Cloudcon Carpentry Services Pty Ltd v Future Capital Group Pty Ltd
[2020] VCC 1270
•27 August 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
BUILDING LIST
Case No. CI-20-01851
| CLOUDCON CARPENTRY SERVICES PTY LTD (ACN 616 443 166) | Plaintiff |
| v | |
| FUTURE CAPITAL GROUP PTY LTD (ABN 35 098 692 369) | Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF JUDGMENT: | 27 August 2020 | |
CASE MAY BE CITED AS: | Cloudcon Carpentry Services Pty Ltd v Future Capital Group Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 1270 | |
REASONS FOR JUDGMENT
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Subject:Claim under Building and Construction Industry Security of Payment Act 2002
Catchwords: Building and Construction Industry Security of Payment Act 2002 s14; whether “tax invoice” may constitute payment claim; whether adequate particulars supplied in claim.
Legislation:Building and Construction Industry Security of Payment Act 2002; Civil
Procedure Act 2010 s61
Cases Cited: John Beever (Aust) Pty Ltd v Paper Australia Pty Ltd [2019] VSC 126; Hickory
Developments Pty Ltd v Schiavello (Vic) Pty Ltd [2009] VSC 156; Jemzone
Pty Ltd v Trytan Pty Ltd [2002] NSWSC 395; Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248;
Judgment: For the Plaintiff
Orders:
Within 14 days of this day, the parties must bring in short minutes to give effect to
these reasons.
Costs reserved.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | N/A | HFW Australia |
| For the Defendant | N/A | Moray & Agnew Lawyers |
HIS HONOUR:
1 The plaintiff, Cloudcon Carpentry Services Pty Ltd (“Cloudcon”), carries on a carpentry business. (Affidavit of James Louden, sworn 24 April 2020, paragraph 5) According to Mr Louden, “on or about 19 March 2019” Cloudcon and the defendant, Future Capital Group Pty Ltd (“Future Capital Group”) entered into a written construction contract for Cloudcon to provide carpentry services on a building site at 93 Warrigal Road, Hughesdale. Mr Hatzis is a director of Future Capital Group. He says that the sub-contract was entered into “between 19 March 2019 and 30 April 2019”. (Affidavit of Mr Hatzis, sworn 16 June 2020, paragraph 5) Mr Louden exhibited as Exhibit JL‑1 to his affidavit a document styled “Sub-contract Agreement” on Future Capital Group stationery, consisting of some 37 pages. The document as exhibited is in blank; that is, the execution clauses have not been completed. Mr Hatzis, at paragraph 6, stated:
“The contract comprised:
(a)the letter of intent dated 19 March 2019 (Letter of Intent);
(b)the email of 30 April 2019 which attached:
(i) the subcontract agreement including the formal instrument of agreement and the general conditions (Subcontract Terms); and
(ii) a document entitled ‘vetting notes’ (Vetting Notes) as contemplated by the Letter of Intent and referenced at Annexure Part E of the Subcontract Terms.”
He exhibited these documents as Exhibit CH‑1. Once again, the execution clauses are blank. I conclude therefore that the parties “never got round” to executing the “Sub-contract Agreement”, which at p37 provides for execution as a deed.
2 On 22 May 2019, Cloudcon emailed a document styled “Tax Invoice” to Future Capital Group claiming the sum of $16,716.70, referring to certain works at the Warrigal Road property said to have been completed, in some cases as to 100 per cent, in other cases as to 80 per cent. The Tax Invoice concluded with the words “Invoices are to be paid in accordance with ‘Building and Construction Industry Security of Payment Act 2002’.” The invoice was designated “IMV-0287”.
3 According to Mr Louden, Future Capital Group did not serve any document being, or purporting to be, a payment schedule as described in the Building and Construction Industry Security of Payment Act 2002. (Affidavit of Mr Louden, paragraph 17) Cloudcon contends that, pursuant to s16(2)(a)(i) of the Building and Construction Industry Security of Payment Act 2002, it is entitled to recover the amount of the claim. Solicitors acting for it filed an Originating Motion dated 24 April 2020 and a Summons of the same date seeking judgment for that amount, together with ancillary relief. The Notice of Motion and Summons have been referred to me for determination “on the papers”.
Statutory framework
4 In enacting the Building and Construction Industry Security of Payment Act 2002 (“the Act”), on the basis of which the present proceeding has been brought, the Victorian Parliament stated:
“1The main purpose of this Act is to provide for entitlements to progress payments for persons who carry out construction work or who supply related goods and services under construction contracts.”
5 In establishing its own special regime for the recovery of progress payments, the statute enacts:
“47(2) Nothing done under or for the purposes of this Part affects any proceedings arising under a construction contract (including any arbitration proceedings or other dispute resolution proceedings), whether under this Part or otherwise, except as provided by subsections (3) and (4).”
This section is found within Part 3 of the Act - “Procedure for Recovering Progress Payments”. Determinations made under the Act may be revisited in ordinary contractual proceedings between the parties, with amounts awarded under the statute susceptible of restitutionary reversal. The statute establishes a regime of “pay now, litigate later”.
Section 47(3) provides:
“In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal –
(a)must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order, determination or award it makes in those proceedings; and
(b)may make such orders as it considers appropriate for the restitution of any amount so paid, and such other orders as it considers appropriate, having regard to its decision in those proceedings.”
6 Section 5 of the Act provides a detailed definition by way both of inclusions and exclusions of the phrase “construction work”. Neither party suggested that the work in question here did not fall within that phrase as defined.
7 The entitlement to progress payments referred to in the introductory purpose section of the Act is provided for in s9, which states as follows:
“(1) On and from each reference date under a construction contract, a person—
(a)who has undertaken to carry out construction work under the contract; or
(b)who has undertaken to supply related goods and services under the contract—
is entitled to a progress payment under this Act, calculated by reference to that date.
(2) In this section, ‘reference date’, in relation to a construction contract, means—
(a)a date determined by or in accordance with the terms of the contract as—
(i)a date on which a claim for a progress payment may be made; or
(ii)a date by reference to which the amount of a progress payment is to be calculated—
in relation to a specific item of construction work carried out or to be carried out or a specific item of related goods and services supplied or to be supplied under the contract; or
(b)subject to paragraphs (c) and (d), if the contract makes no express provision with respect to the matter, the date occurring 20 business days after the previous reference date or (in the case of the first reference date) the date occurring 20 business days after—
(i)construction work was first carried out under the contract; or
(ii)related goods and services were first supplied under the contract; or
(c)in the case of a single or one-off payment, if the contract makes no express provision with respect to the matter, the date immediately following the day that—
(i)construction work was last carried out under the contract; or
(ii)related goods and services were last supplied under the contract; or
(d)in the case of a final payment, if the contract makes no express provision with respect to the matter, the date immediately following—
(i)the expiry of any period provided in the contract for the rectification of defects or omissions in the construction work carried out under the contract or in related goods and services supplied under the contract, unless subparagraph (ii) applies; or
(ii)the issue under the contract of a certificate specifying the final amount payable under the contract a final certificate; or
(iii)if neither subparagraph (i) nor subparagraph (ii) applies, the day that—
(A)construction work was last carried out under the contract; or
(B)related goods and services were last supplied under the contract.”
8 Section 10 headed “Amount of progress payment” provides inter alia:
“(1) The amount of a progress payment to which a person is entitled in respect of a construction contract is to be—
(a)the amount calculated in accordance with the terms of the contract; or
(b)if the contract makes no express provision with respect to the matter, the amount calculated on the basis of the value of—
(i)construction work carried out or undertaken to be carried out by the person under the contract; or
(ii)related goods and services supplied or undertaken to be supplied by the person under the contract—
as the case requires.
…”
9 As to the valuation of construction work, s11 provides inter alia:
“(1) Construction work carried out or undertaken to be carried out under a construction contract is to be valued—
(a)in accordance with the terms of the contract; or
(b)if the contract makes no express provision with respect to the matter, having regard to—
(i)the contract price for the work; and
(ii)any other rates or prices set out in the contract; and
(iii)if there is a claimable variation, any amount by which the contract price or other rate or price set out in the contract, is to be adjusted as a result of the variation; and
(iv)if any of the work is defective, the estimated cost of rectifying the defect.
…”
10 As to the date when such progress payments are due, s12 provides:
“(1) A progress payment under a construction contract becomes due and payable—
(a)on the date on which the payment becomes due and payable in accordance with the terms of the contract; or
(b)if the contract makes no express provision with respect to the matter, on the date occurring 10 business days after a payment claim is made under Part 3 in relation to the payment.
…”
11 The statute contemplates that building contractors and others claiming to be remunerated for construction work may serve payment claims which, if served in accordance with the statute, create a liability to pay the amount claimed in the absence of service of, what the statute describes as, a “payment schedule”. Sections 14 and 15 provide:
“14 Payment claims
(1)A person referred to in section 9(1) who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.
(2)A payment claim—
(a)must be in the relevant prescribed form (if any); and
(b)must contain the prescribed information (if any); and
(c)must identify the construction work or related goods and services to which the progress payment relates; and
(d)must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount); and
(e)must state that it is made under this Act.
(3)The claimed amount—
(a)may include any amount that the respondent is liable to pay the claimant under section 29(4);
(b)must not include any excluded amount.
(4)A payment claim in respect of a progress payment (other than a payment claim in respect of a progress payment that is a final, single or one-off payment) may be served only within—
(a)the period determined by or in accordance with the terms of the construction contract in respect of the carrying out of the item of construction work or the supply of the item of related goods and services to which the claim relates; or
(b)the period of 3 months after the reference date referred to in section 9(2) that relates to that progress payment—
whichever is the later.
(5)A payment claim in respect of a progress payment that is a final, single or one-off payment may be served only within—
(a)the period determined by or in accordance with the terms of the construction contract; or
(b)if no such period applies, within 3 months after the reference date referred to in section 9(2) that relates to that progress payment.
(6)Subject to subsection (7), once a payment claim for a claimed amount in respect of a final, single or one-off payment has been served under this Act, no further payment claim can be served under this Act in respect of the construction contract to which the payment claim relates.
(7)Nothing in subsection (6) prevents a payment claim for a claimed amount in respect of a final, single or one-off payment being served under this Act in respect of a construction contract if—
(a)a claim for the payment of that amount has been made in respect of that payment under the contract; and
(b)that amount was not paid by the due date under the contract for the payment to which the claim relates.
(8)A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract.
(9)However, subsection (8) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim if the amount has not been paid.
15 Payment schedules
(1)A person on whom a payment claim is served (the respondent) may reply to the claim by providing a payment schedule to the claimant.
(2)A payment schedule—
(a)must identify the payment claim to which it relates; and
(b)must indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount); and
(c)must identify any amount of the claim that the respondent alleges is an excluded amount; and
(d)must be in the relevant prescribed form (if any); and
(e)must contain the prescribed information (if any).
(3)If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent's reasons for withholding payment.
(4)If—
(a)a claimant serves a payment claim on a respondent; and
(b)the respondent does not provide a payment schedule to the claimant—
(i)within the time required by the relevant construction contract; or
(ii)within 10 business days after the payment claim is served;
whichever time expires earlier—
the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.”
12 Section 16 provides that when a payment schedule has been served and payment is not made, the claimant may recover the amount claimed from the respondent “as a debt due to the claimant, in any court of competent jurisdiction”. It is this jurisdiction which the plaintiff invokes, or purports to invoke, in this proceeding.
13 Section 17 says that if payment is not made by a respondent in accordance with the terms of the payment schedule, the unpaid portion may similarly be recovered “in any court of competent jurisdiction”.
14 Where a payment schedule indicates a payment less than the amount claimed, the claimant may seek an adjudication from an adjudicator under s18 of the statute. Section 28M and the following sections, make provision for payment by the respondent to the adjudication application of the amount determined by the adjudicator.
Defence
15 The solicitors for Future Capital Group say that Cloudcon “has failed to satisfy the jurisdictional pre-requisites under the [Building and Construction Industry Security of Payment] Act because:
“(a)the Purported July Payment Claim is not a ‘payment claim’ made under the Act but rather a ‘tax invoice’ and therefore does not satisfy the requirements under s14(2)(e) of the Act;
(b)furthermore and/or alternatively, the Purported July Payment Claim fails to meet the requirements under s14(2) of the Act, as identified in Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248.”
16 According to the defendant’s solicitors, the document was properly characterised as a tax invoice and not a payment claim made under the Act. They referred to the heading “Tax Invoice”, its reference to an “invoice date” and its being given a number as an invoice. The endorsement on the document was “Invoices are to be paid in accordance with ‘Building and Construction Industry Security of Payment Act 2002’”, which did not, they said, meet the requirements of s14(2)(e) which require that a payment claim “must state that it is made under” the Act. They said the contract differentiated between payment claims and tax invoices. They concluded:
“The right to serve a payment claim arises on and from the 25th day of each month under clause 8.3 of the Contract, which is also the relevant reference date for the purpose of section 9 of the Act.” (Outline of submissions, paragraphs 5-10)
17 Referring to clause 8.6 of the contract, they said it “clearly contemplates a regime where a payment claim is required to be served prior to the service of a tax invoice” and Cloudcon, incorrectly, now seeks to retrospectively frame the “Purported June Payment Claim” as a payment claim made under the Act rather than a “tax invoice”. (Defendant’s submissions, paragraphs 11 to 12) They referred to the decision of Austin J in Jemzone Pty Ltd v Trytan Pty Ltd [2002] NSWSC 395, where his Honour held that a document relied on as a payment claim did not satisfy the requirements of the New South Wales equivalent of s14(2)(e) where it stated:
“This invoice is subject to the Building and Construction Industry Security of Payment Act 1999, No 46.”
The absence in the present case of the words “made under the Act” was, they said, fatal. (Defendant’s submissions, paragraphs 13-15)
18 By reference to the decision of Finkelstein J in Protectavale, they said that the alleged claim was not sufficiently detailed to enable Future Capital Group to understand the basis of the claim in that it―
“(a)fails to identify the particular portions of work claimed with respect to the purported payment claim;
(b)fails to identify amounts previously paid or the works previously paid under previous payment claims; and
(c)merely provides a token unit quantity of one unit with respect to each line item.”
They concluded, therefore, that their client’s “defence has real prospects of success”. (Defendant’s submissions, paragraphs 16-20)
Plaintiff’s contentions
19 According to the plaintiff’s solicitor, there was no requirement in s14(2) of the Act that “a payment claim should not be labelled as a tax invoice”. They referred to the formulation of the requirements of the subsection by Lyons J in John Beever (Aust) Pty Ltd v Paper Australia Pty Ltd [2019] VSC 126 [83]. The distinction between a payment claim and a tax invoice was, they said, “trivial, provided the document in question meets the other requirements of s14(2)”. (Plaintiff’s submissions, paragraphs 1-3) They said, “once a claim is made under the SOP Act (as is the case here) the prescripts of the SOP Act apply.” They referred to Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 [18]. As to the endorsement, it was sufficient, they said, to meet the requirements of s14(2)(e) as being “sufficient for FCG to be aware that the Payment Claim is a payment claim for the purposes of the SOP Act and the consequences that follow apply.”
20 As to the level of detail provided, they said this situation was different from the one in Protectavale, where Finkelstein J said “It is impossible to determine the basis of the claim for $215,850.” ([2008] FCA 1248 [15]) They said:
“There is no uncertainty here and it is clear what the nature of the claim is. In fact, Mr Hatzis does not assert that he has any uncertainty. Cloudcon thus submits that there can be no confusion in this regard.” (Plaintiff’s submissions, paragraph 10)
They noted that in John Beever’s case ([2019] VSC 126 [18]), Lyons J said that the relevant test was objective and should be judged from the standpoint of a reasonable recipient in the position of the actual recipient and prior exchanges between the parties might be resorted to. They said:
“Each item which is claimed is described and a corresponding amount is provided. It is easily ascertainable how the claimed amount is calculated by adding these items together.” (paragraph 12)
Conclusions
21 I can deal immediately with the argument by Future Capital Group that what is relied on by Cloudcon as a payment claim is, in truth, a tax invoice. There was no explanation as to why, as a matter of general law and principle, a document could not answer both the description of “tax invoice” and “payment claim” for the purposes of the Building and Construction Industry Security of Payment Act 2002. Tax invoices are a creation of the Commonwealth Goods and Services Tax regime to provide records for assessment and substantiation of transactions constituting taxable supplies of goods or services under the Goods and Services Tax regime. That the document which would fulfil that role for tax purposes might also constitute a demand for the payment of a debt, or alleged debt, under the general law of contract would be unsurprising. There is nothing in s14 of the Building and Construction Industry Security of Payment Act 2002 which would require a payment claim to be unique and separate from other documents generated as between debtor and creditor in the building industry or for tax purposes.
22 This leaves only the argument that the relevant contract here draws a distinction between tax invoices and the payment schedules. (Clause 8.6) The Act creates a radically different debtor/creditor regime in the building industry relative to the transactions which it regulates from the one created by the general law of contract. There are many respects in which the law of contract is incorporated into the statutory regime; for instance, relative to the identification of “reference dates”. Section 14 of the Act is not one of these provisions; it stands on its own. A document which answers the description in s14 and meets its criteria is a payment claim. A contractual attempt to modify the operation of s14 is invalid by force of s48(2) of the Act. The question here is whether the various criteria laid down by the section have been met in the present instance. The obvious difficulty here is compliance with the requirements of paragraph (e) of s14(2) of the Act. The clear form of words which should have been adopted here is, “This is a payment claim pursuant to the Building and Construction Industry Security of Payment Act 2002.” It is a matter of bafflement why nearly two decades after the enactment of this epoch-making legislation, operators in the building industry seem to be incapable of incorporating this simple form of words in the documents which they intend to operate as payment claims. In none of the matters which I have considered under the terms of the Act have these words been adopted. Presumably, if they had, the matters would not have been so contentious as to require a disputed hearing in Court.
23 The issue of adequate compliance with paragraph (e) was considered by Lyons J in John Beever (Aust) Pty Ltd v Paper Australia Pty Ltd [2019] VSC 126. The endorsement on the document which his Honour was considering was in the following form:
“Please note that all claims are payment claims made under the Building and Construction Industry Security of Payment Act 2002 (VIC)”.
24 His Honour concluded that this payment claim was effective and determined to grant the plaintiff summary judgment with respect to it. ([2019] VSC 126 [89]) His Honour considered, however, that a later claim made referable to the following month was not an effective payment claim for the purposes of the Act. Significantly, perhaps relative to the first of the defendant’s arguments considered above, he determined against the validity of the July claim as a payment claim under the Act because it was “not an invoice”. ([2019] VSC 126) The July claim was characterised as a “progress payment claim form”. According to his Honour’s judgment, the form of claim “was not produced”, so its text does not appear in the judgment. [22]
25 The argument pressed by the plaintiff and rejected by his Honour was that the reference to the Act in the earlier claim could be regarded as somehow incorporated by reference or “read into” the July claim [95]. The July claim, it would seem, made no reference whatsoever to the Act either by its accurate title or in some mangled form. The approach adopted by his Honour to the application of the s14(2) criteria to the alleged payment claim was as follows:
“90.The position in respect of the July claim is different. For the reasons that follow, I have concluded that the defence advanced by the defendant in respect of the July claim has reasonable prospects of success. This is because I have formed the view that the July claim does not meet the statement requirement.
91.The authorities referred to above relate, for the most part, to the identification requirement, rather than the statement requirement. However, I consider that the general principle that compliance with s 14(2)(c) is not to be approached in an unduly technical manner also applies to the statement requirement in s 14(2)(e).
92.That said, the statement requirement in its terms is clear: it requires that the payment claim ‘must state that it is made under this Act’.
93.Further, it is important to acknowledge the significance of the statement requirement. It is of critical importance that the recipient of a claim is aware that the claim is a payment claim for the purposes of the Act. This is so that the recipient may comply with the time requirements imposed on them in respect of the service of any payment schedule under s 15 of the Act. As noted by the Court of Appeal in SSC set out at [47] above, the Act lays down clear specifications of time to be observed, rendering it not difficult to understand that the availability of the rights conferred upon a person seeking payment under the Act should depend upon strict observance of the statutory requirements that are involved in their creation.
94.In the present case, the July claim did not state that it was claim made under the Act. In my view, a purposive and non-technical construction of the statement requirement would authorise a Court to look at the covering correspondence serving the payment claim to determine whether the statement requirement has been met. However, in this case, the 9:47 pm email serving the July claim also did not state that it was claim made under the Act.
…
98.In all the circumstances, I have concluded that the July claim does not meet the statement requirement. This is because of the failure of each of the July claim or the 9:37 pm email by which it was served to contain the statement requirement: that the claim was made under the Act. This is notwithstanding the terms of the 6:36pm email particularly given the differences between the form of the May and June claims on the one hand and the July claim on the other. Viewed objectively, I do not consider that the statement requirement has been met: there was real doubt that a reasonable recipient in the shoes of the defendant would have reasonably concluded that the July claim was a payment claim under the Act.”
26 Ultimately, in this analysis, one is required to consider what a “reasonable recipient” in the “defendant’s shoes” would have made of the alleged payment claim.
27 The defendant relied on the decision of Austin J in Jemzone, referred to above. His Honour was concerned, here, not with a claim under the New South Wales equivalent of the Building and Construction Industry Security of Payment Act 2002, but, rather, with the validity of a statutory demand, viz a wind‑up notice served under the Corporations Act. His Honour was dealing with an application under s459G of that statute to set aside that statutory demand. The document would not be valid as a statutory demand or “wind‑up notice” if the debt claimed was subject to a genuine dispute or offsetting claim. His Honour concluded, as a matter of general law, that such a dispute or offsetting claim existed [23].
28 His Honour then considered whether the document could be regarded as a Building and Construction Industry Security of Payment Act payment claim which, if it were true, would render the relevant debt payable “regardless of whether [the recipient company] has any genuine dispute about the debt or any genuine offsetting claim.” [24] His Honour dealt with this issue primarily by determining that the New South Wales Act in its then form enabled the recovery of “progress claims”, but not the final amount payable on practical completion. [34] His Honour said:
“If the Act was intended to apply in the case of the final payment on practical completion, it would have been a simple matter for the drafter of the statement of the object of the Act in s3(1) to refer to the entitlement to receive all payments due under the construction contract rather than only ‘specified progress payments’.” [37]
29 Finally, as a further reason for determining against the validity of the wind‑up notice, his Honour said:
“45.Section 13(2)(c) requires the payment claim to state that it is made under the Act. The document in question states:
‘This invoice is subject to the Building and Construction Industry Security of Payment Act 1999, No 46’.
46This is not a statement that the document is a payment claim made under the Act. I do not accept the submission by the plaintiff that a payment claim should expressly draw the recipient's attention to the Act and the provisions concerning the issuing of a payment schedule. Section 13 (2) makes no such requirement. Since, however, the issuing of a proper payment claim has the serious consequences for the recipient of requiring full payment regardless of any genuine dispute or offsetting claim, unless a payment schedule is lodged within time, it must be clear on the face of the document that it purports to be a payment claim made under the Act. The defect on the face of the document is not overcome by evidence that the recipient was not misled. The requirement was not satisfied in the present case.”
30 If this approach be applied in the present case, I agree with the solicitors for the defendant that the plaintiff’s claim must fail. It is, however, significantly more technical than the approach adopted by Lyons J in John Beever referred to above. In particular, it adopts an approach to the Act, viz that the Act provides such radical and extraordinary advantages to a payment claimant in the construction industry that these extraordinary rights should be available only subject to the strictest compliance with the language and procedural requirements of the Act. This approach was repudiated by Vickery J in a frequently quoted passage from his judgment in Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd [2009] VSC 156 [162]-[163] in a slightly different context where his Honour said:
“162The submissions made by Hickory to which I have referred, smack of excessive technicality. The legislature did not intend, in my view, that precise compliance with all of the more detailed requirements of the Act is essential to the existence of a valid determination. To approach the matter in the manner suggested by Hickory would not accord with the legislative intention disclosed in the Act that adjudication determinations should be made and given effect to with minimum delay and therefore should be approached with minimal technicality and court involvement.
163True it is that the Act places the claimant in a privileged position in the sense that it acquires rights that go beyond its contractual rights. However, it is artificial to elevate this consideration to the point where it operates to insist on strict compliance with every procedural requirement with the attendant risk of the process being declared a nullity in the event of non-compliance, as the price for the privilege. In my view, it is not of sufficient weight to displace the legislative intention which I have described.”
31 In my respectful opinion, the approach adopted by Austin J in Jemzone is at odds with the approach to the Act in the more recent decisions of Vickery and Lyons JJ, already referenced. The High Court of Australia has stressed the need for courts throughout Australia to follow determinations of intermediate Courts of Appeal unless such decisions are considered to be “plainly wrong”. This admonition does not apply to first instance determinations from other states. I respectfully prefer the local authority.
32 Despite the mangled and infelicitous language used in the present case, in my view, a reasonable recipient, being an operator in the Victorian building and construction industry, would be in no doubt that a document bearing the endorsement on the present invoice was intended to operate as a payment claim under the Act and the requirements of s14(2)(e) should be regarded as satisfied.
33 I turn, finally, to the contention on behalf of Future Capital Group that there is insufficient detail to be found in the invoice for it to meet the requirements of s14(2)(c) in that it is said to fail to “identify the construction work or related goods and services to which the progress payment relates”. Reliance was placed upon the decision of Finkelstein J in Protectavale, referred to above. The facts in that case were quite different to the facts in the present case. It is unnecessary to track them in any detail.
34 As to the general principles applicable to the adequacy of a payment claim for the purposes of paragraph (c), his Honour said:
“11.The manner in which compliance with s14 is tested is not overly demanding: Leighton Contractors Pty Ltd v Campbelltown Catholic Club Ltd [2003] NSWSC 1103 at [54] citing Hawkins Construction (Aust) Pty Ltd v Mac’s Industrial Pipework Pty Ltd [2002] NSWCA 136 at [20] (‘[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’); Multiplex Constructions [2003] NSWSC 1140 at [76] (‘[A] payment claim and a payment schedule must be produced quickly; much that is contained therein in an abbreviated form which would be meaningless to the uninformed reader will be understood readily by the parties themselves’); Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA Pty Ltd) [2007] QSC 333 at [20] (‘The Act emphasises speed and informality. Accordingly one should not approach the question whether a document satisfies the description of a payment schedule (or payment claim for that matter) from an unduly critical viewpoint’).
12.Nonetheless a payment claim must be sufficiently detailed to enable the principal to understand the basis of the claim. If a reasonable principal is unable to ascertain with sufficient certainty the work to which the claim relates, he will not be able to provide a meaningful payment schedule. That is to say, a payment claim must put the principal in a position where he is able to decide whether to accept or reject the claim and, if the principal opts for the latter, to respond appropriately in a payment schedule: Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) (2005) 64 NSWLR 462, 477; John Holland Pty Ltd v Cardno MBK (NSW) Pty Ltd [2004] NSWSC 258 at [18]-[21]. That is not an unreasonable price to pay to obtain the benefits of the statute.”
35 In the case before him, his Honour concluded that, extrapolating the various figures to be found in the relevant claim, the sum of $215,850 was claimed, the basis for which was impossible to determine. It might have been a claim made under the contract, or, his Honour considered, it might have been “for construction work or ancillary activity”. [15] Here, a series of items is identified. (See Exhibit CH‑4 describing installation of skirtings and architraves, split jambs and so forth, identifying the relevant level, and the percentage of completeness.) Needless to say, in a proceeding such as this, the configuration of the works under construction was not disclosed. One could imagine, in a hypothetical case, an otherwise valid “payment claim” might be rendered invalid by an incomprehensible claim for work on “Level 11” of a development which consisted of nine levels only. If there were any examples such as this in the present case, one would have expected to have it referred to in the affidavit on behalf of the defendant by Mr Hatzis. No such statement appears in the affidavit, nor any description of any perplexity created by the description of works allegedly completed.
Disposition
36 As to the matters raised in the defendant’s Outline of Submissions filed on behalf of Future Capital Group, Cloudcon succeeds. An application such as this in circumstances where the matter was commenced by writ requires satisfaction of the criteria applicable to a summary judgment application under s61 of the Civil Procedure Act 2010, as stated in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27. The present proceeding was commenced by Originating Motion. Whether any different approach is required need not be considered because the defences urged on behalf of Future Capital Group have no reasonable prospect of success or perhaps only a fanciful prospect of success.
37 A number of other matters were raised in Mr Hatzis’s affidavit, but not taken up in the submissions filed on behalf of Future Capital Group. My assumption is that those matters are abandoned or not pressed, in particular, a matter relative to the “reference date” which led Mr Louden to file a supplementary affidavit exhibiting a proposed amended Originating Motion. As I interpret events, this matter need not be dealt with either. Should I be wrong, however, I leave it open to the parties to make further submissions on the subject. Subject to those further submissions, I direct that within 14 days of this date, the parties bring in short minutes to give effect to these reasons.
38 I will reserve costs.
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