was on and from that date that a person may have an entitlement to a progress payment and the service of a payment claim accordingly. That is not a matter that arises in this cross-appeal and the decision does not assist the cross-appellant.
Nova Builders also relies upon Brolton Group Pty Ltd v Hanson Construction Materials Pty Ltd [2020] NSWCA 63.
Brolton was a contractor to Hanson. The parties entered into a written construction contract by which Brolton was entitled to claim monthly progress payments and in the event the contract was terminated, the payment of a sum following valuation of completed work subject to various offsets. Hanson terminated the contract on 3 October 2018. Brolton made a payment claim in August 2019.
The payment claim did not identify a reference date. Hanson served a payment schedule and the matter was referred to adjudication. The adjudicator adopted a reference date of 23 October 2018 and determined that Brolton was entitled to payment of the sum claimed. Hanson sought judicial review.
At first instance, the Primary Judge held, amongst other things, that the determination was void on the basis that Brolton was not entitled to a progress payment “on and from” the purported reference date of 23 October 2018.
In dismissing an appeal from that decision, the Court of Appeal (Gleeson JA with whom Meagher and Payne JJA agreed) held that in circumstances where it was common ground both before the Primary Judge and before the Court of Appeal that the purported reference date of 23 October 2018 adopted by the adjudicator was not an available reference date under the contract, it was not to the point that there was an earlier available reference date under the contract. Accordingly, the determination involved jurisdictional error and was void.
Brolton does not assist Nova Builders.
Woollam was also a matter in which there was a written contractual regime for progress claims and a final claim. To that extent, the question of the relevant reference date was determined according to the contractual regime and the NSW equivalent of s 10(3)(a). McDougall J held that the reference dates fixed in accordance with the contract were either those fixed while work was being performed or at the end of the defects liability period. That is because the contract in question entitled the builder to submit to the Architect “statements” at intervals of not less than four weeks which claimed the various costs “... in respect of the period covered by the statement …”
His Honour held that the contractual entitlement to submit a “statement” was dependent upon work being done. It was on that basis that a later “statement” (which had been submitted as a payment claim) in circumstances where no further work had been done but which claimed the same amounts as a prior “statement” which had also been submitted as a payment claim but had been rejected, was invalid as being contrary to s 13(5) of the Act. That was because applying the terms of the contract, the later “statement” could only have had a reference date which was the same as the prior payment claim and so contravened the prohibition in s 15(5). The case is unique to the particular contractual terms that applied.
Woollam does not assist Nova Builders.
In Grid Projects, the head contractor engaged a subcontractor to carry out rendering and plastering work. The contract between the parties contained no express provision with respect to the date on which progress claims could be made. To that extent, the case falls within s 8(2) of the NSW Act as it then was. There is a distinction between the then second limb of s 8(2) of the NSW Act and s 10(3)(b) of the Act in that the NSW Act provided:
(2)In this section, reference date, in relation to a construction contract, means:
…
(b)if the contract makes no express provision with respect to the matter—the last day of the named month in which the construction work was first carried out (or the related goods and services refer supplied) under the contract and the last day of each subsequent named month.
The subcontractor submitted four payment claims. The first payment claim was paid in full. The second payment claim was part-paid. Grid Projects responded to the third payment claim with a payment schedule in which it proposed to pay only a part of the third payment claim. The subcontractor did not make an adjudication application in respect of the third payment claim. The fourth payment claim was for work done during the same period as the third payment claim although there was a slight difference in the amount claimed. Grid Projects served a payment schedule in response to that payment claim which proposed to pay less than the claimed amount. The subcontractor made an adjudication application in respect of the fourth payment claim.
Stevenson J held at [21] that the expression “named month” in s 8 of the NSW Act means the month “named” in the claim for a progress payment as the month in which the work referred to in the claim for a progress payment was undertaken. On that basis, his Honour reasoned that since “the last month ‘named’ in a claim for progress payment as being the month in which work was undertaken was June 2012 … the last ‘reference date’ to arise … was the last day of that month”. Since the subcontractor had already submitted a payment claim for that reference date, it was precluded from doing so again.
In contrast, s 10(3)(b) of the Act provides:
(3)In this section
…
reference date, for a construction contract, means—
…
(b)If the contract does not provide a date mentioned in paragraph (a) –
(i) the last day of the calendar month in which the construction work was first carried out, or the related goods and services were first supplied, under the contract; and
(ii) the last day of each subsequent named month.
In Broadview, McDougall J observed at [35] that in Grid Projects, Stevenson J had not given the expression “named month” its statutory meaning, such that his Honour considered Stevenson J erred. With respect, McDougall J was correct to reach that conclusion. Further, it may be observed immediately that the distinction Stevenson J relied upon in Grid Projects does not exist in the Act with s 10(3)(b)(i) referring to the “last day of the calendar month”.
Grid Projects does not assist Nova Builders.
None of Kitchen, Falco’s, Valeo or CATCON assist Nova Builders as each concerned multiple payment claims with the same reference date.
In Kitchen, McDougall J was dealing with contractual provisions which governed the making of progress claims. There were three payment claims made, all of which relied on the same reference date. The first payment claim was withdrawn by consent, however his Honour considered that the second payment claim had not been withdrawn and following Allsop P in Dualcorp, held that the conduct of the contractor was the type of conduct s 13(5) of the NSW Act was intended to prohibit.
Falco’s was also a matter involving multiple payment claims with the same reference date. McDougall J followed Dualcorp and the observations of Allsop P at [14] in holding that there could only be one payment claim for an available reference date and as there were two payment claims with the same reference date, the second payment claim, which was the subject of adjudication, was invalid.
Valeo involved a contract which had a regime for making claims for payment under the Building and Construction Industry Security of Payment Act 2002 (VIC) (VIC Act). Digby J at [55] found that more than one payment claim had been served by the contractor in respect of the same reference date. His Honour referred to Southern Han and the High Court’s express approval of Allsop J’s statement in Dualcorp at [14] to which we have referred above.
In CATCON the NSW Act applied and once again, the issue was whether there were multiple payment claims utilising the same reference date. The written contract between the parties provided for the contractor to make monthly progress claims with only one progress claim per month. After considering Dualcorp, Kourakis CJ preferred the reasoning of Allsop P to that of Macfarlan JA and Handley AJA in staying the reference to adjudication of a second payment claim, until there had been a hearing and determination of the validity of the contractor’s second payment claim on the ground it was invalid for non-compliance with s 13(5).
Conclusion
None of the authorities relied upon by the cross-appellant assist its case. The terms of s 10(3)(b) are clear and the Primary Judge was correct in holding that there was no basis to depart from Canberra Drilling, Denham, Brodyn and Falgat.
It follows that her Honour did not err in holding that a fresh reference date for work carried out may arise at the end of each subsequent named month following the last day of the calendar month in which the construction work was first carried out, provided that the payment claim was given before the end of the period of 12 months after the construction work to which the claim relates was last carried out.
Accordingly, her Honour did not err in finding that 30 June 2021 was an available reference date and that consequently, the payment claim made 20 July 2021 was not a payment claim prohibited by s 15(5) and was valid.
It is for these reasons that the cross-appeal should be dismissed.
There is no reason why Nova Builders should not pay Civil & Civic’s costs of the cross‑appeal.
CURTIN AJ:
I agree with Mossop and O’Sullivan JJ’s orders and reasons. What follows is by way of addition rather than qualification.
Ultimately, the point raised for consideration is one of statutory construction. The constructional choice is, under a construction contract which does not provide a date for when a claim for a progress payment can be made, whether the Building and Construction Industry (Security of Payment) Act 2009 (ACT) (the Act) allows for successive payment claims with successive reference dates for the same work or whether the Act confines the contractor to making one payment claim for particular work.
The cross-appellant contends for the latter construction. As Mossop and O’Sullivan JJ have explained, the authorities favour the former.
The process of statutory construction begins and ends with the words of the statute. That oft-repeated mantra does not prescribe a rigid order of analysis. Rather, it serves to emphasise the primacy of the words used in the statute.
Context must be considered in the first instance. In CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 Brennan CJ, Dawson, Toohey and Gummow JJ, Gaudron J agreeing, said at 408:
Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy.
(Footnote omitted.)
In Commissioner of Taxation v Jayasinghe [2016] FCAFC 79; 247 FCR 40 Allsop CJ said at [7] that that passage from CIC had been cited too often to be doubted and cited 15 joint or single judgments of the High Court in support of that proposition.
With that said, the primacy of the words used in the statute and the process of statutory construction was described in the joint judgment of French CJ, Hayne, Crennan, Bell and Gageler JJ in Commissioner ofTaxation v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503 at [39] wherein their Honours said:
This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text”. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.
(Footnote omitted.)
The first sentence of the quote which appears immediately above is a quote from the joint judgment of Hayne, Heydon, Crennan and Kiefel JJ (as her Honour then was) in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27 at [47] wherein their Honours said:
This court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.
(Footnotes omitted.)
I should add, for completeness, that in the ACT s 140 of the Legislation Act 2001 (ACT) requires that in working out the meaning of an Act, the provisions of the Act must be read in the context of the Act as a whole, and s 139 requires that the interpretation that would best achieve the purpose of the Act is to be preferred to any other interpretation.
In Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2004] NSWCA 394 Hodgson JA reasoned to his Honour’s conclusions by reference to the statutory text alone (at [62]-[66]).
I only wish to add that, in my view, Hodgson JA’s holding is also consistent with the context of the Act in terms of the general purpose and policy of the Act and the mischief it was seeking to remedy. As the matters addressed by Mossop and O’Sullivan JJ are dispositive of the appeal, I need only address those matters in brief terms.
Section 6 of the Act says that the object of the Act is to ensure that a person is entitled to receive, and be able to recover, progress payments if the person undertakes to carry out construction work under certain construction contracts or undertakes to supply related goods and services under certain construction contracts. The wording of that section does not provide any indication which construction of the provisions the subject of this appeal should be preferred.
However, the relevant general purpose and policy of the Act, and equivalent statutes in NSW and Victoria, were touched on by the plurality in Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd[2022] ACTCA 42; 371 FLR 96 at [47], the Court of Appeal in Hawkins Construction (Australia) Pty Ltd v Mac's Industrial Pipework Pty Ltd [2002] NSWCA 136 and Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2017] NSWCA 151; 95 NSWLR 82 regarding the NSW statute and by Finkelstein J in Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248 in relation to the Victorian statute.
In Harlech Lee J, with whom Elkaim J agreed, observed at [47] that:
… [the] Act was intended to establish a system for the rapid adjudication and interim resolution of payment disputes. It provides a “minimalist, hands-off” alternative to “costly and protracted” court proceedings, with the aim of alleviating pressure on subcontractors and small business operators: Presentation Speech, Hansard (Thursday 15 October 2009) (at 4541–4543); Explanatory Statement, Building and Construction Industry (Security of Payment) Bill 2009 (ACT) (at 3). The statute is commercial in focus, designed to protect against the failure of any one party in a chain of “cascading payment obligations” to pay for work, goods or services: Presentation Speech (at 4541). The building and construction industry is particularly vulnerable to security of payment issues because it is uniquely reliant on subcontracting relationships with inherent imbalances in bargaining power: Explanatory Statement (at 3).
(Emphasis added)
In Hawkins Davies AJA, with whom Handley and Stein JJA agreed, held at [20] that the terms of s 13(2) of the NSW statute (concerning payment claims) should not be approached in an unduly technical manner. His Honour said:
However, subs (2) of s13 of the Act should not be approached in an unduly technical manner keeping in mind the considerations to which counsel pointed. The terms used by subs (2) of s 13 are well understood words of the English language. They should be given their normal and natural meaning. As the words are used in relation to events occurring in the construction industry, they should be applied in a common sense practical manner.
(Emphasis added)
The salient parts of that passage were quoted with approval by McColl JA, with whom Beazley ACJ (as Her Excellency then was) and Macfarlan JA agreed, in Probuild at [109].
In Probuild, and before the citation of Hawkins referred to above, McColl JA noted the general purpose and policy of the NSW statute. Her Honour said at [103]:
The SOP Act was enacted “to reform payment behaviour in the construction
industry”, by “stamp[ing] out the practice of developers and contractors
delaying payment to subcontractors and suppliers”. It is designed “to ensurethat a person who has carried out construction work under a construction
contract can recover progress payments on an interim basis in circumstances of
a protracted contractual dispute”.
(Emphasis added.)
(Footnotes omitted.)
At [105] her Honour said:
Thus, the SOP Act operates to alter, in a fundamental way, the incidence of
the risk of insolvency during the life of a construction contract by seeking to
preserve the cash flow to a builder notwithstanding the risk that the buildermight ultimately be required to refund the cash in circumstances where the
builder’s inability to repay could be expected to eventuate.
(Emphasis added)
In Protectavale at [11], Finkelstein J also cited with approval the statement from Hawkins at [20] that:
… “[The requirements for a payment claim] should not be approached in an unduly technical manner … As the words are used in relation to events occurring in the construction industry, they should be applied in a commonsense practical manner” …
I see no reason why, given the general purpose and policy of the Act and equivalent statutes in NSW and Victoria, that the same approach should not be taken to the statutory provisions at issue in this appeal.
That is, the provisions of the Act the subject of this appeal should not be approached in an unduly technical manner, and they should be applied in a common-sense practical manner. The provisions should be construed in the context of the general purpose and policy of the Act that being, at least in part, to provide a protective mechanism for subcontractors and suppliers to ensure that they can recover progress payments, preserve their cash flow and thus reduce the incidence of insolvency in the construction industry.
As Lee J noted in Harlech in relation to the Act the subject of this appeal, the Act is commercial in focus, and it was designed to protect against the failure of any one party to pay for work, goods or services in an industry particularly vulnerable to security of payment issues because of inherent imbalances in bargaining power.
It seems to me, as it seemed to Hodgson JA in Brodyn, that the plain words of the provisions favour the construction described by Mossop and O’Sullivan JJ. Section 15(5) means that only one payment claim may be made for each reference date. Section 15(6) means that a subsequent payment claim (with a different reference date) may include an amount that was the subject of a previous claim.
That meaning, to my mind, is consistent with the context, the general purpose and policy of the relevant provisions, their consistency with the balance of the terms of the Act and with fairness when examined against the identified general purpose and policy of the Act and its objects as described above.
Allowing the inclusion of amounts (previously claimed) in subsequent payment claims (with different reference dates) would more readily stamp out the practice of delayed payments to subcontractors and suppliers. It would more readily ensure that a person who has carried out construction work under a construction contract can recover progress payments on an interim basis and would more readily reduce the incidence of subcontractor and supplier insolvencies by preserving their cash flow. To prefer the construction advanced by the cross-appellant would be to accept a construction of the Act which would run counter to those aims.
| I certify that the preceding one hundred and twenty‑two [122] numbered paragraphs are a true copy of the Reasons for Judgment of the Court Associate: Date: 19 July 2023 |
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Amendments
| 19 July 2023 | Replace “by O’Sullivan J” with “by Mossop and O’Sullivan JJ” in paragraph 108. | [108] |
| Insert (1997) prior to 187 CLR 384 in paragraph 102. | [102] |
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