Dixon Excavations and Civil Contracting Pty Ltd and Melbourne Master Painting & Maintenance Pty Ltd
[2022] VCC 2205
•13 December 2022
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Building Cases List
Case No. CI-22-03866
| Dixon Excavations and Civil Contracting Pty Ltd (ABN 5063 010 1398) trading as Dixon Services | Plaintiff |
| v | |
| Melbourne Master Painting & Maintenance Pty Ltd (ABN 1763 624 4776) | Defendant |
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JUDGE: | Her Honour Judge Burchell | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF JUDGMENT: | 13 December 2022 | |
CASE MAY BE CITED AS: | Dixon Excavations and Civil Contracting Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 2205 | |
REASONS FOR JUDGMENT
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Subject: CONTRACTS
Catchwords: Building contract – Summary judgment – whether the parties entered into a construction contract – whether entitled to payment under a construction contract – identity of parties to a construction contract – service of payment claim – adequate identification of construction work – whether the defence has real prospects of success
Legislation Cited: Building and Construction Industry Security of Payment Act2002 (Vic) ss4, 5, 7, 14, 14(1), 14(2), 14(3), 9, 9(1), 9(2)(a), 15(1), 15(2), 15(4), 16(2), 17, 47, 48 50; Civil Procedure Act 2010 (Vic) ss61, 64, 63 and 65; County Court Civil Procedure Rules 2018 (Vic) r22.03
Cases Cited:Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; Vanguard Developments v Promax [2018] VSC 386; Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor (2009) 26 VR 112; Pearl Hill Pty Ltd v Concorp Construction Group (Vic)Pty Ltd [2011] VSCA 99; Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2005) 62 NSWLR 385; 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674; SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449; John Beever v Roads Corporation [2018] VSC 635; Grave v Blazevic Holdings Pty Ltd (2010) 79 NSWLR 132; Baron Forge Contractors v Vaughn [2018] VSC 635; Best Fab Pty Ltd v Australian High Bay Installations Pty Ltd [2018] VCC 1053; Lysaght Building Solutions Pty Ltd (t/a Highline Commercial Construction) v Blanalko Pty Ltd (2013) 42 VR 27; Hausman v Abigroup Contractors Pty Ltd (2009) 29 VR 213; Shells Venture Management v Agresta [2019] VSC 863; Collective Crane Hire Pty Ltd v ICR Steel Pty Ltd [2021] VCC 132; Crown Green Square Pty Ltd v Transport for NSW [2021] NSWSC 155; Lendlease Engineering Pty Ltd v Timecon Pty Ltd [2019] NSWSC 685; Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd [2012] NSWCA 31; Krongold Constructions (Aust) Pty Ltd v SR & RS Wales Pty Ltd [2016] VSC 94; Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd (No 2) [2015] VSC 500; Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248; John Beever (Aust) Pty Limited v Paper Australia Pty Ltd [2019] VSC 126; Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106; Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391; Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140; ACP Properties (Townsville) Pty Ltd v Rodrigues Construction Group Pty Ltd [2021] QSC 045; Joye Group Pty Ltd v Cemco Projects Pty Ltd [2021] NSWCA 211; Style Timber Floor Pty Ltd v Krivosudsky [2019] NSWCA 171.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | A Schlicht | Vadarlis & Associates Lawyers & Consultants |
| For the Defendant | K Wangmann | Hughes Legal Pty Ltd |
HER HONOUR:
Summary and outcome
1In this proceeding, the plaintiff, Dixon Excavations and Civil Contracting Pty Ltd (“Dixon”), applies for summary judgment against the defendant, Melbourne Master Painting & Maintenance (“MMP”) pursuant to r22.03 of the County Court Civil Procedure Rules 2018 (“the Rules”) on the basis that the defendant has no defence to the whole or part of the claim included in the plaintiff’s Statement of Claim dated 16 September 2022. Dixon makes the application by summons dated 21 November 2022 and the application arises out of construction works which Dixon claims it performed as a sub-contractor on various construction sites and projects.
2Dixon submits that it is entitled to judgment because MMP failed to issue a payment schedule or make payment in response to its payment claims. The amount claimed owing in respect of the payment claims is $282,831.35.
3MMP opposes the plaintiff’s application for summary judgment as follows:
(a) MMP did not enter into a “construction contract” with Dixon within the meaning of s4 of the Building and Construction Industry Security of Payment Act2002 (Vic) (“SOP Act”);
(b) even if MMP did enter into any construction contract with Dixon, Dixon was only entitled to zero payment pursuant to the work orders issued by the defendant;
(c) alternatively, that MMP was not party to the construction contract and that any contract was between Mr Tweed and Mr Dixon or between MMP and Mr Dixon;
(d) that Dixon did not serve a payment claim because service was not effected in accordance with s50 of the SOP Act and the invoices relied on were issued by “Dixon Services Pty Ltd”;
(e) even if Dixon did effectively serve any payment claim, invoices 02917 and invoice 03018, concerning the RMIT Bundoora works, did not identify the construction work to which the progress payments related to by reference to the construction contract and;
(f) further, and alternatively, in relation to invoice 02940, the defendant served the payment schedule by email dated 14 April 2022.
4In my view, the prospects of success of the arguments that MMP did not enter into a construction contract or was not party to a construction contract with Dixon, are not fanciful. Based on the evidence before me and provided in support of this application, there remain fundamental questions to be tried, namely the very existence of a construction contract and the identity of parties to the construction contract.
5Dixon has failed to discharge its onus in establishing that the defendant has no real prospect in successfully defending the claim. It has also failed to establish the elements of its own cause of action. Under s64 of the Civil Procedure Act 2010 (Vic) (“CPA”) the Court may exercise its discretion to require a full hearing on the merits and I am of the view that the matter should proceed in this way.
6Accordingly, there will be an order that the plaintiff’s application be dismissed, and that the plaintiff pay the defendant’s costs of and incidental to the summons on the standard basis, to be taxed in default of agreement, unless either party has a basis for seeking a different order as to costs. I invite the parties to prepare draft orders to give effect to these reasons. I will determine any issue concerning costs on the papers.
The relevant facts
7Dixon relies upon the affidavits of Dean Stuart Dixon, director of Dixon, sworn on 25 November 2022 and 6 December 2022 and of Kristy Renee Carey, office manager, sworn 7 December 2022. MMP relies on the affidavit of Matthew Tweed, director of MMP, sworn on 5 December 2022. I have also considered the parties’ written submissions and amended submissions filed in this proceeding.
8Dixon is a company owned and controlled by Dean Dixon and MMP is a company owned and controlled by Matthew Tweed. Mr Dixon and Mr Tweed met through Mr Tweed’s brother.
9From between November 2021 and June 2022, Dixon claims that it entered into contracts or other arrangements under which Dixon undertook to carry out construction work or to supply goods and services for MMP on several projects set out below. On the other hand, MMP argues that Mr Dixon and Mr Tweed agreed to carry out an informal joint venture in relation to several projects as follows:
(a) Fort Gellibrand – Performance of demolition and civil works (“Project 1”);
(b) HMAS Cerberus – Preparation of evacuation plans and drawings (“Project 2”);
(c) RMIT Bundoora – Preparation of shop drawings and performance of preliminary works and supply of materials and labour to carry out scope of work as per architectural drawings (“Project 3”); and
(d) Fishermen’s Bend – Brick up the new wall eastern elevation to enclose courtyard double skin and acid was of bricks plus supply of materials and labour (“Project 4”),
(Collectively the “Projects”).
10Mr Tweed and Mr Dixon reached these arrangements during conversations they had on the construction sites of the Projects with the intention to establish and informal partnership and share the profits.
11Dixon claims that each of the contracts or arrangements referred to above constituted a “construction contract” within the meaning of s4 of the SOP Act.
12For each of the joint venture Projects, Mr Tweed deposes that he and Mr Dixon agreed as follows:
(a) MMP would issue a quotation for the customer for the project;
(b) Mr Dixon would carry out the civil component of the works;
(c) Mr Tweed would carry out other components of the works;
(d) Mr Dixon and Mr Tweed would discuss and agree on an amount to be paid for the works performed by each of them; and
(e) Mr Dixon and Mr Tweed would equally share the profits from each of the Projects.
13Dixon conceded that there was an agreement that Dixon would charge Mr Dixon on a “cost only basis” and the profits of the Projects would be shared. Mr Tweed deposed that there was no agreement reached as to what amount would be paid to Mr Dixon or Mr Tweed for the work and that the amounts payable was subject to further agreement.
14MMP prepared customer quotations which were submitted to the customers for the relevant Projects.[1] Mr Tweed deposes that MMP prepared the work orders. However, he says that the work orders were not issued to Dixon or provided to Mr Dixon. Further, that the value of each of the work orders was zero dollars because there was no agreement as to what amount would be paid to Mr Dixon for each of the joint venture Projects.
[1] See a copy of the customer quotations and work orders for the joint venture Projects is exhibited to the affidavit of Matthew Tweed sworn 5 December 2022 at pages 7 to 21.
15Mr Tweed deposes that none of the work orders were addressed to Dixon, and that all of them were provided to Mr Dixon. Further, that all the work orders state the price of the works as zero dollars because there was no agreement as to what amount would be paid to Mr Dixon for each of the joint venture Projects.
16Mr Tweed claims that “Dixon Services Pty Ltd” purported to issue tax invoices for the works notwithstanding the informal partnership between Mr Tweed and Mr Dixon. There is no entity by the name “Dixon Services Pty Ltd”.[2]
[2] See a copy of the invoices issued by Dixon to MMP are exhibited to the affidavit of Matthew Tweed sworn 5 December 2022 at pages 31 to 38.
17MMP deposes and rejects that the Payment Claims exhibited to the affidavit of Mr Dixon were issued to MMP as payment claims under the SOP Act. It says that the Payment Claims exhibited are not the same documents as the invoices issued to MMP. Further, that the invoices appear to have been amended to delete the words “Pty Ltd” after the words “Dixon Services”.
18Dixon deposes that each of the Payment Claims is headed “Dixon Services” which is a business name owned by Dixon and the ABN listed on each of the Payment Claims, being ABN 50 630 101 398, is the ABN of Dixon. Dixon deposes that it is now and has at all relevant times been the registered owner of the business name “Dixon Services”.[3] It does not reflect Dixon Services Pty Ltd.
[3] See ASIC searches of the registered ownership under ABN 50 630 101 398 and the business name Dixon Services is exhibited at pages 30 to 31 of the affidavit of Dean Stuart Dixon sworn 25 November 2022.
19On or around 29 July 2022, MMP was issued with a letter of demand by Eakin McCaffery Cox Lawyers demanding payment of invoices and attaching copies of the same.
20The invoices issued in respect of the Projects were as follows:
(a) Project 1 - INV-02940
(i)Dixon deposes that MMP contracted with APGC Group to carry out works at the Department of Defence site at Fort Gellibrand. MMP then subcontracted these works to Dixon.[4] Payment Claim 1 was for a total of $149,521.69 (including GST).
[4] See a copy of the quotation by MMP to the APGC Group, the work order from MMP to Dixon and invoice INV-02940 (“Payment Claim 1”) is exhibited to the affidavit of Dean Stuart Dixon sworn 25 November 2022 at pages 7 to 11.
(ii)Payment Claim 1 is dated 30 March 2022 and the due date for payment was 30 April 2022. Dixon says that no payment schedule in respect of Payment Claim 1 was provided by MMP or received by Dixon.
(iii)MMP submits that it did issue a payment schedule in respect of Payment Claim 1 by email correspondence dated 14 April 2022.[5]
[5] See the Defendant’s amended submissions dated 8 December 2022 at pages 14 and 15.
(b) Project 2 - INV-02953
(i)Dixon deposes that it was engaged by MMP to provide excavation drawings to buildings at the Department of Defence site at HMAS Cerberus.[6] Payment Claim 2 was for a total of $19,635.00 (including GST).
[6] See a copy of INV-02953 (“Payment Claim 2”) exhibited to the affidavit of Dean Stuart Dixon sworn 25 November 2022 at page 12.
(ii)Payment Claim 2 is dated 8 April 2022 and the due date for payment was 30 May 2022. Dixon says that no payment schedule was provided in respect of Payment Claim 2.
(c) Project 3 - INV-02917 and INV-03018
(i)Dixon deposes that MMP was engaged to do construction works under a subcontract agreement with Harris HMC Interiors at RMIT Bundoora.[7] Dixon was then engaged by MMP to provide shop drawings for the job and carry out works under Work Order No. 29 which is exhibited at pages 18 to 20 of the affidavit of Dean Stuart Dixon. Two payment claims were served on MMP in respect of Project 3 works.[8]
(ii)Payment Claim 3 was for a total of $7,150.00 (including GST) and Payment Claim 4 was for a total of $81,398.46 (including GST). Payment Claim 3 was payable on 30 April 2022 and Payment Claim 4 on 30 June 2022. Dixon says that no payment schedules in respect of Payment Claim 3 and Payment Claim 4 were provided or served by MMP or received by Dixon.
(iii)MMP submits that INV-02917 and INV-03018 do not adequately identify the construction work to which the progress payments relate to by reference to the construction contract.
(d) Project 4 - INV-03019
(i)Dixon deposes that MMP was engaged by Harris HMC to carry out works on the Department of Defence site at Fishermans Bend. MMP then subcontracted these works under Work Order No. 45.[9] Payment Claim 5 was for a total of $25,126.20 (including GST).
(ii)Payment Claim 5 was dated 3 June 2022 and payable on 30 July 2022. Payment Claim 5 was made by Dixon to MMP and Dixon says that no payment schedule was provide by MMP in respect of Payment Claim 5.
[7] See a copy of the sub-contract agreement is exhibited in the affidavit of Dean Stuart Dixon sworn 25 November 2022 at pages 13 to 17.
[8]A copy of INV-02917 (“Payment Claim 3”) for shop drawings and INV-03018 (“Payment Claim 4”) for construction work are exhibited in the affidavit of Dean Stuart Dixon sworn 25 November 2022 at pages 21 to 22.
[9] See a copy of Work Order No. 45 exhibited at page 23 of the affidavit of Dean Stuart Dixon sworn 25 November 2022. See also a copy of INV-03019 (“Payment Claim 5”) exhibited at page 24 of the affidavit of Dean Stuart Dixon sworn 25 November 2022.
(collectively “the Payment Claims”)
21Dixon deposes that no monies owed, as reflected in the Payment Claims, has been paid by MMP to Dixon or received by Dixon.
22The issues to be decided by the Court in respect of the current application are as follows:
(a) whether MMP entered into a “construction contract” within the meaning of s4 of the SOP Act?
(b) whether Dixon was entitled to progress payments under the construction contract?
(c) whether Dixon was party to the construction contract?
(d) whether Dixon served a payment claim?
(e) whether the payment claim identifies the construction works to which the progress payment relates by reference to the construction contract?
(f) whether MMP served a payment schedule in respect of Payment Claim 1?
23Critically, as set out in my reasons and in the legal principles below, the issues (b) and issues (d) to (f) are all contingent on issues (a) and (c) being whether MMP entered into a “construction contract” within the meaning of the SOP Act and whether Dixon was in fact party to the purported construction contract. In turn, the focus of my reasons set out below will address these primary issues. However, I will also make determinations in the alternative, for the sake of completeness, in the event I am incorrect on issues (a) and (c).
The legal context and principles
Summary Judgment
24The Victorian Court of Appeal in Lysaght Building Solutions Pty Ltd (t/a Highline Commercial Construction) v Blanalko Pty Ltd (“Lysaght”)[10] distilled the relevant principles and test to be applied when determining whether to give summary judgment in a civil proceeding pursuant to s63 of the CPA.
[10] (2013) 42 VR 27.
25The Court must also necessarily have regard to ss61, 64 and 65 of the CPA. In summary, a plaintiff may apply to the court for summary judgment on the grounds that a defendant’s defence or part of that defence has no real prospect of success. The court may give summary judgment if satisfied that a defence or part of a defence has no real prospect of success.
26Under r22.03 of the Rules a defendant may show cause against the application generally by affidavit. In respect of the application for summary judgment itself, the plaintiff must satisfy the court of the contents of its affidavit and the very elements of its claim in order to discharge its onus. The affidavit must also establish the deponent’s belief that the defence has no reasonable prospects of success. The requirement of the rules was considered by the Victorian Court of Appeal in Hausman v Abigroup Contractors Pty Ltd,[11] namely, the necessity of an affidavit in support to verify the facts necessary to establish a good cause of action.[12]
[11] (2009) 29 VR 213.
[12] Ibid at [60].
27Pursuant to ss61 and 64 of the CPA, the court will not give judgment if the defendant satisfies the court of the following:
(a) the defence or part of the defence has a real prospect of success; or
(b) it is not in the interests of justice to dispose of the matter summarily; or
(c) the dispute is of such a nature that only a full hearing on the merits is appropriate.
Security of Payment Scheme
28Turning now to the SOP Act, the security of payment scheme seeks to ensure that people who undertake to carry out construction work can recover progress payments for the performance of that work. Section 4 defines construction contract as a “contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services for another party”. The SOP Act applies to any construction contract whether written or oral, or partly written and partly oral. “Construction work” is defined by s5. There is no dispute that the works the subject of this proceeding is “construction work” within the meaning of s5.
29Section 14 of the SOP Act concerns the form and content of payment claims. Sections 14(2) and (3) relevantly provide that a payment claim:
(a) must be in the prescribed form (if any) and contain the prescribed information (if any) – neither is prescribed;
(b) must identify the construction work or related goods and services to which it relates;
(c) must indicate the amount of progress payment that the claimant claims to be due;
(d) must state that it is made under the SOP Act; and
(e) must not include any “excluded amounts” (being amounts referable to particular categories of variations).
30Another important provision informing the formal requirements for payment claims under the Act is s9. Section 9(1) provides that “on and from each reference date under a construction contract” a claimant is “entitled to a progress payment under this Act calculated by reference to that date”.
31Section 9(2)(a) of the SOP Act provides that a reference date is a date determined by or in accordance with the construction contract as:
(a) a date on which a claim for a progress payment may be made; or
(b) a date by reference to which the amount of a progress payment is to be calculated,
(c) in relation to a specific item of construction work “carried out or to be carried out” or a specific item of related goods and services “supplied or to be supplied” under the contract.
32The rest of s9 concerns situations where the contract makes no express provision for reference dates.
33It is now well established in Victoria that unless a payment claim answering the description in s14(1) of the SOP Act is served, there can be no application to a court under s16(2)(a)(i). Although dealing with the alternative option of an adjudication application referred to in the New South Wales equivalent of s16(2)(a)(ii), this follows inexorably from the decision of the High Court in Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd[13] (“Southern Han”). On the other hand, the available defences to a payment claim are very limited.
[13] (2016) 260 CLR 340 at [44].
34The available defences concern either the nature of the underlying contract or the form and service of the purported payment claim, and thus whether the payment claim is effective to trigger the procedures established by Part 3 of the SOP Act.[14] More particularly, the defences to a payment claim enlivened by the formal requirements of the SOP Act are, in substance, that the payment claim:
(a) does not relate to a “construction contract” (including because it does not involve carrying out “construction work”), or it relates to a construction contract excluded from the operation of the Act under s7 (for example, a construction contract that forms part of a loan agreement, or one that is a domestic building contract under the Domestic Building Contracts Act 1995);
(b) fails to satisfy the formal requirements of s14(2) (for example, by failing to identify the construction work or failing to state that it is made under the SOP Act);
(c) was made when no valid reference date existed,[15] including where it is served before an applicable reference date or relies on a reference date that has already been used up by an earlier payment claim;[16]
(d) includes variations that are “excluded amounts” under s10B; and
(e) was not validly served on the respondent under either the terms of the contract or under s50.
[14] Southern Han at [62].
[15] Southern Han at [61]–[62]; Vanguard Developments v Promax [2018] VSC 386 per Kennedy J at [121].
[16] SOP Act s14(8).
35Another issue that may arise, in rare circumstances, is where a defendant alleges that they are not party to or are not liable under the contract. This usually arises where multiple subcontractors are involved in the works. Applicable authorities addressing this issue include Shells Venture Management v Agresta[17](“Shells”), Baron Forge Contractors Pty Ltd v Vaughan Constructions Pty Ltd[18](“Baron Forge”) andGrave v Blazevic Holdings Pty Ltd[19](“Grave”), Collective Crane Hire Pty Ltd v ICR Steel Pty Ltd;[20] and 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd[21](“3D Flow”).
[17] [2019] VSC 863 (“Shells”).
[18] [2015] VCC 1424 (“Baron Forge”).
[19] (2010) 79 NSWLR 132 (“Grave”).
[20] [2021] VCC 132.
[21] [2018] VCC 674 (“3D Flow”).
36Under s47, nothing in Part 3 of the SOP Act precludes bringing or continuing proceedings under the construction contract, including where those proceedings deal with the same issues in dispute in the proceeding relying on Part 3. Thus, a judgment under ss16 and 17 is a provisional judgment in what it grants and what it refuses.[22] The statutory context both contemplates and permits inconsistent judgments.[23] This section is, in effect, the statutory manifestation of the “pay now, argue later” description often given to the policy behind the SOP Act and its counterparts in other states.[24]
[22] Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor (2009) 26 VR 112 [2] and [43]-[46] per Vickery J, cited with approval in Pearl Hill Pty Ltd v Concorp Construction Group (Vic)Pty Ltd [2011] VSCA 99 [11].
[23] Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2005) 62 NSWLR 385 [22] per Handley JA, with whom Santow JA and Pearlman AJA agreed.
[24] Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor (2009) 26 VR 112 [2] and [43]–[46].
37Further, in considering any purported defences to a payment claim, it is important to be mindful of s48 of the SOP Act. This section provides that the provisions of the SOP Act have effect despite any contractual provision to the contrary. It further provides that any provision in any contract purporting to exclude, restrict or modify the operation of the SOP Act or that may reasonably be construed as an attempt to deter a person from taking action under the Act, is void.
38This court has endorsed the hearing of applications under the SOP Act on a summary basis by summons on originating motion with affidavit evidence.[25] Such claims are properly assessed on the balance of probabilities,[26] with the quality of the evidence weighed having regard to the fact that the legislation seeks to facilitate a swift but temporary remedy.[27] Occasionally, a plaintiff nevertheless applies for relief under s16 by bringing a proceeding commenced by writ and statement of claim, then issuing a summons seeking summary judgment pursuant to s61 of the CPA.[28] This can add an additional layer of complexity in determining the test to be applied to any defences raised.[29]
[25] 3D Flow at [39]–[54]. See also SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805 [26].
[26] Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449, 449-450 per Mason CJ, Brennan, Deane and Gaudron JJ.
[27] 3D Flow at [51]–[54].
[28] John Beever v Roads Corporation [2018] VSC 635; see also Best Fab Pty Ltd v Australian High Bay Installations Pty Ltd [2018] VCC 1053.
[29] SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805 [31] (“SJ Higgins”).
39The present proceeding was commenced by the plaintiffs summons seeking summary judgment, so questions of the application of the test under ss61 and 63 of the CPA thereby arises.
Test to be applied
40In Lysaght[30] the Victorian Court of Appeal clarified the summary judgment test as being whether the respondent to the application has a real, as opposed to a fanciful, prospect of success. Critically, that the power is to be exercised with caution and only when it is clear that there is no real question to be tried.[31]
[30] Lysaght at [27]–[35].
[31] Ibid.
41In adopting the reasoning of his Honour Judge Woodward in SJ Higgins[32], referring to 3D Flow, the summary judgment test must be imposed on the examination of whatever limited defences the SOP Act allows, where judgment is sought by application for summary judgment. Relevantly his Honour reasoned that:[33]
“To do otherwise would amount to ignoring a key aspect of the clear statutory regime created by Part 4.4 of the CPA. There is no express provision of the SOP Act permitting that course and, in my view, it cannot be justified by reliance only on the broad purposes of the SOP Act. This is particularly so where, for the reasons discussed in 3D Flow, the problem can be avoided altogether by a claimant selecting the originating motion option”.
[32] SJ Higgins at [31].
[33] Ibid.
42As such, and in the circumstances of the current proceeding, I will consider MMP’s defences applying the summary judgment test.
Analysis
Whether the defendant entered into a “construction contract” within the meaning of s4 of the SOP Act?
43Dixon submits that between November 2021 to June 2022, Dixon entered into contracts or arrangements with MMP to carry out construction works, or to supply related goods, in respect of the Projects. Dixon submits that is clear that there was a contract for each of the Projects.
44Dixon further submits that the works under the contract was for construction works, the scope of which was defined in the works orders exhibited to Mr Dixon’s affidavit.
45Dixon rejects the primary argument of the defendant that the arrangements in respect of the Projects were informal Joint Venture agreements between Mr Tweed and Mr Dixon in his personal capacity. It is not disputed that Mr Tweed is the principal director of the defendant and Mr Dixon the principal director of the plaintiff.
46Dixon says that MMP’s submissions are contrary to the defence pleaded whereby the defendant claims money owed by the plaintiff for works and material supplied to the plaintiff in respect of the Projects. Further, that the Joint Venture agreements were never raised when invoices were issued to the defendant and that the defendant has in fact paid a number of invoices. In turn, it rejects that the Payment Claims were the subject of an individual Joint Venture agreement between Mr Tweed and Mr Dixon.
47Dixon relies on the chain of events in respect of the Project 1 construction works whereby a customer quotations were prepared by MMP, which is a business name owned by the defendant, who provided a quote for works completed. MMP would then provide a work order in the same terms to Dixon. It rhetorically argued that if MMP contracted with the customer for works, how then does this translate to an informal Joint Venture agreement between Tweed and Dixon personally, given a lack of contractual privity. It similarly relies on the chain of events in respect of Project 3 in which MMP entered into a written subcontract agreement with Harris HMC and a work order was then provided from MMP to Dixon.
48Dixon further rejects MMP’s arguments, as deposed in the affidavit of Mr Tweed, that there was an agreement that Mr Tweed and Mr Dixon would discuss and agree on an amount to be paid for the works performed. It says that if this was accepted, it would mean that, despite works being completed on the Projects, no money was payable, unless Mr Tweed agreed to pay it. This would mean that the defendant and Mr Tweed would not be liable to pay for any works, unless agreed, and if there was no agreement there would be no liability for payment whatsoever. Dixon argues that this consequence was the precise basis for the introduction of the security for payment legislative scheme.
49MMP concedes in its submissions that an agreement does not need to be legally binding in order for the SOP Act to apply. However, it submits that the object of the SOP Act does not create an obligation to pay for construction works where one does not otherwise exist. It relies on Henry J’s reasoning in Crown Green Square Pty Ltd v Transport for NSW,[34] who considered the analogous NSW SOP Act and the need for some form of reciprocal obligation and recognition of rights.
[34] [2021] NSWSC 155 at [166]–[170].
50MMP relies on Mr Tweed’s evidence in which he deposes that there was no agreement as to what amount would be paid to Mr Dixon or Mr Tweed for the works and that the amounts payable was subject to further agreement. It says that Mr Tweed’s evidence should be preferred over Mr Dixon whose evidence should be treated with caution.
51MMP responds to Dixon’s arguments, that the works were to be paid on a “costs only basis”, by submitting that such an agreement would be too vague and uncertain and would allow Dixon the ability to charge whatever it wished for the works. It says that it was no more than an agreement for Dixon to undertake works for the defendant and does not rise to an acceptance of rights and obligations as to payment for the works, which is required to trigger the SOP Act.
52MMP further relies on s7 of the SOP Act, which provides that a construction contract, in which it is agreed that consideration is payable for construction work, is to be calculated by reference to the value of the work carried out or the goods supplied. It submits that the value to be paid by the Joint Venture agreement was to be calculated by reference to the profits of the Projects.
53As summarised by Judge Woodward in 3D Flow,[35] a “construction contract” is defined by s4 of the SOP Act to mean a “contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services for another party”. Subject to s7 of the SOP Act, the Act applies to any construction contract, whether written or oral, or partly written and partly oral, and applies even if the contract is expressed to be governed by the law of a jurisdiction other than Victoria.
[35] [2018] VCC 674 at [31].
54However, as clarified by Ball J in Lendlease Engineering Pty Ltd v Timecon Pty Ltd,[36] there remains some debate in the authorities as to whether an “arrangement” needs to give rise to a legally binding obligation. As Ball J observed[37]:
“It is plain that the SOP Act is not intended to affect the ultimate rights and liabilities of the parties to whom it applies. Rather, its purpose is to provide a mechanism by which contractors who do work in the construction industry, or provide related goods and services, and are entitled to be paid for that work are able to make progress claims and to have those claims paid promptly. The purpose of the SOP Act is not to create an obligation to pay where one does not otherwise exist”.
[36] [2019] NSWSC 685 at [67]–[87].
[37] Ibid at [68].
55Further, as referred to in the defendant’s submissions, Henry J in Crown Green Square Pty Ltd v Transport for NSW[38] viewed that a factual element underpinning such an arrangement, for the purposes of the SOP Act, would involve some communication between the parties on the subject matter of payment for the works and recognition of the right to be paid. Further, there is the requirement of some element of reciprocity and consideration and something more than a party simply undertaking to carry out construction works for another.
[38] [2021] NSWSC 155 at [166]–[170].
56What is evident from the authorities is that this a somewhat grey area, in that the existence of a “construction contract” within the meaning of the SOP Act, where disputed, will ultimately turn to the facts and the circumstances of the proceeding. It is evident from the submissions, and material relied on by both parties, that there is a clear divergence of facts and events in the establishment of any arrangement or agreement through oral conversations between Mr Tweed and Mr Dixon, in respect of the Projects. Therefore, one party’s evidence will necessarily need to be preferred over the other, which, accordingly, needs to be assessed at the hearing of a trial in this proceeding through cross examination and further evidence. Finally, the defendant has shown real prospects of success of its defence that the value to be paid was to be calculated by further agreement and by reference to the profit made from the particular project.[39] Dixon has not discharged its onus, nor overcome MMP’s arguable defence, that it did not enter into a “construction contract” for the purposes of the present application. In my view, on the balance of probabilities, there remains a question to be tried of the existence of a “construction contract” within the meaning of the SOP Act in this proceeding.
[39] See SOP Act s7(2)(c) which provides that the Act does not apply to “a construction contract under which it is agreed that the consideration payable for construction work carried out under the contract, or for related goods and services supplied under the contract, is to be calculated otherwise than by reference to the value of the work carried out or the value of the goods and services supplied”.
Whether Dixon was party to the construction contract?
57MMP submits that, even if the Court accepts there was a “construction contract” within the meaning of the SOP Act, it denies that Dixon was the relevant party to the contract. It argues that the identity of the parties is to be determined objectively from the surrounding circumstances.
58MMP further relies on Digby J in Shells,[40] who refers to Baron Forge and Grave, whereby the SOP Act is limited in its operation to the parties of the relevant construction contract.
[40] Shells per Digby J at [33] and [48].
59MMP says that the Court cannot be satisfied that Dixon is not the correct party to any relevant construction contract because Mr Tweed, or alternatively, the defendant, dealt with and gave instructions to Mr Dixon. No work order was issued by MMP to Dixon and Dixon did not issue any quotation to MMP. Further, that save for the invoices relied on by Dixon, there is no further documentary evidence that Dixon rather than Mr Dixon was contracting with MMP. Additionally, invoices were issued by “Dixon Services Pty Ltd”, an entity which does not exist and did not issue the demand on the defendant for payment.
60Dixon rejects the defendant's argument that the Payment Claims were issued by “Dixon Services Pty Ltd”. It argues that this is incorrect and that MMP was under no misapprehension as to who was doing the work and contracting with them.
61Dixon further submits that factors such as the ABN on the invoice being that of the plaintiff, the letterhead reading “Dixon Civil Construction Services”, the invoices provided and the email correspondence showed the invoiced amount to be with Dixon Services supports it argument. Dixon also submits that “Dixon Services Pty Ltd” does not exist and the email exhibited to the affidavit of Mr Dixon makes clear that all agreements were between MMP and Dixon Services, which is a business name owned by the plaintiff.
62It is well-established that for the SOP Act to apply, a person who is entitled to a progress payment must be a party to a construction contract.
63Judge Cosgrave in Baron Forge,[41] affirming the principles in Grave,[42] confirmed that a person serving a payment claim who is not party to a contract has no entitlement to serve the payment claims. Further, and critically, that ss14 and 9 of the SOP Act are guided by the underlying legislative assumption that the claimant serving a progress payment claim is party to a construction contract.[43]
[41] Baron Forge.
[42] (2010) 79 NSWLR 132
[43] Baron Forge at [34].
64Relevantly, Baron Forge,[44] also concerned a summary judgment application under s16(2) of the SOP Act on the basis that Vaughn Constructions Pty Ltd (“Vaughn”) had failed to provide a payment schedule in response to payment claims or pay the monies owed. In response, Vaughn argued that it had not contracted with the applicant Baron Forge; instead, it had contracted with Baron Forge Contractors (Vic) Pty Ltd (“BFVic”). The contract only made reference to Baron Forge and there were differences in various payment claims and correspondence served. His Honour dismissed the summary judgment application primarily on the basis that Vaughn was not a party to a construction contract with Baron Forge and, therefore, had no claims under the SOP Act which were arguable. Critically, Cosgrave J noted that Baron Forge had not clearly rebutted why BFVic was not the contracting party. Indeed, the strongest factual arguments put forward were based on payment claims sent which were then paid.[45]
[44]Ibid.
[45] Ibid at [28].
65In my view and based on the material and submissions relied upon by the parties, Dixon has not appropriately rebutted why the plaintiff, rather than Mr Dixon, was contracting with MMP. It also does not adequately respond to the fact that invoices were issued by “Dixon Services Pty Ltd”, an entity which does not exist. In agreement with the plaintiff, and by reference to Cosgrave J in Baron Forge,[46] Dixon’s strongest evidence is based on payment claims sent to MMP purportedly issued by “Dixon Services Pty Ltd”. There further remains questions around the veracity of the Payment Claim documents and invoices themselves and suggestions by the defendant that the Payment Claims were amended to reflect “Dixon Services”. Accordingly, without further evidence or cross examination which can be appropriately ventilated at trial, it remains at large whether the contracting parties were MMP and Dixon, MMP and Mr Dixon or MMP and Mr Dixon trading as “Dixon Services” or Mr Dixon and Mr Tweed. In my view, Dixon has not discharged its onus on the balance of probabilities, nor satisfied the test, that MMP’s defence that the defendant was trading with Mr Dixon has no real prospect of success.
[46] Ibid.
Whether Dixon was entitled to a progress payment under the construction contract?
66Dixon submits that there was a clear contract for each of the Projects and that the works were for construction works, defined in the work orders. Relying on s14(1) of the SOP Act, Dixon argues that a person who is, or claims to be, entitled to a progress payment may serve a progress claim on the person who is or may be liable to make the payment. It relies on the Payment Claims exhibited to the affidavit of Mr Tweed.
67Dixon further submits that the payment claims complied with all relevant requirements of s14(2) of the SOP Act and that there is no dispute that the invoices constituted valid Payment Claims other than in respect of the identity of the claimant. Further, that it is not contested that no payment schedule was lodged by MMP.
68MMP submits that even assuming there is an arrangement or “construction contract” within the meaning of the SOP Act, Dixon was entitled to zero payment. It refers to Dixon’s statement of claim in which it argues that the contract or arrangements in respect of the Projects was constituted by the work orders, all of which provide the value of zero. MMP also says that Dixon has not pleaded its entitlement to any other amount, nor suggested that the customer quotations formed part of any contract or arrangement.
69MMP argues that even if Dixon was entitled to serve a Payment Claim, this necessarily should be for the value of zero, because the construction contract provided a value of zero as payment for the construction works carried out.
70Entitlement to claim a progress payment is dependent on the existence of a construction contract under which a person who has undertaken to carry out construction work under the contract is entitled to a progress payment.[47]
[47] SOP Act s9(1).
71In light of my earlier reasoning, in respect of whether Dixon has discharged its onus in establishing the existence of a “construction contract” within the meaning of the SOP Act and whether it is in fact a party to the construction contract, it is unnecessary for me to determine the merit or the defence raised in respect of this issue.
72However, for the sake of completeness, a payment claim must identify the construction work to which the progress payment relates, must indicate the amount of the progress payment that the claimant claims to be due and must state that it is made under the SOP Act.[48] As relevantly identified by the defendant, Dixon’s statement of claim pleads that the construction contract, in respect of the Projects, was constituted by work orders, which provided the value of zero for the works. In turn, Dixon would only be able to serve a progress payment claim to the value of zero as the customer quotations, which included the breakdown of works and the monies owed, and have not been pleaded to form part of the purported construction contract. In my view, Dixon has not satisfied the Court of this element of its cause of action, being its entitlement to serve a progress payment.
[48] SOP Act s14(2).
Whether Dixon served a payment claim?
73Dixon submits that all the Payment Claims issued to MMP complied in all material ways with ss14 and 15 of the SOP Act. It also rejects MMP’s submission that the invoices were not served in accordance with s50 of the SOP Act. It argues that s50 simply reflects which methods of service may be appropriate and that fact remains that MMP did receive the invoices. It cites the decisions of Bathurst CJ in Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd[49] and Hodgson J in Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd[50] who viewed sections dealing with service, in the reciprocal NSW SOP Act, are merely facultative and where a document has been received or come to the attention of a person to be served in such case there has been service, provision and receipt. Dixon submits that MMP received the invoices via email.
[49] [2012] NSWCA 31;
[50] [2006] NSWCA 259.
74MMP relies on s14 of the SOP Act and submits that the payment claims were served by “Dixon Services Pty Ltd”, not Dixon. It relies on Mr Dixon’s affidavit in which he concedes that the payment claims were incorrectly issued by “Dixon Services Pty Ltd” because the tax invoices exhibited to his affidavit were amended to delete the words “Pty Ltd” after “Dixon Services”. Further, that there is no evidence before the Court that Dixon has served any payment claim in accordance with s50 of the SOP Act.
75The SOP Act reflects that if entitled to a progress payment, a claimant may issue a payment claim to a respondent who is liable to make payment.[51]
[51] SOP Act s14(1).
76Again, following my earlier reasoning, it is unnecessary for me to determine the merit or the defence raised in respect of this issue.
77However, in the event I am wrong, I agree with Dixon’s submissions that service of payment claims and payment schedules may occur in a broad range of ways pursuant to s50 of the SOP Act. Further, that it is well-established that email service is acceptable.[52] Yet, Dixon has conceded, as apparent in the affidavit of Mr Dixon, that the Payment Claims were incorrectly issued by “Dixon Services Pty Ltd”, which is not the plaintiff and, therefore, falls foul of s14(1) requirements under the SOP Act.
[52] Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd (No 2) [2015] VSC 500 at [122].
Whether the payment claim identifies the construction works to which the progress payment relates by reference to the construction contract?
78Dixon submits that, in response to the defendant’s submission of the inadequate description of the work, each of the Payment Claims refers to the work orders exhibited in both the affidavit of Mr Tweed and Mr Dixon. Dixon also relies on the decision of Vickery J in Krongold Constructions (Aust) Pty Ltd v SR & RS Wales Pty Ltd[53](“Krongold”), referring to Finkelstein J in Protectavale Pty Ltd v K2K Pty Ltd,[54] to argue that while the requirements of the SOP Act are not overly demanding, they should not be approached in an unduly technical manner and that cross-referencing was deemed to be sufficient identification of the works the subject of the invoice.
[53] [2016] VSC 94 at [52] (“Krongold”).
[54] [2008] FCA 1248 per Finkelstein J at [12].
79Dixon contends that the Payment Claims referred to each work order which sufficiently sets out the work done of which the invoice is subject of. Further, that the work order is identical to the quotation from MMP.
80MMP, relying on s14(2) of the SOP Act, submits that Payment Claim 3 and Payment Claim 4 do not identify the construction works to which the progress payment relates.
81MMP also relies on Vickery J’s reasoning in Krongold,[55] in which he affirmed the requirement for a payment claim to be sufficiently detailed so that a reasonable principal could ascertain with sufficient certainty the work to which the claim relates. MMP submits that it is not possible to ascertain from Payment Claim 3 and Payment Claim 4 the works to which the payment claims relate.
[55] Krongold at [52].
82The SOP Act provides that a payment claim must identify the construction work or related goods and services to which the progress payment relates.[56]
[56] SOP Act s14(2).
83In John Beever (Aust) Pty Limited v Paper Australia Pty Ltd,[57] the Victorian Supreme Court held that whether a payment claim adequately identifies the construction work is an objective test and asks whether a reasonable person in the position of the respondent would understand the basis of the claim.[58] The test is not overly strict, and the court must not adopt an unduly technical approach.[59] Further, the context of the payment claim is relevant, including industry conventions and earlier contractual dealings.[60] The background knowledge of the parties from their past dealings and prior exchanges of information, including correspondence, are also relevant.[61] Thus, the Court may look beyond the face of the payment claim itself.
[57] [2019] VSC 126 at [83].
[58] Ibid.
[59] Ibid; See also Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 at [51].
[60] Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391 at [40].
[61] John Beever (Aust) Pty Limited v Paper Australia Pty Ltd [2019] VSC 126 at [83]; Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 at [51].
84Again, following my earlier reasoning, whilst it is unnecessary for me to determine this issue, in the event I am wrong, I agree with Dixon in that the construction works and supply of goods and services were identified in respect of Payment Claim 3 and Payment 4. In consideration of the purported contractual dealings and exchange of information between Mr Tweed and Mr Dixon and, in particular, the work orders prepared by MMP, a reasonable person in the position of MMP would necessarily understand the basis of the Payment Claims. However, I do note that Payment Claims 3 and 4 do not necessarily cross-reference the work orders they are the subject of, unlike other payment claims, yet looking beyond the mere face of the Payment Claims 3 and 4, and the context of the claims, Dixon has satisfied its onus on this issue.
Whether MMP served a payment schedule in respect of Payment Claim 1?
85MMP submits that Payment Claim 1 appears to have been issued on or around 30 March 2022. On 14 April 2022, MMP sent an email to Kristy Cary indicating that it was not prepared to pay the invoice and requested a breakdown and further details.[62] MMP further relies on an email from Vesna Kostovski dated 31 May 2022 which seeks Payment Claim 1 to be revised.
[62] See a copy of this email is exhibited to the affidavit of Kristy Carey sworn 7 December 2022 at pages 4 and 5.
86MMP say that a payment claim, and a payment schedule should be produced quickly and, therefore, may be in an abbreviated form. Relying on Palmer J in Multiplex Constructions Pty Ltd v Luikens,[63] it submits that neither is required to be as particularised as a pleading, however, that they must be sufficient to appraise the parties of the real issues in dispute.
[63] [2003] NSWSC 1140 at [78].
87MMP, in turn, argues that the email correspondence dated 14 April 2022 is a payment schedule within the meaning of s15 of the SOP Act. It says that the correspondence was sent within 10 business days of service of the Payment Claim 1, identifies the relevant payment claim and indicates that the defendant was not prepared to pay any amount without further information.
88Dixon rejects MMP’s submission that it provided a payment schedule in respect of Payment Claim 1. It submits that the email relied on by the defendant, was in fact a request for a breakdown of charges. Dixon says that the breakdown was provided to Vesna Kostovski on the same as the request, as pleaded in MMP’s defence. Further, that MMP also sought clarification on two other Payment Claims in respect of Project 1 and Project 4.
89Pursuant to s15(1) of the SOP Act, a person on whom a payment claim is served may reply to a payment claim with a payment schedule. A payment schedule must identify payment claim to which it relates, must schedule the amount of the payment that respondent proposes to make and must identify any excluded amounts.[64]
[64] SOP Act s15(2).
90Where a scheduled amount is less than the claimed amount, the payment schedule must explain and provide reasons for withholding payment.[65] Section 15(4) of the SOP Act also reflects that a respondent must issue a payment schedule as per the contractual time frame or within 10 business days after the payment claim is served.
[65] Ibid s15.
91Recently, the Queensland Supreme Court in ACP Properties (Townsville) Pty Ltd v Rodrigues Construction Group Pty Ltd[66] considered the level of detail required in a payment schedule and whether email correspondence can constitute a payment schedule. Justice Bradley found that email correspondence between the parties made clear that the respondent considered no amount was payable and, further, that it proposed to pay no amount. Additionally, that the reason for its position had been clearly conveyed, being that the construction costs had been capped. Relevantly, Bradley J still reached this conclusion whilst acknowledging that the emails were complicated by references to other matters.[67]
[66] [2021] QSC 45 at [28]–[35].
[67] Ibid at [31].
92However, other recent decisions of the New South Wales Court of Appeal in, Joye Group Pty Ltd v Cemco Projects Pty Ltd (“Joye Group”)[68] and Style Timber Floor Pty Ltd v Krivosudsky (“Style Timber Floor”)[69], have reached the opposite conclusion. In Joye Group[70] the Court of Appeal emphasised that a payment claim is not to be reconstructed by reference to external material so as to give it a degree of particularity. In Style Timber Floor,[71] the generality of matters raised in email correspondence rendered it impossible to determine the scope of the dispute and impossible for a subcontractor to understand why payment was being withheld and, therefore, the email was not a valid payment schedule.
[68] [2021] NSWCA 211 (“Joye Group”).
[69] [2019] NSWCA 171 (“Style Timber Floor”).
[70] Joye Group at [50].
[71] Style Timber Floor at [4].
93Following on from my earlier reasoning and in the event I am wrong, in my view, despite the authorities being somewhat divided, the themes that emerge, and as emphasised by the NSW Court of Appeal in Style Timber Floor,[72] are the two important functions served by payment schedules under the SOP Act. Firstly, to inform the claimant as to the bounds of its dispute with the respondent and secondly, to articulate its case.[73] In agreement with the defendant, the email correspondence in respect of Payment Claim 1 was a valid payment schedule for the purposes of the SOP Act. Critically, the scope of the dispute was made clear, including the original quote cost of $88,996.00 and indicated that MMP was not prepared to pay the Payment Claim without further information or a breakdown of costs.
[72] Ibid at [45].
[73] Ibid.
Conclusion
94For the foregoing reasons, the plaintiff’s application for summary judgment is dismissed.
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Certificate
I certify that these 29 pages are a true copy of the judgment of Her Honour Judge Burchell delivered on 13 December 2022.
Dated: 13 December 2022
Nikki Thomson
Associate to Her Honour Judge Burchell
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