Jackson Clements Burrows Pty Ltd v Seabay Properties Pty Ltd

[2009] VCC 557

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
COMMERCIAL LIST

BUILDING CASES DIVISION

Case No. CI-09-01286

JACKSON CLEMENTS BURROWS PTY LTD	Plaintiff
(ACN 072 854 883)
v
SEABAY PROPERTIES PTY LTD	Defendant
(ACN 105 314 074)

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JUDGE:	HIS HONOUR JUDGE SHELTON
WHERE HELD:	Melbourne
DATE OF HEARING:	22 April 2009
DATE OF JUDGMENT:	1 May 2009
CASE MAY BE CITED AS:	Jackson Clements Burrows Pty Ltd v Seabay Properties Pty Ltd
MEDIUM NEUTRAL CITATION:	[2009] VCC 0557

REASONS FOR JUDGMENT

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Catchwords: Payment claims not challenged by payment schedules and paid – challenged in later payment schedules – Energetech Australia Pty Ltd v Sides Engineering Pty Ltd (2005) 226 ALR 362.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Goldblatt	Damian Abrahams Legal Consultant
For the Defendant	Mr J Twigg	Giannakopoulos Solicitors
HIS HONOUR:

Background

1          This proceeding commenced by way of Originating Motion. On the hearing of the matter I made orders pursuant to Rule 45.05(2)(a) and (b). The plaintiff seeks judgment against the defendant in the sum of $52,046.08 pursuant to s.16(2)(a), or alternatively, s.17(2)(a) of the Building & Construction Industry Security of Payment Act 2002 (“the Act”).

2          The plaintiff is an architectural company. By an agreement dated 5 July 2006 entered into with Bovis Lend Lease Pty Ltd as agent for the defendant (“the agreement”), it agreed to provide architectural services for a development at Western Beach Road, Geelong, for which it would be remunerated in accordance with the agreement. Since the agreement was entered into prior to 30 March 2007, the amendments to the Act made by the Building & Construction Industry Security of Payment Act 2006 are inapplicable.

3          The plaintiff rendered accounts regularly and accounts 1 to 19 were paid. Accounts 8 to 19 stated, in accordance with s.14(3)(c) of the Act, that the claims for payment in them were made pursuant to the Act. No payment schedules were provided by the defendant pursuant to s.15 of the Act in relation to accounts numbered 8 to 19.

4          On 17 December 2008, the plaintiff served account number 20 on the defendant. It was for the sum of $110,699.60 and contained the statement required by s.14(3)(c) of the Act. The defendant provided a payment schedule dated 2 January 2009. It was not in issue that it was served within the time limit imposed by s.15(4)(b) of the Act. It stated that the sum owing by the defendant under account number 20 was nil. It contended, firstly, that the contract documentation was only 60 per cent complete and not 80 per cent complete as claimed by the plaintiff. This resulted in a deduction of $49,000 plus GST. Further, and relevantly to this proceeding, the payment schedule claimed that there were overpayments in respect of account 8 and accounts 10 to 19.

5          In this proceeding, the plaintiff seeks the sum of $52,046.08, being the sum claimed in account number 20 of $110,699.60, less the adjustment of $49,000 claimed by the defendant and a few minor adjustments.

The Issue

6          Since the defendant did not provide payment schedules in respect of accounts 8 and 10-19, can it now challenge these accounts?

Discussion and Conclusions

7          A useful starting point is s.15 of the Act. It was not argued before me that s.15(2)(a) and (b) had not been complied with. Nor was it contended by the plaintiff that sufficient reasons had not been provided pursuant to ss.(3).

8          Mr Goldblatt, who appeared for the plaintiff, submitted that the payment schedule could only relate to account number 20, the payment claim to which it was responding. Such a limitation is not provided in s.15(2). Mr Goldblatt submitted that s.15(1), in referring to “the claim”, provided that the payment schedule must relate to that claim only. This, in my view, is too narrow a reading of this provision. It does not provide that the payment schedule is limited to the payment claim to which it is responding. Nor can it be implied, in my view, that earlier payment claims are conclusive and not open to challenge at a later point in time if not challenged by a payment schedule served within time pursuant to s.15.

9          It seems clear to me that payments made pursuant to a payment claim are on account only and subject to challenge at a later stage. S.3(4)(a) and s.47 of the Act support this view. In Brodyn Pty Ltd v Davenport [2004] NSWCA 394, at paragraph 51, Hodgson JA stated:

“… The payments themselves are only payments on account of a liability

that will be finally determined otherwise. …”

10        In Energetech Australia Pty Ltd v Sides Engineering Pty Ltd (2005) 226 ALR 362, at 383 and 384, Campbell J stated:

“I agree, with respect, with the remarks of McDougall J in Australian Remediation Services Pty Ltd v Earth Tech Engineering Pty Ltd [2005] NSWSC 362 (Earth Tech) at [13] that:

‘[13] … the legislature has made it quite clear that it is adjudicators under the Act who are the primary organs for the resolution of these disputes. The power of this Court comes in either to enforce the determination (a power shared with other courts) or, in the limited circumstances described in Brodyn, to restrain enforcement of the determination. The whole scheme of the Act including, as Palmer J said in Multiplex Constructions Pty Ltd v Luikens & Anor [2003] NSWSC 1140, is one of ‘pay now, argue later’. It is clear from the provisions of s 32 of the Act that the time for final adjustment of rights and remedies is later.’”

(s.32 of the New South Wales Building & Construction Industry Security
of Payment Act 1999 (NSW) corresponds to s.47 of the Act.)

11        The “final adjustment of rights and remedies” need not, in my view, await proceedings in court or arbitration under a contract between the parties. It can be raised in a payment schedule in response to a payment claim.

12        I therefore conclude that the defendant is entitled to raise the matters it has in account number 20 and has provided a payment schedule in compliance with s.15 of the Act.

13        It is clear that the defendant did not become liable to pay account number 20 pursuant to s.15(4) of the Act since, as I have found, the defendant has provided a valid payment schedule to the plaintiff. A liability pursuant to s.15(4) of the Act is a prerequisite to recovery under s.16(2)(a) of the Act. The claim under this provision therefore fails. A prerequisite to a claim under s.17(2)(a) of the Act is that a person who has provided a payment schedule has failed to pay the sum indicated in that payment schedule – see s.17(1)(c) and (d). Here, however, the payment schedule in question states that “nil” is due. It follows that the plaintiff has no basis for claiming under s.17(2)(a) either.

14        The appropriate step for the plaintiff to take was to apply for adjudication under s.18 of the Act. It is now out of time to do this – see s.18(3)(b).

15        The plaintiff contended that an agreement had been reached between the parties and confirmed by an email dated 24 October 2008 on certain issues and therefore could now not be the subject of a payment schedule. This again was an appropriate matter to be determined by adjudication.

16        I dismiss the proceeding.

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