John Beever v Roads Corporation

IN THE SUPREME COURT OF VICTORIA AT MELBOURNE
COMMERCIAL COURT
TECHNOLOGY ENGINEERING AND CONSTRUCTION LIST

Not Restricted

S ECI 2018 0078

JOHN BEEVER (AUST) PTY LTD	Plaintiff
v
ROADS CORPORATION	Defendant

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JUDGE:	Digby J
WHERE HELD:	Melbourne
DATE OF HEARING:	28 June 2018
DATE OF JUDGMENT:	26 October 2018
CASE MAY BE CITED AS:	John Beever v Roads Corporation
MEDIUM NEUTRAL CITATION:	[2018] VSC 635

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BUILDING – Reference date for payment claim – Whether jurisdictional fact satisfied – Whether inadequate payment claim documentation precludes finding reference date - Building and Construction Industry Security of Payment Act 2002 (Vic), s 16(2)(a)(i).

BUILDING – Whether payment claim includes excluded amount – Whether variation is claimable variation – Whether variation was requested or directed - Building and Construction Industry Security of Payment Act 2002 (Vic), ss 10(3), 16(2)(a)(i), 16(4).

PRACTICE AND PROCEDURE – Application for summary judgment – Application to strike out pleadings – Whether pleadings disclose cause of action – Whether pleadings address causation – Whether pleadings address loss and damage – Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 23.

PRACTICE AND PROCEDURE – Where proceeding must be commenced by originating motion – Whether judgment is a summary judgment – Applicable approach to and test for judgment – Building and Construction Industry Security of Payment Act 2002 (Vic), s 16(2)(a)(i); Civil Procedure Act 2010 (Vic), s 61; Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 22; Supreme Court (Chapter 1 Summary Judgment Amendment) Rules 2015 (Vic).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M A Robins QC	Champions Lawyers
For the Defendant	Mr M Scott QC with Mr B Mason	Clayton Utz

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

The Payment Claim...................................................................................................................... 1
The Plaintiff’s Application........................................................................................................... 1
The Defendant’s Application...................................................................................................... 2
The Present Judgment.................................................................................................................. 3

Background......................................................................................................................................... 3

The Bridge...................................................................................................................................... 3
Welding Dispute........................................................................................................................... 4
Payment Claim 16......................................................................................................................... 6

The SOP Application......................................................................................................................... 8

The Security of Payment Regime............................................................................................... 8
Reconciliation of the Civil Procedure Act 2010 (Vic) and the SOP Act................................ 9
The Originating Process................................................................................................... 10
Relevant Principles for Summary Judgment................................................................. 11
Requirements of the SOP Act.......................................................................................... 13
Nature of ‘Summary’ Judgment under the SOP Act.................................................... 15

Questions for Summary Judgment........................................................................................... 18
The Plaintiff’s Application for Summary Judgment.............................................................. 19

Reference Date Objection............................................................................................................... 19

Determining a Reference Date.................................................................................................. 20
Contractual Framework for a Reference Date......................................................................... 21
Submissions – Reference Date.................................................................................................. 23
Plaintiff’s Submissions...................................................................................................... 23
Defendant’s Submissions................................................................................................. 25
Plaintiff’s Reply Submissions.......................................................................................... 28

Considerations – Reference Date.............................................................................................. 29
Conclusion – Reference Date........................................................................................... 35

Formal Requirements Objection................................................................................................... 35

Objective Assessment................................................................................................................. 36
Submissions – Formal Requirements...................................................................................... 37
Plaintiff’s Submissions...................................................................................................... 37
Defendant’s Submissions................................................................................................. 38

Considerations – Formal Requirements.................................................................................. 39
Conclusion – Formal Requirements......................................................................................... 39

Claimable Variations Objection.................................................................................................... 40

Included and Excluded Amounts under the SOP Act.......................................................... 40
Submissions – Claimable Variations....................................................................................... 42
Plaintiff’s Submissions...................................................................................................... 42
Defendant’s Submissions................................................................................................. 46

Considerations – Claimable Variations................................................................................... 50
Conclusion – Claimable Variations.......................................................................................... 51

Technical Objection to the Plaintiff’s Supporting Affidavit Material................................... 51

The Strike Out Application............................................................................................................ 52

Defendant’s Submissions – Paragraphs [6] to [12]................................................................. 53
Plaintiff’s Submissions – Paragraphs [6] to [12]..................................................................... 53
Decision – Paragraphs [6] to [12].............................................................................................. 55

Conclusion......................................................................................................................................... 57

Orders................................................................................................................................................. 57

HIS HONOUR:

Introduction

On 28 January 2016, John Beever (Aust) Pty Ltd (plaintiff) and Roads Corporation (defendant) entered into a construction contract (the construction contract) in respect of strengthening works to the Wallen Road Bridge in Hawthorn, in the State of Victoria.[1]
[1]CB068.

On 11 April 2017, the defendant certified that practical completion of the works was achieved on 22 March 2017.[2] At the earliest, the Defects Liability Period (DLP) under the construction contract expired in March 2018.
[2]CB646 and 647. While the parties contest whether the defects liability period commenced on 22 March 2017 (being the date specified in the certificate), or 11 April 2017 (being the date the certificate was received), the question does not require resolution on return of the current applications (T9.23–10.2).

The Payment Claim

On or around 28 September 2017, a representative of the plaintiff sent a payment claim (PC 16) under the Building and Construction Industry Security of Payment Act 2002 (SOP Act) to the defendant seeking a progress payment under the contract in the sum of $290,146.61.[3] PC 16 was served within the DLP.
[3]CB069; CB704; CB707–711. The plaintiff’s payment claim of 28 September 2017 was forwarded to the defendant by express post: Affidavit of Joanne Mary Riley, 15 May 2018, [2].

The defendant did not serve a payment schedule in response to PC 16.

By its Statement of Claim dated 29 March 2018, the plaintiff seeks the sum of $290,148.61 from the defendant as a debt due to the plaintiff, recoverable under s 16(2)(a)(i) of the SOP Act. The plaintiff also claims for damages for breach of the construction contract and a contract payment claim in respect of certain disputed variation work.[4]
[4]Statement of Claim, 29 March 2018; CB010–023.

The Plaintiff’s Application

By Summons dated 16 May 2018, the plaintiff seeks summary judgment in the sum of $290,148.61, pursuant to s 16 of the SOP Act on the basis that the defendant did not serve a payment schedule in response to PC 16 under the SOP Act.

The Defendant’s Application

By Summons dated 29 May 2018, the defendant applied to strike out certain paragraphs of the plaintiff’s Statement of Claim, namely those parts which alleged that:

(a) pursuant to the SOP Act, the plaintiff was entitled to judgment in the sum of $290,148.61 and interest, as a result of the defendant failing to serve a payment schedule in respect of the plaintiff’s PC 16 payment claim;[5]
[5]Statement of Claim, 29 March 2018, [6]-[12].

(b) the construction contract contained an implied term that the defendant would procure the Contract Superintendent to act honestly, fairly, justly and impartially;[6]

(c) the defendant had breached the construction contract by failing to procure the Contract Superintendent to act honestly, fairly, justly and impartially with respect to references by the plaintiff to the Contract Superintendent for explanation and direction for a ‘Weldability Issue’[7] and allegedly resulting damages; and

(d) the defendant had directly or via its Contract Superintendent ordered variations for which the plaintiff has not been paid and in relation to which the plaintiff has suffered loss and damage.

[6]Ibid [5(b)].

[7]Ibid [21]-[33].

Since filing its Summons, the defendant has clarified that it only maintains its complaint that the plaintiff failed to properly allege the existence of a ‘reference date’ for its SOP Act related claims at [6] to [12] of the plaintiff’s Statement of Claim. The defendant argues this asserted cause of action should be struck out for that reason. The defendant otherwise accepts that the balance of its strike out application has been satisfied with the further and better particulars received from the plaintiff.[8]
[8]T26.29-T27.12.

The Present Judgment

The present judgment deals with the following applications:

(a) the plaintiff’s application for summary judgment on its claims under the SOP Act (the SOP Application) in the sum of $290,148.61, plus interest;[9] and

(b) the defendant’s strike out application in relation to the plaintiff’s SOP Act claim, referred to at [6] to [12] of its Statement of Claim (the Strike Out Application).[10]

[9]Plaintiff’s Summons, 16 May 2018; CB034.

[10]Defendant’s Summons, 18 May 2018; CB035.

It is convenient to dispose of both applications together. For the reasons below, I have decided that the plaintiff’s application for summary judgment must fail and the defendant’s strike out application should be rejected.

Background

The plaintiff is a mechanical engineering company providing construction, maintenance and industrial services to the manufacturing, resources, infrastructure and industrial sectors.[11] The defendant is a statutory corporation trading under the name VicRoads.[12]
[11]CB066.
[12]Transport Integration Act 2010 (Vic) s 80.

The Bridge

The Wallen Road Bridge (the Bridge) is an extension of Swan Street linking Richmond with Hawthorn across the Yarra River in Victoria. Originally designed and construed in 1881,[13] it is one of the only remaining examples of nineteenth-century bridges in Australia.[14] In 1916, the Bridge was strengthened and modified to accommodate electric trams.[15] In 1934, the Bridge suffered a partial collapse which required strengthening works.[16] The General Manager of the plaintiff deposes that the Bridge requires ‘careful maintenance and work to maintain safe operation to modern standards’.[17]
[13]CB067 [7].
[14]Ibid.
[15]Ibid.
[16]Ibid.
[17]Ibid [8].

On 22 October 2015, the defendant awarded the plaintiff the subject construction contract. The construction contract required the plaintiff to perform strengthening works and other associated maintenance works to the Bridge (the Works).[18] The construction contract was executed on 28 January 2016,[19] for a contract price in the sum of $2,122,064 plus GST.[20]
[18]CB725 [8]; CB068 [10].
[19]CB068 [11].
[20]Ibid [11].

Welding Dispute

The construction contract is described as a ‘substantial document which required a variety of works and included drawings and specifications prepared by or on behalf of VicRoads’.[21] The drawings, amongst other things, identified the following ‘Welding Procedures for Wrought Iron’:[22]
[21]Ibid [12].
[22]CB635.

(a) Welding procedures shall be carried out and qualified in line with the requirements of AS 1554.1;

(b) Welders and welding supervisors shall be qualified as to AS 1554.1;

(c) Welding contractors shall be experienced and qualified in working with wrought iron; and

(d) All paint shall be removed from surfaces to be welded by grinding.

‘AS 1554.1’ is a reference to an Australian Standard regulating the welding of a wide range of steel structures. It is set by Standards Australia, an independent standards organisation, which the Australian Government recognises through a Memorandum of Understanding. Broadly, AS 1554.1 specifies the types of parent metal and welding consumables to which it apples and also describes permissible levels of imperfections.[23]
[23]CB1137.

Between about May and June 2016, the plaintiff raised concerns that the material to be welded as part of the Works would not achieve mechanical properties that were specified under AS 1554.1.[24] This led to an extended email exchange in which the plaintiff repeatedly requested an explanation and directions for how to proceed,[25] and suggested that there be a review of the design to remove the requirement for welding.[26]
[24]CB1140–41 [21]–[25].
[25]CB726 [13]; CB727 [14]; CB783.
[26]CB807.

In response, the defendant undertook to ‘review in good faith the design and extent of the welding required’.[27] Ultimately, however, the defendant asserted that the plaintiff was contractually obliged to develop an appropriate welding procedure in accordance with AS 1554.1 and conveyed that the designers had rejected any request for an alteration to what it asserted were the contractual welding requirements.[28]
[27]CB800.
[28]CB826.

On 5 November 2016, the plaintiff made a variation claim for additional welding work.[29] In substance, the claim asserted an entitlement to costs which it had incurred beyond the scope of the requirements of the construction contract and pursuant to an instruction which had been issued by the defendant.[30] This claim was rejected by the defendant.[31]
[29]CB849–50.
[30]CB849.
[31]CB854–55.

On 30 November 2016, the plaintiff sent its weld procedure pre-qualification to the defendant.[32] The defendant responded that the procedure was unsatisfactory ‘due to the low strength when tested’ and sought resubmission of the procedure to conform to the agreed requirements.[33] This was followed by a meeting on 22 December 2016 between representatives of the plaintiff and the defendant to discuss an appropriate welding procedure.[34] The plaintiff’s welding work at the bridge concluded on or around 30 January 2017.[35]
[32]CB871; CB732 [28]–[29].
[33]CB870; CB732 [28]–[29].
[34]CB732 [31].
[35]CB733 [33].

The evidence on which the parties rely for the welding procedure-related variation claim under the SOP Act is summarised and analysed as necessary below. However, given the welding dispute briefly described above goes to the heart of the broader contractual dispute between the parties, this issue cannot be determined finally on return of the current interlocutory applications.

Payment Claim 16

On or around 6 April 2017 the Senior Project Manager at John Beever sent a letter to the defendant requesting a Certificate of Practical Completion for the works.[36] The Certificate of Practical Completion was returned on 11 April 2017. The Certificate of Practical Completion specified 22 March 2017 as the Date for Practical Completion and identified the following defects:[37]
[36]CB645.
[37]CB646–47.

(a) complete test results for painting;

(b) complete test results for concrete repairs; and

(c) As Constructed Drawings.

The extent to which the test results and As Constructed Drawings were ‘defects’ claimable after practical completion is a point of difference between the parties.

On 28 September 2017, a representative of the plaintiff sent a letter by express post to the defendant enclosing PC 16.[38] PC 16 claimed $290,148.61 as follows:
[38]CB069 [22]–[25].

JOHN BEEVER

AUSTRALIA
PROGRESS PAYMENT CLAIM FORM
Project  20181 – Wallan Road Bridge
John Beever (Aust)
Claim No: 16
Application to  VICROADS
Contract  VicRoads Wallen Rd Bridge Strengthening
Job No  20181
Date  15-Sep-17
We hereby apply for a Progress Payment of $290,148.61 in accordance with the following:-

Value of contract works (Exc. GST) As per Attached Schedule $2,122,063.61

Plus Agreed Variations $1,293,658.14

Plus Non Agreed Variations for additional works $211,622.32

____________

SubTotal $3,627,344.07

Less Prev Payments (Esc. GST) totalling $3,363,572.61

Grand Total $263,771.46

Plus GST $26,377.15
____________

AMOUNT NOW APPLIED FOR $290,148.61
This is a payment claim under the “Building and Construction Industry Security of Payment Act 2002 (VIC)” .[39]

[39]CB708.

As earlier noted, the defendant did not serve a payment schedule contesting any of the amount claimed.[40] This is despite claims being made for additional work for variations completed in respect of the disputed welding work. Instead, on 3 November 2017, a representative of the defendant made the following observations in relation to PC 16:

It is not clear what JBA says is the relevant reference date, but it seems unlikely that a reference date has arisen since payment claim 15 was paid. If JBA takes a different view, I invite you to explain when the relevant reference date arose.

Payment Claim No 16 is comprised predominately of unapproved variations. These are Excluded Amounts for the purposes of the Security of Payment Act.[41]

[40]CB069.

[41]CB899.

The plaintiff now seeks judgment under s 16(2)(a)(i) of the SOP Act for the amount claimed in PC 16. The defendant asserts PC 16 is deficient for want of a reference date and that the ‘purported payment claim is defective’.[42] The defendant also argues that judgment should not be entered on PC 16 because the plaintiff claims an excluded amount. Finally, the defendant applies to strike out the plaintiff’s claim for $290,148.61 plus interest for want of an alleged ‘reference date’ as required by the SOP Act.
[42]Defendant’s Submissions on Summary Judgment, 8 June 2018, [2].

The SOP Application
The Security of Payment Regime

One of the objects of the SOP Act is to establish an interim statutory entitlement to ‘progress payments’ under construction contracts.[43] Proceedings to recover the amount of a progress payment in Court should, if possible, be conducted expeditiously in light of the ‘pay now argue later’ policy underpinning the SOP Act.[44] To mitigate the otherwise harsh summary consequences of this statutory regime, s 47(3)(b) of the SOP Act allows a court to make orders for allowances and, inter alia, the restitution of amounts awarded under the SOP Act, in future civil proceedings that finally determine the rights of the parties.[45]
[43]Building and Construction Industry Security of Payment Act 2002 (Vic) s 1 (SOP Act).
[44]Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd (2009) 26 VR 112, 121 [44]; T53.18–28.
[45]Section 47(4) similarly provides for future arbitral proceedings to allow for amounts earlier paid under Part 3 of the SOP Act.

The Parliament has emphasised that:

Cash flow is the lifeblood of the construction industry. It is critical that industry participants obtain prompt interim payment, pending a final determination of the matters in dispute.[46]

[46]Victoria, Parliamentary Debates, Legislative Assembly, 9 February 2006, 220 (Rob Hulls, Attorney General); Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd (2009) 26 VR 112, 121 [44]–[46].

The scheme of the Act has justifiably been described as ‘pay now, argue later’.[47] In Protectavale Pty Ltd v K2K Pty Ltd (Protectavale),[48] Finkelstein J stated that the SOP regime:

…places the claimant in a privileged position in the sense that he acquires rights that go beyond his contractual rights. The premise that underlies the legislation is that cash flow is the lifeblood of the construction industry and that the principal under a construction contract should pay now and argue later.[49]
[47]Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd (2009) 26 VR 112, 121 [44].
[48][2008] FCA 1248.
[49]Ibid [7].

Reconciliation of the Civil Procedure Act 2010 (Vic) and the SOP Act

The plaintiff has applied for ‘judgment’ under s 16(2)(a)(i) of the SOP Act.[50] The precise nature of this ‘judgment’ was not identified in the plaintiff’s Summons. Nor does the Summons identify any rule of Court pursuant to which that application is brought. However, in submissions, the parties to this application both identified the nature of the plaintiff’s application as being for ‘summary judgment’. Indeed, both the plaintiff and the defendant referred to r 22 of the Supreme Court (General Civil Procedure) Rules 2015 (the SC Rules) as relevant to the plaintiff’s application in relation to s 16 of the SOP Act, without any suggestion that r 22 was in the circumstances inapplicable or inappropriate.[51]
[50]Plaintiff’s Submissions on Summary Judgment, 18 May 2018, [1].
[51]Defendant’s Submissions on Summary Judgment, [4]–[5]; Plaintiff’s Reply Submissions on Summary Judgment, 25 June 2018, [3]–[7]; Affidavit of Raymond John McCann, 25 June 2018, [5].

A central point of difference between the parties is the nature of an application for judgment under s 16(2)(a)(i) of the SOP Act as outlined at paragraph [52] below. That question cannot be resolved in the abstract. It is important to consider the procedure by which the present matter was instituted:

(a) On 29 March 2018, the plaintiff filed an Originating Process-RedCrest indorsed with a Statement of Claim. Paragraphs [6] to [12] of the Statement of Claim make a claim under s 16(2)(a)(i) of the SOP Act. Paragraphs [13] to [34] of the Statement of Claim plead a separate claim for contractual damages.

(b) On 16 May 2018, the plaintiff filed and served a Summons seeking ‘judgment’ against the defendant in relation to the claims made in paragraphs [6] to [12] of the Statement of Claim, namely the SOP Act claims. The nature of this ‘judgment’ and the basis of the application for judgment were not otherwise expressly identified in the plaintiff’s Summons.

The Originating Process

Rule 4.05 of the SC Rules requires applications under s 16(2)(a)(i) of the SOP Act to be commenced by way of originating motion:

A proceeding shall be commenced by originating motion…
(b)where by or under any Act an application is authorised to be made to the Court…[52]

[52]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 4.05.

If there are issues beyond the scope of s 16(2)(a)(i), the parties may seek orders that all or part of the claims pleaded in the originating motion be progressed and addressed as if commenced by writ and that any affidavits filed stand as pleadings.[53]
[53]Ibid r 4.07.

If there are issues which are not suitable for an application for judgment under s 16(2)(a)(i) of the SOP Act, a moving party is permitted to bring separate proceedings.

As earlier mentioned, the overarching position established by s 47 of the SOP Act is that determinations under the Act for the recovery of progress payments do not affect other proceedings arising under the construction contract. In subsequent proceedings before a court or tribunal (including an arbitral tribunal) under the same construction contract, the SOP Act enables an allowance or restitution to be made for an amount paid under Part 3 of the Act, as the case may require.[54]
[54]Section 47 of the SOP Act contemplates that subsequent civil proceedings between the parties will finally determine their positions.

Formerly, under the SC Rules, summary judgment was not available in proceedings commenced by originating motion.[55] That may have informed the requirement that applications for judgment made under specific statutes with unique procedures be commenced by originating motion. Now, however, that restriction does not apply,[56] and the requirement has less procedural significance.
[55]Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 22, as amended by Supreme Court (Chapter 1 Summary Judgment Amendment) Rules 2015 (Vic) r 4.
[56]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 22.01; Civil Procedure Act 2010 (Vic) s 4; Gurappaji v Tonkin [2015] VSC 177.

Plaintiffs may commence a proceeding to recover a payment claim under the SOP Act by writ. However, in the usual course, an application for summary determination, such as pursuant to s 16(2)(a)(i) of the SOP Act, would be commenced by originating motion supported by affidavit.[57]
[57]The same conclusion was reached by Judge Woodward in SJ Higgins Pty Ltd v The Bays Healthcare Group Inc [2018] VCC 805 at [26]; cf 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674 [49].

Relevant Principles for Summary Judgment

Rule 22 of the SC Rules appears to provide for the sole procedural avenue for an application for summary judgment. That Order aligns the test for summary judgment under the SC Rules with and refers to the relevant test under the summary judgment provisions of Part 4.4 of the Civil Procedure Act 2010 (Vic) (the CPA).

Part 4.4 of the CPA relevantly provides:

61. Plaintiff may apply for summary judgment in proceeding
A plaintiff in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a defendant's defence or part of that defence has no real prospect of success.
63. Summary judgment if no real prospect of success
(1)Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.
(2)A court may give summary judgment in any civil proceeding under subsection (1)—
(a)on the application of a plaintiff in a civil proceeding;
(b)on the application of a defendant in a civil proceeding;
(c)on the court's own motion, if satisfied that it is desirable to summarily dispose of the civil proceeding.

64. Court may allow a matter to proceed to trial
Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because—
(a)it is not in the interests of justice to do so; or
(b)the dispute is of such a nature that only a full hearing on the merits is appropriate.

Rule 22 of the SC Rules relevantly provides:

Summary judgment
Part 1—General
22.01   Scope of Order
This Order applies to all civil proceedings in the Court to which, in accordance with section 4 of the Civil Procedure Act 2010, that Act applies.
Part 2—Application by plaintiff for summary judgment
22.03   Application by plaintiff for judgment
An application under section 61 of the Civil Procedure Act 2010 by a plaintiff in a civil proceeding for summary judgment in the proceeding shall be made in accordance with this Part of this Order.
22.04   Summons and affidavit in support
(1)An application shall be made by summons supported by an affidavit—
(a)verifying the facts on which the claim or the part of the claim to which the application relates is based; and
(b)stating that in the belief of the deponent the defence to the claim or the defence to the relevant part of the claim—
(i)has no real prospect of success; or
(ii)has no real prospect of success except as to the amount of the claim or as to the amount of the relevant part of the claim.

Where the plaintiff can demonstrate that the defendant’s case in defence lacks a real prospect of success, the Court may enter judgment summarily without a full trial.

In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd,[58] Warren CJ and Nettle JA made the following observations in relation to the test for summary judgment under the CPA:

Upon the present state of authority:
(a)the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a “real” as opposed to a “fanciful” chance of success;
(b)the test is to be applied by reference to its own language and without paraphrase or comparison with the “hopeless” or “bound to fail test” essayed in General Steel;
(c)it should be understood, however, that the test is to some degree a more liberal test than the “hopeless” or “bound to fail” test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
(d)at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.[59]
[58](2013) 42 VR 27.
[59]Ibid 40 [35].

Requirements of the SOP Act

Section 15(4) of the SOP Act provides:

(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.

Section 16 of the SOP Act provides in relevant part:

16Consequences 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—
(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. (Underlining added)

Subparagraphs (a) and (b) of s 16(4) set the parameters of the cause of action under s 16(2)(a)(i) and identify requirements for engaging the Court’s power to enter judgment for the plaintiff. In particular, s 16(4)(a)(ii) precludes the Court from giving judgment for the claimant in respect of any ‘excluded amount’ as defined by the SOP Act. Subsection 16(4)(b) also prevents any contractual defence or cross-claim being brought or raised against the applicant’s claim for judgment on the debt created by the receipt of a valid payment claim and the failure to the recipient of the payment claim to provide a payment schedule under the SOP Act.

Notwithstanding s 16(4)(b), it is open to a respondent to ‘deny’ the existence of the facts that engage the Court’s power to enter judgment.

If the plaintiff applies for ‘summary judgment’ the Court should apply the test prescribed in s 61 of the CPA and follow the procedure in r 22 of the SC Rules, to determine whether the defendant has no real prospect of success in challenging the claimed entitlement to judgment under s 16(2)(a)(i) of the SOP Act.

The challenges that could be raised by the defendant include the following that:

(a) there was no ‘construction contract’ as defined in the SOP Act;[60]
[60]See, eg, Suprima Bakeries Pty Ltd v Australian Weighing Equipment Pty Ltd [2016] NSWSC 998 (McDougall J); Fifty Property Investments Pty Ltd v Barry J O’Mara [2006] NSWSC 428 (Brereton J).

(b) there was no ‘reference date’ as required under the SOP Act;[61]

(c) the documentation constituting the payment claim does not meet the formal requirements of the SOP Act;[62]

(d) the claimant cannot otherwise satisfy the requirements of s 16(1)(a)[63] and (b) and s 16 (4)(a)(i) of the SOP Act.[64]

[61]See, eg, Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340, 361; Green Suburban Pty Ltd v Vita Built Pty Ltd [2018] VSC 330 [43]–[47] (Kennedy J).

[62]See, eg, Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248 (Finkelstein J); Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 (Vickery J).

[63]Failure to provide the payment schedule triggers liability under s 16(2)(a)(i).

[64]See eg, Maxstra Constructions Pty Ltd v Gilbert [2013] VSC 243 (Vickery J); Seabay Properties Pty Ltd v Galvin Construction Pty Ltd [2011] VSC 183 (Vickery J); SSC Plenty Road Pty Ltd v Construction Engineering (Aust) Pty Ltd [2015] VSC 631 (Vickery J).

Nature of ‘Summary’ Judgment under the SOP Act

The plaintiff’s submissions track the statutory requirements to recover a payment claim. In its written submissions responding to the plaintiff’s application, the defendant states:

Although the plaintiff’s summons dated 16 May 2018 fails to properly identify the grounds of its application, it is obviously an application for summary judgment under rule 22 and s 16(2)(a)(i).[65]

[65]Defendant’s Submissions on Summary Judgment, [4] (emphasis added).

The defendant also referred to the following observation of Vickery J in Phoenix International Group Pty Ltd v Resources Combined No 2 Pty Ltd (No 2) (Phoenix International): [66]

In cases where application is made for the entry of judgment pursuant to s 27 of the Old Act, in my view it is appropriate to approach the matter by applying the closely analogous procedure for entry of a summary judgment pursuant to O 22 of the Rules of Court.[67]

[66]T25.12–14; [2009] VSC 459.

[67]Phoenix International Group Pty Ltd v Resources Combined No 2 Pty Ltd (No. 2) [2009] VSC 459 [21].

The procedure under s 16(2)(a)(i) has also been described as ‘summary’ by the Victorian Court of Appeal in Façade Treatment Engineering Pty Ltd (in liq.) v Brookfield Multiplex Constructions Pty Ltd (Façade).[68]
[68](2016) 116 ACSR 493; [2016] VSCA 247 [56], [92], [112].

In its reply submissions, the plaintiff states:

Insofar as VicRoads’ submissions refers to the summary judgment test under s 63 of the Civil Procedure Act 2010, that test is essentially uncontroversial … So whatever “caution” is to be exercised in making an order for summary judgments in other contexts, an application for summary judgment under s 16 of the Act (which also expressly limits the matters a defendant can raise by defence) is governed by the Purpose and Object of the Act, respectively stated in ss 1 and 3 thereof.[69]

[69]Plaintiff’s Reply Submissions on Summary Judgment, [7].

The submissions of the parties on this aspect are in essence as follows:

(a) the plaintiff submits that the s 16(2)(a)(i) is a specific regime for summary judgment under the SOP Act, which either partially or wholly displaces the operation of the general regime of the CPA in these circumstances;

(b) the defendant submits that, by reason of the decision of Vickery J in Phoenix International,[70] the general summary judgment test in r 22 of the SC Rules informs the relevant considerations attending the Court’s power to enter judgment under s 16(2)(a)(i) of the SOP Act.[71]

[70]Phoenix International Group Pty Ltd v Resources Combined No 2 Pty Ltd [2009] VSC 459.

[71]Rule 22 of the SC Rules provides guidance for the application of the test in ss 61 and 63 of the CPA.

Accordingly, the two relevant bodies of legislation to be considered are:

(a) the procedure for an application for ‘judgment’ under s 16(2)(a)(i) of the SOP Act. The SOP Act provides that if certain conditions are satisfied (such as a valid payment claim, the absence of a payment schedule and the absence of an excluded amount), the Court is required to enter judgment for the amount of the payment claim for the plaintiff;

(b) the regime for an application for ‘summary judgment’ under s 61 of the CPA and r 22 of the SC Rules. Such an application can be made in all proceedings to which the CPA applies.

The undifferentiated use of the term ‘summary’ can be confusing. Ordinarily, ‘summary’ describes the expeditious disposition of a claim without a full trial. In this respect, given the SOP Act provides an interim mechanism to facilitate the payment of payment claims, the description ‘summary’ is particularly apt to describe the procedure for entering judgment under s 16(2)(a)(i) of the SOP Act. Such a description accords with the purpose and object of the SOP Act referred to above.[72]
[72]Reasons for Judgment, [28].

However, ‘summary’ also describes the process of ‘summary judgment’; an interlocutory process facilitating the Court’s disposal of unmeritorious claims and defences that have ‘no real prospect of success’.

Notwithstanding that it is intended to be resolved expeditiously, and gives rise to only interim entitlements which are subject to allowance and restitution in future civil proceedings,[73] the claim and procedure for entering judgment under s 16(2)(a)(i) of the SOP Act is treated analogously to any other civil claim to which the CPA applies. That is to say, the plaintiff can apply for ‘summary judgment’ under s 61 of the CPA on its claim under s 16(2)(a)(i) of the SOP Act, and the plaintiff should succeed on such an application if the defendant’s defence to that claim has ‘no real prospect of success’.
[73]Building and Construction Industry Security of Payment Act 2002 (Vic.) (‘SOP Act’) s 47(3).

I see no justification for displacing one of the regimes under consideration in favour of the other. The two statutes, namely the SOP Act and the CPA, and the regimes which they establish, although fulfilling different functions, are capable of being construed in a harmonious manner and operating in a complementary way.

Section 16(2)(a)(i) of the SOP Act gives rise to a substantive cause of action. Like many other causes of action, statutory or otherwise, s 16(2)(a)(i) sets parameters for what can be argued by the parties in relation to an application for judgment under s 16 of the Act. These parameters are limited by s 16, and in particular s 16(4)(b).

Sections 61 and 63 of the CPA, and r 22 of the SC Rules, provide a procedural mechanism and a test to determine whether summary judgment may be entered in respect of a cause of action.

In my view, the Court of Appeal’s use of the term ‘summary’ in Façade does not amount to it holding, nor does it necessarily suggest, that an application for judgment under s 16(2)(a)(i) is attended by identical considerations to an application for summary judgment under s 61 of the CPA.

If an applicant such as the plaintiff in this proceeding applies for ‘summary judgment’ under s 16(2)(a)(i) of the SOP Act, the applicant must however demonstrate that the defendant’s case in defence to the application has no real prospect of success. That is the summary judgment test established by the provisions of the CPA. The application will be brought via r 22 of the SC Rules. In this setting the onus is on the applicant as the moving party.[74]
[74]This accords with the approach taken by Judge Woodward in SJ Higgins Pty Ltd v The Bays Healthcare Group Inc [2018] VCC 805.

If the plaintiff’s application for summary judgment is unsuccessful, there may as is the case with any other civil claim if the applicant’s claim is pursued, be a trial as to whether the requirements of s 16(2)(a)(i) of the SOP Act have been satisfied. If judgment is entered on a successful application under s 16 of the SOP Act the outcome will nevertheless be of an interim nature.

Accordingly, if the plaintiff applies for ‘summary judgment’ under s 16 of the SOP Act, the Court should apply the test referred to in s 61 of the CPA and follow and apply the procedure and approach prescribed in r 22 of the SC Rules in determining whether the requirements of s 16 of the SOP Act have been satisfied and whether a defendant’s defence(s), here based on one or more of the limited challenges identified below in relation to s 16 of the SOP Act, have any real prospect of success.[75]
[75]SJ Higgins Pty Ltd v The Bays Healthcare Group Inc [2018] VCC 805 at [27]-[29].

Questions for Summary Judgment

In light of the parties’ submissions, the following questions in particular, in addition the defendant’s pleading related complaints, arise for determination on the plaintiff’s application for summary judgment, namely whether the defendant has any real prospect of success in arguing that PC 16:

(a) was not supported by a reference date (the reference date objection);[76]

(b) does not satisfy the formal requirements of the SOP Act (the formal requirements objection); and

(c) includes an amount which is an ‘excluded amount’ under the SOP Act (the claimable variations objection).

[76]Having moved for summary judgment, the plaintiff accepts that it has the onus of proving that the defendant has no real prospect of success. Defendant’s Submissions on Summary Judgment, [25]; Defendant’s Supplementary Submissions on Summary Judgment, [23]; T21.28–22.12 (Robins QC); T39.8–10 (Scott QC).

The Plaintiff’s Application for Summary Judgment

Under s 16 of the SOP Act, I consider that the plaintiff’s summary judgment application should be determined on the balance of probabilities on the basis of whether the plaintiff has established that the circumstances referred to s 16(1) of the SOP Act are shown to exist; and on the basis of whether I am satisfied that the plaintiff’s claim does not include an excluded amount as defined by s 10B of the SOP Act and that the matters raised against the plaintiff’s claim for judgment under s 16 of the SOP Act by the defendant have no real prospect of success.

Reference Date Objection

The entitlement to a progress payment under the SOP Act accrues on a ‘reference date’ under the parties’ construction contract, or in certain circumstances by force of the provisions of the SOP Act.[77]
[77]SOP Act, s 9(1), and s 9(2)(b)(c) and (d).

It has been suggested that the validity of the payment claim does not require identification of the reference date in the payment claim.[78] However, under the New South Wales equivalent to the Victorian Act, in Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd,[79] the High Court of Australia held that the existence of a reference date is a precondition to making a valid payment claim.[80] This interpretation of the Act has been applied to various security of payment regimes across Australia,[81] including Victoria.[82]
[78]Trustee for Allway Unit Trust (t/as Westside Mechanical Contracting Pty Ltd) v R&D Airconditioning Pty Ltd [2018] SASC 46 [129] (Doyle J).
[79](2016) 260 CLR 340.
[80]Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340, 361.
[81]See, eg, Pinnacle Construction Group Pty Ltd v Dimension Joinery & Interiors [2018] NSWSC 894 [17]–[18] (Stevenson J); Trustee for Allway Unit Trust (t/as Westside Mechanical Contracting Pty Ltd) v R&D Airconditioning Pty Ltd [2018] SASC 46 [129] (Doyle J); Watkins Contracting Pty Ltd v Hyatt Ground Engineering Pty Ltd [2018] QSC 65 [54] (Brown J).
[82]Green Suburban Pty Ltd v Vita Built Pty Ltd [2018] VSC 330 [43]–[47] (Kennedy J). It is particularly apposite given the Victorian legislation was modelled on the New South Wales legislation. See Victoria, Parliamentary Debates, Legislative Assembly, 21 March 2002, 427 (Mary Delahunty).

Here, if there is no applicable ‘reference date’ under the SOP Act, the payment claim on which the plaintiff seeks judgment under s 16(2)(a)(i) of the SOP Act will be invalid and the plaintiff’s application for summary judgment will be unsupported in that critical respect.

Determining a Reference Date

The Act prescribes different methods for determining a reference date. Essentially, for specific items of work or the provision of specific goods and services under a construction contract, the SOP Act provides that a ‘reference date’ is to be determined in accordance with the terms of the parties’ contract.[83] The means of determining the ‘reference date’ can be either by reference to the date on which a progress payment claim may be made,[84] or the date by reference to which the amount of a progress payment is to be calculated.[85]
[83]SOP Act, s 9(2).
[84]SOP Act, s 9(2)(a)(i).
[85]SOP Act, s 9(2)(a)(ii).

Where the subject construction contract makes no provision for a reference date, the SOP Act deems the first reference date to occur twenty business days after the date on which construction work was first carried out, or goods and services were first supplied under the contract, and also deems further reference dates to have occurred every twenty business days thereafter.[86] There are exceptions in the cases of ‘single or one-off payments;’[87] and for a ‘final payment’.[88]
[86]SOP Act, s 9(2)(b).
[87]SOP Act, s 9(2)(c).
[88]SOP Act, s 9(2)(d).

Contractual Framework for a Reference Date

Parties cannot ‘contract out’ of statutory entitlements to progress payments under the SOP Act.[89] Any provision in a construction contract that purports to exclude modify or restrict the operation of the SOP Act or which could be ‘reasonably construed’ as attempting to deter a person from taking action under the SOP Act is void.[90]
[89]SOP Act, s 48(1).
[90]SOP Act, s 48(2).

However, subject to the requirement that the parties’ statutory entitlements are preserved, parties are afforded the contractual freedom to adopt ‘any particular mechanism for determination of progress payments’,[91] because the ‘framework of the SOP Act is to create a statutory system alongside a contractual regime’.[92] In this regard it was aptly stated that the statutory progress payment regime should ‘underwrite’ the parties’ contractual entitlements.[93]
[91]TransGrid v Siemens [2004] NSWSC 116 [21] (Macready AsJ).
[92]Beckhaus v Brewarrina Council [2002] NSWSC 960 [60] (Macready AsJ).
[93]Quasar Constructions v Demtech Pty Ltd [2004] NSWSC 116 [21] (Barrett J).

The construction contract in this instance provides the following in relation to reference dates:

S17.1.1 Payment claims
Unless otherwise provided in the Contract, the Contractor shall submit to the Superintendent a payment claim stating that it is made under the Security of Payment Act, in a form satisfactory to the Superintendent, every month, at a date to be agreed at the first site meeting, (the reference date for the purpose of the Security of Payment Act), showing the contract value of the work carried out in performance of the Contract and incorporated in the Works together with the requisite statutory declarations. If the date for a payment claim falls due on a day which is not a business day, the Contractor shall submit the payment claim on the next business day following that date.[94]
[94]CB274.
S17.3 Practical Completion Payment Claim and Payment
Within fifty-six (56) days of the issue of the Certificate of Practical Completion, or where there is more than one, the last to be issued, the Contractor shall provide the Superintendent with a Practical Completion Payment Claim and endorse it “Practical Completion Payment Claim”.
In addition to claims for payment required to be included in a payment claim under Clause S17.1.1, the Contractor shall include in the Practical Completion Payment Claim all claims for moneys that the Contractor considers to be due from the Corporation arising out of any alleged breach of the Contract. Subject to the following paragraph, all claims which could have been made under Clause S17.1 or this Clause S17.3 or any other clause of the Contract, which have not already been barred, shall be barred after the expiration of the period for lodging a Practical Completion Payment Claim.
During the Defects Liability Period the Contractor may make further claims for payment but (other than the Practical Completion Payment Claim) solely in respect of work required to be performed during the Defects Liability Period.[95]

[95]CB275–76.

The minutes of the parties’ first site meeting on 19 November 2015 evidence their agreement that progress payments would be submitted on the twenty-fifth day of each month.[96] Both parties accepted that this evidence satisfied the requirement for an ‘agreement’ in cl S17.1.1.[97]
[96]CB1199; T8.15–T9.4.
[97]T8.15–9.6 (Robins QC); T31.2–6 (Scott QC).

On 11 April 2017, the defendant recognised that Practical Completion of the Works was achieved on 22 March 2017.[98] This engaged clause S17.3 of the construction contract.
[98]CB647.

Upon the achievement of the practical completion of the works, the contractually defined DLP under the construction contract ran for twelve months from the date of practical completion, and as earlier noted, at the earliest concluded in March 2018.

Thus, between 22 March 2017 and 22 March 2018, in addition to the Practical Completion Payment Claim, the plaintiff was able to make further claims for payment, but this type of claim was restricted to a claim ‘solely in respect of work required to be performed’ during the DLP.[99]
[99]CB275–76; Construction Contract, S17.3 (paragraph three).

The meaning and application of that italicised phrase above is in issue on this application and requires determination. Because service was effected on 28 September 2017 at the latest,[100] there is no doubt that PC 16 was served during the DLP. Issues however remain, including as to whether during the DLP, and furthermore after the time specified for the payment claim required by cl S17.3 (paragraph one) to be endorsed ‘Practical Completion Payment Claim’, the Contractor is permitted to make any payment claim other than solely in respect of work required to be performed during the DLP.
[100]T12.20–26; CB707; cf CB708 (date of the payment claim erroneously reads ’15-Sep-17’).

Submissions – Reference Date
Plaintiff’s Submissions

The plaintiff interprets the construction contract as providing for three schemes in relation to the identification of reference dates, namely:

(a) ‘normal’ progress payment claim reference dates under clause S17.1.1;[101]

(b) a practical completion reference date under the first and second paragraphs of clause S17.3;[102] and

(c) the further reference date after the commencement of the DLP, in respect of a further entitlement to progress payments during the DLP under the third paragraph of clause S17.3.[103]

[101]T56.7–8.

[102]T56.8–9.

[103]T56.10–18.

The plaintiff submits that PC 16 was compliantly served pursuant to the third reference date scheme referred to above.[104] Further, the plaintiff submits that:

(a) a reference date occurred on 25 September 2017.[105] The plaintiff also observed that the third paragraph clause S17.3 does not expressly set a reference date for DLP claims.[106] Even so, the plaintiff contended that, reading the contract ‘harmoniously as a whole’, the parties’ agreed to set the twenty-fifth day of each month as the reference date applicable to payment claims for work performed during the DLP;[107]

(b) the work claimed had been properly identified as ‘defects’. The construction contract permitted the defendant to issue a ‘Certificate of Practical Completion’ requiring the plaintiff to rectify certain omissions and defects within the DLP.[108]

[104]T12.21–26.

[105]T58.28–59.4.

[106]T56.10–13.

[107]Plaintiff’s Reply Submissions on Summary Judgment, [9]; T56.10–18.

[108]Plaintiff’s Reply Submissions on Summary Judgment, [9].

The plaintiff submits that the work claimed in PC 16 had been identified in the Certificate of Practical Completion as work to be performed.[109] Accordingly, the plaintiff submits, that work is claimable in accordance with clause S17.3 and relevant provisions of the SOP Act because it is in respect of work required to be performed during the DLP.[110]
[109]CB068.
[110]CB276; Plaintiff’s Reply Submissions on Summary Judgment, [9].

Specifically, the work identified in the Certificate of Practical Completion as ‘defects and omissions’ was to ‘complete test results for painting’, to ‘complete test results for concrete repairs’ and to provide ‘as built drawings’.[111] The plaintiff’s General Manager deposes that the plaintiff performed and claimed for these works during the DLP.[112]
[111]CB647.
[112]CB068–069 [16]–[21].

The plaintiff contends that, even if it were the case that the subject works ought to have been performed prior to practical completion, or that the plaintiff had made claims previously for these works for which it had not been paid, this does not alter the position that a relevant applicable reference date provided for by the third paragraph of clause S17.3 exists in relation to these works.[113]
[113]Plaintiff’s Reply Submissions on Summary Judgment, [13].

In relation to the three items of work referred to above, Counsel for the plaintiff acknowledged a typographical error in PC 16, which claimed a ‘nil’ amount for the ‘as constructed drawings’.[114] Counsel for the plaintiff also stressed that the amount which should have been claimed in PC 16 in relation to ‘as constructed drawings’, had not been previously claimed by the plaintiff in earlier progress claims,[115] and further submitted that, in any event, the defendant was in a position to identify the error and to understand the documentation associated with this part of the claim.[116]
[114]T7.27–8.7.
[115]T8.1–2.
[116]T8.3–7.

In substance, on the plaintiff’s submissions, the defendant ‘must live with the consequences’ of electing not to contest the subject payment claim by serving a payment schedule.[117]
[117]T17.8–13.

The plaintiff also argues that once a reference date arises pursuant to the terms of the construction contract, as the plaintiff argues it does here during the DLP, a claimable variation can be included in any payment claim made in relation to that reference date by reason of s 10(2) of the SOP Act.[118]
[118]T11.5-10; T12.20-26.

Defendant’s Submissions

The defendant submits in substance that the contract contemplates two types of payment claim in relation to the DLP, namely:

(a) a payment claim for work up to the date of practical completion; and

(b) a payment claim for work solely required to be performed during the DLP.

The defendant submits that:

(a) the practical completion payment claim ‘picks up all work that has been done and was claimable at the date of that claim’;

(b) subsequent DLP claims should not be interpreted as having the same function as a Practical Completion payment claim. Instead, DLP claims pick up a limited type of claim which is completely different to a claim which can be made under cl 17.1.1; and

(c) to be claimable under a DLP progress claim, work must be ‘solely required’ during the DLP, such as a claimable variation, or work prescribed in the contract as performable during the DLP.

The defendant rejects the existence of a relevant reference date in relation to PC 16. On the defendant’s submission, there are only two schemes in the construction contract for the identification of a reference date following practical completion:

(a) the first is the agreed reference date referred to in clause S17.1.1 of the construction contract at which a payment claim may be made for all work completed prior to the date of practical completion. This claim must be served within either fifty-six days following the practical completion certificate, or three months and fifty-six days following the practical completion certificate (applying s 14(a) of the SOP Act).[119]

[119]Defendant’s Supplementary Submission on Summary Judgment, [5]–[13].

The defendant submits that the correct timeframe is a question of construction, however even if the relevant period was three months and fifty-six days, being the more generous timeframe, the plaintiff’s right to serve a payment claim under this first scheme lapsed on 6 September 2017.[120]

(b) the second scheme allows a payment claim for work completed during the DLP. The defendant emphasises that the scope of this payment claim is limited by cl S17.3 to a payment claim ‘solely in respect of work required to be performed during the Defects Liability Period’.[121]

Under the second scheme, the defendant points out that s 9(2) of the SOP Act sets default reference dates in the absence of an express agreement between the parties.[122]

[120]Ibid [11].

[121]Ibid [18].

[122]T33.3–8.

The defendant submits that the contractual provision in relation to the submissions of payment claims during the DLP does not extend to ‘all work that happens to be done in the 12 months following practical completion’.[123]
[123]Defendant’s Supplementary Submission on Summary Judgment, [18] (emphasis in original).

Instead, the defendant submits that the phrase ‘solely in respect of work required to be performed’ is directed to work other than what is first required after practical completion.[124] In this way, cl S17.3 of the construction contract contemplates ‘specific’ items of work that will be performed during the DLP. In a practical sense, the term ‘solely’ contemplates that something extraneous to the parties’ initial agreement, such as a variation, could be required during the DLP and would properly be the subject of a cl S17.3 type payment claim.[125]
[124]Ibid.
[125]Ibid.

The defendant also submits that the plaintiff’s interpretation of the provision for claims during the DLP does ‘the work that the practical completion payment claim is plainly intended to achieve’.[126]
[126]T32.2–6.

The defendant acknowledges that the contract contemplates ‘as constructed drawings’ would be produced by the plaintiff during the DLP after practical completion.[127] It submits, however, that there was no claim for these works in PC 16,[128] because a ‘nil’ amount appeared in the ledger appended to the claim.[129]
[127]T34.24; CB311.
[128]Defendant’s Supplementary Submission on Summary Judgment, [20].
[129]T36.3–9.

The defendant submits that no claim for this work can be inferred.[130] Even if the claim for ‘nil’ was a typographical mistake, the effect of a failure to claim ‘as constructed drawings’ is to deprive PC 16 of a reference date during the DLP.[131] This is considered in more detail under ‘Formal Requirements Objection’ below.
[130]Defendant’s Supplementary Submission on Summary Judgment, [19]–[20].
[131]T36.13–22.

The defendant also points out that annotations in PC 16 suggest most of the other claimed work was completed before practical completion.[132] Therefore, the defendant submits failure to claim the ‘as constructed drawings’ prevents the plaintiff from ‘piggy-backing’ on a reference date that might otherwise have been available,[133] and thus precludes finding that the work is claimable under a reference date falling within the DLP.[134]
[132]T37.11–31; CB1147; CB1149.
[133]T38.27–39.3.
[134]T38.27.

Notably, as pointed out by Counsel for the plaintiff, the defendant did not address the plaintiff’s evidence that it completed the ‘test results for painting’ and ‘test results for concrete repairs’ elements of incomplete work which were identified in the Certificate of Practical Completion.[135] On the defendant’s view of the scheme of the construction contract, it seems those claims could only have been made under a post-practical completion payment claim and are thus barred.[136]
[135]T56.19–T57.
[136]Defendant’s Submissions on Summary Judgment, [19].

In summary, the defendant’s submission in relation to the existence of a valid post practical completion ‘reference date’ is that no valid reference date can be identified in relation to PC 16 because payment claims for post practical completion work are not permitted, save in respect of narrowly defined works ‘solely’ required during the DLP, that do not extend to what was claimed in PC 16.

The defendant also impugns the plaintiff’s pleading in relation to a reference date. This is part of the defendant’ case addressed below in connection with the defendant’s Strike Out Application.

Plaintiff’s Reply Submissions

Counsel for the plaintiff submitted that items in the payment claim were made in respect of ‘defects’ claimable during the DLP.[137] The plaintiff rejected the defendant’s focus on the ‘as constructed drawings’ as the only claimable ‘defect’.[138] Counsel for the plaintiff observed that the construction contract also required the plaintiff to provide test results, as referred to in the Certificate of Practical Completion, at the request of the Superintendent.[139] The plaintiff also submits that non-fulfilment of this contractual requirement prior to practical completion amounted to a ‘defect’.[140]
[137]T57.16–26.
[138]T56.19–27.
[139]CB309; CB311.
[140]T57.16–26.

Considerations – Reference Date

The central questions to be considered in relation to whether the defendant’s defensive contentions have a real prospect of success are, in essence, the likely meaning and application of cl S17.3 of the construction contract including the following phrase: ‘solely in respect of work required to be performed during the Defects Liability Period’ in the third paragraph of that clause.

The Certificate of Practical Completion dated 11 April 2017 was relevantly in the following terms:[141]
[141]CB647.

Vicroads CERTIFICATE OF PRACTICAL COMPLETION
Issued pursuant to Sub-clause S17.2 of the General Conditions of Contract for Road and Bridge Works 1994
499 Ballarat Road
Sunshine VIC 3020
Date: 11/04/17

CONTRACT NO. 9061
CONTRACT DESCRIPTION: Strengthening and other associated maintenance works to Wallan Road Bridge over the Yarra River, Hawthorn
CONTRACTOR’S NAME: John Beever
CONTRACTOR’S ADDRESS: 174 Turner Street,

Port Melbourne, Vic 3207

I hereby certify that the Date of Practical Completion of the Works under the above Contract was 22/03/17 and that the Defects Liability Period referred to in Clause 37 commenced on that date.
The Defects Liability Period is 12 months unless it is extended; the due date for the issue of the Final Certificate is 22/03/18.
During the Defects Liability period the following omissions and defects shall be rectified.

DESCRIPTION

MISCELLANEOUS

1.   Complete test results for the painting

2.   Complete test results for the concrete repairs

3.   As-Build Drawings

DEBBIE FINDLEY
DIRECTOR OPERATIONS

The above Certificate of Practical Completion:

(a) expressly requires certain work to be performed by the plaintiff, namely:

(i) complete test results for the painting

(ii) complete test results for the concrete repairs

(iii) as-build drawings; and

(b) expressly requires that the said work to be performed during the DLP .

Accordingly, in my view, the three items of work, namely:

(a) complete test results for the painting;

(b) complete test results for the concrete repairs; and

(c) as-build drawings

referred to in the ‘Description’ section of the above Certificate of Practical Completion are in the nature of work required to be performed during the DLP.

PC 16 dated 15 September 2017 was served on 28 September 2017, well after the fifty-six day timeframe in cl S17.3 of the construction contract which permitted the plaintiff to serve a Practical Completion Payment Claim.

Here both parties have treated the present application as one for summary judgment under s 61 of the CPA. Accordingly, it is incumbent on the plaintiff, in addition to its positive proofs under s 16 of the SOP Act referred to above, and any formal requirements of r 22 of the SC Rules, to demonstrate that the defendant’s case in defence of the plaintiff’s claim for summary judgment has ‘no real prospect of success’.

In my view, the present case is one in which the defendant has a real prospect of success in defending the plaintiff’s claim under s 16(2)(a)(i) and s 16(4)(a) of the SOP Act in relation to the reference date objection, the formal requirements objection and the claimable variations objection in relation to excluded amounts. Thus, the present case is not appropriate for summary judgment.

I have come to this decision, dealing first with the reference date objection, for the following reasons:

(a) The plaintiff submitted that there was an available reference date under cls S17.1.1 and S17.3 of the construction contract which founded PC 16 because John Beever had been required to perform the work, including in relation to As-Constructed Drawings, that was identified in the Certificate of Practical Completion.[142]
[142]Plaintiff’s Reply Submissions on Summary Judgment, [9], [11], [12].

(b) The defendant made a number of the cogent and plausible arguments against the plaintiff’s submission in this respect. One such argument is that the asserted reference date sought to be relied on in the DLP applied ‘solely’ to work required to be performed during the DLP, whereas the As-Constructed Drawings were defects within the original scope of work under the contract.[143]
[143]Reasons for Judgment [107], [108]-[113].

(c) Another cogent and plausible argument mounted by the defendant is that the plaintiff did not make a claim in relation to As-Constructed Drawings in PC16 in any event.[144] The defendant submits that this factual position, which was not seriously contested by the plaintiff, should prevent the plaintiff from being able to rely upon a reference date in the DLP as the basis for claiming either payment in relation to providing As-Constructed Drawings, or any other items of work claimed by PC 16, which included the plaintiff’s claim for $211,622.32 for the non-agreed welding procedure related variation works.[145]
[144]Refer Reasons for Judgment [113] and [120].
[145]Reasons for Judgment [113], [126] and [127].

(d) In respect of each of the defendant’s arguments referred to above, as outlined below I am not satisfied the defendant’s case is devoid of any real prospect of success.

(e) Further, the connection between the welding work (comprising $211,000 of the $290,000 claim) and the asserted reference date(s) on which the plaintiff relied is unclear and arguably against the plaintiff’s position. The defendant submits that the plaintiff’s entitlement to claim these works, pursuant to a reference date, was curtailed during the DLP. In response, the plaintiff only asserts that there were multiple reference dates and at least one ought to be sufficient.

(f) The plaintiff also submits that:

Accordingly, as long as the plaintiff attended to some part of the defects as identified by VicRoads at ex.RJM576 (whatsoever their nature) during the Defects Liability Period prior to 25 September 2017, then under clause S 17.3 that triggered a further reference date under the Contract and thereby also the Act, which in turn invoked the potential right under s.14(9).[146]

However, the question remains: whether Practical Completion, and specifically the provision for a final claim post practical completion, referred to in the first paragraph of cl S17.3, extinguished or altered the right to make regular payment claims. In my view the plaintiff could not demonstrate that the defendant had no real prospect of success on this point.

[146]Plaintiff’s Reply Submissions on Summary Judgment, [13].

I consider that it is at least strongly arguable that the effect of cl S17.3 is as follows:

(a) following certification of Practical Completion (which occurred by Certificate of Practical Completion issued on 11 April 2017), the Contractor was to provide a specifically entitled ‘Practical Completion Payment Claim’ within fifty-six days. That claim was permitted to include:

(i) the type of payment claims earlier authorised to be made under S17.1.1 on the twenty-fifth day of each month;

(ii) all claims asserted as due from the defendant arising out of any alleged breach of the contract, subject to claims in relation to work required by the defendant to be performed during the DLP; and

(iii) all claims which could have been made under S17.1 or S17.3, or any other clause of the contract which had not already been barred, noting that cl S17.3 also provides that such claims would be barred after the expiration of the period for lodging a Practical Completion Payment Claim;

(b) during the DLP, the Contractor was entitled to make further claims for payment (other than the above Practical Completion Payment Claim), but solely in respect of work required to be performed during the DLP.

The defendant’s arguments are cogent, viable and prima facie establishes a real prospect of success in at least the following strongly arguable respects:

(a) After Certification of Practical Completion, cl S17.3 of the construction contract, replaces and renders inoperative the past monthly reference date mechanism in S17.1.1.

(b) Under cl S17.3, the plaintiff was restricted to claiming payment solely in respect of work required to be performed during the DLP, and further the plaintiff is subject to the clear time constraints provided in that clause.

(c) The plaintiff has not made an effective claim for such work, compliantly identified in PC 16, so as to engage the potential reference dates under cl S17.3, in particular because:

(i) even if the provision of As-Constructed Drawings was claimable during the DLP, the plaintiff failed to make an effective claim for this amount in PC 16 for the reasons explained below under ‘Formal Requirements Objection’; and

(ii) even if the ’Complete test results for the concrete repairs’ and ’Complete test results for the painting’ works were claimable during the DLP, it is unclear, on the present state of the evidence, whether and when those items of work were completed by the plaintiff or precisely what value the plaintiff sought to claim for those works.[147]
[147]The McCann affidavit of 22 June 2018, at [3] (CB1195-1196) and the McCann affidavit of 15 May 2018, at [17]-[20] (CB69), refer to April to September 2017 and at [21] refer to September 2018 and equivocates as to the actual completion and provision of the test results for the painting works and do not clarify the time of provision of test results for concrete works or time of completion of these works; and PC 16 no clear claim for these test result works (CB708 and CB711).

(d) The plaintiff has not submitted a Practical Completion Payment Claim as required by cl S17.3 within fifty-six days of the issue of the Certificate of Practical Completion. The plaintiff’s PC 16 payment claim is not so endorsed and was not provided within the specified time frame.

(e) The plaintiff claimed work in relation to the disputed welding claims was performed well before the DLP, and in December 2016 and January 2017.[148]

(f) Save in respect of the specific type of work solely permitted to be claimed in the DLP, by reason of the third paragraph of S17.3, the plaintiff’s claims, including its ‘non-agreed variation’ claims, are arguably barred by 15 September 2017 under the second paragraph of S17.3.[149]

(g) Further, s 10(2) of the SOP Act addresses the amount which may be claimed in relation to a progress payment entitlement. Section 10(2) of the SOP Act is however not directly material to the stipulations of the Act which establish applicable reference dates. I therefore consider that the plaintiff’s contention about its entitlement to include any claimable variation in the DLP progress claim[150] is not to the central point if, in the context of this matter, there is a real prospect of success associated with the defendant’s case that the plaintiff is unable to found its PC 16 claim on any available reference date.

[148]Affidavit of Julia McCarthy sworn 21 June 2018, [44].

[149]Certificate of Practical Completion dated 11 April 2017, plus 56 days is about 6 June 2017, well before PC 16 submitted in September 2017.

[150]T11.5-10; T12.20-26.

In short, the defendant has raised and rendered cogent a number of viable arguments for impugning the validity of PC 16 for want of a reference date. I consider that each of these aspects of the defendant’s defensive case enjoys a real prospect of success.

In addition, there are a number of further considerations militating against giving summary judgment for the plaintiff in this case.

One such consideration is that the plaintiff depends, quite emphatically, on certain interpretations of the parties’ contract and the SOP Act. That is not to say that the plaintiff may not ultimately be correct. But the crux of an argument based on interpretation is the need to resolve ambiguity. By identifying and seeking to resolve such ambiguities, the plaintiff has shown that a competing interpretation must also have some merit. For this further reason, in the respects referred to above, I am unable to conclude that the defendant’s defensive case does not have any real prospect of success.[151]
[151]Refer Reasons for Judgment [41(a), (c) and (d)], Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27.

Conclusion – Reference Date

For the above reasons, I consider that the defendant does have a real prospect of success in arguing that PC 16 was not compliant with the reference date regime created under the parties’ construction contract and the SOP Act. Accordingly, the test for summary judgement for the plaintiff has not been satisfied.

The above conclusion is in addition to my conclusions, explained below, that the defendant also has a real prospect of success in arguing that variations in the sum of $211,622.32 are excluded under s 16(4)(a)(ii) of the SOP Act, and that the provision of As-Constructed Drawings was not in fact claimed in PC 16, and that the amount claimed by the plaintiff in the sum of $52,149.14, as well as the As-Constructed Drawings claim in PC 16, were non-compliant with s 14(2) of the SOP Act.

Formal Requirements Objection

The requirements of an effective payment claim are prescribed in s 14 of the SOP Act. Section 14 provides in relevant part:

(1)A person referred to in section 9(1) who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.

(2)       A payment claim—
(a)       must be in the relevant prescribed form (if any); and
(b)       must contain the prescribed information (if any); and
(c)must identify the construction work or related goods and services to which the progress payment relates; and
(d)must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount ); and

(e) must state that it is made under this Act.

(3) The claimed amount—
(a)may include any amount that the respondent is liable to pay the claimant under section 29(4);

(b) must not include any excluded amount.

Objective Assessment

In Protectavale,[152] Finkelstein J made the following observations in relation to s 14 of the SOP Act:

The test is an objective one; that is, it must be clear from the terms of the document that it contains the required information…But the terms must be read in context. Payment claims are usually given and received by parties experienced in the building industry who are familiar with the particular construction contract, the history of the project and any issues which may have arisen between them regarding payment. Those matters are part of the context.

Please confirm this is the basis why we have rejected the weld procedure. Further, by testing the full weld height of 5mm and/or 5.5mm has verified that the weld procedure does not comply to the tensile strength requirements.
…Testing the specimens at the full plate thickness of 5mm and/or 5.5mm has verified that the weld procedure does not comply to the tensile strength requirements.[197]

[195]CB874-877; T15.28–16.4; Plaintiff’s Reply Submissions on Summary Judgment, [19](b).

[196]CB875.

[197]CB875-876.

The plaintiff submits that this email exchange accords with instructions given previously in the letter dated 10 October 2016.[198]
[198]T15.28–16.4.

McCarthy deposes that the above works, which the plaintiff says were requested, were performed between 10 October 2016 and 30 January 2017.[199]
[199]CB1147 [39].

The fourth variation was requested and directed on the plaintiff’s case by email dated 23 December 2016 from Brian Westley (Director Operations, VicRoads) (Westley) to Mr Ray McCann (General Manager, John Beever) and McCarthy.[200] In summarising a discussion which occurred the previous day, that email states in relevant part:
[200]T16.5–7; Plaintiff’s Reply Submissions on Summary Judgment, [19](c).

Hi Ray, Julia, Paul, Fred and Dennis
Thanks heaps for your time yesterday to discuss the Wallen Road Bridge project. Although we didn’t 100% resolve the matter, I thought we reached some reasonable agreements and solutions that ensure the project proceeds.
Hai will prepare a brief summary of the conversation for your records (to be sent by myself within the next week). In the interim, I have summarised the key agreements and actions:
Test procedure discussed was accepted subject to:
1.        On site supervision of the preparation
2.        Sufficient amount of buttering material placed both thickness
3.        Plates should be tight fitting
4.Ensure overwelding does not occur given the differences between strengthening plate and wrought iron angle thickness

Alternative strengthening design
1.Steve/Peter to investigate alternative strengthening design (as a back up only)

Quality Assurance
1.JBA to undertake a controlled strengthening plate welding under VicRoads observation on 23/12/16 with the weld procedure in accordance with above conditions
2.JBA to grind any cracks that appear after the controlled strengthening plate installed and some existing locations where cracking has occurred (monitor)
3.Andrew and Stewart to make assessment weather lamination or cracking is artefact or a defect that impacts structural integrity.[201]

[201]CB881–82 (emphasis in original).

Counsel for the plaintiff also submitted that the ‘directory and mandatory nature of the requirements specified in the email’ is clear and satisfied s 10A(3)(b) of the SOP Act.[202]
[202]T16.5–15.

Defendant’s Submissions

The defendant observes that there was no agreement that the work in question would constitute a variation to the plaintiff’s scope of work under the construction contract.[203] Indeed, to the contrary, the defendant submits the dispute between the plaintiff and defendant as to whether the work in question could be completed using welding methods initially outlined in the construction contract goes to the heart of this litigation.[204] For this reason, the plaintiff acknowledges that the work in question does not come within s 10A(2) of the SOP Act.[205]
[203]Defendant’s Submissions on Summary Judgment, [28].
[204]Ibid [28].
[205]T3.4–9; Plaintiff’s Reply Submissions on Summary Judgment, [18].

In relation to the first alleged variation, the defendant emphasised that the context of the letter dated 10 October 2016 was broader than that relied on by the plaintiff. Specifically, the defendant emphasised that there was an extended discussion between the parties as to how the welding required under the construction contract would comply with the applicable Australian Standard.[206]
[206]T45.22–28.

The defendant also by its submissions pointed out that, by letter dated 2 September 2016, Long wrote as follows:

VicRoads in good faith is currently reviewing the design and extent of welding required for the strengthening works on the transverse beams. However, this does not remove the requirement for John Beever to undertake welding works as per the contract specification as there is no guarantee that the design can be changed.[207]

[207]CB800.

In response the defendant noted, by letter dated 12 September 2016, McCarthy said:

Our request would be for the designers to review the design with the view of removing the requirement of welding. This request is made with mindfulness that JBA do not have design responsibility under this contract, and therefore are not authorised to make this assessment.[208]

[208]CB807.

The defendant in addition relies upon the following passage of the letter dated 10 October 2016, from Long to McCarthy, which was extracted in part above:

I also note that the requirement to develop an appropriate welding procedure in accordance with the Specification remains with JBA.[209]

[209]CB826.

In substance, the defendant submits that these communications were merely reminding the plaintiff of its existing contractual obligations to perform the welding work and develop an appropriate procedure. Put simply, the defendant was saying, ‘it’s on you’ to perform existing obligations under the contract in relation to this work.[210]
[210]T47.3–8; Defendant’s Supplementary Submission on Summary Judgment, [24].

On this basis, the defendant submits that the communications relied on by the plaintiff do not constitute ‘requests’ or ‘directions’ in relation to the relevant welding work and procedures. At best, on the defendant’s submissions, the correspondence referred to above contains suggestions as to how the plaintiff might comply with its subsisting contractual obligations,[211] and ‘reflected an ongoing discussion’ about how the plaintiff was to perform ‘its existing obligation under the specification’.[212] Further, the defendant submits that ‘every communication between a principal and a contractor can’t be a request or direction for the purposes of [the SOP Act]’.[213]
[211]Defendant’s Supplementary Submission on Summary Judgment, [24].
[212]T43.5–13.
[213]T41.20–22.

In relation to the second communication alleged to give rise to a variation, the defendant also emphasises the following passage in the email dated 13 October 2016 from Long to McCarthy which, on the plaintiff’s case, is said to give rise to a relevant request:[214]

Can you please advise JBA’s acceptance/objection to the alternative arrangement above in order to progress the work. Any cost adjustment can be discussed in further detail later on.[215]

[214]T47.20–22.

[215]CB1156.

The defendant submits that because the defendant framed the above email as a question of ‘acceptance or rejection’, rather than a question of ‘confirmation of compliance’, the Court should not find that this communication was a ‘request’ or ‘direction’ within the meaning of s 10A(3)(b) of the SOP Act.[216]
[216]T47.20–25.

The defendant also points out that a number of events intervened between the second and third alleged communication relied on by the plaintiff in relation to its variation claim. This included the communication of 5 November 2016, in which the plaintiff made a variation claim for additional welding amounting to $104,481.56.[217] Here the defendant relies upon a letter from Mr Souhail Muhammad (Acting Director Operations, VicRoads) to McCarthy, dated 16 November 2016, which rejected this claim:[218]

In summary, JBA is responsible to complete the welding of wrought iron in a manner that achieves the performance requirements of the Contract. The welding of strengthening plates to the existing wrought iron structure always formed part of the work under the Contract and cannot be considered to be additional work. It is JBA’s responsibility to develop procedures and to undertake the work in a manner that achieves the test requirements for the welds unless dispensation has been granted.[219]

[217]CB849–50.

[218]T47.30–48.12.

[219]CB854–55 (emphasis added).

Further, in relation to the third alleged variation communication, the defendant rejects that the email from Hai Luong dated 19 December 2016 contained any such request. That email relevantly stated:

Can weld procedure be submitted to conform to the requirements.[220]

[220]CB870.

The defendant submits that the above statement amounted to nothing more than a request for the performance of an existing obligation.[221]
[221]T49.20–23.

In relation to the fourth alleged communication requesting or directing a variation, the defendant highlights the phrase ‘test procedure discussed’ in the email from Westley dated 23 December 2016.[222] The defendant submits that, read in context, this communication constituted the defendant’s acceptance of a test procedure proposed by the plaintiff subject to the four enumerated conditions.[223] The defendant rejects that this amounted to a relevant request or a direction for a variation to the plaintiff under the SOP Act.
[222]T50.2–4; CB881.
[223]T50.2–8.

Ultimately, Counsel for the defendant summarised his client’s position as being that there is ‘certainly a real prospect that an argument would succeed on a fuller hearing after cross-examination, that these are not request or directions’.[224]
[224]T42.13–18.

Considerations – Claimable Variations

Section 10A(3)(b) of the SOP Act requires only that:

10A Claimable variations
(3) The second class of variation is a variation where—
(b)the person for whom the work has been carried out or the goods and services supplied or a person acting for that person under the construction contract requested or directed the carrying out of the work or the supply of the goods and services. (Underline added)

In my view, based on communications referred to above and considered in this summary judgment context, the defendant has a real prospect of success on its case that $211,622.32 is an excluded amount and that this precludes recovery of the amount claimed in PC 16. In particular, I consider the following defendant arguments are cogent and viable:

(a) given the arguably equivocal nature of the communications in question, and the nature of these communications within the above context, the defendant did not make ‘requests’ or ‘directions’ within the meaning of s 10A(3)(b) of the SOP Act;

(b) that the underlying terms of the parties’ construction contract applied and required compliance with AS1554, militates against the communications relied on by the plaintiff amounting to requests or directions to carry out the subject welding work; and

(c) the communications in question arguably provided advice to the plaintiff as to how best to comply with its subsisting contractual obligations in relation to welding work.

I again observe that the recognition of the matters referred to in the last preceding paragraph does not amount to a final determination on the parties’ contractual liability on these issues, but for present purposes gives rise to a real prospect of success on the defendant’s defensive case.

Conclusion – Claimable Variations

Accordingly, for the above reasons, I am not persuaded the defendant has no real prospect of success in establishing that the PC 16 progress claim includes an amount excluded under the SOP Act. Nor am I satisfied that the plaintiff has here satisfied s 16(4)(a)(ii) of the SOP Act.

Technical Objection to the Plaintiff’s Supporting Affidavit Material

The defendant also submits that the plaintiff’s affidavit material in support of its application for summary judgment is defective because those materials do not comply with the SC Rules and in particular Rule 22.04(1)(b).[225]
[225]Defendant’s Submissions, 28 June 2018, [3]. The defendant has referred to ‘Rule 22.03(1)(b)’ in its written submissions, this may have been intended to be a reference to Rule 22.04(1)(b).

In particular, the defendant submits that, at the time the plaintiff’s Summons seeking summary judgment was issued, the affidavit material did not expressly and formally verify the deponent’s belief that the defence to the plaintiff’s claim for summary judgment had no real prospect of success.

The plaintiff however cured this alleged defect through the affidavit of Raymund McCann sworn 22 June 2018.[226] Otherwise, the defendant does not argue that the matters referred to in the preceding paragraphs have given rise to prejudice in any respect.
[226]Affidavit of Raymund McCann, 22 June 2018, [5].

In any event, in these circumstances, I would pursuant to the Court’s inherent powers and under r 2.01(2) of the SC Rules permit the plaintiff to rely upon the affidavit of Raymund McCann sworn 22 June 2018. Further, I would dispense nunc pro tunc and alleviate any non-compliance with the relevant Supreme Court Rule from the time the plaintiff issued its Summons dated 16 May 2018.[227]
[227]Plaintiff’s Reply Submissions, 25 June 2018, [7].

The Strike Out Application

By Summons dated 18 May 2018, the defendant applies to strike out substantial components of the plaintiff’s Statement of Claim.

A strike out application is made against the following paragraphs affected by the plaintiff’s failure to plead a reference date:

6.        Practical completion of the Works was achieved on 22 March 2017.
7.On or about 11 April 2017 VicRoads issued a certificate of practical completion under the contract requiring rectification of the following omissions and defects during the defects liability period:
(a)       complete test results for the painting;
(b)       complete test results for the concrete repairs;
(c)       as built drawings.
Particulars
The certificate of practical completion was in writing. A copy may be inspected at the offices of the lawyers for the plaintiff by prior appointment.

8.Thereafter, John Beever performed work pursuant to the Agreement all of which such work was construction work or related goods and services within the meaning of the SOP Act (Works Performed).
9.On or about 15 September 2017 John Beever served VicRoads with a payment claim pursuant to the SOP Act claiming the sum of $290,148.61 (Payment Claim).
Particulars

The Payment Claim was in writing. A copy may be inspected at the offices of the lawyers for the plaintiff by prior appointment.

10.VicRoads did not serve John Beever with a payment schedule pursuant to the SOP Act in response to the Payment Claim.
11.VicRoads has failed to make any payment to John Beever in respect of the Payment Claim.
12.As a consequence VicRoads became liable to pay John Beever:
(a) the sum of $290,148.61;
(b) interest pursuant to s 12(2) of the SOP Act.

Defendant’s Submissions – Paragraphs [6] to [12]

The defendant relies upon the judgment in Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd,[228] and submits the occurrence of a reference date is akin to a jurisdictional fact.[229] The defendant submits that the plaintiff’s failure to expressly allege a reference date is fatal to the SOP Act pleading set out above.
[228](2016) 260 CLR 340.
[229]Ibid 361.

Specifically, the defendant submits that ‘it’s a question that’s fundamental that goes to the right to relief on the application and needs to be pleaded as a material fact’;[230] and ‘shoehorning’ particulars of facts giving rise to an alleged reference date into the statement of claim is entirely unsatisfactory redress for the antecedent failure to plead a material fact.[231] Here, the situation complained of by the defendant was said to be aggravated by the fact that further particulars provided by the plaintiff, said to found a reference date, were not provided ‘in respect of the payment claim’.[232] On the defendant’s submission, that has caused confusion and discordance between the pleaded facts and the particulars.[233]
[230]T26.24–28.
[231]T26.29–27.9.
[232]T29.26–30.3.
[233]T27.18.26.

The defendant further submits that the Statement of Claim (and unamended particulars) fail to describe the work alleged to be subject to its entitlement to payment under the SOP Act.[234] Further, the overlap between paragraphs [6] to [12] and the remainder of the Statement of Claim, being the breach of contract claim, prevent the defendant from appreciating the total amount that has been claimed.[235]
[234]Defendant’s Strike Out Submissions, 18 May 2018, [18].
[235]Ibid [19].

Plaintiff’s Submissions – Paragraphs [6] to [12]

Since the plaintiff expressly pleaded clause S17.3 of the construction contract elsewhere in the Statement of Claim,[236] the plaintiff submits there is ‘an aura of unreality inherent in VicRoads complaint that it somehow did/does not understand’ the plaintiff’s case as to a reference date after issue of the Certificate of Practical Completion.[237]
[236]Statement of Claim, [5(q)].
[237]Plaintiff’s Strike Out Submissions, 22 June 2018, [7].

Notwithstanding that the existence of a reference date is accepted as akin to a jurisdictional fact, the plaintiff further submits that it is not mandatory for a reference date to be expressly pleaded.[238]
[238]Ibid [7].

Finally, the plaintiff emphasises that it has filed and served further and better particulars of the facts and circumstances alleged to have given rise to the reference date applicable after the Certificate of Practical Completion.[239] The following particulars were provided by the plaintiff on 21 June 2018:
[239]Ibid [9].

2. As to paragraph 9 thereof
The reference date was 25 September 2017. The plaintiff relies in that regard upon the following matters.
(a)It was a term of the Agreement that the plaintiff shall submit to the contract superintendent a payment claim every month at a date to be agreed at the first site meeting which date shall be reference date for the purpose of the Security of Payment Act (in supplementary condition S 17.1.1 thereof).
(b)At the first site meeting it was agreed that claims for progress payments shall be submitted on the 25^th day of each month (in paragraph 1.5(a) of the minutes of the initial contract meeting);
(c)It was further a term of the Agreement that during the defects liability period under the Agreement the plaintiff may make further claims for payment (in the third paragraph of supplementary condition S 17.3 thereof).
(d)The certificate of practical completion referred to in paragraph 7 of the statement of claim required rectification of specified omissions and defects during the defect liability period.
(e)The defect liability period under the Agreement which ran for 12 months from 22 March 2017;
(f)During the defect liability period under the agreement and in particular on prior to 25 September 2017 the plaintiff performed work required to be performed during the defects liability period which work was identified in the certificate of practical completion as work required to be performed during the defect liability period.

A copy of the certificate of practical completion and the Minutes of Meeting of 19 November 2015 may be inspected by prior appointment at the offices of the plaintiff’s lawyers.

On the plaintiff’s submission, the further and better particulars are ‘more than adequate’ for the defendant to understand the case that must be met.[240]
[240]Plaintiff’s Strike Out Submissions, [9].

In oral submissions, Counsel for the plaintiff maintained that the defendant’s objection to the plaintiff’s pleadings was pedantic. He emphasised that ‘we live in the land of the Civil Procedure Act’,[241] indicated his client’s preparedness to amend the pleadings ‘in five minutes time over lunch’ if that were necessary,[242] and stressed that ‘pleadings are not a game to be played at the expense of litigants’.[243]
[241]T63.11–12.
[242]T63.12–13.
[243]T62.24–26.

Decision – Paragraphs [6] to [12]

The impugned paragraphs of the plaintiff’s Statement of Claim relate to both the SOP Act Application and breach of contract claims. However, the defendant only presses its complaint against the SOP Act pleading at paragraphs [6] to [12], and only then on the basis that no ‘reference date’ is expressly alleged in the plaintiff’s Statement of Claim.[244]
[244]T26.1-27.9.

Rule 23.02 of the SC Rules provides:

Where an indorsement of claim on a writ or originating motion or a pleading or any part of an indorsement of claim or pleading—
(a) does not disclose a cause of action or defence;
(b) is scandalous, frivolous or vexatious;
(c)may prejudice, embarrass or delay the fair trial of the proceeding; or

(d) is otherwise an abuse of the process of the Court—

the Court may order that the whole or part of the indorsement or pleading be struck out or amended.

The relevant principles in relation to Order 23.02 of the SC Rules have been explained as follows:

Under r 23.02 of the Rules, the objection is to the manner of expression of the pleading. That is, the statement of claim does not disclose the cause of action or its contents are such that it is scandalous, frivolous or vexatious, or may prejudice, embarrass or delay the fair trial of the proceeding, or is otherwise an abuse of process…The meaning of some of the important terms are:
(a)scandalous: allegations made in a pleading for the purpose only of abusing or injuring the opposite party and allegations which are indecent or offensive are scandalous within the meaning of the rule, and are liable to be struck out;
(b)frivolous or vexatious: these words in combination have traditionally been used to describe a wide variety of circumstances in which a claim is found to be groundless, or lacking a legal basis or merit; and
(c)prejudice, embarrass or delay: in general, a pleading or indorsement is embarrassing when it places the opposite party in the position that he or she does not know what is alleged against him or her. Thus, a pleading is embarrassing where it is unintelligible, or is vague or ambiguous, or is too general.[245]

[245]Annesley v Westpac Banking Corporation [2016] VSC 323 [70] (Derham AsJ).

I am not persuaded that the plaintiff’s pleading in relation to its SOP Act claim should be struck out. It is not ‘embarrassing’ within the meaning of r 23.02(c). That pleading, read with the further and better particulars provided by the plaintiff, is sufficiently comprehensible, communicates the plaintiff’s case in relation to the issues sought to be addressed in that part, and is also sufficiently compliant with the SC Rules.

Nor is the pleading ‘frivolous or vexatious’ within the meaning of r 23.02(b). The pleading articulates a cause of action under s 16(2)(a)(i). It then alleges that the plaintiff made a valid claim under s 15(4) of the SOP Act.[246]
[246]Statement of Claim, [9].

Finally, the plaintiff’s pleading alleges that the defendant is liable to pay the claimed amount under s 15(4) because it did not provide a payment schedule and has continued to fail to pay the whole of the amount.[247] There is no requirement that the plaintiff expressly plead conditions precedent to a valid payment claim or recite in any particular way the relevant provisions and operation of the SOP Act.
[247]SOP Act s 16(1)(a) and (b).

The plaintiff’s pleading is sound and sufficiently comprehensible. In my view, the plaintiff’s pleadings in paragraphs [6]-[12] are not liable to be struck out, and should not be struck out for want of an express pleading in relation to a reference date.

Conclusion

The plaintiff has applied for ‘summary judgment’ under the CPA and the SC Rules in respect of its claim under s 16(2)(a)(i) of the SOP Act. In this context, read together, the SOP Act and the CPA require the plaintiff to demonstrate that the defendant has ‘no real prospect of success’ in arguing the requirements of s 16(2)(a)(i) are not satisfied.

For the above reasons, I find that the plaintiff has failed to demonstrate the defendant has no real prospect of success in arguing that:

(a) PC 16 has no valid reference date;

(b) PC 16 includes amounts defined as excluded under the SOP Act, in respect of the non-agreed welding variation claimed in the sum of $211,622.32; and

(c) PC 16 was non-compliant with s 14(2) of the SOP Act, in respect of the claim for the provision of As-Constructed Drawings and in relation to the claimed sum of $52,149.14.

In my view therefore this is not an appropriate case for awarding summary judgment under the CPA and the SC Rules to the plaintiff, principally because the defendant enjoys a real prospect of success on the issues joined in this application.

Further, for the above reasons, I also reject the defendant’s application to strike out paragraphs [6] to [12] of the Statement of Claim.

Orders

I shall order:

(a) the plaintiff’s application for summary judgment by Summons dated 16 May 2018 be dismissed; and

(b) the defendant’s application to strike out by Summons dated 29 May 2018 be dismissed.

I shall await the parties’ proposed final form of orders, including as to costs.

---

Value of contract works (Exc. GST) As per Attached Schedule	$2,122,063.61
Plus Agreed Variations	$1,293,658.14
Plus Non Agreed Variations for additional works	$211,622.32
____________
SubTotal	$3,627,344.07
Less Prev Payments (Esc. GST) totalling	$3,363,572.61
Grand Total	$263,771.46
Plus GST	$26,377.15 ____________
AMOUNT NOW APPLIED FOR	$290,148.61

[2018] VSC 635

26 October 2018