Fifty Sixth Taljan P/L v Dattilo Holdings P/L

IN THE SUPREME COURT OF VICTORIA	Not Restricted
AT MELBOURNE COMMERCIAL AND EQUITY DIVISION

No. 9450 of 2006

FIFTY SIXTH TALJAN PTY LTD	Plaintiff
(ACN 007 129 017)
v
DATTILO HOLDINGS PTY LTD	Defendant
(ACN 099 882 532)

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JUDGE:	WILLIAMS J
WHERE HELD:	Melbourne
DATE OF HEARING:	13 April 2007
DATE OF JUDGMENT:	28 June 2007
CASE MAY BE CITED AS:	Fifty Sixth Taljan P/L v Dattilo Holdings P/L
MEDIUM NEUTRAL CITATION:	[2007] VSC 226

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Building Contract – Progress payment claim – Alleged negligence of builder in underquoting – Finance withdrawn – Alleged representations by builder to effect that it would rectify defendant’s financial difficulties – Alleged representation by builder that it would continue to build and forbear in relation to outstanding debt until defendant arranged finance – Right of set off under s 14 Building and Construction Industry Security of Payment Act 2002.

Practice and Procedure – Summary judgment application – Whether real question to be tried.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr K C Oliver	RND Lawyers
For the Defendant	Mr D Clough	Ferdinand Zito & Associates

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TABLE OF CONTENTS

The proceeding ...................................................................................................................................2
Material before the Court .................................................................................................................2

Facts.......................................................................................................................................................2

The BankWest decision ................................................................................................................3
The contract....................................................................................................................................3

The progress claim ........................................................................................................................5

The pleadings......................................................................................................................................7

Statement of claim.........................................................................................................................7
Defence and counterclaim............................................................................................................7

Amended defence and counterclaim .........................................................................................8

The Act .................................................................................................................................................9
Applicable principles ......................................................................................................................12

Submissions ......................................................................................................................................12

The plaintiff..................................................................................................................................12

The defendant ..............................................................................................................................15

Conclusions .......................................................................................................................................17

HER HONOUR:

The proceeding

This is an appeal from the order of the Master dismissing the plaintiff’s application for summary judgment. The appeal proceeded as a re-hearing de novo under r 77.05(7) of the Supreme Court (General Procedure) Rules 2005 (“the Rules”).
Material before the Court
In accordance with r 77.05(7)(a), the parties rely upon affidavits used before the Master. The plaintiff relies upon affidavits from:

(a) Antonio Leonardo Coco, its director, sworn on 20 December 2006 and 14 February 2007, respectively; and
(b) Michael Cattenazzi, an information management co-ordinator, sworn on 20 December 2006.

The defendant relies upon an affidavit sworn on 2 February 2007 by its director Antonio Gianluca Dattilo.
Facts
A number of matters of fact appear to be uncontentious. I will note where there is disagreement.
The plaintiff carries on business as a builder. It traded at relevant times as “Apex Constructions”.
In April 2004, the defendant obtained a building permit for the construction of seven warehouses/offices (“the building works”) on its land known as Lots 421 and 422 Randor Street, Campbellfield, Victoria (“the land”). The defendant sought quotations in relation to the building works from the plaintiff and others. The plaintiff provided a quotation of $1.08m and the defendant obtained others of $1.35m and $1.45m.
On 5 October 2004, the plaintiff and the defendant first entered into a contract for the building works. The contract price was $1.08m plus GST. The defendant did not pursue the development. About a year later, Mr Dattilo of the defendant asked Mr Coco of the plaintiff whether the contract price stood. Mr Coco responded that there had been some increase in the cost of materials.
Ultimately, the parties entered a written contract, dated 9 November 2005, (referred to in the defence pleadings as “the old contract”). The price of the building works under the old contract was $1.112m plus GST. The plaintiff commenced the building works in January 2006.
The defendant had obtained a finance facility from the Bank of Western Australia (“BankWest”) which it proposed to utilise to fund the building works. BankWest obtained a quantity surveyor’s report which indicated that the plaintiff had failed to make sufficient allowance for the cost of structural steel in calculating the old contact price. Towards the end of March 2006, the quantity surveyor notified Mr Coco of the error.
The BankWest decision
Early in April 2006, BankWest informed Mr Dattilo that it would not increase the amount available under the facility to accommodate any increase in the price under the contract. BankWest expressed concern as to whether the plaintiff would be able to complete the project.
By 12 April 2006, the parties had agreed to cancel the old contract. The deed of cancellation contains a recital to the effect that the plaintiff had inadvertently omitted the cost of steel works, estimated at $220,000, from the price.
The contract
The parties executed another written contract dated 12 April 2006 (“the contract”). The contract is incomplete: both by reason of the omission of terms and because terms described as “alternatives” have not been deleted, in accordance with instructions which form part of the notes to the contract.
Notwithstanding that the relevant section of the contract has been left incomplete, it is common ground that the contract price, described in the contract as the “Contract Sum”, was agreed to be $1.332m plus GST. It is some $220,000 greater than the Contract Sum under the old contract. The contract also includes a table which sets out the progress payments under the contract as follows:

dep 66,000
slab 230,000
walls 380,000
lock up 380,000
fit out 166,000
car park 80,0000
final 30,000
1332,000 & gst

However, the contract does not indicate whether or not the Contract Sum is subject to cost adjustment.

The plaintiff relies upon the terms of cl 22 of the contract which provides:

22. (a) Subject to the work done and materials used being in accordance with the Contract, the Contract Sum shall be paid by the Proprietor to the Contractor as follows:
(b)        The Contractor may make claims for Progress Payments at intervals not less than as stated in clause 1(l)(i) for the value of the work completed and materials actually used and/or delivered to the site.
(c)         Within the period stated in clause 1(l)(ii) from the date of submission of the Contractor’s claim in writing, the Proprietor shall pay to the Contractor the valuation of the Works so claimed less any retention monies retainable under the provisions of clause 23.
(d)        Upon Practical Completion, the Proprietor shall pay to the Contractor the outstanding value of the Contract Sum adjusted as herein provided.
(e)        In the event of the Proprietor failing to pay to the Contractor any such sum or amount within three (3) clear days of its falling due the Contractor may forthwith suspend the Works. The Contractor shall also be at liberty to exercise all his legal rights and remedies against the Proprietor including the right to interest upon the said amount from the time it fell due until payment is made at the rate agreed in clause 1(l)(iii).

On 28 April 2006, Mr Darren Kerr of BankWest advised Mr Dattilo by email that the bank would not be in a position to provide the funding for the development. Mr Kerr’s email refers to previous discussions as to the conditional nature of the bank’s original approval of funding. It states that the bank’s approval had been conditional on the quantity surveyor’s report. It goes on to record that the shortfall of $328,000 in the costings, revealed by the quantity surveyor’s report, was unacceptable to it.
The progress claim
On about 10 August 2006, the plaintiff had completed the slab and wall stages of the building works. It served a progress claim on the defendant claiming payment of $743,600.00 (“the progress claim”). The progress claim has not been paid. The defendant has not obtained another source of finance for the project and the plaintiff stopped the building works on about 7 June 2006.
The affidavit material discloses that the parties are in dispute as to the events surrounding the cancellation of the old contract and the execution of the contract.
It appears to be common ground that Mr Coco acknowledged that he had made an error in the calculation of the price under the old contract.
However, Mr Coco denies Mr Dattilo’s allegation that he also acknowledged responsibility for the withdrawal of the defendant’s BankWest facility. Indeed, Mr Coco deposes that he did not know that BankWest had refused to finance the building works at the time of signing the contract on 12 April 2006. According to his version of events, the contract was executed after he had been notified of his mistake by the surveyor, had discussed it with Mr Dattilo and had obtained Mr Dattilo’s agreement to execute a new contract with an increased price. Mr Coco also denies Mr Dattillo’s further claim that Mr Coco told Mr Dattilo that he would “fix” the defendant’s financial problems and would obtain finance for it, through a Mr Calafati at Westpac.
Mr Dattillo contends that Mr Coco stated that the plaintiff would continue the building works until the defendant obtained finance. It was as a result of what Mr Dattilo characterises as “those promises” and “out of goodwill”, as well as his belief that Mr Coco had made a genuine mistake, that Mr Datillo agreed to draw up a new contract. Mr Dattilo deposes that he would not have entered into the contract on behalf of the defendant, had he been aware that the plaintiff would stop the building works before the defendant had obtained an alternative source of finance.
Mr Coco maintains that, on 12 April 2006, at the time of the signing of the contract, Mr Dattilo’s solicitor assured him that he would “take care of any issues with BankWest”. Mr Coco claims that the solicitor went on to state that, if the defendant were unable to obtain finance from BankWest, it would secure it from another source. Mr Coco does, nevertheless, concede that, at some stage, he offered to assist Mr Dattilo to obtain finance for the defendant.
It is common ground that the defendant did, unsuccessfully, attempt to obtain finance from Westpac through Mr Calafati. In about June 2006, Mr Dattilo was advised by a Westpac officer that the defendant’s application had been refused.
Mr Dattilo alleges that the defendant tried to obtain finance for the project through a Mr Nathan Cooper of AML Mortgage Group after the building works had stopped. He blames the plaintiff’s non-completion of the project for the failure of his approaches to financiers. Mr Dattilo further alleges that the BankWest facility supported the defendant’s other businesses and that they have been deleteriously affected by its unavailability.
I note that the documents exhibited to the affidavit material do not satisfy me as to which of the two conflicting accounts of relevant events I should accept.
The pleadings
Statement of claim
By its statement of claim filed with the writ on 27 October 2006, the plaintiff seeks a declaration that the amount of the progress claim is a sum due to it under the contract. It contends that payment is due to it both under the terms of the contract and under s 15(4) of the Building and Construction Industry Security of Payment Act 2002 (“the Act”).
The plaintiff also claims declaratory recognition of a charge in its favour over the defendant’s interests in the land securing the amount of the progress claim. It seeks possession of the land and an order that it be at liberty to sell the land, in default of payment of the amount claimed, as if it were a registered mortgagee under s 77 of the Transfer of Land Act 1958.
Defence and counterclaim
The defendant’s defence and counterclaim filed on 5 December 2006 denies liability for the progress claim. The defendant alleges that the plaintiff encouraged it to assume that the plaintiff would not seek to strictly enforce its rights under the contract, if the defendant were to cancel the old contract and to enter into the contract. The defendant claims to have entered into the contract in reliance upon that assumption.
The defence alleges that it was as a result of “the increased price of the works” that BankWest froze the finance facility which the defendant proposed to use to make progress payments. It alleges that it would be unconscionable, in the circumstances of the dealings between the parties, for the plaintiff to seek to enforce its rights under the contract or to suspend the building works, before the defendant has had a reasonable opportunity to make alternative financial arrangements.
The defendant also claims that, by suspending the works, the plaintiff breached obligations under the contract, including that requiring it to act in good faith. It alleges that the plaintiff had caused it to suffer loss and damage in an amount which could be set off against the plaintiff's claim. The defendant alleges in its counterclaim, that the plaintiff is estopped from seeking to enforce its rights and from suspending the building works. The defendant claims damages, equitable compensation and specific performance of the contract.
Amended defence and counterclaim
The defendant filed an amended defence and counterclaim on 21 February 2007.
The amended pleading alleges that the cost of the steel works was omitted from the price under the old contract by the negligence of the plaintiff. It alleges that BankWest’s freezing of the defendant’s finance facility resulted in its financial difficulties, both in relation to the building works under the old contract and its other businesses.
The amended defence goes on to allege that the plaintiff, through Mr Coco, made representations to the defendant on 9 April 2006, in effect acknowledging that it had made an error in calculating the old contract price and was aware of the resulting financial difficulties to the defendant. It also acknowledged that the defendant could hold it to the old contract price.
Significantly, the amended defence alleges that the plaintiff made the representations to which Mr Dattilo deposes in his affidavit in opposition to this application. The defendant is alleged to have entered both the deed of cancellation and the contract as a result of:

(a) the representations;
(b) an alleged relationship of trust and confidence between the parties;

(c)

the defendant’s financial difficulties caused by the plaintiff’s allegedly negligent assessment of the price of the building works under the old contract; and

(d)

its belief, encouraged by the plaintiff, that the plaintiff would fix its financial problems and continue the building works the subject of the old contract without making further progress claims, until the defendant obtained alternative finance.

In the circumstances, the amended defence alleges that the plaintiff is estopped from resiling from the representations, failing to take “active steps to facilitate the Defendant obtaining further finance”, enforcing its rights under the contract before the defendant had a “reasonable opportunity” to obtain alternative finance, suspending the works and asserting its entitlement to progress payments.
The amended pleading adds a claim under s 51AC of the Trade Practices Act 1974 (Cth) based on allegations as to the parties’ relative business strengths and the unconscionability. It also includes a claim for damages in negligence premised upon a duty of care on the part of the plaintiff “and/or Antonio Coco” to provide accurate information as to the cost of the building works.
The plaintiff is further alleged to have waived its right “to prosecute its claim in arbitration”. Alternatively, the defendant alleges that the plaintiff has breached an implied obligation under the contract to take steps to have the dispute arbitrated. Relevant declaratory relief is sought, as well as an order that the arbitration be terminated.
The Act
The Act contained the following provisions at relevant times:
Part 3—Procedure for Recovering Progress Payments Division 1—Payment Claims and Payment Schedules
14. Payment claims

(1) A person who is entitled to a progress payment under a construction contract (the "claimant") may serve a payment claim on the person who under the contract is liable to make the payment.
(2) A claimant may serve only one payment claim in respect
of a specific progress payment.
(3) 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 for the construction work done or related goods and services supplied to which the payment relates (the "claimed amount"); and
(c)         must state that it is made under this Act.

15.      Payment schedules

(1) A person on whom a payment claim is served (the "respondent") may reply to the claim by providing a payment schedule to the claimant.
(2) A payment schedule—
(a)        must identify the payment claim to which it relates; and
(b)        must indicate the amount of the payment (if any) that the respondent proposes to make (the "scheduled amount").

(3) If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent's reasons for withholding payment.
(4) If—

(a) a claimant serves a payment claim on a respondent; and
(b) the respondent does not provide a payment schedule to the claimant—
(i) within the time required by the relevant construction contract; or

(ii) within 10 business days after the payment
claim is served;
whichever time expires earlier—

the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.

16. 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 15(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 any 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 recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction; and
(b) may serve notice on the respondent of the claimant's intention—

(i) to suspend carrying out construction work under the construction contract; or

(ii) to suspend supplying related goods and
services under the construction contract.

(3) A notice referred to in sub-section (2)(b) must state that it
is made under this Act.
(4) Judgment in favour of the claimant is not to be entered unless the court is satisfied of the existence of the circumstances referred to in sub-section (1).

A provision in identical terms to s 16(4) was found in s 17(4) which provided for the consequences of failure to pay in accordance with a payment schedule and in s 27(4) which dealt with the consequences of failure to comply with an adjudicator’s determination.
From 30 March 2007, s 16 (4) of the Act was in the following terms:

(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—
(i) of the existence of the circumstances referred to in subsection (1); and

(ii) that the claimed amount does not include any
excluded amount; and
(b) the respondent is not, in those proceedings, entitled—

(i) to bring any cross-claim against the claimant; or
(ii) to raise any defence in relation to matters arising
under the construction contract.

Sections 17(4) had also been amended so as to include provisions identical to s 16(4)(b)(i) and (ii). Section 27 had been repealed and a provision in similar terms to those of s 16(4) was to be found in s 28R(5)(a)(i) and (ii).
Applicable principles
The authorities provide guidance in relation to applications for summary judgment. The High Court made it clear in Fancourt v Mercantile Credits Limited.[1] that:
The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.
[1] (1983) 154 CLR 87 at 99.
Further, in such an application, the court should be reluctant to try a case on affidavit where the facts are in dispute.[2] Nevertheless, it must consider whether the defendant’s account is credible in all the circumstances.[3]
[2] Evans v Bartlam [1937] AC 473 at 489.
[3] See Commonwealth Development Bank of Australia v Karastavrou (unreported decision of Beach, J on 12 November 1996).
It is undesirable that, if a court gives the defendant leave to defend, it should give detailed reasons for doing so.[4]
Submissions
[4] Ticco Pty Ltd v Complete Family Health Care Services Pty Ltd [2005] VSCA 221.
The plaintiff
Counsel for the plaintiff argues that the plaintiff has established its right to summary judgment under the Act and under the contract.
He contends that Mr Dattilo’s version of events should not be accepted by the Court. He submits that, even if the Court were to accept the truth of Mr Dattilo’s account of Mr Coco’s alleged statements, they could not properly be interpreted, in their commercial context, as including any representation that the plaintiff would complete the project, even if the defendant failed to obtain finance before it did so.
Counsel for the plaintiff argues that the defendant’s account of an agreement on the part of the plaintiff to complete, notwithstanding the defendant’s failure to make progress payments whilst it sought alternative finance, is implausible and at odds with the contemporaneous and subsequent conduct of the parties. He asserts that there is a lack of documentation substantiating the making of the alleged representations and argues that there are inconsistencies in Mr Dattilo’s account. He also asserts that the defendant only referred to the alleged agreement for the first time in its defence.
As to the differences between the stories told by Mr Coco and Mr Dattilo, counsel for the plaintiff asks the Court to note what he argues is Mr Dattilo’s failure to file any further affidavit in response to the second of Mr Coco’s affidavits.
The plaintiff then compares the content of the defence and the amended defence, arguing that the “substantive ‘defence’ “ relied upon in the defence and counterclaim has been “jettisoned” in the subsequent pleading.
Counsel for the plaintiff further submits that his client is entitled to rely upon the Act to establish its entitlement to the progress claim. He contends that the effect of s 3, s 14, s 15 and s 16 of the Act is that no defence of the type sought to be raised by the defendant can be relied upon to resist the summary judgment application, or at all.
He submits that the attempted reliance upon estoppel flies in the face of the Act, citing Einstein J’s judgment in a summary judgment application in Lucas Stuart Pty Ltd v Council of the City of Sydney[5]. He does concede that the subject NSW legislation, s 15(4) of the Building and Construction Industry Security of Payment Act 1999 (NSW) was in identical terms to s 16(4) of the Act as it now stands, rather than as it stood at the relevant time for the purposes of this application.
[5] [2005] NSWSC 840 at [13]-[25].
In Lucas, Einstein J considered a summary judgment application arising out of the defendant’s failure to make a payment after service of a payment claim and failure to serve a payment schedule under s 15(4) of the NSW act. His Honour noted that s 15(4) was part of a statutory structure which included similar provisions in relation to the consequences of failure to make a payment in accordance with a payment schedule (s 16(4)) and those dealing with the filing of an adjudication certificate as a judgment debt (s 25(4)).
Einstein J took the view that a “strictly mechanical scheme” was set up by the words of s 15(1)(a) under which the defendant had become liable to pay the amount claimed. His Honour went on to state that the attempt by the defendant in that case to invoke a cause of action under the trade practices and fair trading legislation required a cross-claim and, “for that reason alone’ could not be pursued by reason of s 15(4)(b)(i). Einstein J concluded that the estoppel defence “flew in the face of s 15(4)(b)(ii)”[6]. The application succeeded; as counsel for the plaintiff submits should happen in this case.
[6] [2005] NSWSC 840 at [24]- [25].
Counsel for the plaintiff also submits that the Act does not permit a defendant to defend a claim on the basis of a set off. He cites the decision of Habersberger J in Abigroup Contractors Pty Ltd v River Street Developments Pty Ltd[7].
[7] [2005] VSC 425.
Counsel for the plaintiff further argues that cl 22 of the contract sets out the common intention of the parties that a progress payment which had become payable should be paid, subject only to deduction of retention monies. He contends that there was a common intent that a right to set off in relation to the progress payment be excluded. He argues that the Court should not re-write the contract, citing the statement of relevant principles by Gillard J in Novawest Contracting Pty Ltd v Taras Nominees Pty
Ltd[8].
[8] [1998] VSC 205.
Insofar as the defendant relies upon an implied term of good faith in the contract, counsel for the plaintiff submits that the implied term would have to be consistent with the express terms of the agreement[9] which, in his submission, excluded the claimed right of set off and required the payment of the progress claim.
[9] The plaintiff refers to Meridian Retail Pty Ltd v Australian Unity retail Network Pty Ltd[2006] VSC 22 at [184] per Dodds-Streeton J.
The plaintiff further submits that, in any event, the plaintiff did not have a duty to take reasonable care to provide accurate information concerning the cost of the works as alleged in the amended defence and counterclaim. Counsel for the plaintiff seeks support for this contention in the New South Wales Court of Appeal decision in To Ha Ma Pty Ltd v Allen[10].
[10] (1999) 47 NSWLR 1.
Even if such a duty might have existed, counsel for the plaintiff submits that, in this case, the plaintiff did not provide information as to the cost of the works by setting the contract price. It simply made a quotation which was accepted by the defendant, as a result of which the plaintiff became bound to carry out the building works for the contract price.
The plaintiff argues that even if there is any merit in the defence, the defendant would only be relieved of the obligation to pay the amount by which the price under the old contract was increased under the amended terms of the contract. The defendant should be ordered to pay the balance. There was no defence to any claim under the old contract.
The defendant
The defendant submits that neither the contract nor the Act prohibits the defences upon which it seeks to rely.
As far as the conflict in the accounts of events is concerned, counsel for the defendant responds that it would be inconceivable that the defendant would have agreed to enter into the contract providing for the increased price, throwing away its rights under the old contract, in the absence of the alleged assurances. Further, he argues that it should not be regarded as improbable that the arrangements between the parties under the contract would be flexible and that the opportunity would be given to the defendant to obtain the necessary finance in the circumstances.
In relation to the Act, counsel for the defendant submits that the plaintiff’s arguments should be rejected. He points out that the Act did not, at relevant times, contain the provisions, now found in s 16(4)(b)(i) and (ii), which mirror those of the equivalent NSW provisions, the subject of the authorities relied upon by the plaintiff. Counsel for the defendant concedes that the situation might be different if the provisions added to s 16(4) were under consideration.
As far as Lucas is concerned, counsel for the defendant submits that Einstein J’s decision was equivocal in the sense that his Honour referred to an alternative analysis, on the basis that he was wrong in his interpretation of the legislation, and found that there wasn’t a serious defence raised in any event.
As to the terms of the contract, counsel for the defendant argues that they do not specifically address the issue of set off and so the contract does not preclude the alleged right.
Counsel for the defendant meets the plaintiff’s argument as to duty of care based on the foreseeability of the alleged loss, by submitting that the material before the Court shows that Mr Coco was aware that his miscalculation resulted in the defendant’s loss of the facility.
Counsel for the defendant argues that the parties’ course of dealing under the old contract was radically altered after Mr Coco’s acknowledgment of his error. It would be unconscionable for the plaintiff to now seek to revert to reliance upon the strict terms of the contract. The materials indicate that there is dispute between the parties as to the facts relevant to the particular defences based on good faith and unconscionability.
Conclusions
The parties are at odds as to what occurred between Mr Coco and Mr Dattilo as to the circumstances surrounding the cancellation of the old contract and their entry into the contract.
Suffice it to say that the evidence before me is not decisive. I have considered the arguments made by counsel for the plaintiff in relation to asserted inconsistencies and other deficiencies of the defendant’s materials. However, I am not persuaded that I should reject the defendant’s version of events as implausible. The affidavits reveal that there are significant factual issues which, in my opinion, should be resolved at trial. The issues sought to be raised appear to be the subject of the defendant’s amended defence and counterclaim.
I am not persuaded to reject the application on the basis of any differences between the content of the defence and counterclaim and the defendant’s amended pleading.
Further, neither the evidence before me in this interlocutory application nor the plaintiff’s references to authority have persuaded me that I should construe the contract as one excluding any right of set off relating to a claim for damages based on loss sustained by reason of reliance upon the alleged representations.
In Novawest the Court was concerned with the issue as to whether the plaintiff builder was entitled to judgment on certificates issued in accordance with a building contract, in the face of the defendant’s cross-claim for liquidated damages for delay. The defendant conceded the plaintiff’s prima facie right to be paid, but claimed the right to set-off by way of defence. Gillard J recognised the established principle that a contractual intent to exclude common law rights must be clearly and unequivocally set out[11]. His Honour refused to imply an intent to exclude or curtail the right of set- off [12]. Nevertheless, he concluded from an examination of the contractual language that the parties had so agreed. Gillard J considered it significant that the contract provided both that payments made on the basis of the certificates would not prejudice any right to dispute whether those payments were due and that an account would follow a determination of a dispute.
[11] [1998] VSC 205 at [27].
[12] Adopting the approach of Lord Salmon in Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd (1974) AC 689 at 724.
The contract is in different terms and it is enough for me to say that I am not persuaded by the plaintiff’s argument that the parties have agreed to exclude any right to set-off in relation to progress payments.
Further, I am not persuaded that the defendant could not successfully argue at trial that the plaintiff was estopped from requiring strict compliance with the terms of the contract. Nor am I satisfied that a duty of care of the type alleged could not have arisen. I note in this regard that To Ha Ma Pty Ltd v Allen[13] involved the different question as to whether a valuer owed a duty of care to a third party mortgagee.
[13] (1999) 47 NSWLR 1.
Finally, I am not satisfied that the Act operated, as the plaintiff contends, to prevent the defendant from defending the progress payment claim on the basis of an estoppel or its right to set off in respect of a claim against the plaintiff. As was conceded by counsel for the defendant, the situation might well have been different, had s 16(4) mirrored the sub-section as it presently stands and the provisions of s 15(4) of the New South Wales legislation considered by Einstein J in Lucas. I do not regard Habersberger J’s decision in the summary judgment application in Abigroup as an expression of a contrary view. His Honour did note arguments relating to the availability of an entitlement to set-off,[14] but, referring to the principles applicable to a summary judgment application, said no more.[15]
[14] [2005] VSC 425 [78].
[15] [2005] VSC 425 at [81].
The appeal should be dismissed.

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dep	66,000
slab	230,000
walls	380,000
lock up	380,000
fit out	166,000
car park	80,0000
final	30,000

(3)	A notice referred to in sub-section (2)(b) must state that it is made under this Act.
(4)	Judgment in favour of the claimant is not to be entered unless the court is satisfied of the existence of the circumstances referred to in sub-section (1).

[2007] VSC 226

28 June 2007