Conset Pty Ltd v Johns Lyng Commercial Builders Pty Ltd

[2010] VCC 275

IN THE COUNTY COURT OF VICTORIA Unrevised

Not Restricted

AT MELBOURNE
CIVIL DIVISION

COMMERCIAL LIST - BUILDING CASES DIVISION

Case No. CI-09-05447

CONSET PTY LTD	Plaintiff
(ACN 103 828 324)
v
JOHNS LYNG COMMERCIAL BUILDERS PTY LTD	Defendant
(ACN 088 343 453)

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JUDGE:	HIS HONOUR JUDGE SHELTON
WHERE HELD:	Melbourne
DATE OF HEARING:	29 March 2010
DATE OF JUDGMENT:	15 April 2010
CASE MAY BE CITED AS:	Conset Pty Ltd v Johns Lyng Commercial Builders Pty Ltd
MEDIUM NEUTRAL CITATION:	[2010] VCC 0275

REASONS FOR JUDGMENT

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Catchwords: Summary judgment application - Building & Construction Industry Security of Payment Act 2002, s.16(2)(a)(i), s.17 – sufficiency of payment schedule – Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 – Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 – Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 – Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391 – Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2009] NSWCA 157.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J A F Twigg	Nicholsons Lawyers & Consultants
For the Defendant	Mr N Andreou	Andrew Bell Lawyer Pty Ltd
HIS HONOUR:

1          This is an application for summary judgment pursuant to Order 22 of the Count Court Rules of Civil Procedure 2008. The application is based upon s.16(2)(a)(i) of the Building & Construction Industry Security of Payment Act 2002 (“the Act”).

2          The approach to be taken to an application such as this is as stated by the High Court in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, at 89, as follows:

“The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.”

3          To similar effect is the statement of Herring CJ and Lowe J in Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332, at 334, that:

“Where there is a real case to be investigated either in fact or law, leave

to defend should be given.”

4          By a Sub-Contract made between the plaintiff and the defendant dated 16 May 2008, the plaintiff undertook to carry out concrete and associated works at 108 Power Street, Hawthorn for the sum of $3,435,500 (“the Sub- Contract”).

5          The plaintiff now claims the sum of $345,817.02. The plaintiff states that this sum is made up as follows:

• $100,288.20 (plus GST), being the amount due under the Sub-Contract for the month of August 2009;

• $151,081.65 (plus GST), being the amount claimed for variations in August 2009;

• $88,780.25 (plus GST), being half the retention amount that, pursuant to the Sub-Contract, fell due for payment upon practical completion of the works.

These three sums total $340,150.10 (plus GST) and the discrepancy between
this sum and the amount claimed was not explained to me.

6          The sum of $88,780.25 (plus GST) was not the subject of a separate payment claim pursuant to s.14 of the Act. Rather, Mr Twigg, who appeared for the plaintiff, relied upon monthly progress claims which showed a deduction of 10 per cent of the amount claimed. These monthly claims contain the notation required by s.14(2)(e) of the Act. Mr Twigg relied upon these monthly invoices which showed the amount deducted by way of the 10 per cent retention allowed under the Sub-Contract and Clause 4.2(a) of the Sub- Contract which provided for the release within 21 days after the issue of a Completion notice of “such amount, not exceeding 50 per cent of any security required under Clause 4.1 as JLCB considers reasonable to ensure JLCB’s interests are not prejudiced”. No separate claim was made for half the retention sum. It is not in dispute that the Completion notice was issued.

7          The notation on the progress claims that 10 per cent retention sum had been deducted read with the provisions of Clause 4.2(a) of the Sub-Contract is not, in my view, a payment claim as envisaged by s.14 of the Act. On account of the need for swift action upon receipt of a payment claim, a recipient must be in no doubt that a payment claim has been made. Here the defendant could well be forgiven for not appreciating the making of such a claim. Further, Clause 4.2 only requires the defendant to release a sum not exceeding 50 per cent of the retention amount which is, in my view, a further bar to the plaintiff obtaining summary judgment for this sum. Mr Twigg properly conceded that the claim for half the retention sum was “novel”, and did not pursue it.

8          In my view, there is a question to be tried with respect to the claim for $88,780.25 (plus GST), being half the retention sum.

9          With respect to the other two sums claimed of $100,288.20 (plus GST) and $151,081.65 (plus GST), it is not in issue that a Payment Claim was made dated 25 August 2009 for $100,288.20 (plus GST) being the August claim under the Sub-Contract and for variations totalling $151,081.65 (plus GST), totalling $276,506.84. Henry Tsai, a contract administrator of the defendant, in an affidavit sworn on 24 March 2010, states that this claim was received on 31 August 2009. He forwarded a response to the plaintiff by facsimile dated 4 September 2009 as follows:

“Re: 108 Power Street, Hawthorn – Payment Schedule
Payment claim Tax invoice 1961 dated 25/08/09 (received on 31/08/09)

We have assessed the above payment claim and advise we disagree with the value claimed by you. Please refer to below our certification.

Total Claimed to date:	$3,691,551.31
Less items not approved-
Contract works not yet completed	$3,435.500.00
Claimed approved	$3,435,500.00  ($0.00)
Variations claimed not yet approved	$256,051.31
Variations approved	$104,969.66  ($151,081.65)
Total Approved to date: Retention: Paid previously:	$3,540,469.66

$177,560.50

$3,262,620.96

Total approved by this payment claim	$100,288.20
GST	$10,028.82

$110,317.02

We advise the above approved value $110,317.02 will be paid in accordance with our contract agreement on or about 30/09/09.”

10        Mr Tsai forwarded a further facsimile to the plaintiff on 7 September 2009 as follows:

“We refer to above Claim No.16 dated the 25/08/09 and advise that the

following variations are still being disputed and further

discussion/information is required.

VO16, 17, 36, 47, 51, 52, 56, 58, 59, 61, 62, 63, 65, 67, 68, 69, 70, 71, 72, 73, 74.

As such, amount certified for this claim is $100,288.20 + GST.”

11        Joseph George Bortolo, a director of the plaintiff, and its contracts administrator, Deanne Rachelle Clements, deny receipt of the facsimile of 4 September 2009.

12        Mr Twigg, who appeared for the plaintiff, submitted that even if the facsimile of 4 September 2009 was, contrary to his submission, served on the defendant, it did not constitute a payment schedule with respect to the sum claimed for variations of $151,081.65 plus GST.

13        He relied upon the wording of s.15(3) of the Act and submitted that the facsimile of 4 September 2009 did not 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”.

14        In Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, Palmer J stated, at paragraph 76:

“A payment claim and a payment schedule are, in many cases, given and received by parties who are experienced in the building industry and are familiar with the particular building contract, the history of construction of the project and the broad issues which have produced the dispute as to the claimant’s payment claim. 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. A payment claim and a payment schedule should not, therefore, be required to be as precise and as particularised as a pleading in the Supreme Court. Nevertheless, precision and particularity must be required to a degree reasonably sufficient to apprise the parties of the real issues in the dispute.”

15        Again, in Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391, Mason P stated, at paragraph 30:

“In Multiplex, Palmer J was considering the requirements for a valid payment schedule. The function of that document is apparent from the statutory scheme to which reference has already been made. Section 14(2) provides that the payment schedule must identify the payment claim to which it relates, and must indicate the amount of the payment (if any) that the recipient of the payment claim proposes to make. Section 14(3) requires the recipient to indicate why payment in full is withheld and the reasons for doing so. The joinder of issue thus achieved sets the parameters for the matters that may be contested if an adjudication under the Act ensues …. .”

(Section 14 of the New South Wales Act corresponds with s.15 of the Act).

16        These statements of the law were approved by the New South Wales Court of Appeal in Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2009] NSWCA 157, at paragraphs 46-52.

17        Mr Andreou, who appeared for the defendant, opposed the application on two grounds. Firstly, he submitted that there was a “real question to be tried” as to whether the facsimile of 4 September 2009 was served on the defendant. Secondly, he submitted that the facsimile of 4 September 2009 was a sufficient indication as required by s.15(3) of the defendant’s reasons for withholding payment.

18        For the purposes of this application, I assume that the facsimile dated 4 September 2009 was received by the defendant on that date. It does not, however, in my view, constitute a payment schedule with respect to the variations.

19        Here, the words “variations claimed not yet approved” does not, in my view, enable the recipient to “decide whether or not to pursue the claim and understand the case it will have to meet in an adjudication” – Perform (NSW), at paragraph 52. Even if taken in conjunction with the facsimile of 7 September 2009, still, in my view, there is not sufficient “indication” to comply with s.15(3) of the Act. I agree though with Mr Twigg’s submission that it is not appropriate to read the facsimile of 4 September 2009 in conjunction with the facsimile of 7 September 2009.

20        The facsimile of 4 September 2009 indicates, in accordance with s.15(2)(b) the scheduled amount. In my view, it is appropriate to regard the facsimile of 4 September 2009 in two parts, one part as a payment schedule which indicates a scheduled amount of $110,317.02 and the other part with respect to the variations which, in my view, does not constitute a payment schedule.

21        A claim for the scheduled amount can be brought pursuant to s.17 of the Act. Mr Andreou properly conceded that it would be difficult for the defendant to oppose such an application.

22        There is no question to be tried with respect to the claim for variations and there will be judgment for the plaintiff in the sum of $151,081.65 plus GST of $15,108.17, totalling $166,189.82.

23        I will hear from the parties on the question of costs, interest and the future conduct of this proceeding.

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