DC Concepts Pty Ltd v Gold Bundall Pty Ltd
[2014] VCC 1558
•3 October 2014
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted |
AT MELBOURNE
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-14-03029
| DC CONCEPTS PTY LTD | Plaintiff |
| v. | |
| GOLD BUNDALL PTY LTD | Defendant |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 2 September 2014 | |
DATE OF JUDGMENT: | 3 October 2014 | |
CASE MAY BE CITED AS: | DC Concepts Pty Ltd v. Gold Bundall Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2014] VCC 1558 | |
REASONS FOR JUDGMENT
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Catchwords: Building contract – Progress claims – Defendant failed to deliver payment schedules – Summary judgment application – Whether a process was agreed for making claims – Alleged lack of sufficient detail in the claims – Sections 17(2)(a), (4) and (5), Building and Construction Industry Payment 2004 (Qld)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S. Waldren | ComLaw |
| For the Defendant | Mr R. Moore | Logie Smith Lanyon |
HIS HONOUR:
1The plaintiff made application by summons filed 6 May 2014 for summary judgment against the defendant in relation to four progress claims for amounts totalling $59,060.60. The claims were made pursuant to the Building and Construction Industry Payments Act 2004 (Qld) (“the Act”). The plaintiff applies for judgment on the basis that the defence to the claim has no real prospect of success.
2The defendant is the tenant of premises at Bundall in the State of Queensland (“the premises”). The plaintiff claims it is a “builder” as defined under the Act. In July or August 2012, the plaintiff entered into an agreement with the defendant whereby the plaintiff “agreed to carry out certain building works and further supplied goods to the defendant”.
3The plaintiff claimed that the contract was made in discussions between Mr Jordan Platis and Mr Theo Tsapepas on behalf of the defendant and Mr John Miller on behalf of the plaintiff. The plaintiff also relies upon a document titled “Scope of Works” (undated) and email correspondence forwarded to the plaintiff from Mr Platis on behalf of the defendant dated 20 August 2012.
4 The following relevant facts appear not to be in dispute:
a.It was agreed that the plaintiff would supervise and manage the fit out of the premises to enable it to be used as a café business.
b.On or about 9 December 2012, the plaintiff made a payment claim for the sum of $14,723.50 for works completed in the previous week. On or about 18 December 2012, the plaintiff received payment for this invoice. There may have been an earlier claim as there is reference in invoice number DC037 dated 9 December 2012 to, “deducted payment $2,200 incl gst – invoice DC031”;
c.The plaintiff sent four further payment claims to the defendant on 17 December 2012 and 9, 18 and 29 January 2013 for amounts totalling $59,060.60. These claims have not been paid.
5 The issues for determination on the application are:
a.Whether the progress claims are arguably a nullity because:
i.In breach of s. 17(4) of the Act, the claims were served in relation to the previous week’s work, although there was no written agreement that progress claims would be made within any particular period and there is a dispute on the affidavit material as to whether the parties specifically agreed to progress claims being made weekly, rather than at the end of each month which is the default position under the Act.
ii.In breach of s. 17(5), more than one payment claim was made in the months of December 2012 and January 2013.
iii.In breach of s. 17(2)(a), insufficient details of “the construction work or related goods and services” to which the claims related were identified in the claims.
b.Whether the progress claims, should not to be regarded a nullity by reason of the following matters:
i.the failure by the defendant to serve a payment schedule in response to the payment claims, and whether that failure disentitled it from raising the breaches referred to in paragraphs a(i)-(iii);
ii.the payment of the progress claim dated 9 December 2012, which claim also contained the deficiencies alleged in paragraph (a)(iii) hereof;
iii.the matters raised in the letter from the defendant to the plaintiff dated 11 January 2013.
c.Whether, in the circumstances:
i.The plaintiff is entitled to summary judgment in respect of the progress claims;
ii.The claims should, in any event, be determined at trial.
Relevant Legislative Provisions
6 The relevant legislative provisions of the Act are:
Section 12, “Rights to progress payments”:
From each reference date under a construction contract, a person is entitled to a progress payment if the person has undertaken to carry out construction work, or supply related goods and services, under the contract.
Section 17, “Payment claims”:
…
(2)A payment claim—
(a) must identify the construction work or related goods and services to which the progress payment relates; and
(b) must state the amount of the progress payment that the claimant claims to be payable (the claimed amount); and
(c) must state that it is made under this Act.
…
(4)A payment claim may be served only within the later of—
(a) the period worked out under the construction contract; or
(b) the period of 12 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.
(5)A claimant cannot serve more than one payment claim in relation to each reference date under the construction contract.
(6)However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim.
Section 18, “Payment Schedules”:
(1)A respondent served with a payment claim may reply to the claim by serving a payment schedule on the claimant.
(2)A payment schedule—
(a) must identify the payment claim to which it relates; and
(b) must state the amount of the payment, if any, that the respondent proposes to make (the scheduled amount).
(3)If the scheduled amount is less than the claimed amount, the schedule must state why the scheduled amount is less and, if it is less because the respondent is withholding payment for any reason, the respondent’s reasons for withholding payment.
(4)Subsection (5) applies if—
(a) a claimant serves a payment claim on a respondent; and
(b) the respondent does not serve a payment schedule on the claimant within the earlier of—
(i)the time required by the relevant construction
(ii)10 business days after the payment claim is served.
(5)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.
Section 19, “Consequences of not paying claimant if no payment schedule”:
This section applies if the respondent—
(a) becomes liable to pay the claimed amount to the claimant under section 18 because the respondent failed to serve a payment schedule on the claimant within the time allowed by the section; and
(b) fails to pay the whole or any part of the claimed amount on or before the due date for the progress payment to which the payment claim relates.
(1)The claimant—
(a) may—
(i)recover the unpaid portion of the claimed amount from the respondent, as a debt owing to the claimant, in any court of competent jurisdiction;
…
(4)If the claimant starts proceedings under subsection (2)(a)(i) to recover the unpaid portion of the claimed amount from the respondent as a debt—
(a) judgement in favour of the claimant is not to be given by a court 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 any counterclaim against the claimant; or
(ii)to raise any defence in relation to matters arising under the construction contract.
Schedule 2 of the Act provides that “reference date” under a construction contract means:
(a) a date stated in, or worked out under, the contract as the date on which a claim for a progress payment may be made for construction work carried out or undertaken to be carried out, or related goods and services supplied or undertaken to be supplied, under the contract; or
(b) if the contract does not provide for the matter—
(i)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
(ii)the last day of each later named month.
Background facts relevant to the issue of the validity of the progress claims
7 In his affidavit of 2 May 2014, Mr Miller stated that he and Mr Platis agreed that Mr Miller “would forward all timesheets for the plaintiff’s subcontractors to the defendant together with details of the cost of all materials purchased by the plaintiff and the defendant would pay these amounts to the plaintiff”. Mr Miller said that it was also agreed the plaintiff would charge a reasonable fee for its services.
8 Mr Miller said that, “The defendant and I had not discussed any set time for making progress claims prior to starting work. Once we started work, I discussed the timing of the plaintiff’s invoices with Mr Platis on the phone and we agreed that the plaintiff would send invoices as and when it required reimbursement to pay trades and suppliers”.
9 In his affidavit of 21 August 2014, Mr Platis stated that, “The plaintiff and the defendant did not discuss, nor did they agree to a date for the plaintiff to send the defendant invoices for work that the plaintiff completed”.
10 The plaintiff’s progress claims included the following:
a.invoice no. DC031 (referred to in invoice no. DC037 dated 9 December 2012);
b.9 December 2012 (invoice no. DC037 - $14,723.50) for the week ending 9 December 2012;
c.17 December 2012 (inv. no. DC040 – $11,205.70) for the week ending 16 December 2012;
d.9 January 2013 (inv. no. DC043 – $14,383.60) for the week ending 23 December 2012;
e.18 January 2013 (inv. no. DC045 – $31,462.60) for the week ending 14 January 2013;
f.29 January 2013, (inv. no. DC046 – $1,998.70) for the week ending 20 January 2013.
11 No payment schedules were delivered by the defendant to the plaintiff following service of the progress claims. No payments were made after the progress claim made on 9 December 2012.
12 In his affidavit dated 2 May 2014, Mr Miller stated the plaintiff completed the works in January 2013. This is confirmed by an email from Mr Platis to Mr Miller dated 11 January 2013 in which Mr Platis on behalf of the defendant stated, “Thank you for your ongoing assistance and continuing cooperation towards helping our business get up and running. Without the help we have received to date, needless to say we would not be where we are now...we have been working towards an opening date on Monday January 14th but this may stretch to Tuesday. Nonetheless, we are basically ready to commence”.
13 The letter continued: “Thank you for returning to site to complete the works. I trust that you can accept this as an indication that the delay [in making payments] is merely a delay and not a complete neglect of our responsibilities to you and the other contractors. It’s been a long road but we are very very happy with the works completed and the professionalism shown throughout this process…”.
Validity of the Progress Claims
1. Was a period agreed for the service of progress claims?
14 The plaintiff relies upon the statement of Mr Miller that progress claims were to be sent “as and when it required reimbursement to pay trades and suppliers”. It further claims that the fact that it was agreed that progress claims were to be served weekly should be implied from the circumstances of the 9 December 2012 progress claim and the payment of that claim by the defendant on 18 December 2012.
15 This arrangement was further confirmed by the defendant’s letter dated 11 January 2013 which suggested that the defendant accepted that payment claims would be made as required (as the 9 December 2012 claim had been), and that the defendant had always intended to pay such claims.
16 The defendant submitted that no period had been “worked out under the construction contract” for the service of progress claims. Accordingly, progress claims could only be made on the last day of the month. By section 17(5) of the Act, only one progress claim could be served each month.
2. Were sufficient details provided in the payment claims?
17 The defendant claimed that insufficient details of the construction work, or related goods and services to which the claims related, were provided in the claims. The plaintiff, in its invoices to the defendant, used general terms such as, “materials purchased”. There was generally no description of the materials purchased and no receipts evidencing payment for the materials included with the claims. The payment claims generally included copies of the timesheets supporting the labour components of the charges on the invoices.
18 Other invoices refer to terms such as “builders clean”, “painting/paint” and “skip bins” x 2 without any further description or any receipts evidencing payment for those matters. In his affidavit dated 21 August 2014, Mr Platis stated, “In the absence of sufficient details contained in the invoices, or the payment claims (as the plaintiff alleges), the defendant was unable to understand the basis of the claim”.
Relevant legal principles
19 The defendant relied upon the statutory requirements of ss (2), (4) and (5) of s 17 as preconditions for the service of a valid progress claim. In FK Gardiner & Sons Pty Ltd v Dimin Pty Ltd [2006] QSC 243 at paragraph 24, Lyons J stated as follows:
“The Act sets up a statutory regime for the recovery of progress claims and it is dependent on a series of steps being completed. There must be a valid statutory entitlement to a progress payment before a payment claim can be made and then if a payment schedule does not issue within time the unpaid portion of the claim becomes a debt. Such a statutory regime depends on strict compliance with the provisions in the Act”.
20 Plaintiff’s counsel, Mr Waldren, submitted that this, and similar statements of principle did not necessarily lead to the conclusion that non-compliance with the statutory requirements (including the equivalent provision in other stated legislation) of sections 17(2)(a), (4) and (5) rendered the progress claims a nullity.
21 In Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (In Liquidation) [2005] NSWCA 409 Hodson JA stated as follows:
“In my opinion, a document which purports to be a payment claim does not fail to be a payment claim, within the meaning of the Act, merely because it can be seen, after a full investigation of all the facts and circumstances, not to successfully identify all the construction work for which payment is claimed. This could be the case, for example, if there is some typographical omission or other error in relation to one of a large number of items included in the claim; and the question whether or not the other party, by reason of its knowledge of the project, would have been able to fill in or correct that error could be one depending on a great deal of evidence concerning the circumstances of the case. In my opinion, it is inconceivable that it was the intention of the legislature that the existence of a payment claim under the Act should depend on that kind of consideration” [at paragraph 34].
22 Further, Mr Waldren relied upon the failure by the defendant to serve a payment schedule. In Nepean Engineering, Hodgson JA and Ipp JA stated as follows:
“If a payment claim which thus purports to identify the work in respect of which the claim is made is sufficient to support a valid determination, as Basten JA says, it would in my opinion be wholly inconsistent with the scheme of the Act if it was not also sufficient to support a cause of action under s.15 of the Act in a case where no payment schedule is served. Otherwise, a respondent could avoid the effect of the Act by not serving a payment schedule, and defending the s.15 proceedings by raising a question as to identification, which could be as to just one of many items in a claim and could be such as to depend upon a very detailed examination of all the circumstances of the contract” [at paragraph 38 per Hodgson JA].
“In regard to the issue the subject of this application for leave to appeal, for the reasons given by Hodgson JA, I would construe the Building and Construction Industry Security of Payment Act 1999 (NSW) as follows. Provided that a payment claim is made in good faith and purports to comply with s 13(2) of the Act, the merits of that claim, including the question whether the claim complies with s 13(2), is a matter for adjudication under s 17 and not a ground for resisting summary judgment in proceedings under s 15. In particular, if no adjudication is sought summary judgment cannot be resisted on grounds that could have been raised by way of a payment schedule leading to adjudication” [at paragraph 76 per Ipp JA].
23 In T & M Buckley Pty Ltd v 57 Moss Rd Pty Ltd [2010] QCA 381 Fraser and White JJA and Philippides J followed the decision of the New South Wales Court of Appeal in Nepean Engineering stating that, “What was required was that the payment claim purports in a reasonable way to identify the work the subject of the claim, and a payment claim was not a nullity for failure to identify the work unless the failure was patent on its face. The payment claim did not cease to satisfy the requirement concerning identification because it could be subsequently shown that the payment claim was not entirely successful in identifying all of the work” [at paragraph 35].
24 In Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd [2009] QSC 357 Lyons J considered whether a defence based on s. 17(5) of the Act had a real prospect of succeeding at trial. He relied upon statements by Palmer J in Brookhollow Pty Ltd v R x R Consultants Pty Ltd [2006] NSWSC 1, a decision on the New South Wales equivalents of s. 17(4) and (5). Lyons J quoted with approval the statement of Palmer J at paragraph 48 that, “the scheme of the Act in general and of s. 13 and s 14 in particular requires that a defence in bar to a payment claim founded on s. 13(4) or (5), like any other defence said to defeat or rdeduce the claim, must be raised in a timeously served payment schedule. If it is not, then the defence may not be relied upon to set aside or restrain enforcement of the adjudication determination as a nullity, nor may it be relied upon as a defence to entry of judgment under s.15(4) of the Act (the New South Wales equivalent s. 19(4) of the BCIP Act)”.
25 On appeal, the Court of Appeal considered that the trial judge should not have granted summary judgment. Muir JA (with whom Holmes and Chesterman JA agreed) stated at paragraph 82 that, “the range and complexity of the issues before [the trial judge] and the existence of factual disputes rendered the granting of summary judgment overly bold”. Muir JA considered that, “s. 19(4)(b)(ii) prohibits the raising of a defence only if it can fairly be described as one which relates to matters arising under the relevant construction contract” (paragraph 47). Muir JA concluded that the defendant had a real prospect of defending the claim on the basis of s. 17(5) of the Act and that there was only a “tenuous” connection between the defence and matters arising under the contract (paragraphs 47-49).
26 In McCarthy v State of Queensland [2013] QCA 268, the Court of Appeal considered whether a defence based upon non-compliance with s. 17(5) should deny the plaintiff summary judgment. Muir JA, with whom Gotterson and Morrison JJA agreed, stated at paragraph 19, “Section 19 operates to give a claimant a prima facie right to judgment for the unpaid amount of its claim if the respondent failed to serve a payment schedule on the claimant within the prescribed period and failed to pay the whole or any part of the claimed amount on or before the prescribed date. Significantly, the respondent is unable to rely on any counterclaim or on any defence in relation to matters arising under the construction contract”.
Validity of Progress Claims - Conclusion
27 In my view, it is appropriate that I should apply the law as stated by the Court of Appeal in Neumann Contractors and in McCarthy v State of Queensland. However, in the present case, although the contract between the parties was relatively informal, I am satisfied that the matters of defence presently sought to be raised “arose under the construction contract” and should therefore have been raised in a payment schedule.
28 It appears from the evidence of the regularity of the progress claims, the payment of the claim made on 9 December 2012 and the contents of the defendant’s letter dated 11 January 2013, that the parties had agreed to a consistent process for the plaintiff to make progress claims.
29 The defendant, by the recent affidavit of Mr Platis seeks to deny that any such arrangement was made. I consider, however, that for the purposes of the Act, I should rely upon the natural inference arising from the contemporaneous events in preference to what is essentially a bare denial without any attempt to traverse all the relevant matters raised by the plaintiff. Further, the plaintiff submitted a series of invoices, all expressed to be progress claims under the Act. I am satisfied that the claims for work completed in the week previous to the claims gave the defendant sufficient information so as to require it to either pay the claim or to indicate the basis for refusing to do so.
30 The defendant made no response, either formally by the delivery of a payment schedule specifying matters of contention, or even informally. Instead, the defendant’s conduct indicated acquiescence with the processes adopted and a willingness to meet its indebtedness to the plaintiff.
31 In these circumstances, the purposes of the Act require that the defendant not be permitted to raise at this stage defences which merely assert that the progress claims were made at times not necessarily agreed by the parties or that the level of detail provided by the plaintiff was insufficient to permit the defendant to adequately assess what sum might be due to the plaintiff.
32 There are other matters of defence the defendant is pursuing in the separate proceeding it has brought against the plaintiff. However, in relation to these progress claims, it is appropriate that summary judgment should be entered against the defendant.
Proposed Orders:
1. Judgment for the plaintiff against the defendant that the defendant pay to the plaintiff the sum of $59,060.60, together with interest pursuant to statute from 1 March 2013 to today of $10,080.75, total judgment $69,141.35.
2. The defendant must pay the plaintiff’s costs of the proceeding, including any reserved costs and the costs of the summons filed 6 May 2014 and of the appearances on
2 September 2014 and today, to be assessed by the Costs Court in default of agreement.
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Certificate
I certify that the preceding 9 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 3 October 2014.
Dated: 3 October 2014
Olivia Bramwell
Associate to His Honour Judge Anderson
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