Henny Pty Ltd v Little Hardiman Street Pty Ltd
[2024] VCC 177
•29 February 2024
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-24-00356
| Henny Pty Ltd (ACN 625 359 766) | Plaintiff |
| v | |
| Little Hardiman Street Pty Ltd (ACN 625 167 955) | Defendant |
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JUDGE: | HER HONOUR JUDGE KIRTON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 31 January 2024 | |
DATE OF JUDGMENT: | 29 February 2024 | |
CASE MAY BE CITED AS: | Henny Pty Ltd v Little Hardiman Street Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2024] VCC 177 | |
REASONS FOR JUDGMENT
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Subject:CONTRACTS - Building and Construction Industry Security of Payment
Catchwords: Building contract – payment claim – entitlement to unpaid amounts – reference dates – multiple payment claims – allowable defences to payment claim – estoppel – misleading and deceptive conduct
Legislation Cited: Building and Construction Industry Security of Payment Act 2002 (Vic)
Cases Cited:Diamond Builders Pty Ltd v Gilridge Investments Pty Ltd [2023] VCC 1527; Aalborg CSP A/S v Ottoway Engineering Pty Ltd [2017] SASCFC 158; Bitannia Pty Ltd & Anor v Parkline [2006] NSWCA 238; Emery t/as Yarra Valley Commercial v J. Hutchinson Pty Ltd [2021] VCC 1019; Marques Group Pty Ltd v Parkview Constructions Pty Ltd [2023] NSWSC 625; Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd [2011] 2 Qd R 114; Winslow Constructors Pty Ltd v John Holland Rail Pty Ltd [2008] VCC 1491; Jones v Dunkel (1959) 101 CLR 298; Argyle Building Services Pty Ltd v Dalanex Pty Ltd (No 2) [2022] VSC 452; Grundt v Great Boulder Pty Ltd Gold Mines Pty Ltd (1937) CLR 641; Demagogue Pty Ltd v Ramensky [1992] FCA 557
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Silver | Moray & Agnew |
| For the Defendant | Mr B Reid | Colin Biggers & Paisley Pty Ltd |
HER HONOUR:
Background
1The plaintiff contractor, Henny Pty Ltd (ACN 625 359 766) (Henny) performed construction work for the defendant principal Little Hardiman Street Pty Ltd (ACN 625 167 955) (LHS) at 347-367 Macaulay Road, Kensington (the Property) in relation to a multi-residential development commonly known as the “Little Hardiman Lofts.”
2Henny applied for judgment[1] under sub-s 16(2)(a) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act). The amount claimed is $431,409.63 (including GST); being what Henny says is the unpaid balance of its payment claim 17.
[1] By summons on originating motion dated 24 January 2024.
3LHS relied on four grounds in opposition to Henny’s claim, all of which arise from the course of conduct adopted by the parties for the 16 previous payment claims. LHS’ defences are as follows:
(a) It in fact issued a payment schedule to Henny in time, being the document issued by the quantity surveyor, Drawdown Partners Pty Ltd (Quantity Surveyor).
(b) Further or alternatively, by agreement Henny’s original payment claim was withdrawn and replaced by its tax invoice. If this is accepted, then LHS has paid the amount of the claim in full. Further, LHS’ payment schedule issued by the superintendent was in time.
(c) It has a possible defence of estoppel in relation to the service of the payment schedule.
(d) It has a possible defence of misleading and deceptive conduct in relation to the service of the payment schedule.
4Henny disputed the relevance of the previous course of conduct and submitted that the Court’s role is to enforce the SOP Act, not to decide the merits of the claim, but instead to protect Henny’s cash flow.
5For the following reasons, LHS has satisfied me that in the circumstances of this matter it is not appropriate to award judgment under s 16(2)(a) of the SOP Act. I have decided to refuse Henny’s application.
The relevant facts
6The following facts are not in dispute:
(a) The parties entered into a construction contract on 19 May 2022;
(b) The Superintendent appointed under the contract was Pitch Architecture and Design;
(c) The contract provided that a progress claim could be made on the 25th day of each month, for work under the contract (“WUC”) done to the end of that month. The 25th day of each month is a "reference date" for the purposes of sub-s 9(a)(i) of the SOP Act;
(d) Prior to November 2023, Henny had made 16 progress claims;
(e) On 27 November 2023, Henny sent progress claim 17 for WUC done to the 30th day of November. The claim was sent by email to Ms Ellen Wong of the Superintendent and copied to others including representatives of LHS, and the Quantity Surveyor appointed by the bank;
(f) Claim 17 was a payment claim that satisfied the requirements of section 14 of the SOP Act;
(g) The contract provided for a payment certificate (being a schedule under the SOP Act) to be provided seven days after the Superintendent received the payment claim (Clause 37.2);
(h) The date seven days from 27 November 2023 was 4 December 2023;
(i) Representatives of Henny, LHS, the Superintendent and the Quantity Surveyor met on site for a walk through on 30 November 2023, to assess the work completed. During that walk through the parties apparently agreed on the amount that should be paid for the claim. This agreement was recorded by the Quantity Surveyor in an email sent on 30 November 2023;
(j) On 30 November 2023 Henny issued a tax invoice bearing that date, for an amount very similar[2] to that noted as agreed by the Quantity Surveyor. The tax invoice stated, “Due Date: 22 December 2023;” and further stated, “(t)his invoice is submitted under the Building and Construction Industry Security of Payment Act 2002;”
(k) On 6 December 2023 the Superintendent issued a payment schedule (being a document headed Progress Payment Certificate) for the amount in the tax invoice; and
(l) LHS paid the amount stated in the tax invoice on 20 December 2023.
[2] Mr Butera deposed that he could not explain the negligible difference in the amounts between the amount agreed on site $1,113,787.87 plus GST) and the tax invoice and the payment schedule (both $1,112,472.82 plus GST) given the short time frame to respond to the application: Affidavit of F Butera, affirmed 30 January 2024, paragraph 10.
The legal context
7The purpose and operation of the SOP Act is well known. A recent very useful summary was provided by Her Honour Judge Burchell in Diamond Builders Pty Ltd v Gilridge Investments Pty Ltd[3] (Diamond Builders) and at [41] she concluded:
(A) judgment under sections 16 and 17 is a provisional judgment in what it grants and what it refuses…. 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.
[3] [2023] VCC 1527, 27 – 40, and at 41.
8The relevant parts of section 16 provide as follows:
(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; …..
(2) In those circumstances, the claimant—
(a) may—
(i) recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction; …
(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.
9Accordingly, provided the payment claim complies with the requirements of s 16(4)(a) of the SOP Act, by subsection (4)(b)(ii) the respondent is not entitled to raise any defence in relation to matters arising “under the construction contract.”
10Having said that, Courts have permitted defences which raise matters not arising under the construction contract; that is, defences which involve a consideration of the equitable issue of whether the payment claim was properly served, as distinct from whether the claim complied with the formal SOP Act requirements. For example, in Aalborg CSP A/S v Ottoway Engineering Pty Ltd[4] (Aalborg), the Full Court of South Australia held in relation to its equivalent of s 16(4)(b)(ii):
[This section] does not preclude a respondent relying on estoppel on the issue whether the payment claim was served. First the estoppel issue will need to be determined as part of determining whether the claimant has brought itself within subsection 14(4) and section 15(1)(a). Secondly the raising of such an estoppel does not comprise a “defence in relation to matters arising under the construction contract” within the meaning of section 15(4)(b)(ii).
[These are sections 15(4), 16(1)(a) and 16(4)(b)(ii) in the Victorian SOP Act respectively].
[4] [2017] SASCFC 158, 60.
11A defence of misleading and deceptive conduct is also available, as it does not arise under the contract. Moreover, the defence can be relied upon without bringing a cross claim or substantive proceedings. In Bitannia Pty Ltd & Anor v Parkline[5] (Bitannia), the New South Wales Court of Appeal held:
The District Court can give effect to equitable defences in relation to matters within its jurisdiction and there is no reason why it could not give effect to defences justified by the Trade Practices Act in relation to matters within its jurisdiction.[6]
…
The next question is whether the Building Payment Act sought to preclude such a defence. Section 15(4)(b)(ii)[7] precludes a respondent from raising “any defence in relation to matters arising under the construction contract”. But in truth, the defence raised did not arise under the contract, nor was it in relation to a matter arising under the contract: rather it was in relation to misleading or deceptive conduct on the part of the claimant which could lead to injunctive relief under s 87 of the Trade Practices Act. While it is true that the phrase “in relation to” may identify any rational connection between the prohibited defence and a matter arising under the construction contract, and while the entitlement to a progress payment depends in part upon the construction contract and conduct in execution thereof, this language should not be construed so broadly as to prohibit a defence based upon conduct undertaken in service of a payment claim for the purpose of creating a statutory right.[8]
[5] [2006] NSWCA 238.
[6] Ibid, 10 (per Hodgson JA).
[7] This is section 16(4)(b)(ii) in the Victorian SOP Act.
[8] Ibid, 96 (per Basten JA with Hodgson & Tobias JJA agreeing).
12In Emery t/as Yarra Valley Commercial v J. Hutchinson Pty Ltd,,[9] Judge Burchell referred to Aalborg and Bitannia and noted, “(t)here have been a small number of cases in which claims of misleading and deceptive conduct under the Australian Consumer Law have been found not to be precluded by the Act (or its interstate equivalents).” She continued:
Those cases have claimed misleading and deceptive conduct only in relation to the manner in which the plaintiffs perform their obligations under the Act (or its interstate equivalents), such as how they have served payment claims on the defendants, not in relation to performance or failure to perform under the construction contract.[10]
[9] [2021] VCC 1019, 72.
[10] Ibid, 73.
13In Marques Group Pty Ltd v Parkview Constructions Pty Ltd,[11] Justice Rees confirmed that Bitannia established that breaches of the Australian Consumer Law can be pleaded by way of defence to a claim for judgment under the SOP Act, without bringing a cross-claim or substantive proceedings, and noted this had been followed in numerous cases including, Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd[12]; Aalborg; and Winslow Constructors Pty Ltd v John Holland Rail Pty Ltd.[13]
[11] [2023] NSWSC 625.
[12] [2011] 2 Qd R 114.
[13] [2008] VCC 1491.
The evidence
14Henny relied on an affidavit of Ben Clive Turner (a director of Henny), sworn 11 January 2024 and an affidavit of Samuel Loi Kai Xiang, (a contract administrator employed by Henny), sworn 11 January 2024. LHS relied on an affidavit of Franco Butera (company officer and project manager), sworn 30 January 2024.
15Henny objected to Mr Butera’s evidence being given any weight, as he was not the project administrator. It said that the defendant had not called evidence from anyone who was had firsthand knowledge of the events. They submitted that LHS could have filed an affidavit from Ms Wong of the Superintendent, as it was she who was responsible for issuing the payment certificates under the contract. Henny seeks me to draw an inference in accordance with Jones v Dunkel,[14] that her evidence would not have assisted LHS. In response, LHS submitted that due to the urgency of the hearing it did not have time to locate and prepare affidavits from other witnesses.
[14] (1959) 101 CLR 298.
16I am not prepared to draw the inference sought by Henny. It was Henny who requested an urgent hearing of this application. The parties therefore had limited time to file affidavits and submissions. The onus should not be on LHS to request an adjournment of the hearing to file further evidence in addition to its project manager, when it was not aware there was even a challenge to that witness until the plaintiff served its written submissions on the day of the hearing.
17As Her Honour Judge Burchell said in Diamond Builders, “(t)his court has endorsed the hearing of applications under the SOP Act on a summary basis by summons on originating motion with affidavit evidence. Such claims are properly assessed on the balance of probabilities, with the quality of the evidence weighed having regard to the fact that the legislation seeks to facilitate a swift but temporary remedy.” [15]
[15] Op. cit., 43.
Did LHS provide a payment schedule in time?
18LHS contended that the document issued by the Quantity Surveyor following the walk through was a payment schedule. As stated above, prior to November 2023, Henny had made 16 progress claims prior to claim 17. It was not disputed that the claim made on 27 November 2023 followed the same process as the previous 16.
19Samuel Loi of Henny sent progress claim 17 by email to Ms Ellen Wong of the superintendent, copied to others including representatives of LHS and the Quantity Surveyor, and asked, “(h)ow are you placed for a site walk this coming Friday (1/12/23) morning?”[16]
[16] Affidavit of F Butera, affirmed 30 January 2024, page 42.
20Representatives of Henny, LHS, the Superintendent and the Quantity Surveyor then met on site for a walk through on 30 November 2023, to assess the work completed. During that walk through, the parties apparently agreed on the amount that should be paid for the claim. This agreement was recorded by the Quantity Surveyor in its email of 30 November 2023, to which was attached a spreadsheet listing each item of work, the trade sum, last percentage complete, last value complete, current percentage complete, current value complete, this payment value and cost to complete. The agreement recorded the total to be paid was $1,113,787.87, excluding GST.[17]
[17] There was a separate spreadsheet for variations but this was not addressed by either party in the hearing and so I have had no regard to its effect.
21LHS submitted that the document issued by the Quantity Surveyor on 30 November 2023 to Henny assessing payment claim 17 is a payment schedule that schedules an amount of $1,113,787.87 plus GST. It said that it clearly meets the requirements of s 15 of the SOP Act. Specifically; it identifies the claim, it indicates the amount proposed to be paid and why the amount assessed is less than the claim.
22LHS said further that I may infer that Henny accepted that this was a payment schedule, from the fact that it issued a tax invoice on 30 November 2023, for an amount very similar to that noted as agreed by the Quantity Surveyor, being $1,112,472.82, excluding GST. The tax invoice stated, “(t)his invoice is submitted under the Building and Construction Industry Security of Payment Act 2002.”[18]
[18] Affidavit of Franco Butera, affirmed 30 January 2024, pg 169.
23Henny disputed this interpretation of events, submitting that the Quantity Surveyor did not have power to issue a payment schedule. Under Clause 37.2 of the contract it was to be issued by the Superintendent. Nor did LHS say at any time (either in respect of PC 17 or the first 16 claims ) that it had adopted the Quantity Surveyor’s document as the payment schedule. Instead, the Superintendent sent a payment schedule on 6 December 2021, which she would not have done had she understood that the Quantity Surveyor’s document was the payment schedule
24I am satisfied that it is arguable that the document issued by the Quantity Surveyor on 30 November 2023 was a payment schedule within the meaning of the Act. It provided all the information required by s 15, namely it identified the claim, it indicated the amount proposed to be paid and why the amount assessed was less than the claim.
25In respect of Henny’s argument that under the contract only the Superintendent may issue a progress certificate, I note that s 15(1) of the SOP Act does not specify that it must be sent by the Superintendent. That section provides:
(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.
26In the present case the payment claim was served by email sent to the Superintendent and copied to the Quantity Surveyor and representatives of the parties. Representatives of the Superintendent, the Quantity Surveyor and the parties then met on site when the parties agreed on the amount that should be paid for PC 17. The document sent by the Quantity Surveyor on 30 November 2023 was sent to representatives of the Superintendent and Mr Loi, Henny’s contract administrator. In my view, the service of the document satisfies section 15 of the Act
27As for Ms Wong of the Superintendent sending a payment schedule on 6 December 2021, I am unable to determine why she did that, in the absence of any evidence from the Superintendent. Based on the evidence before me I am able to conclude that such conduct is consistent with her previous conduct. According to Mr Butera, none of the superintendent’s 17 payment schedules were issued within seven days. I am not prepared to infer that Ms Wong’s action in sending a payment schedule on 6 December 2021 is an admission or concession by her that she knew the Quantity Surveyor’s document was not a payment schedule. Instead, it is more likely that she sent the payment schedule on each of the 17 occasions as a means of completing the documentary trail, in circumstances where Henny had issued at least 12 of its 17 tax invoices before each payment schedule was due.[19]
[19] Affidavit of Franco Butera, affirmed 30 January 2024, paragraphs 6 and 9.
Was Henny’s original payment claim withdrawn and replaced by its tax invoice?
28LHS also submitted in the alternative that Henny’s action in issuing the tax invoice dated 30 November could be seen as it replacing the payment claim issued on 27 November 2023. If the tax invoice is accepted as a payment claim, then the payment certificate issued on 6 December 2023 was within time.
29It conceded that under the contract and under the SOP Act it is not possible to have two payment claims for the one period, but said one could replace the other by agreement. It is open to the Court to infer that there was such an agreement between the parties by their conduct in respect of the 16 previous payment claims.
30Henny disputed this interpretation and said that it is not possible to have two payment claims for the one period. It relied on the decision of Argyle Building Services Pty Ltd v Dalanex Pty Ltd (No 2),[20] where Delany J held, “leaving agreement between the parties to one side, the statutory scheme does not contemplate the unilateral withdrawal or abandonment of a payment claim and the resubmission of a fresh claim in respect of the same reference date.”
[20] [2022] VSC 452, 97.
31Further, while it conceded that it is possible to withdraw a payment claim by agreement, Henny’s evidence is that it never did anything to indicate or represent that it had withdrawn the first payment claim.
32I accept that LHS’ submission is arguable. A payment claim may be withdrawn and replaced by agreement. Although Henny denies any such agreement, its conduct subsequent to issuing the payment claim tends to a different conclusion. It was Henny that asked LHS to meet for the walk through to discuss the value of the WUC after issuing its payment claim – as it had done for each of the previous claims. An on site discussion to agree on the value of the claim is inconsistent with Henny relying on its payment claim. Further, Henny’s tax invoice issued after that walk through (dated 30 November 2023) stated, “(t)his invoice is submitted under the Building and Construction Industry Security of Payment Act 2002.”[21] These words on the tax invoice would not have been necessary had Henny been relying on its payment claim.
[21] Affidavit of Franco Butera, affirmed 30 January 2024, pg 169.
Is a defence of estoppel reasonably arguable?
33Even if I am wrong about the above matters, the conduct adopted by the parties during the project as a whole, is nevertheless relevant to LHS’ foreshadowed defences of estoppel or misleading and deceptive conduct.
34LHS submitted that because of the conduct adopted by all parties for all or nearly all of the previous claims, Henny is estopped from asserting that the payment schedule was not served in accordance with the SOP Act.
35LHS referred to the elements of estoppel by representation as summarised by the Full Court of South Australia in Aalborg as follows:
(a) the plaintiff makes a representation or engages in other conduct which is capable of occasioning the formation by the defendant of the assumption the subject of the second element;
(b) the defendant forms an assumption as to the legal relationship between the defendant and the plaintiff;
(c) the conduct of the plaintiff is a material cause of the formation of the assumption by the defendant;
(d) the defendant takes or omits to take action in change of his or her position in reliance on the assumption;
(e) the defendant would suffer detriment if the plaintiff were permitted to depart from the assumption;
(f) it would be unjust or unconscionable for the plaintiff to depart from the assumption.
36LHS also referred to the elements of promissory estoppel as summarised by the Full Court of South Australia in Aalborg as follows:
(a) the plaintiff makes a representation or engages in other conduct which is capable of occasioning the formation by the defendant of the assumption the subject of the second element;
(b) the defendant forms an assumption as to the manner in which rights will be exercised or enforced;
(c) the conduct of the plaintiff is a material cause of the formation of the assumption by the defendant;
(d) the defendant takes or omits to take action in change of his or her position in reliance on the assumption;
(e) the defendant would suffer detriment if the plaintiff were permitted to depart from the assumption;
(f) it would be unjust or unconscionable for the plaintiff to depart from the assumption.
37LHS contended that on the evidence before the Court, it is arguable that the above elements are satisfied. By its conduct in issuing a tax invoice for the scheduled amount four days prior to the date it now says is the date upon which LHS was required to issue a payment schedule, Henny accepted that the 30 November 2023 document was the payment schedule.
38LHS also said that Henny’s prior conduct in accepting as the payment schedules the documents issued by the Quantity Surveyor for the previous 16 payment claims, and issuing its taxation invoices for the amounts scheduled by the Quantity Surveyor, was a representation that it had accepted that the documents issued by the Quantity Surveyor are payment schedules for the purposes of the SOP Act. At no time did Henny identify and / or protest and / or reserve any rights in relation to that process.
39In response, Henny submitted that in the absence of any evidence from the superintendent Ms Wong that she had been told it was acceptable for her to send a payment schedule late, the Court should not find an estoppel. Henny disputed any agreement to vary the terms of the contract and disputed that anything was said to Ms Wong that she could ignore the seven-day period. The simple fact was she did not act on time.
40I accept the contention of LHS that estoppel is reasonably arguable in this matter. Henny’s conduct, as identified in the affidavit of Mr Butera, has been set out above. It is curious that Henny did not mention the meeting on-site or the tax invoice or the previous 16 claims in either of the affidavits it filed.
41On the other hand, Mr Butera is clear that LHS formed an assumption as to the manner in which rights would be exercised and enforced and or the assumption of its legal rights (including the time in which it could serve a payment schedule). It is immaterial whether this process was different to that provided in the contract: “It is important to notice that belief in the correctness of the facts or state of affairs assumed is not always necessary. Parties may adopt as the conventional basis of a transaction between them an assumption which they know to be contrary to the actual state of affairs.”[22]
[22] Grundt v Great Boulder Pty Ltd Gold Mines Pty Ltd (1937) CLR 641, 676 (per Dixon J).
Is a misleading and deceptive conduct defence reasonably arguable?
42LHS also submitted that it has an arguable defence that Henny engaged in misleading and deceptive conduct. In reliance upon the conduct and representations of Henny, LHS did not issue a payment schedule within the seven calendar days specified in the contract. Given Henny’s conduct (and silence in accepting and not demurring from the procedural process for service of the payment schedules), LHS said Henny has engaged in misleading and deceptive conduct in contravention of the Australian Consumer Law. Henny now seeks to rely upon a process it did not follow for its prior 16 claims.
43LHS referred to each of the necessary elements as identified in Bitannia,[23] as follows:
(a) the plaintiff makes a representation or engages in other conduct which is capable of being misleading;
(b) the plaintiff’s conduct is objectively misleading;
(c) the plaintiff’s conduct is a material cause of the action or omission by the defendant;
(d) the action or omission would cause loss in the absence of the defendant being able to rely on the answer; and
(e) the Court in the exercise of its discretion should make an order under section 232 or 237 of the Australian Consumer Law effectively preventing the plaintiff from succeeding in the action.
[23] Bitannia, 7 - 9 (per Hodgson JA) & 78 - 95 (per Basten JA) (with each of whom Tobias JA relevantly agreed).
44LHS then identified the following alleged facts in support of its contention that each of those elements were made out.
45Henny, in the company of LHS and the QS, agreed that the value of progress claim 17 would be the amount “agreed” on site. This agreement is recorded in the emailed payment schedule from the QS. Henny then issued the taxation invoice for that amount.
46The agreement and subsequent conduct in issuing the taxation invoice is a representation by Henny that the value of progress claim 17 that it agreed was owing is $1,112,472.82.
47None of the sixteen previous payment schedules were issued (whether by the Quantity Surveyor or otherwise) within seven days of the payment claim. Instead, the process adopted (as set out above) was that Henny issued taxation invoices some days after each payment claim for the amount agreed by the parties. LHS then made payments in accordance with the tax invoices issued by Henny.
48LHS says that the fact that Henny was silent regarding the timing of the sixteen previously issued payment schedules, in circumstances where Henny has relied upon these documents to issue its taxation invoices under the contract, is misleading. It relied on the decision of Demagogue Pty Ltd v Ramensky,[24] where Gummow J, with whose reasons the other members of the Court agreed, said:
… consistently with regard to the natural meaning of the terms of s 52, the question is whether in the light of all relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is or is likely to be misleading or deceptive…
If in a particular case silence would, as a matter of fact, constitute misleading or deceptive conduct, s 52 by virtue of its prohibition of such conduct imposes its own statutory duty to make disclosure. The cases in which silence may be so characterised are no doubt many and various and it would be dangerous to essay any principle by which they might be exhaustively defined. However, unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist.
[24] [1992] FCA 557, 40 - 41.
49LHS submitted that this is a situation where the circumstances of the sixteen prior claims process gave rise to an expectation that Henny would disclose to LHS that its payment schedules were either not accepted (the Quantity Surveyor’s assessments) and or were being served outside the time identified within the contract.
50In response, as with the estoppel defence, Henny submitted that the Court should strictly apply the SOP Act. Further, there was no evidence of any representation having been made.
51For similar reasons to the above, I accept the contention of LHS that a defence of misleading and deceptive conduct is reasonably arguable in this matter, based on Henny’s conduct, as set out above.
Conclusion
52As discussed above, while the SOP Act provides a “pay now, argue later” remedy in cases where a payment schedule is not provided, Courts have permitted defences which involve a consideration of the issue whether the payment claim was properly served. If Henny is estopped from asserting that the payment schedule was not served in accordance with the SOP Act, this is an allowable defence. Similarly if LHS can establish that Henny engaged in misleading or deceptive conduct, which it relied upon, this may be raised in defence to a claim under the SOP Act.
53For the reasons set out above I am satisfied that Henny’s conduct (including its silence in accepting and not demurring from the process for service of the payment schedules), gives rise to a claim for estoppel and / or under the Australian Consumer Law. LHS is entitled to raise these matters in defence of the claim and the summary judgment process of s 16 is not available to Henny.
54Accordingly the proceeding is dismissed.
55Unless there is an objection, I propose to order that Henny pay LHS’ costs of and incidental to the proceeding on the standard basis. I invite the parties to prepare draft orders to give effect to these reasons. If a party seeks a different form of costs order, they should allow for submissions and affidavits in the draft orders. I will determine any issue concerning costs on the papers.
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Certificate
I certify that these 17 pages are a true copy of the judgment of her Honour Judge Kirton delivered on 29 February 2024.
Dated: 29 February 2024
Jessica Meaney
Associate to Her Honour Judge Kirton
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