Cook Building & Development Pty Ltd v Gardman Pty Ltd

[2020] SADC 20

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

COOK BUILDING & DEVELOPMENT PTY LTD v GARDMAN PTY LTD

[2020] SADC 20

Decision of His Honour Judge O'Sullivan

6 March 2020

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - ENDING PROCEEDINGS EARLY - SUMMARY DISPOSAL - SUMMARY JUDGMENT FOR PLAINTIFF OR APPLICANT

The plaintiff and defendant entered into a Contract for the construction of 18 Townhouses.  The Contract provided for monthly progress claims.  During the course of the Contract the plaintiff lodged 15 progress claims with the Superintendent, all of which were certified for payment.  The first 11 progress claims were paid in full. 

Progress claims 12-15 were part paid. 

Each progress claim was accompanied by a payment claim within the meaning of the Building and Construction Industry Security of Payment Act 2009 ("Act"). Each of the payment claims was served on either the Superintendent and/ or Mr Shaw, one of the three owners of the Land in question but not a director of the defendant. The defendant failed to provide payment schedules. The plaintiff applies for summary judgment under s15(2)(a)(i) of the Act in the sum of $810,423.70 plus interest. The defendant submits the payment claims were not served in accordance with the Act and were defective for other reasons.

Principles relating to apparent or ostensible authority discussed and applied.

Held:

1. The Superintendent and Mr Shaw had ostensible authority to receive the payment claims in question on behalf of the defendant.

2. Application allowed.

3. Summary judgment for the plaintiff to be entered in the sum of $810,423.70 plus interest.

4. Parties to be heard on the question of interest and costs.

Building and Construction Industry Security of Payment Act 2009 (SA); District Court Civil Rules 2006 s 232, referred to.
ISIS Projects Pty Ltd v Clarence Street Pty Ltd [2004] NSWSC 714 [65]; Davies v Minister for Urban Development and Planning & Anor [2011] 109 SASR 518 [44]; Spencer v Commonwealth (2010) 241 CLR 118; Built Environs Pty Ltd v Tali Engineering Pty Ltd [2013] SASC 84; Civil & Allied Technical Construction Pty Ltd v Resolution Institute & Ors [2019] SASC 193; Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393 [207]-[209]; Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211; Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] 30 VR 141; Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, 503; The Trustee for Allway Unit Trust Trading as Westside Mechanical Contracting Pty Ltd v R&D Airconditioning Pty Ltd & Ors [2018] SASC 46, considered.

COOK BUILDING & DEVELOPMENT PTY LTD v GARDMAN PTY LTD
[2020] SADC 20

Introduction

1. The plaintiff (“Cook”) applies for summary judgment in the sum of $810,423.70, relying on s15(2)(a)(i) of the Building and Construction Industry Security of Payment Act 2009 (SA) (the “Act”).

2. Cook reads and relies upon the affidavits of:

3. Cameron Peter Francis Sumpter - sworn and filed 12 September 2019 (First Sumpter Affidavit);

4. Cameron Peter Francis Sumpter – sworn and filed 31 October 2019 (Second Sumpter Affidavit);

   i.Loni Jean Manners – sworn 4 October 2019, filed 31 October 2019;

   ii.Peter John Basedow – sworn and filed 31 October 2019;

   iii.Derek David Murphy – sworn and filed 31 October 2019;

   iv.Tracey Lee Visintin – sworn 4 November 2019, filed 5 November 2019.

5. The defendant (“Gardman”) reads and relies upon the affidavits of:

   i.Michael John Stokie – sworn 29 October 2019, filed 30 October 2019 (First Stokie Affidavit);

   ii.Michael John Stokie – sworn 4 November 2019, filed 7 November 2019 (Second Stokie Affidavit);

   iii.Gregory Shaw – sworn 4 November 2019, filed 7 November 2019;

   iv.Sam Paddick – sworn and filed 6 November 2019.

6. Both Cook and Gardman objected to parts of the affidavit evidence.  I received the affidavits de bene esse and directed the parties to file a table setting out the passages of the affidavits to which objection was taken and why.  The other party was to respond to that objection in writing on the same table and as part of my reasons I would rule on the admissibility of the passages in question.

7. My rulings, set out in tabular form with the parties’ respective objections and responses is attached at Annexure A to these reasons. 

   Background

8. Cook is a builder, supplying labour, materials and construction services. 

9. By contract dated 22 March 2018,[1] (“Contract”) Cook and Gardman entered into a contract for the construction of 18 townhouses (“Project”) on land situated at West Lakes Shore (“Land”). 

   [1]    First Stokie Affidavit, Exhibit MJS-1, volume 1, p 9.

10. There are three registered proprietors of the Land – West Lakes No.1 Pty Ltd as trustee for the West Lakes No.1 Trust; West Lakes No.2 Pty Ltd as trustee for the West Lakes No.2 Trust; and West Lakes No.3 Pty Ltd as trustee for the Catalyst Investment Fund.

11. Michael John Stokie is the sole director, secretary and shareholder of Gardman.  He is also the sole director of West Lakes No.1 Pty Ltd.  His son, Luke Stokie is the sole director of West Lakes No.2 Pty Ltd and Gregory Shaw is the sole director of West Lakes No.3 Pty Ltd.[2]

    [2]    Ibid [4]-[8].

12. The Contract comprised the usual Formal Instrument of Agreement in the form AS4950-2006 and General Conditions of Contract (GCC) AS4000-1997, together with Annexures parts A-D.

13. Gardman submits there were other documents which also formed part of the Contract.  I will deal with those documents during the course of these reasons if it becomes necessary to do so.

14. The contract sum was $12,949,200 (inc GST). 

15. The Superintendent named in the Contract was WT Partnership.[3]

    [3]    Ibid, p 84.

16. There is no dispute that during the course of the Project, Cook provided 15 progress claims to the Superintendent.

17. Each of progress claims 1-11 were certified for payment by the Superintendent. Included in the bundle of supporting material accompanying the progress claims was a tax invoice endorsed under the Act as a payment claim.[4]  Each of progress claims 1-11 were paid in full by Gardman. 

    [4]    Murphy Affidavit, Exhibit DM-3, pp 7, 10, 14, 16, 17, 22, 23, 25, 27, 29, 31, 34, 35, 39, 42, 44, 47, 51, 52, 56, 58.

18. This application concerns four progress claims and consequent payment claims referred to as:

    i.The March claim (progress claim number 12);[5]

    ii.The April claim (progress claim number 13);[6]

    iii.The May claim (progress claim number 14);[7] and

    iv.The June claim (progress claim number 15).[8]

    [5]    First Sumpter Affidavit, Exhibit CS-1, pp 1-15.

    [6]    Ibid, pp 16-29.

    [7]    Ibid, pp 30-43.

    [8]    Ibid, pp 44-60.

19. Each of the four progress claims comprised a bundle of documents which provided supporting information for the progress claims and were sent under cover of an email to the Superintendent by Cook, accompanied by a tax invoice in anticipation of the Superintendent certifying the amount claimed. Each of the four tax invoices in question bears the notation “This is a payment claim made under the Building and Construction Industry Security of Payment Act 2009 (SA).”

20. In the event the Superintendent certified an amount different to that claimed in a progress claim, an amended tax invoice in the sum certified was issued.  This occurred on one occasion which was progress claim number 13 (April progress claim).[9]

    [9]    Murphy Affidavit, Exhibit DM-3, pp 77-79.

21. In these reasons I refer to the tax invoices as “payment claims”.

    March progress claim

22. The March progress claim was certified by the Superintendent on 27 March 2019,[10] and the Superintendent sent the certified claim by email to Cook and others including Mr Shaw that day. The progress claim certified by the Superintendent included a payment claim dated 22 March 2019, which was addressed to Gardman in the amount certified.[11]  Gardman part-paid the payment claim.

    April progress claim

    [10] Ibid, pp 61-76.

    [11] Ibid, p 72.

23. The April progress claim was sent to the Superintendent and others by email from Cook dated 2 May 2019.[12]

    [12] Ibid, pp 77-79.

24. It was certified by the Superintendent on 7 May 2019 and sent by the Superintendent by email to Cook and others, including Mr Shaw that day. [13]  On 7 May 2019, Cook sent a payment claim dated 15 May 2019 by email to the Superintendent and others, including Mr Shaw.[14]  The payment claim was addressed to Gardman in the amount certified.  It is not clear why the tax invoice was dated 15 May 2019 when it was apparently sent to the Superintendent on 7 May 2019 but no party took any point and Gardman part-paid the payment claim.[15]

    May progress claim

    [13] Ibid, pp 77-80.

    [14] Ibid, p 80.

    [15] Defence [11.2.6]. 

25. The May progress claim was certified by the Superintendent on 7 June 2019[16] and the Superintendent sent the certified claim by email to Cook and others including Mr Shaw that day.  The progress claim certified by the Superintendent included a payment claim dated 6 June 2019[17] which was addressed to Gardman in the amount certified.[18]  Gardman part-paid the payment claim.

    June progress claim

    [16] Ibid, pp 81-95.

    [17] Ibid, p 92.

    [18] Ibid, p 81.

26. The June progress claim was sent to the Superintendent and others by email from Cook on 20 June 2019.  It was certified by the Superintendent on 26 June 2019[19] and that day, the Superintendent emailed Cook asking it to provide its tax invoice and a statutory declaration.  That email was copied to others, including Mr Shaw.[20]  On 26 June 2019, Cook sent by email to the Superintendent and others, including Mr Shaw, a payment claim dated 26 June 2019 addressed to Gardman in the amount certified.  Gardman part-paid the invoice.[21]

    [19] Ibid, pp 96-103.

    [20] Ibid, p 96.

    [21] Ibid, p 101. 

    Cook’s Claim – Overview

27. Cook’s claim is straightforward. 

28. It submits such that each tax invoice is a payment claim within the meaning of s13 of the Act and that Gardman failed to provide payment schedules as required by s14 of the Act.

29. On the basis that each of the tax invoices comprised payment claims within the meaning of the Act and Gardman’s failure to serve payment schedules in response, Cook seeks summary judgment relying on s15(2)(a)(i) of the Act.

30. Section 15 provides:

    15—Consequences of not paying claimant where no payment schedule

    (1)     This section applies if the respondent—

    (a) becomes liable to pay the claimed amount to the claimant under section 14(4) as a consequence of having failed to provide a payment schedule to the claimant within the time allowed by that section; and

    (b)     fails to pay the whole or a part of the claimed amount on or before the due date for the progress payment to which the payment claim relates.

    (2)     In those circumstances, the claimant—

    (a)     may—

    (i)recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in a court of competent jurisdiction; or

    (ii) make an adjudication application under section 17(1)(b) in relation to the payment claim; and

    (b)     may serve notice on the respondent of the claimant's intention to suspend carrying out construction work (or to suspend supplying related goods and services) under the construction contract.

    (3)     A notice referred to in subsection (2)(b) must state that it is made under this Act.

    (4)If the claimant commences proceedings under subsection (2)(a)(i) to recover the unpaid portion of the claimed amount from the respondent as a debt—

    (a)     judgment in favour of the claimant is not to be given unless the court is satisfied of the existence of the circumstances referred to in subsection (1); and

    (b)     the respondent is not, in those proceedings, entitled—

    (i)    to bring a cross-claim against the claimant; or

    (ii)to raise a defence in relation to matters arising under the construction contract.

31. Under s15(4), the court is not to give judgment in the plaintiff’s favour unless the court is satisfied of the existence of the circumstances referred to in s15(1).

32. Section 15(1) provides for a respondent becoming liable to pay the amount claimed under s14(4) of the Act as a consequence of a failure to provide a payment schedule within the required time.

33. If that is satisfied then pursuant to s15(4), on an application for judgment on the claimed amount, a respondent is not entitled:

    i.to bring a cross-claim against the claimant; or

    ii.to raise a defence in relation to matters arising under the construction contract.

34. Cook applies for summary judgment for the sum outstanding on the four payment claims totalling $810,423.70.

    Gardman’s Response - Overview

35. Gardman denies it was required to serve payment schedules but accepts it did not do so.[22] It denies each of the four tax invoices in question is a payment claim within the meaning of s13 of the Act on a number of grounds including that each was not served in accordance with the Act, hence its submission is that it was not required to provide a payment schedule. [23] 

    [22] Defence [23].

    [23] Defence [11.1.4], [11.2.4], [11.3.4], [11.4.4].

36. Progress claims are dealt with in the Contract under GCC 37 and Special Condition of Contract (“SCC”).  Gardman admits that the Superintendent certified each of the progress claims[24] but denies that was done under GCC 37.2(a)(b).  It accepts the Superintendent certified Cook’s progress claims pursuant to SCC 2.1 and GCC 37.2. 

    [24] Defence [11.1.3], [11.2.3], [11.3.3], [11.4.4].

37. As I have noted, Gardman admits it has paid various amounts against the payment claims as follows:[25]

    [25] Defence [11.1.6], [11.2.6], [11.3.6], [11.4.6].

Tax Invoice	Progress claim No.	Claimed (inc GST)	Paid	Balance
22 March 2019	No.12	$634,871.75	$577,156.14	$57,715.61
15 May 2019	No.13	$832,095.25	$756,450.23	$75,645.02
6 June 2019	No.14	$443,084.40	$402,804.00	$40,280.40
26 June 2019	No.15	$1,186,060.00	$549,277.89	$636,782.67
Total	$3,096,111.97	$2,285,688.26	$810,423.70

1. Gardman submits there is a reasonable basis for defending Cook’s claims in the sense there is a reasonable basis for contending that the necessary requirements of s15(4) of the Act have not been satisfied or may not have been satisfied. It relies on five grounds:

   1First, the payment claims have not been served by Cook on Gardman as required by s13(1) of the Act and/ or in accordance with s34 of the Act.[26] Specifically, in the case of the March and May payment claims (numbers 12 and 14 respectively) Gardman submits that the emails relied upon by Cook by way of service under the Act were sent by the Superintendent rather than Cook. The plaintiff says that is fatal to the application because under s13(1) of the Act, service of a payment claim must be by the person who is, or who claims to be, entitled to a progress payment.

   2Second, the payment claims did not adequately identify the construction work to which they related and, therefore, did not comply with the mandatory requirement for payment claims contained in s13(2)(a) of the Act. Specifically, in the case of the April and June progress claims (numbers 13 and 15 respectively) the emails relied upon by Cook for the purpose of service of the payment claim under the Act attached Cook’s invoices but not the supporting progress claim breakdowns such that the emails did not satisfy the mandatory requirements of s13(2)(a) of the Act.[27]

   3Third, each of the payment claims were in relation to anticipated work under the Contract which was intended to be carried out by Cook. Gardman submits that s13(4) of the Act precludes payment claims in relation to anticipated work because payment claims can only be served within the period of six months after which the construction work to which that claim relates was last carried out and because it is anticipated work, the 6 month period had not begun to run.[28]

   4Fourth, the payment claims were invalid because a payment claim or a “claimed amount” in relation to a payment claim under the Act must be limited to the amount claimed to be due for “construction work carried out” as opposed to construction work anticipated to be carried out in the future. In the alternative, under the scheme and policy of the Act, only construction work done up to a particular reference date is able to be the subject of a payment claim;[29] and

   5Fifth, Gardman relies upon what it describes as “equitable grounds”.  The equitable ground is said to be unjust enrichment.  As I understand that submission, insofar as the June progress claim is concerned, it contains a claim for loss of profit in respect of work not carried out under the Contract.  As such, it does not represent a proper reflection of any loss of profit suffered by Cook because Cook has not incurred the costs associated with the balance of the June progress claim.  I note that equitable ground is not pleaded in Gardman’s defence but I will deal with it anyway in the course of these reasons.[30]

   [26] Defendant’s Written Submissions [13].

   [27] Defendant’s Written Submissions [14].

   [28] Ibid [15].

   [29] Ibid [16].

   [30] Ibid [18], [173].

   Summary Judgment Principles

2. Under DCR 232, on an application for summary judgment, the court may only give summary judgment if the court is satisfied there is no reasonable basis for defending the applicant’s claim.  DCR 232 provides:

   232—Summary judgment

   (1)     The Court may, on application by a party, give summary judgment for that party.

   (2)     Summary judgment may only be given if the Court is satisfied that—

   (a)     if the applicant is a plaintiff—there is no reasonable basis for defending the applicant's claim; or

   (b)     if the applicant is a defendant—there is no reasonable basis for the claim against the applicant.

3. Section 15 of the Act proceeds on the basis that no payment schedule has been provided. A payment schedule is the opportunity to raise any point in answer to the contractor’s payment claim.

4. In ISIS Projects Pty Ltd v Clarence Street Pty Ltd,[31] Einstein J considered s15 of the New South Wales Act which is in the same terms as s15 of the Act. His Honour said:

   The statutory scheme is, undoubtedly, supplementary to the contractual scheme; see for example s 3(4) of the Act. However, one object of the statutory scheme is to provide a swift remedy to a claimant in circumstances where the scheme is engaged. That is why (for example) a respondent that does not raise a contractual defence in its payment schedule cannot raise that defence thereafter: s 15(4)(b)(ii); s 20(2B); s 22(2)(d); s 25(4)(a)(ii). In my judgment, that statutory scheme does not permit a respondent to refrain, upon some contractual basis, from providing a payment schedule but to retain the right, in subsequent proceedings, to rely upon whatever the contractual issue was. The matter may be tested simply. Under s 15(2)(a), a claimant to whom no payment schedule has been provided has two options. One is to recover the unpaid amount as a debt. The other is to make an adjudication application under s 17(1)(b). If the claimant took the latter course, the respondent could not, in its adjudication response, rely upon the contractual issue: s 20(2B). If an adjudication determination were made in the claimant’s favour and the claimant sought to register as a judgment a certificate issued consequent upon that determination, the respondent could not rely upon the contractual issue: s 25(4)(a)(ii). It would be anomalous in the extreme if the claimant, by choosing the alternative path of suing for the debt as provided by s 15(2)(a)(i), were placed in a worse situation because, as a result of that choice, the respondent was able to raise an argument that it could not raise had the claimant followed the other path.

   [31] [2004] NSWSC 714 [65].

1. In resisting Cook’s application, Gardman is not entitled to raise as a defence, matters arising out of the Contract. The only basis for resisting a claim under s15 is that the requirements of s15(1) have not been satisfied,[32] or to put it another way, the requirements of s14(4) have not been satisfied.

   [32] Section 15(4)(a).

2. Nonetheless the principles applicable to summary judgment still apply in relation to those matters which Cook has to satisfy the court in order to obtain summary judgment under s15(1) and (2) of the Act.

3. The exercise of granting summary judgment is discretionary and will only be considered if the requirements of DCR 232 have been satisfied.  In Davies v Minister for Urban Development and Planning & Anor[33] Bleby J followed the decision of the plurality in Spencer v Commonwealth[34] in holding that:

   Nevertheless, as the plurality in Spencer observed, the power to dismiss an action summarily is not to be exercised lightly.  The Court must be cautious not to do a party an injustice by summarily dismissing the proceedings where, for example, contested evidence might reasonably be believed one way or the other so as to enable one side or the other to succeed.  However, what amounts to no reasonable basis will ultimately be decided through a succession of decided cases.  (Footnotes omitted)

   [33] [2011] 109 SASR 518 [44].

   [34] (2010) 241 CLR 118.

4. The same consideration applies to granting summary judgment but as I have noted s15(4) of the Act limits the matters to which consideration may be had when considering an application under s15(2)(a) of the Act.

   The statutory regime

5. The policy behind the Act is set out in the objects in s3(1) as follows:

   3—Object of Act

   (1)The object of this Act is to ensure that a person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services.

6. In Built Environs Pty Ltd v Tali Engineering Pty Ltd[35], Blue J set out and described the statutory regime which his Honour summarised in the following terms:[36]

   [35] [2013] SASC 84.

   [36] Ibid [49]-[50].

   The statutory regime

   The Act came into force on 10 December 2011. The Act is in large part identical to the Building and Construction Industry Security of Payment Act 1999 (NSW) (“the NSW Act”). Victoria, Queensland, Tasmania and the Australian Capital Territory have also enacted legislation based on the NSW Act but with greater variations from the model. New Zealand, Western Australia and the Northern Territory have also legislated for progress payments as part of legislation covering a broader field.

   Essentially, the Act:

   1. gives to a construction contractor (including a subcontractor, sub‑subcontractor, etc) a statutory entitlement to progress payments where there is no contractual right;

   2.gives to a construction contractor a statutory entitlement to progress payments in essentially the same terms as and in parallel to a contractual right to a progress payment;

   3.creates a statutory procedure for payment claims and responsive payment schedules in respect of progress claims (whether purely statutory or statutory/contractual);

   4.provides for the adjudication of disputes in relation to payment claims by qualified adjudicators appointed by authorised nominating authorities;

   5.enables recovery in a court of competent jurisdiction by way of debt of the unpaid portion of a payment claim in response to which no payment schedule is served within time or which has been acknowledged by a payment schedule or pursuant to an adjudication;

   6. precludes parties contracting to modify rights and obligations created by the Act;

   7.does not otherwise take away or affect parties’ contractual rights under a construction contract.

7. In The Trustee for Allway Unit Trust Trading as Westside Mechanical Contracting Pty Ltd v R & D Airconditioning Pty Ktd & Ors, Doyle J described the statutory regime in these terms:[37]

   The SOP Act creates what may be described as a parallel regime, separate from the contract, for the prompt making of progress payments under a construction contract. In short, the SOP Act is intended to provide a speedy and effective means of ensuring cash flow to builders from the parties with whom they contract. It does so by creating a regime for enforcing the interim payment of progress claims, without affecting the parties’ ultimate rights under the relevant construction contract in subsequent civil proceedings in respect of that contract.

   The object and scheme of the SOP Act is summarised in s 3 of the Act…

   [37] [2018] SASC 46 [36]-[37].

8. In Civil & Allied Technical Construction Pty Ltd v Resolution Institute & Ors,[38] Kourakis CJ referred to the decision of McDougall J in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd[39] where his Honour described the NSW statutory regime (which is very similar to the Act) as follows:

   The Security of Payment Act operates to alter, in a fundamental way, the incidence of the risk of insolvency during the life of a construction contract.  As Keane JA said, of the not dissimilar Queensland statute, the Building and Construction Industry Payments Act 2004 (Qld), in RJ Neller Building Pty Ltd v Ainsworth [2008] QCA 397 at [40], the statute ‘seeks to preserve the cash flow to a builder notwithstanding the risk that the builder might ultimately be required to refund the cash in circumstances where the builder’s ... inability to repay could be expected to eventuate’. It followed, his Honour said, that the risk of inability to repay, in the event of successful action by the other party, must be regarded as one that the legislature has assigned to that other party. The same is true of the regime established by the Security of Payment Act.

   …

   The Security of Payment Act gives very valuable, and commercially important, advantages to builders and subcontractors.  At each stage of the regime for enforcement of the statutory right to progress payments, the Security of Payment Act lays down clear specifications of time and other requirements to be observed.  It is not difficult to understand that the availability of those rights should depend on strict observance of the statutory requirements that are involved in their creation. 

   [38] [2019] SASC 193.

   [39] (2010) 78 NSWLR 393, [207]-[209].

   Cook’s submissions

9. Cook points to the requirements of s14(4) of the Act and submits the requirements of that section have been satisfied.

10. Section 14(4) provides:

    (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 15 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.

11. That subsection has three requirements:

    1First, the claimant serves a payment claim;

    2Second, on the respondent; and

    3Third, the respondent does not provide a payment schedule;

    (a)   Within the time required by the relevant construction contract; or

    (b)  Within 15 business days after the payment claim is served.

12. Gardman filed its defence on 30 October 2019 and as I have noted, it is not in dispute that Gardman did not provide a payment schedule at any time. [40]

    [40] Statement of Claim [23], [24]; Defence [23], [24].

    Agency

13. Since one of the grounds upon which Gardman resists the application is that there was no service of the payment claims, that calls into issue the question of agency, in particular, apparent or ostensible authority and against those principles the terms of the Contract, the role played by the Superintendent and the role played by Mr Shaw respectively.

14. The defendant submits, correctly, that ostensible authority must arise out of the principal’s conduct not that of the agent.[41]  The principle authority is Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd[42] in which Diplock LJ said:

    An “apparent” or “ostensible” authority, on the other hand, is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the “apparent” authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract.

    [41] Bowstead & Reynolds on Agency, 19^th edition, [8-014].

    [42] [1964] 2 QB 480, 503.

15. The principle was described by Professor Dal Pont in “Law of Agency”[43] in the following terms:

    The doctrine of ostensible authority dictates that a principal may be liable under a contract effected by a person who lacks actual authority from the principal to effect the contract, but on whom the principal has, by his or her words or actions, conferred ‘apparent’ or ‘ostensible’ authority to do so.  This liability may arise whether or not there is a pre-existing agency relationship; it is conceivable, although perhaps not common, that a person ‘holds out’ another person as having authority as agent even though no agency relationship exists between them.

    [43] 3^rd edition [20.2].

16. In Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd,[44] Vickery J considered the principles relating to ostensible authority in the following terms:[45]

    The principles giving rise to the ostensible authority of an agent are well established: Freeman and Lockyer v Buckhurst Park Properties. The agent must have been held out by someone with actual authority to carry out the transaction and an agent cannot hold himself out as having authority for this purpose: Armagas Ltd v Mudogas SA.  The acts of the party alleged to be the principal must constitute a representation (express or by conduct) that the agent had a particular authority and must be reasonably understood so by the third party. In determining whether the principal had represented his agent as having such authority, the court has to consider the totality of the conduct of the party alleged to be the principal: Egyptian International Foreign Trade Co v Soplex Wholesale.

    [44] [2010] 30 VR 141.

    [45] [150].

17. The fundamental proposition behind ostensible authority is that the principal is prevented from denying the agent’s ostensible authority.[46]  In order for ostensible authority to exist, there must be a representation by the principal as to the extent of the agent’s authority.  A representation by the conduct of the principal commonly forms the foundation for ostensible authority and the principal’s representation as to an agent’s authority can be effected via a course of dealing that is sufficiently frequent and understood.[47]

    [46] Dal Pont, Law of Agency [20.3].

    [47] Ibid [20.17], [20.18].

    Contract

18. GCC 37 deals with progress claims.  Insofar as relevant it provides as follows:

    37.1   Progress claims

    The Contractor shall claim payment progressively in accordance with Item 28.

    An early progress claim shall be deemed to have been made on the date for making that claim.

    Each progress claim shall be given in writing to the Superintendent and shall include details of the value of WUC done and may include details of other moneys then due to the Contractor pursuant to provisions of the Contract

    37.2   Certificates  

    The Superintendent shall, within 14 days after receiving such a progress claim, issue to the Principal and the Contractor:

    a)   a progress certificate evidencing the Superintendent’s opinion of the moneys due from the Principal to the Contractor pursuant to the progress claim and reasons for any difference (‘progress certificate’); and

    b)   a certificate evidencing the Superintendent’s assessment of retention moneys and moneys due from the Contractor to the Principal pursuant to the Contract.

    If the Contractor does not make a progress claim in accordance with Item 28, the Superintendent may issue the progress certificate with details of the calculations and shall issue the certificate in paragraph (b).

    If the Superintendent does not issue the progress certificate within 14 days of receiving a progress claim in accordance with subclause 37.1, that progress claim shall be deemed to be the relevant progress certificate.

    The Principal shall within 7 days after receiving both such certificates, or within 21 days after the Superintendent receives the progress claim, pay to the Contractor the balance of the progress certificate after deducting retention moneys and setting off such of the certificate in paragraph (b) as the Principal elects to set off.  If that setting off produces a negative balance, the Contractor shall pay that balance to the Principal within 7 days of receiving written notice thereof.

    Neither a progress certificate nor a payment of moneys shall be evidence that the subject WUC has been carried out satisfactorily.  Payments other than final payment shall be payment on account only.

19. The role of the Superintendent was constrained by SCC 3 to only those matters set out in SCC 2 and SCC 3 which are in the following terms:[48]

    [48] First Stokie Affidavit, Exhibit MJS-1, pp 112-114.

    2.     Payments

    2.1    Progress Claims

    (a)Prior to the 20^th day of each calendar month the Contractor will prepare a progress claim that includes:

    (1)the value of any WUC done (and not included in a previous progress claim);

    (2)the anticipated WUC for work scheduled to be completed in the following calendar month; and

    (3)any other amount payable by the Principal under the Contract.

    (b)Before the 20^th day of each calendar month (or the last Business Day prior to the 20^th if the 20^th is not a Business Day) the Superintendent shall meet with the Contractor’s representative and review and confirm the progress claim.

    (c)Before the 21^st day of each calendar month (or the last Business Day prior to the 21^st if the 21^st is not a Business Day) the Superintendent will issue a progress certificate and a certificate evidencing the Superintendent’s assessment of retention moneys and moneys due from the Contractor to the Principal pursuant to the Contractor in accordance with subclause 37.2 of the Contract (Certificates).

    2.2    Payment Date

    The Principal pay any amounts (sic) payable to the Contractor under the Certificates by the 15^th day of the calendar month after the Certificates are received.

    2.3    Suspension of Works

    If payment, in accordance with the Certificates, is not received by the Contractor by the 3^rd Business Day after the 15^th day of the calendar month then the Contractor may immediately, by written notice to the Principal and the Superintendent, suspend all WUC (Suspension for Non Payment).  A Suspension for Non Payment is a qualifying cause of delay.

    2.4    Suspension and Extension

    If WUC is suspended as the result of a Suspension for Non Payment then, without limitation to the Contractor’s other rights and remedies under the Contract, the Contractor will be entitled to liquidated damages on respect of the costs of the suspension of works in the amount of $1,950 per day that WUC are suspended (to be added to the next progress claim) (Suspension Costs).  The Principal and the Contractor agree that the Suspension Costs are reasonable pre-estimate of the Contractors costs and damages as a result of ay (sic any) Suspension for Non Payment.

    3.     Payment and Role of Superintendent

    3.1    The Principal and the Contractor have agreed that subject these Special Conditions, the role of the Superintendent will be limited to:

    (a)     those matters set out in Special Condition 2 above; and

    (b)     those matters set out in this Special Condition 3,

    and, except as required by Special Condition 2 or 3, the Superintendent will have no other rights, obligations or functions under the Contract.

    3.2    In contemplation of the agreement in Special Condition 3.1, it is agreed that, other than in respect of the requirements under Special Condition 2 and subject to Special Condition 3.3:

    (a)where the Contract would otherwise require any notice to be provided by the Contractor to the Superintendent, that notice will instead be provided by the Contractor to the Principal;

    (b)where the Contract would otherwise require any notice to be provided by the Principal to the Superintendent, that notice will instead be provided by the Principal to the Contractor;

    (c)where under the Contract any direction, determination, role or function is to be given by or performed by the Superintendent then, subject to Special Condition 3, such direction, determination, role or function is to be given or performed by the unanimous consent of the Principal and the Contractor, except in the case of emergency when either party can unilaterally give or perform the relevant direction, determination, role or function.

    3.3.   In the event that:

    (a)     any disputes arises in respect of any matter in Special Condition 3.2;   or

    (b)the Contractor and the Principal can not (sic cannot) agree on an (sic a) direction or determination, or the performance of any role or function with 3 business days in accordance with Special Condition 3.2(c),

    then prior to any escalation to any other form of dispute resolution under this Contract, either the Principal or the Contractor may, by written notice to the Superintendent and the other party, escalate the matter for determination by the Superintendent who will have the ability to make any direction or determination or perform any role or function that they would normally have under the Contract but for the operation of these Special Conditions.

    3.4    The Principal shall be responsible for paying any fees payable to the Superintendent in respect of the Contract, which fees are not included in the contract sum.

20. SCC 2.1 has a number of important functions but in the context of this application there are four in particular.

21. First, it provides that prior to the 20^th day of each calendar month Cook is to prepare a progress claim and the Superintendent is to meet with Cook’s representative to review and confirm the progress claim.

22. Second, SCC 2.1 sets out what is to be included in the progress claims.  Those matters are:

    ·The value of any WUC (work under the Contract) done and not previously claimed;

    ·The anticipated WUC for work scheduled to be completed in the following calendar month; and

    ·Any other amount payable by the Principal (ie. Gardman) under the Contract.

23. Third, before the twenty-first day of each calendar month the Superintendent is to issue a progress certificate and a certificate evidencing the Superintendent’s assessment of retention moneys and moneys due from the contractor to the Principal in accordance with GCC 37.2 of the Contract.

24. Fourth, the Principal is to pay any amounts payable to the contractor under the certificates by the 15^th day of the calendar month following the month in which the certifications are received.

25. Although GCC 37.2 requires Gardman to pay Cook the balance of the progress certificates after deducting retention moneys and setting off any other sums that may be due from Cook to Gardman within 7 days of receiving both certificates, or within 21 days after the Superintendent receives the progress claims, GCC 37.2 is inconsistent with SCC 2.2.  Under those circumstances, SCC 14 gives precedence to the SCC over the GCC.

    The role of the Superintendent

1. GCC 20 sets out the provisions in relation to the Superintendent in the following terms:

   20.     Superintendent

   The Principal shall ensure that at all times there is a Superintendent, and that the Superintendent fulfils all aspects of the role and functions reasonably and in good faith.

   Except where the Contract otherwise provides, the Superintendent may give a direction orally but shall as soon as practicable confirm it in writing.If the Contractor in writing requests the Superintendent to confirm an oral direction, the Contractor shall not be bound to comply with the direction until the Superintendent does so.

2. No individual is identified as Superintendent in the Contract.  GCC 21 deals with the Superintendent’s representative and it is possible for WT Partnership to identify a particular individual as WT Partnership’s representative in carrying out its role as Superintendent, but there is no evidence before me of that having occurred.

3. In Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd,[49] the New South Wales Court of Appeal considered the role of the Superintendent when exercising certifying functions. 

   [49] [2002] NSWCA 211.

4. The clause in that case was GCC 23 of AS2124-1992, which provided in part:

   23 Superintendent

   The Principal shall ensure that at all times there is a Superintendent and that in the exercise of the functions of the Superintendent under the Contract, the Superintendent -

   (a)     acts honestly and fairly;

   (b)     …

5. In considering the capacity in which a Superintendent acts, Hodgson JA said:[50]

   The authorities referred to by Mr. Douglas and Mr. Walker are not altogether clear as to whether a person in the position of a superintendent of a building contract is the owner’s agent in exercising all the functions of the superintendent.  However, in my opinion the better view (supported by Perini, Dixon, Egan and London Borough of Merton, and not refuted by Sutcliffe) is that the superintendent is the owner’s agent in all matters only in a very loose sense, and that, when exercising certifying functions in respect of which the superintendent must act honestly and impartially, the superintendent is not acting as the owner’s agent, in the strict legal sense.  In my opinion, this is confirmed by the consideration that the issue of a certificate by the superintendent does not bind the owner to any extent beyond what is prescribed by the building contract itself, so that the owner can challenge such certificates.  If the superintendent was acting as the owner’s agent in the strict sense, the issue of the certificate would be an act done by the owner through its agent, which the owner could not then challenge.

   [50] At [50].

6. Whereas it is the case that in carrying out its functions in assessing and certifying a progress claim the Superintendent does not act as the principal’s agent and there is a question as to whether when the Superintendent received progress claims and issued certificates it was acting as Gardman’s agent, that is not the issue in this matter.  Irrespective of whether the Superintendent had actual authority, the question is whether Gardman’s conduct is such that it allowed it to be held out that the Superintendent had authority to receive payment claims from Cook such that the payment claims have been served on Gardman as the person who, under the Contract is, or may be liable to make the payment.[51]

   [51] Section 13(1).

7. In Metacorp, Vickery J considered service of a payment claim on the Superintendent. Although considering the reasoning of an adjudicator nonetheless his Honour’s observations are relevant. His Honour was considering s14(1) of the Victorian legislation which is in the same terms as s13(1) of the Act, and was dealing with the submission that service of the payment claim on the Superintendent did not constitute service under the Act.

8. His Honour observed: [52]

   Section 14(1) of the Act provides that a payment claim is to be served “on the person who, under the construction contract concerned, is or may be liable to make the payment.” This provision does not operate in a commercial vacuum. It needs to be read in the practical context of the building industry. Builders, more often than not, whether they are incorporated or unincorporated, act through their servants or agents.

   Section 14(1) does not seek to remove the service of a payment claim from this reality. Accordingly, a payment claim may be served upon any person who, under the construction contract concerned, is or may be liable to make the payment, or has the actual or ostensible authority of such a person to accept service.

   Receipt of a payment claim by a respondent or its servant or agent with actual or ostensible authority to receive it, for the purposes of s. 14(1) of the Act, constitutes service.

   [52] [2010] 30 VR 141 [141]-[143].

9. Gardman submits that the Superintendent’s role did not include acting as an agent or conduit for either Cook or Gardman to send or receive payment claims or payment schedules under the Act. In support of that submission Gardman refers to the First Stokie Affidavit at paragraphs [30]-[33] and [46]. Those paragraphs have not been received into evidence for the reasons set out in the rulings on evidence attached to these reasons.

10. Further, Gardman seeks to rely on the terms of the engagement of WT Partnership as excluding WT Partnership from any services associated pursuant to the Act. Not only does that document not form part of the Contract documents,[53] there is no suggestion that Cook were made aware of any restriction on WT Partnership’s authority in relation to payment claims and the Act.

    [53] See Exhibit MJS-1 to the First Stokie Affidavit, p 9.

11. Gardman admits that the Superintendent issued “Recommendation for Payment Reports” in relation to progress claims 11-15, 16R2 and 16R3[54] which were provided to both the Project Financier - Vertex Funds Management Pty Ltd (Vertex) and Mr Shaw. [55]  Gardman also admits each of the Recommendation for Payment Reports numbers 11-15 included a copy of Cook’s corresponding payment claim.[56]  It is apparent from the evidence that Recommendation for Payment Reports were also provided by the Superintendent in relation to earlier claims[57] and I infer that each of those reports was accompanied by the corresponding payment claim.

    [54] First Stokie Affidavit [34].

    [55] Defence [11.1.4(c)], [11.2.4(c)], [11.3.4(c)], [11.4.4(c)].

    [56] Defence [11.1.4(d)], [11.2.4(d)], [11.3.4(d)], [11.4.4(d)] although Gardman describes it as Cook’s tax invoice.

    [57] Murphy Affidavit, Exhibit DM-3, p 17.

12. Irrespective of the contractual relationship between Gardman and WT Partnership as Superintendent, it is apparent on the evidence before the Court that Gardman held out the Superintendent as its agent for the purpose of receiving progress claims and payment claims.

13. In my view, the Superintendent had ostensible authority to receive payment claims on Gardman’s behalf.

    Mr Shaw

14. It is not in issue that Mr Shaw was not an officeholder of Gardman but was a sole director, secretary and shareholder of West Lakes No. 3 Pty Ltd, one of the three owners of the Land.[58] Although Gardman concedes that Mr Shaw had an involvement in the Project, it disputes he was Gardman’s agent or was authorised to bind or represent Gardman for the purpose of service by Cook of payment claims under the Act.[59]

    [58] Defendant’s Submissions [41].

    [59] Ibid [78-88].

15. In the affidavits filed by Cook, Mr Basedow deposes that to his knowledge Mr Chris Latsch, Cook’s commercial manager, negotiated the terms of the Contract with Mr Shaw and that Mr Latsch liaised with Mr Shaw in relation to the Contract.  Mr Basedow deposes  that he and Mr Shaw signed the Contract.[60]

    [60] Basedow Affidavit [7], [8], [12].

16. Gardman points out, and I accept for the purposes of this application, that Mr Shaw signed the Contract for West Lakes No.3 Pty Ltd and took the Contract away for the remaining Land owners to sign it.  The Contract was returned to Cook in an amended form such that the principal, rather than being the three Land owners, was Gardman although the only signature for Gardman in the Formal Instrument of Agreement was that of Mr Shaw.[61]  The Contract was signed by Michael Stokie in Annexure part A of the Contract.[62]

    [61] First Stokie Affidavit, Exhibit MJS-1, volume 1, p 9; Basedow Affidavit, Exhibit PB1. 

    [62] Ibid.

17. Cook submits that Mr Shaw was the agent or representative of Gardman and points to the inconsistency that Gardman takes, on the one hand saying Mr Shaw is not endowed with the authority to receive payment claims under the Contract, whilst at the same time permitting him to sign the Contract on its behalf.  It submits that the matters set out in paragraphs 5 to 18 of the Murphy Affidavit are evidence of Mr Shaw’s ostensible authority to act for Gardman.  As is apparent from my rulings at Annexure A, some of those paragraphs have not been received into evidence.  Given there is no dispute that Mr Shaw is not an officer of Gardman, the question then becomes whether he had apparent or ostensible authority to act as Gardman’s agent for the purposes of the Contract.

    Conduct

18. As to Gardman’s conduct;

19. First, Mr Murphy deposes[63] that during his involvement with the project, Mr Shaw presented himself as the primary representative of Gardman by communicating with Mr Murphy about the project, giving approval for the project to proceed and progress, issuing directions to him and otherwise making decisions about the project’s direction.  He also deposes that he was told by Mr Shaw that he was in daily contact with the directors of Gardman and that he should liaise directly with Mr Shaw as the person acting with Michael Stokie’s full authority and knowledge on the project, such that he should not send correspondence directly to Michael Stokie.[64]

    [63] Murphy Affidavit [6], [7].

    [64] Ibid [9].

20. Although Mr Shaw accepts he said that he speaks regularly with Michael Stokie and Luke Stokie, he denies he said to Mr Murphy or anyone else at Cook, that he should liaise directly with him as the person acting with Michael Stokie’s full authority and knowledge on the project, such that he should not send correspondence directly to Michael Stokie.[65]  In his second affidavit Michael Stokie disputes Mr Shaw was authorised by Gardman to act for it.[66]

    [65] Shaw Affidavit [19].

    [66] Second Stokie Affidavit [4], [5].

21. I proceed on the basis that those words alleged to have been said to Mr Murphy by Mr Shaw about Mr Shaw having authority to act for Gardman were not, in fact, said.  Although Gardman concedes that Mr Shaw communicated by email to Mr Murphy in which he said that he was in daily contact with both Michael Stokie and Luke Stokie, that is not to the point.  In order for ostensible authority to be established the representation must come from the principal and not the purported agent.  Accordingly, I do not consider Mr Murphy’s evidence of his dealings with Mr Shaw nor Mr Shaw’s concession or Gardman’s concession as set out above, as establishing ostensible authority on the part of Mr Shaw to act as Gardman’s agent. 

22. Second, there is an email string exhibited to Mr Murphy’s affidavit in which Mr Shaw gives the impression he is acting on behalf of Gardman.[67] There is a question about whether or not that issue is one that arises under the construction contract and so is contrary to s15(4) of the Act, however in my view whereas that may be the case, it also goes directly to the question of ostensible authority. Again however, that email string is a representation on the part of Mr Shaw and cannot establish ostensible authority.

    [67] Murphy Affidavit, Exhibit DM-3, pp 17-21.

23. Third, all of Cook’s payment claims arising out of progress claims 1-15 were provided either by the Superintendent or by Cook to Mr Shaw via email.  As I have noted, payment claims 1-11 were paid in full.  Gardman concedes that each of the Recommendation for Payment Reports numbers 12-15 issued by the Superintendent were provided to Mr Shaw and Vertex and that the reports included the relevant payment claims (although it refers to them as tax invoices).[68]

    [68] Defence [11.1.4], [11.1.6], [11.2.4], [11.2.6], [11.3.4], [11.3.6], [11.4.4], [11.4.6].

24. There is no evidence before me that at any time Gardman took the position that no payment would be made because payment claims had not been sent to it or had been sent to Mr Shaw who had no authority to accept it on behalf of Gardman.  In my view:

    i.The failure by Gardman to object to making payment because it had not been served with the relevant payment claims; and/ or

    ii.The payment in full of payment claims provided to Mr Shaw by either Cook or the Superintendent consequent upon the Superintendent certifying progress claims 1-11; and/ or

    iii.The part payment of the four payment claims consequent upon the Superintendent certifying progress claims 12-15, with each of the four payment claims having been provided to Mr Shaw either by Cook or the Superintendent,

    constitutes a representation by Gardman that Mr Shaw had authority to receive Cook’s payment claims on the part of Gardman.

25. Gardman also submits[69] that Cook’s allegation regarding Mr Shaw’s alleged ostensible authority is unable to be determined on a summary basis in the absence of a full hearing.  I do not accept that submission.  It is clear to me on the material placed before the Court and if for no other reason the receipt by Mr Shaw of the payment claims and the full payment by Gardman of payment claims 1-11 and the part payment of payment claims 12-15, that there is compelling evidence to find ostensible authority on the part of Mr Shaw to receive payment claims on behalf of the principal.

    Conclusion on agency

    [69] At [86].

26. I do not accept Gardman’s submission that there is no or inadequate evidence before the Court concerning how it is alleged that Gardman held Mr Shaw out as having authority to act on its behalf. [70]  Nor do I accept Gardman’s submission that either Mr Shaw or the Superintendent did not have authority to receive payment claims from Cook.

    [70] Defendant’s Submissions [84]-[86].

27. Against that background, I consider each of the grounds upon which Gardman relies in resisting Cook’s application in relation to the March and May payment claims. 

    First Ground – Non-service for the payment claim 

28. Section 13(1) of the Act provides:

    13—Payment claims

    (1) A person referred to in section 8 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 contract concerned, is or may be liable to make the payment.

29. The documents relating to the four payment claims are set out in Exhibit DM-3 to the Murphy Affidavit.[71]

    [71] At pp 62-101.  

30. As to the March payment claim, those documents reveal that on 27 March 2019, the Superintendent recommended payment of progress claim number 12, which is the subject of the March claim, in the sum of $634,871.75.  The remainder of the documents between pages 64 and 72 provide documentation in support of the progress claim.  The corresponding payment claim was sent to the Superintendent as part of the March progress claim. 

31. The April progress claim was provided to the Superintendent on 17 April 2018 together with supporting information.  The Superintendent recommended payment of the April progress claim but in a reduced amount on 7 May 2019.  Cook sent its April payment claim to the Superintendent and Mr Shaw on 7 May 2019.[72]

    [72] First Sumpter Affidavit [4.8.7]-[4.8.12], Murphy Affidavit, Exhibit DM-3, pp 77-80.

32. The documents in relation to the May progress claim reveals that the Superintendent recommended payment of progress claim number 14 on 7 June 2019.  The May payment claim was sent to the Superintendent as part of the progress claim.

33. The June progress claim was provided to the Superintendent on 20 June 2019 together with supporting information.  The Superintendent recommended payment of the June progress claim on 26 June 2019.  Cook sent its June payment claim to the Superintendent and Mr Shaw on 26 June 2019.

34. Gardman refers to paragraph 19 of the Murphy Affidavit in which Mr Murphy deposes as to how progress claims during the project were delivered.  In the case of the certified March and May progress claims (numbers 12 and 14) and the accompanying payment claims, they were delivered to Mr Shaw by email from the Superintendent. 

35. Gardman submits that since the March and May payment claims were sent to Mr Shaw by the Superintendent, that is fatal to Cook’s application because under s13(1) of the Act, service must be by the person who is, or claims to be, entitled to a progress payment, in this case, Cook.[73]  In light of my conclusion that both the Superintendent and Mr Shaw had ostensible authority as Gardman’s agent I do not accept that submission.

    [73] Defendant’s Written Submissions [42]-[44].

36. Gardman further submits that the Superintendent was providing the payment claims as an appendix to its certification as Superintendent and not for the purposes of a payment claim under the Act.[74]  This point may be dealt with readily in that the purpose for which a payment claim is provided is irrelevant.  The fact that a payment claim forms part of an appendix to the Superintendent’s certification, by itself, is of no consequence. 

    [74] Ibid [45].

37. Finally, Gardman submits that the Superintendent was not engaged by Cook or acting on its behalf and the Superintendent’s role did not include acting as an agent or conduit for Cook to send or receive payment claims or schedules under the Act. The question however is whether the Superintendent has ostensible authority to receive payment claims on behalf of Gardman. I have also dealt with this point above. The fact that as between Gardman and WT Partnership, WT Partnership was not retained or authorised to act as Gardman’s agent or conduit for Gardman in the circumstances before the Court is not to the point. There was no suggestion Cook was made aware of the arrangements between WT Partnership and Gardman.

38. Accordingly, I do not accept Gardman’s submissions that service of the payment claims, were made contrary to the requirements of s13(1) of the Act and/ or were not sent for the purposes of payment claims under the Act.

    Service by email

39. Gardman also submits that service by email is not a valid form of service and that service is governed by s34 of the Act. It submits s34 is a code setting out the only ways in which a notice may be served under the Act. Section 34 provides:

    34—Service of notices

    (1)A notice that by or under this Act is authorised or required to be served on a person may be served on the person—

    (a)by delivering it to the person personally; or

    (b)by lodging it during normal office hours at the person’s ordinary place of business; or

    (c)by sending it by post or fax addressed to the person’s ordinary place of business; or

    (d)in such other manner as may be prescribed by the regulations for the purposes of this section; or

    (e)in such other manner as may be provided under the construction contract concerned.

    (2)Service of a notice that is sent to a person’s ordinary place of business, as referred to in subsection (1)(c), is taken to have been effected when the notice is received at that place.

    (3)The provisions of this section are in addition to, and do not limit or exclude, the provisions of any other law with respect to the service of notices.

40. Vickery J also considered the question of service in Metacorp.[75]Metacorp had submitted that service by email was not permitted under the provision s50 of the Victorian legislation. His Honour considered s50 which, although not identical, insofar as relevant to this point, is in very similar terms to s34 of the Act.

    [75] At [161]-[168].

41. His Honour considered that s50 was facultative and not mandatory, noting that the opening words used in s50(1) were ‘may be given to or served’ and that the section did not operate such that if there was no service under any of the limbs set out in s50 there was no service at all.  His Honour held that the service provisions in s50 were in addition to and did not limit or exclude the common law or the provisions of any other applicable legislation with respect to service of notices, for example s109X of the Corporations Act.  His Honour concluded that s50 made no mention of service by email but did not prohibit service by email, and that the section combined with the Contract in that matter was broad enough to contemplate delivery by email in line with common commercial practice.[76]

    [76] Ibid.

1. Section 34 of the Act also commences with the words “…may be served on the person”. On its proper construction, I do not consider s34 of the Act sets out a code as to service for the purposes of the Act.

2. GCC 7 of the Contract provides:

   Service of notices

   A notice (and other documents) shall be deemed to have been given and received:

   a)   if addressed or delivered to the relevant address in the Contract or last communicated in writing to the person giving the notice; and

   b)   on the earliest date of:

   i)actual receipt;

   ii)confirmation of correct transmission of fax; or

   iii)3 days after posting.

3. On its proper construction, GCC 7 is a deeming provision.  It does not constitute a code and does not prescribe the means by which service is to occur. 

4. In my view, both in view of the observations of Vickery J in Metacorp and on a proper construction of both s34 and GCC 7, service by email is not precluded. It follows that I do not accept Gardman’s submission that s34 of the Act should be interpreted as a code governing the service of documents under the Act.

   Second Ground – No identification of the Construction Work contrary to s13(2)(a) of the Act

5. Gardman submits that the construction work the subject of the payment claims was not sufficiently identified for the purposes of s13(2)(a) of the Act. The defendant relies on the observation of Blue J in Built Environs Pty Ltd v Tali Engineering Pty Ltd[77] in which his Honour said:

   The reasoning of Spigelman JA (with which Basten JA expressly agreed) and of Basten JA himself in relation to section 17(2)(a) applies equally to section 13(2) of the Act. Like section 17(2)(a), section 13(2) is expressed in mandatory terms. Moreover, section 17(1) itself permits a claimant to apply for adjudication only of a “payment claim”. This must mean a claim which complies with section 13(2). The term “payment claim” is defined by section 4 to mean “a claim referred to in section 13”.

   Further, section 14(4) provides that, if a claimant serves a payment claim on a respondent but the respondent does not provide a payment schedule within the requisite time, the respondent becomes liable to pay the claimed amount to the claimant. Section 15(2)(a)(i) entitles the claimant to recover the claimed amount from the respondent as a debt due in a court of competent jurisdiction. In those circumstances, it is clear that there is only a valid and recoverable debt if the payment claim complies with section 13(2).

   [77] [2013] SASC 84 [75], [76].

6. Section 13(2) of the Act provides:

   (2)     A payment claim—

   (a)     must identify the construction work (or related goods and services) to which the progress payment relates; and

   (b)     must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount); and

   (c)     must state that it is made under this Act.

7. Gardman submits that the payment claims do not comply with s13(2) of the Act because each of the emails attaching Cook’s payment claims did not include the progress claim breakdown such that there was no identification of the construction work to which the progress payment related.

8. A consideration of each of the payment claims reveals that the payment claims refer to the progress claim in question.  That progress claim in turn relies upon the documentation provided to the Superintendent and forms part of the material the subject of the “Recommendation for Payment Reports”. 

9. I do not accept that because a payment claim refers to a progress claim which had been certified by the Superintendent in accordance with the provisions of the Contract, it does not comply with s13(2)(a). Accordingly, I do not accept the defendant’s submission that the payment claims did not sufficiently identify the work for the purposes of s13(2)(a) of the Act.

   Third Ground - payment claims cannot extend to future work of the nature claimed by Cook

10. Gardman submits that payment claims under the Act cannot extend to future work and that since the payment claims are in relation to anticipated work, the payment claims are invalid. It also submits that under the Act, such claims must generally be limited to the amount claimed to be due for “construction work carried out” as opposed to construction work anticipated to be carried out, and so cannot be wholly for work anticipated to be carried out in the future.

11. Gardman further submits that under the scheme and policy of the Act, only construction work done up to a particular reference date is able to be the subject of a payment claim.

12. Still further, Gardman submits that under s13(4) of the Act, a payment claim can only be served within a period of 6 months after which construction work to which the claim relates was last carried out unless the Contract permits a later date. As I understand the point, it is because the payment claim refers to work anticipated to be carried out, that the time within which a payment claim could be made did not start to run.[78]

    [78] Defendant’s Written Submissions [119]-[122].

13. Section 13(4) of the Act provides:

    (4)A payment claim may be served only within—

    (a)the period determined by or in accordance with the terms of the construction contract; or

    (b)the period of 6 months after the construction work to which the claim relates was last carried out (or the related goods and services to which the claim relates were last supplied),

    whichever is the later.

    Anticipated Work

14. Section 9 of the Act provides as follows:

    9—Amount of progress payment

    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 construction work carried out or undertaken to be carried out by the person (or of related goods and services supplied or undertaken to be supplied by the person) under the contract.

15. Section 10(1) of the Act provides:

    10—Valuation of construction work and related goods and services

    (1) Construction work 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)any variation agreed to by the parties to the contract by which the contract price, or any other rate or price set out in the contract, is to be adjusted by a specific amount; and

    (iv)if any of the work is defective, the estimated cost of rectifying the defect.

16. It is apparent from the terms of s9(a) and s10(1)(a), that the amount of a progress payment to which a person is entitled and the valuation of that progress claim, is to be determined in accordance with the terms of the Contract.

17. SCC 2(a)(2) provides that Cook is to provide progress claims prior to the 20^th day of each month and that those progress claims are to include the anticipated WUC for work scheduled to be completed in the following calendar month.

18. So it is that the Contract sets out expressly that not only work completed and not yet claimed, but also work anticipated to be completed, may be claimed in progress payments. 

19. Accordingly, I do not accept the defendant’s submission that the scheme and policy of the Act is such that payment claims under the SOP Act cannot extend to anticipated work.

    Section 13(4)

20. For the same reasons as set out above, I do not accept that s13(4) precludes the claiming of work anticipated to be done in these particular circumstances.

    Fourth Ground - The Act is intended to apply to construction work projecting backwards, not forwards from the reference date[79]

    [79] Defendant’s Written Submissions [164]-[170].

21. To an extent this submission repeats the third ground, however this submission appears to be focussed on the expression ‘reference date’ in s8 of the Act.

22. Kourakis CJ considered the issue of “reference date” in relation to the NSW legislation in Civil & Allied Technical Construction Pty Ltd v Resolution Institute & Ors,[80] in the context of a payment claim claiming payment for a second time for work claimed in a previous payment claim. 

    [80] [2019] SASC 193 [39]-[80].

23. In this matter, the provisions of s8 of the Act provides an entitlement of a party to a progress payment on and from each reference date. “Reference date” is defined in the Act as:

    reference date, in relation to a construction contract, means—

    (a)a date determined by or in accordance with the terms of the contract as the date on which a claim for a progress payment may 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 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 were first supplied) under the contract and the last day of each subsequent named month; 

24. The Contract has a reference date in SCC 2 and the Contract sets out what Cook is able to claim in that progress payment.

25. I do not accept Gardman’s submission that the Act is intended to apply to construction work projecting backwards not forwards from the reference date in circumstances where the Contract specifically requires valuation of anticipated work when a progress claim is being valued.

    Fifth Ground - Equitable grounds

26. As its final submission, Gardman submits that judgment should not be awarded because it would be inequitable in the circumstances.  The basis for that submission is that Cook has not performed any work under the Contract since the time the Contract was suspended on 19 July 2019, whereas the June claim relates to work forecasted to be performed by Cook to 30 July 2019. 

27. Gardman pleads it is not obliged to pay the balance of the payment claims to Cook because it has paid an amount for works that have not been carried out by Cook under the Contract that is in excess of the amount the subject of the March and May payment claims.

28. It is further submitted by Gardman that the Superintendent made a subsequent recommendation by which it credited to Gardman, amongst other things, its assessment of the anticipated work the subject of the June claim that was not completed in the period 19 July to 30 July 2019. Since that work was not going to be done, the defendant submits it would be contrary to the policy of the Act, if Cook was to obtain judgment in relation to the unpaid balance of the June claim. Alternatively, Gardman submits Cook has been unjustly enriched.

29. To the extent this ground is raised in relation to the March, April and May claims, I do not accept that submission.  Payment sought in those payment claims was for work done and for work anticipated to be done for the months of March and April (March payment claims), April and May (April payment claims) and May and June (May payment claims).  Insofar as Gardman’s submission is directed at the June payment claim, I deal with that issue as well as the Superintendent’s subsequent recommendation below. 

    Equitable Grounds – June claim

30. Each party alleged the Contract was terminated by it on either 21 August 2019 (Cook) or 27 August 2019 (Gardman).  I do not need to determine whether the Contract was terminated and if so, by whom, in the context of this application.

31. The June claim was the subject of a payment claim dated 26 June 2019.  The progress claim was submitted by Cook on 20 June 2019 and was certified by the Superintendent on 26 June 2019.[81]  On that basis, under the Contract Gardman was required to pay Cook the certified amount by 15 July 2019.[82]

    [81] Murphy Affidavit, Exhibit DM-3, pp 96-103.

    [82] SCC 2.2, First Stokie Affidavit, Exhibit MJS-1, volume 1, pp 112-113.

32. GCC 37.2 provides that neither a progress certificate nor a payment of moneys shall be evidence that the subject WUC had been carried out satisfactorily and that payment other than final payment shall be payment on account only.

33. As at 15 July 2019 the Contract was still on foot such that Cook had an accrued right to be paid, albeit on an “on account” basis.

34. Further, s3(4)of the Act provides:

    (4)   It is intended that this Act does not limit—

    (a)any other entitlement that a claimant may have under a construction contract; or

    (b)any other remedy that a claimant may have for recovering any such other entitlement.

35. Accordingly, it is open to Gardman to claim from Cook sums it says are not due to Cook in subsequent proceedings.  Further, there is no suggestion that Cook is in some way insolvent or unable to meet any subsequent award of damages.

36. I do not accept Gardman’s submission that it would be contrary to the policy of the Act if Cook was to obtain judgment in relation to the unpaid balance of the June claim, nor that in receiving payment Cook is being unjustly enriched. Accordingly I do not accept Gardman’s submissions that judgment should not be awarded in favour of Cook on a summary basis because it would be inequitable to do so.

    Conclusion

37. In all the circumstances I am satisfied that:

    1Cook has served payment claims in accordance with s13 of the Act;

    2In each case Gardman has not replied to the payment claims by providing payment schedules as required by s14 of the Act;

    3Consequently, in each case Gardman became liable to pay the claimed amounts to Cook under s14 of the Act;

    4In each case the requirements of s15(1) of the Act have been satisfied, that is, ie. Cook may recover the unpaid portion of the claimed amounts from Gardman as a debt due because:

    4.1 Gardman is liable to pay the claimed amounts to Cook under s14(4) of the Act as a consequence of having failed to provide a payment schedule to Cook within the time allowed by that section; and

    4.2    Gardman has failed to pay the whole or a part of the claimed amount on or before the due date for the progress payment to which the payment claim relates.

    5In the case of each payment claim, Gardman has no reasonable basis to defend Cook’s claim.

38. The result is that there will be summary judgment for Cook.  I note the amount claimed in the sum of $810,423.70 does not include interest.  I will hear the parties as to interest and costs prior to entering judgment.

    Table of Objections to Evidence

PARA	WHOLE OR PART	BASIS OF OBJECTION	RESPONSE	RULING
AFFIDAVIT OF DEREK DAVID MURPHY
7	Second sentence	Hearsay In each case where Annexure 1 is referred to by the plaintiff, the defendant relies on its submissions in red font in Annexure 1. If the sentence is permitted into evidence, it should be given limited weight, and the words “with Gardman” should be excised.	Refer Annexure 1 to this document The defendant’s replies to the plaintiff’s responses are set out in red font in the “Basis of Objection” column. The words “with Gardman” should remain.  The Court can determine the weight that should be given to the words but to excise them would change the meaning of the sentence.	Not received
8	All, except for the words: “Exhibited hereto and marked “DM-1” are true extracts from each of the Formal Instrument of Agreement and the General Conditions of Contract” (noting the omission of the words “as executed by Shaw”)	Hearsay	Refer Annexure 1 to this document	Not received – document speaks for itself
11	Words: “(or following enquiry be me, anyone else with Cook)” “He acted at all times in this regard as someone with unlimited authority for Gardman on the Project”	Hearsay Conclusion The opinion of Mr Murphy is inadmissible.	Refer Annexure 1 to this document. It is not a conclusion, it is the opinion of Mr Murphy. The opinion is not conclusive as to the fact of Mr Shaw’s authority in the legal sense, but it indicates what Cook was led to believe.	Not received Received
				14	Whole	Hearsay	Refer Annexure 1 to this document	Not received
18	First sentence Words “endorsed as” Words “usual (only)”	Clause speaks for itself Submission Lack of foundation Ambiguous/inconsistent	Agree Agree Delete (only)	Not received Not received Not received – the word ‘only’
19	Word “payment” in the first line	Conclusion as to the legal status of the claims No objection provided that the term “payments claims”, wherever appearing in the affidavit, is not taken to mean a payment claim as defined in the SOP Act.	No – not asserted these are Payment Claims as defined in the SOP Act. This is referred to in subsequent responses as the (“Payment Claim point”).	Received on that basis
21	Words “, in accordance with clause 2.1(a) of the Special Conditions of Contract”	Conclusion	Accepted	Not received
22	Whole	Conclusion Submission The clause speaks for itself.  The effect of the paragraph is to make a conclusion and submission that what was done by Cook was in accordance with the clause of the Contract.  The witness can only give evidence as to what was done as a matter of fact – that evidence is contained in paragraphs 19 and 23 of the affidavit.  It is those paragraphs that represent the witness’s evidence as to what was done.  The inadmissibility lies in the witness taking the matter a step further and saying that what was done was in accordance with (or “exactly” in accordance with) the contractual clause, particularly where the meaning of the clause and the effect of the progress claims are specifically in issue.  The witness’s subjective understanding of the terms of the Contract is irrelevant.	No – he has quoted the clause in the preceding paragraph and is now saying that is the way the claims were calculated. It is the Court that will decide whether the procedure described by the evidence was in accordance with the Contract.  What Murphy is saying is that, as the operative of Cook who was involved, to his own knowledge, they followed the Contract method.  Parties often give evidence that they followed contractual procedures and they may be right or wrong about that. The evidence should not be regarded as conclusive of the issue but rather indicative of what Cook was attempting to achieve as described in paragraph 21 through to 23.	Received
23.2	Words “and also to Shaw”	Lack of evidentiary foundation from primary documents A process that was allegedly adopted lacks a sufficient evidentiary foundation, in circumstances where direct evidence can be provided in relation to the particular emails that are relied upon by Cook.  This is particularly so where paragraph 23.2 refers to some of the alleged emails being sent by someone other than the witness (that is, being sent by Ms George).  Paragraph 23.2 effectively represents a bare assertion, and infringes the best evidence rule.  If the words “and also to Shaw” are to be received, they should be given no to little weight.	He is saying that was what was done.  Whether it is backed up by the documents tendered is a separate issue.	Received
23.5	Words: “both the terms of the Contract” “as a ‘payment claim’”	Terms of the Contract speak for themselves No objection provided that the evidence is received as being limited the act of Cook having regard to the terms of the Contract (noting that the witness cannot speak for what WT had regard to), as opposed to whether the progress claim amount was “accurate and reasonable” having regard to the terms of the Contract. Conclusion as to the legal status of the claim	No – he is saying that they took into account the terms of the Contract when they worked out the claims.  Payment Claim point.	Received Received on that basis
23.6	Whole (conditional) Words “payment claims” Words “as Gardman’s representative”	Paragraph be received on the basis that the evidence of the asserted “standard practice” is received subject to the direct evidence contained in paragraph 19 of the affidavit, being the specific emails that are relied upon by the plaintiff as to the means of the delivery of the alleged payment claims A standard practice that was allegedly adopted lacks a sufficient evidentiary foundation, in circumstances where direct evidence can be, and has been (in paragraph 19), provided in relation to the particular emails to be relied upon by Cook.  This is particularly so where paragraph 23.6 refers to the alleged emails being sent by persons other than the witness (that is, being sent by Ms Bahnert or by Ms George).  Importantly, the alleged standard practice is not in fact borne out by the documentary evidence (emails), because the emails do not include emails from Cook in the case of each of the progress claims – for example, in the case of progress claims 12 and 14, where the emails relied upon are emails from WT. Paragraph 23.6 effectively represents a bare assertion, and infringes the best evidence rule.  If the paragraph is to be received on an unconditional basis, it should be given no to little weight. Conclusion as to the legal status of the claim Conclusion No objection if the words are received as going only to the witness’s belief as to Mr Shaw being Gardman’s representative, without any admission by Gardman that the witness’s belief is relevant.	No – he is giving evidence as to what he says was the “standard practice”.  That may or may not be borne out by the documents.  As it transpires, it is borne out by the documents. Payment Claim point Disagree – he is giving evidence as to the identity of the person to whom he sent the claims on his personal understanding that the person was the person who was delegated to receive claims by Gardman.	Received Received on that basis
	Received
23.7	Words “payment claims” (twice appearing)	Conclusion as to the legal status of the claim	Payment Claim point	Received on that basis
24	All, except for the words: “Exhibited hereto and marked “DM-6” is a copy of the 2 November 2017 email from Latsch to Greg.” Words: “(noting that the document contains details for a different Gardman project)”	Hearsay Document speaks for itself.  And there is no reference to Gardman in the document, but rather to “Circa Properties Group” and “LuxeHaus”. No objection provided that the word “Gardman” appearing before the word “project” is removed.	Refer Annexure 1 to this document The note that the document contains details for a different Gardman project should remain.  The words are there to explain that the document is not one prepared for use in unmodified form in this project, but was provided as an example/template, for modification and later use in this project.	Not received
				Received
26	Whole	Speculation Submission Objection maintained.  No objection to the paragraph if it is limited to WT having reduced the amount claimed by Cook in progress claim breakdowns on multiple occasions.	No – he is giving evidence as to his experiences on the Project and specifically that progress claims were altered by discussion with WT.	Received
29	Whole (conditional)	Do not object if it is limited to being received as a submission, as opposed to for the truth of the matters referred to in the paragraph	The paragraph commences by saying it is not relevant to this application.  It should be received in the same way that the Court decides to deal with the evidence by Gardman that relates to events that occurred after the issue of Payment Claim 14.	Received
AFFIDAVIT OF PETER JOHN BASEDOW
8	Words: “as the authorised representative of Gardman Pty Ltd, the Project principal” “I understood that Shaw had complete authority to negotiate and agree the terms of the contract on behalf of Gardman Pty Ltd.”	Conclusion Lack of foundation Hearsay Mr Basedow’s state of mind in relation to the negotiations, and the basis on which Shaw was allegedly involved, is irrelevant. The evidence should properly come from the representative of Cook who was dealing with Shaw.  Otherwise it is inherently unreliable and should not be permitted in the context of a summary judgment application. No explanation has been provided by Cook for the non-provision of an affidavit by Mr Latsch.	Agree to remove the word “authorised” but the fact of the presence of Shaw as the person who was negotiating the contract is itself evidence that he was representing Gardman.  Otherwise the paragraph should remain.  It is not hearsay to say what he personally understood – he is giving evidence about his state of mind. Basedow was the person who signed the contract for Cook, he is the one who needed to know whether the person signing the contract for Gardman had authority to do so.  Why would Shaw not say he did not have the authority but rather sign document.	Received – except for word ‘authorised’
9	Words: “Once the terms of the Contract had been discussed and agreed in principle as between Shaw and Latch”	Hearsay The suggested potential modification would be a reconstruction of the purported evidence.	It could say “after I was informed that the terms…” instead – but the evidence should be received per Annexure 1	Not received
12	Words “on behalf of the Principal”	Conclusion No objection if the evidence is received as Mr Shaw having signed the document, inter alia, above the word “Principal” at the bottom of page 1 of PB-1.  It is this that is the fact, rather than the true capacity in which Mr Shaw in fact signed the document.  The witness cannot speak for what was in Mr Shaw’s mind when he signed the document, in circumstances where there is a contest about this.	While the words could perhaps be more elegantly described by saying “I confirm the signature adjacent to the word Principal is that of Shaw”, the effect of the evidence is the same and there is no evidence from Shaw contradicting the fact that it is his signature in that space.  It is not a conclusion.  It is a fact.	Received on basis Mr Shaw signed above the typed word ‘Principal’
SECOND AFFIDAVIT OF CAMERON PETER FRANCIS SUMPTER
7	Words: “acted as the authorised representative of Gardman” “on Gardman’s behalf” “on behalf of Gardman”	Conclusion Objection maintained.  As to the words “acted as the authorised representative of Gardman”, if they are to be received, they should be received in the form “acted as a representative of Gardman”.	Not agreed – he is saying that the actions of Shaw were those of a person holding himself out to be an authorised representative.  Those actions were actions taken on Gardman’s behalf and on behalf of Gardman.	Received – except for word ‘authorised’
8	Whole	Hearsay The nature of Mr Sumpter’s particular involvement in the Project, and of his dealings with Mr Shaw (if any), is not evident, or sufficiently evident, from his two affidavits. It is not apparent how Mr Sumpter’s belief in connection with the execution of the Contract is relevant, or how it is said to add to the admissible direct evidence of Mr Basedow.  Further, the hearsay content in paragraph 8 of Mr Sumpter’s second affidavit is not referred to in paragraph 7 of the affidavit to found a basis for a state of mind of Mr Sumpter as to Mr Shaw’s authority.  Rather, the affidavit deals separately with the negotiation and execution of the Contract (at paragraphs 8 and 9) and does not provide a state of mind link to question of Mr Shaw’s perceived authority. The content of paragraphs 8 and 9 cannot therefore be reliably accepted as state of mind evidence on the question of Mr Shaw’s perceived authority.	Evidence should be received per Annexure 1 Paragraph 1 – says he is a Project Manager with Cook and is authorised by Cook Paragraph 6 – says Shaw was the person who, on behalf of Gardman, communicated to him about the Project, issued directions to him, otherwise made decisions about the Project and have approval for the Project to proceed and progress. Paragraph 23 – says he or George met with WT every month to arrange claims Paragraph 29 – refers to his “direct and intimate knowledge of the Project”	Not received
9	All, except the words: “The executed pages of the each of the Formal Instrument of Agreement and GCC are provided as part of exhibit CS-2”	Lack of foundation Not of own knowledge Direct evidence on the topic has been given by the person involved, Mr Basedow, and the evidence should properly be restricted to that direct evidence. Gardman repeats its submissions in relation to paragraph 8 above.	No – maybe the words “To this end” could be excised, but the remainder to the paragraph should stay.  It is supported by the affidavit evidence of Basedow and he is simply saying what he, as the General Manager of the Plaintiff, knew from his involvement in the project.	Received, except words ‘to this end’
FIRST AFFIDAVIT OF MICHAEL JOHN STOKIE
17	First sentence. Words in the second sentence: “and WT’s part” and “and WT”	A submission without any substantiation and too vague to have any evidentiary weight.  If admitted, it should be given no weight. Objection maintained. The content of paragraph 18 speaks for itself The difficulties experienced by WT are not explained, there is no individual identified or words identified to explain how the difficulties were experienced.  Mr Paddick’s affidavit does not confirm these assertions.  Where Mr Paddick does not confirm an assertion made by Mr Stokie, it should be inferred that Mr Paddick did not agree with the assertion.  Mr Paddick says at para 11.1 of his affidavit it was an “unusual provision” but does not say it was difficult. The words “subject to” inserted in Mr Paddick’s affidavit at paragraph 11 indicate the content of the introductory section of paragraph 11 of his affidavit is not an unqualified endorsement of paragraph 17.  For example, the words in paragraph 17 “very difficult for Gardman and WT” are not endorsed by paragraph 11.1.	The plaintiff’s replies to the defendant’s responses are set out in blue font in the “Basis of Objection” column. Disputed.  The existence of contention is a matter of fact, as is the existence of communications in relation to the contention.  One of the communications is referred to in paragraph 18 of the affidavit. Disputed.  Paragraph 11 of the Paddick Affidavit states that Mr Paddick believes the matters referred to, inter alia, in paragraph 17 of Mr Stokie’s affidavit to be true and correct, save and subject only to the additional comments made by Mr Paddick in paragraphs 11.1 to 11.8 of his affidavit.  The comments in paragraph 11.1 of the Paddick Affidavit expand on, and do not contradict, paragraph 17 of Mr Stokie’s affidavit.	Received Not received
				23	Whole	Irrelevant to the proceedings	Disputed.  Relevant to the matters set out in the Defendant’s Summary of Argument at [171]-[173].	Received
24	Whole	Irrelevant to the proceedings	Disputed.  Relevant to the matters set out in the Defendant’s Summary of Argument at [171]-[173].	Received
25	Whole	Irrelevant to the proceedings	Disputed.  Relevant to the matters set out in the Defendant’s Summary of Argument at [171]-[173].	Received
26	Whole	Irrelevant to the proceedings	Disputed.  Relevant to the matters set out in the Defendant’s Summary of Argument at [171]-[173].	Received
28	Whole	The paragraph is internally inconsistent and should be given little or no weight. On the one hand, the introductory section says “Cook did not perform work throughout the period of March 201[9] to August 2019” but then paragraph 28(a) says Cook “suspended works more than once during that period and from the suspension on 19 July 2019, Cook did not perform any further works under the Contract”.  These propositions are contradictory. The assertion in the introductory section that Cook “did no render invoices to Garman according to the terms of the Contract” is a conclusion of law. The context of the paragraph is that it responds to paragraph 4.7 of Sumpter’s 12 September 2019 Affidavit.  That paragraph says “During the period March 2018 to August 2019, Cook performed works and rendered invoices”. The response is a suggestion that “throughout” means continuously and without suspension or interruption. That is not the plain English meaning of the word. In relation to paragraph 28 (b), the paragraph should be given little weight as it makes an assertion by paraphrasing a clause in the Contract but does not otherwise explain Gardman’s “position”.  The Paddick affidavit does not support paragraph 28.	Disputed that the paragraph is internally inconsistent.  The point is that the works were not performed throughout the period of March 2018 [2018, rather than 2019 is in fact intended] to August 2019, because of the various suspensions and because the work ceased on 19 July 2019 (not in August). Paragraph 28(b) is merely noting Gardman’s position for the purposes of this litigation, as opposed to the truth of that position.  It should be received in that limited manner.	Not received
29	Whole	The paragraph should be given little weight as it is not clear what is meant by “receive by way of service”. It appears to be a legal submission as to effective service under the SOP Act it should not be received as evidence.	Disputed. “Service” has a known meaning in the English language, other than by reference to the meaning of the term under the SOP Act. The first sentence of the paragraph is properly admissible as a denial of service by Cook on Gardman. The second sentence is admissible as to none of the alleged invoices or payment claims being served by Cook or on its behalf, on Gardman or anyone entitled to receive them on Gardman’s behalf.	Not received, word ‘served’ is not used in either Mr Sumpter’s affidavit sworn 12 September 2019 or in the Statement of Claim in relation to COOK.
30	Whole	The paragraph is submission and not evidence.  The Contract speaks for itself. The reference to WT’s engagement by others is irrelevant.	No objection to the paragraph being excised on the ground of it being a submission.  Gardman maintains, however, that the circumstances in relation to the engagement of WT is relevant for the reason referred to below.	Not received on the basis it is a submission
31	Whole	No relevance to the proceedings	Disputed.  The paragraph is relevant to the context and the surrounding circumstances, including with respect to: ·    the involvement of Vertex; and ·    objective circumstances relevant to the proper construction of the provisions of the Contract regarding the role of the superintendent and the resolution of any ambiguities in those provisions. The topic of the objective circumstances relevant to the proper construction of the provisions of the Contract is addressed further below, in the context of Cook’s objection to paragraph 12 of the Paddick Affidavit.	Not received
32	Whole	No relevance to the proceedings and submission in any event	As above.	Not received
33	Whole	No relevance to the proceedings and submission in any event	As above.	Not received
34	Paragraphs 34 (f) and 34(g)	Irrelevant to the proceedings as relates to events after Payment Claim 14	Disputed.  Relevant to the matters set out in the Defendant’s Summary of Argument at [171]-[173].	Received
35	Whole	Irrelevant to the proceedings as relates to events after Payment Claim 14	Disputed.  Relevant to the matters set out in the Defendant’s Summary of Argument at [171]-[173].	Not received - hearsay
36	Whole	Irrelevant to the proceedings as relates to events after Payment Claim 14	Disputed.  Relevant to the matters set out in the Defendant’s Summary of Argument at [171]-[173].	Not received – document speaks for itself
37	Whole	Irrelevant to the proceedings as relates to events after Payment Claim 14	Disputed.  Relevant to the matters set out in the Defendant’s Summary of Argument at [171]-[173].	Not received
38	Whole	Irrelevant to the proceedings.  Not validated by Paddick at paragraph 11.5 of his affidavit.	Disputed. Paragraph 11 of the Paddick Affidavit states that Mr Paddick believes the matters referred to, inter alia, in paragraph 38 of Mr Stokie’s affidavit to be true and correct, save and subject only to the additional comments made by Mr Paddick in paragraphs 11.1 to 11.8 of his affidavit.  The comments in paragraph 11.5 of the Paddick Affidavit expand on, and do not contradict, paragraph 38 of Mr Stokie’s affidavit.	Not received
39	Whole	Irrelevant to the proceedings.  Not validated by Paddick.  To the extent that hearsay evidence is to be excluded this should be excluded.	Disputed. As to relevance, is relevant to the matters set out in the Defendant’s Summary of Argument at [171]-[173]. As to alleged hearsay, Mr Stokie is able to address what he has been told by a supplier to Cook for the lifts supplied for the Project, in circumstances where Cook was able in its responding material to confirm or deny what Mr Stokie has been told by the supplier.	Not received
41	Whole	Irrelevant to the proceedings as relates to events after Payment Claim 14	Disputed.  Relevant to the matters set out in the Defendant’s Summary of Argument at [171]-[173].	Not received
43	Whole	Irrelevant to the proceedings The affidavit says these facts are not relied upon for the purpose of opposition so clearly irrelevant	Disputed.  Relevant solely as an explanation of the background as to why the GST component of the March Claim, the April Claim and the May Claim was not paid.	Received
44	Whole	The paragraph should be given little or no weight. The documents speak for themselves. Any criticism of the Payment Claims is irrelevant to the proceedings. The only issue is whether they are “Payment Claims” as defined in the SOP Act. In any event, Mr Paddick’s affidavit at paragraph 11.7 expressly confirms the process set out in the contract was followed when the Payment Claims were prepared and certified by WT. In relation to paragraph 44(f), Mr Paddick expressly confirms at 11.8 of his affidavit that the valuation and certification process required by the Special Conditions of the Contract was followed when the Payment Claims quanta was certified by WT.	Disputed. Relevant to the matters set out in the Defendant’s Summary of Argument at [98]-[111]. Further, paragraphs 11.7 and 11.8 of Mr Paddick’s affidavit do not confirm the process set out in, or required by, the contract was followed in relation to certifications by WT, but rather: ·   Refer, in paragraph 11.7, to the process of assessing progress claim work anticipated to be done in the following month being followed in relation to each of the Payment Recommendations made by WT.  Clause 2.1(a) of the Special Conditions was not limited to that anticipated work; and ·   Refer, in paragraph 11.8, to WT’s standard progress claim assessment reporting regime being applied to anticipated work that WT had understood to be reflected in Clause 2.1 of the Special Conditions.	Not received
45	Whole	The paragraph should be given little weight as the partial payment of Payment Claims 12, 13 and 14 by Gardman is otherwise inexplicable	Disputed. First, payment was made by Vertex under the finance arrangements, not by Gardman direct. Secondly, Payment Claims under the SOP Act have a specific and narrow meaning. Thirdly, the paragraph refers to the Purported Payment Claims not being provided by Cook to Mr Stokie or Gardman.

46	Whole	Objectionable as it is a submission as to a legal conclusion.  If admitted, it should be given little weight.	Disputed. Mr Stokie, as the sole director of Gardman, is able to give evidence on behalf of Gardman at least as to the scope of the actual authority of WT in relation to the receipt of Payment Claims to be made under the SOP Act.	Not received
SECOND AFFIDAVIT OF MICHAEL JOHN STOKIE
Whole affidavit	Plaintiff refers to its submissions as to estoppel.	Disputed. Basis of the objection is not properly identified. The argument by Cook regarding estoppel or ostensible authority does not make the affidavit inadmissible. Further, as submitted by Gardman, estoppel or ostensible authority requires a representation or conduct by the principal (Gardman), as opposed to by the alleged agent (Shaw).  The affidavit is admissible and relevant for that purpose.	Received – except for paragraph [6]
AFFIDAVIT OF GREG SHAW
7	The paragraph should be given no weight as it directly contradicts paragraph 14 of the same affidavit, in which Mr Shaw admits that, as sole director of 3SF Pty Ltd, he entered into an arrangement to provide project management services for the Project.	Disputed. The agreement entered into by 3SF Pty Ltd was with Cook, not with Gardman. Accordingly, the involvement of Mr Shaw with the Project pursuant to that agreement was as a contractor to the Cook and has nothing to do with the alleged relationship between Mr Shaw and Gardman.	Received
11	The paragraph should be given little or no weight as it is not supported by the evidence that Mr Shaw’s signature is also adjacent to the word “Principal”. There is nothing in either of the Stokie affidavits saying that Mr Shaw signing adjacent to the word “Principal” is in error.	Disputed. Mr Shaw signing above the word “Principal” is alleged by Gardman to be in error.  It would be contrary to the interests of justice for Mr Shaw’s explanation to be given no or little weight where Mr Shaw is not a party the action and the explanation has not been tested by oral evidence.  Further, Mr Michael Stokie was not in attendance when Mr Shaw signed and was not in control of Mr Shaw’s actions.  Gardman did not by any conduct or representation on its part, hold out Mr Shaw as having authority on Gardman’s behalf to sign the Contract as principal.	Received
AFFIDAVIT OF SAM PADDICK
11.2 to 11.4	Irrelevant to these proceedings as these subparagraphs relate to events that occurred after the service of Payment Claim 14.	Disputed.  Relevant to the matters set out in the Defendant’s Summary of Argument at [171]-[173].	Not received
12	The paragraph is irrelevant and, if received as evidence, should be given little weight.  The assertion now being made is at odds with the terms of the Contract.  If Gardman did not inform WT as to the terms of its Contract, that is not relevant to the claims now made by Cook.  That is a matter for Gardman, not WT.  Cook was not a party to, or privy to, the contract between Gardman and WT and this paragraph has no relevance to the issues at hand. There is no need for regard to surrounding circumstances to interpret the plain meaning of the Contract.  The rule in Codelfa expressly prohibits the use of extrinsic evidence: 1.  To contradict the language of the contract when it has a plain meaning; or 2.  To establish subjective intentions of the parties, even where shared by both parties. Here, the role of the Superintendent is clearly set out in the SCC and the General Conditions of Contract.	Disputed. Gardman relies on its Summary of Argument at [54]-[67], and on its oral submissions, as to the effect of the provisions of the Contract. The paragraph is also relevant to the question of the actual authority of WT.  Whatever the effect of the terms of the Contract may be, there could be no actual authority on the part of WT unless and to the extent that it accepted such authority, which it did not. Further, the paragraph is relevant as part of the surrounding circumstances in relation to the proper construction of the contractual terms concerning the role of the superintendent and the resolution of any ambiguity in those terms – in particular as to how Gardman and Cook each treated or contracted with WT in terms of its authority.  While WT’s involvement came after the Contract was entered into, events and conduct following the entry into a contract can be relevant in determining the appropriate construction of a contract.  That is, the post-contract conduct of parties is relevant, as part of the surrounding circumstances, to construing the objective intention of the parties and the terms of the Contract and in resolving any ambiguity.	Not received

ANNEXURE 1

Gardman’s responses to this Annexure 1 are contained in green font below.

This annexure deals with the objections of Gardman to what is characterised by it as “Hearsay Evidence”.

There are three reasons the Court should receive this evidence.

1.Exception 1 in DCR 162.

2.Exception 2 in DCR 162.

3.The evidence can be received as evidence of the state of mind of the deponent without necessarily relying on the truth of the assertions repeated by the deponent and is therefore not hearsay evidence.

In what follows, each of these three reasons is explained.

DCR162 Exception 1

In exercising its discretion under Rule 162(2) to receive evidence in a matter such as this where a plaintiff is seeking judgment based on s16 of the Building and Construction Industry Security of Payment Act 2009 (SA) (“SOP Act”), the Court is not undertaking the usual exercise of discretion in relation to a final order.

DCR162, Exception 1 is as follows:

An affidavit made for the purpose of interlocutory proceedings may contain statements that the witness honestly believes to be true if the witness also states the grounds of the belief.

The Plaintiff says, for the reasons that follow, that the proceedings in this matter are of an interlocutory nature.  The distinction between interlocutory and final proceedings has been considered at length by the High Court in Carr v. Finance Corporation of Australia Ltd. (No. 1)[83]. Although that case dealt with the rights in relation to a refusal to set aside a default judgment, the principles as to the difference between the two types of proceedings is fully developed.  At paragraph 3 of his reasons, Gibb CJ says that the Court is to have regard to “the legal rather than the practical effect of the judgment.”

[83] [1981] HCA 20; (1981) 147 CLR 246.

The fundamental distinction between interlocutory and final proceedings is whether the proceedings finally resolve the issue between the parties, or whether the issues between the parties are finally disposed of by the order that might be made.

The legal effect of any judgment in this action is final.  It would give rise to a judgment debt against Gardman, and result in a final determination of the issues in the present proceedings.

The fact that Gardman is able to bring a claim in separate proceedings, seeking a separate and distinct judgment against Cook does not mean that any judgment in favour of Cook in the within proceedings is interlocutory only.

The provisions of section 32 of the SOP Act do not alter the position in that regard. While the Act may not affect other rights under a construction contract, it nevertheless permits a final, as opposed to an interlocutory, judgment to be entered and enforceable under section 15.

In the case of the SOP Act, it is expressly stated in s32 that nothing in Part 3 of the SOP Act affects any right that a party to a construction contract may have. S32 is in the following terms:

32 —Effect of Part on civil proceedings

(1)Subject to section 33, nothing in this Part affects any right that a party to a construction contract—

(a)may have under the contract; or

(b)may have under Part 2 in respect of the contract; or

(c)may have apart from this Act in respect of anything done or omitted to be done under the contract.

(2)Nothing done under or for the purposes of this Part affects any civil proceedings arising under a construction contract, whether under this Part or otherwise, except as provided by subsection (3).

(3)In proceedings before a court or tribunal in relation to a matter arising under a construction contract, the court or tribunal—

(a)must allow for an amount paid to a party to the contract under or for the purposes of this Part in any order 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.

In other words, these proceedings are not the practical end of the dispute between the parties.  They are of a “pay now argue later” type character.  The Defendant and the Plaintiff are both at liberty to take further action in relation to the dispute between them.  For that reason alone, the hearsay evidence should be received.

DCR 162 Exception 2

Further and in any event, in the submission of the Plaintiff, even if the proceedings were of a final nature and not of an interlocutory nature, the Court has a sound policy reason for exercising its discretion under DCR 162 Exception 2.  That exception is as follows:

The Court may dispense with the requirements of this subrule to the extent it considers appropriate in a particular case.

The Plaintiff says hearsay evidence should be accepted by the Court in considering an application for judgment under s16 of the SOP Act. In effect, the Court is undertaking the same role that an adjudicator might have undertaken. There is no section in the SOP Act dealing with evidence or hearsay evidence. An adjudicator may have regard to submissions. It is against the policy of the SOP Act to attempt to introduce technical rules of evidence.

The test for the Court as set out in s16(4)(a) of the SOP Act is that is must “be of the satisfied of the existence of the circumstances referred to in subsection (1)”.  That is an invitation to the Court to use its discretion under Rule 262 to accept evidence that might otherwise be excluded in relation to proceedings of a final nature.

The majority of the hearsay content that Cook seeks to rely upon relates to the events associated with the execution and negotiation of the Contract.

Direct evidence can be, and has been, provided in relation to events associated with the execution of the Contract – in the affidavit of Mr Basedow.  There is no reason for hearsay content to be admitted, extending beyond the direct evidence.

Direct evidence could have been, but was not, provided by Mr Latsch in relation to the negotiation of the Contract.  There has been no explanation by Cook regarding why that evidence was not provided.

The default position under rule 162 serves an important purpose in ensuring only reliable evidence is received by the Court.  There is no reason in the circumstances to vary the default position. 

Where direct evidence has been, or can be, provided, there is no warrant for indirect or hearsay content to be provided, or admitted into evidence, given its inherent unreliability. This is particularly so given the serious consequences of a judgment entered under section 15 of the SOP Act.

If hearsay content is received over Gardman’s objection, it should be given little weight, particularly to the extent that direct evidence could have been, and has not been, given by other employees of Cook.

Proper characterisation of the evidence

Finally, it is not clear that the evidence is properly characterised as “Hearsay evidence” when it is viewed as evidence of the state of mind of the deponent, who is the General Manager of the Plaintiff.  That is, if the Court is not prepared to accept the evidence on one of the two grounds set out above, the Court can receive the evidence as an assertion by the Plaintiff that it had been led to believe that this state of affairs existed.  The actions of Mr Shaw are set out elsewhere in direct or documentary evidence, such as signing the Contract and attending at site meetings and giving instructions to the deponents to the affidavits.  Those actions led the Plaintiff to a state of mind.  The statements by Mr Sumpter are direct evidence of it holding that state of mind.  As such they are not hearsay.  The evidence should, in any event, be received on that basis.

Hearsay content as to state of mind is only admissible where the state of mind is otherwise relevant. 

As stated above, in this case, direct evidence can be, and has been, provided in relation to events associated with the execution of the Contract – in the affidavit of Mr Basedow.  The hearsay content adds nothing to that.  For example, as previously stated, the hearsay content in the Second Affidavit of Mr Sumpter does not expressly rely on the alleged circumstances in relation to negotiation and execution of the Contract in founding a basis for a state of mind of Mr Sumpter as to Mr Shaw’s authority.  Rather, the Second Affidavit of Mr Sumpter deals separately with the negotiation and execution of the Contract at paragraphs 8 and 9 and does not provide a state of mind link to the question of Mr Shaw’s perceived authority dealt with in paragraph 7 of the affidavit.  Accordingly, as previously submitted, the content of paragraphs 8 and 9 cannot be reliably accepted as state of mind evidence on the question of Mr Shaw’s perceived authority.

As also stated above, direct evidence could have been, but was not, provided by Mr Latsch in relation to the negotiation of the Contract and there has been no explanation by Cook regarding why that evidence was not provided.

In the above circumstances, only the direct and most reliable evidence should be admitted.