Lake & Land Pty Ltd v Austin Land Pty Ltd
[2025] VCC 796
•18 June 2025
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
BUILDING CASES LIST
Case No. CI-24-06518
| LAKE & LAND PTY LTD (ACN 098 471 311) | Plaintiff |
| V | |
| AUSTIN LAND PTY LTD (ACN 621 492 779) | Defendant |
---
JUDGE: | Her Honour Judge Kirton | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13 December 2025 | |
DATE OF RULING: | 18 June 2025 | |
CASE MAY BE CITED AS: | Lake & Land Pty Ltd v Austin Land Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2025] VCC 796 | |
REASONS FOR JUDGMENT
---
Subject:CIVIL PROCEDURE – SUMMARY JUDGMENT - Building and Construction Industry Security of Payment Act 2002 (Vic)
Catchwords: Building and Construction Industry Security of Payment Act 2002 (Vic) – summary judgment procedure – power to dispense with requirements of the Rules – did payment claim included excluded amounts – contract contained an alternative dispute resolution clause – effect of settlement and release
Legislation Cited: Building and Construction Industry Security of Payment Act 2002 (Vic); County Court Civil Procedure Rules 2018 (Vic); Civil Procedure Act 2010 (Vic); Supreme Court (General Civil Procedure) Rules 2015;
Cases Cited:Hausman v Abigroup Contractors Pty Ltd [2009] VSCA 288; John Beever v Roads Corporation [2018] VCS 635; Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158; Ramvek Pty Ltd v Visioneer Builders Pty Ltd [2025] VCC 496; Yuanda Vic Pty Ltd v Façade Designs International Pty Ltd [2021] VSCA 44; Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1; Spirito Development Pty Ltd v Sinjen Group Pty Ltd [2020] VCC 1368; All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289; Branlin Pty Ltd v Totaro [2014] VSC 492; Contract Control Services v DET [2017] VSC 507; SSC Plenty Road v Construction Engineering (Aust) Pty Ltd [2015] VSC 631; SSC Plenty Road v Construction Engineering (Aust) Pty Ltd [2016] VSCA 119;
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | B Reid | Moray & Agnew |
| For the Defendant | P Caillard | Madgwicks |
HER HONOUR:
By summons on Originating Motion dated 11 November 2024 (the Summons), the plaintiff (LL) seeks judgment against the defendant (AL) pursuant to section 16(2)(a)(i) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (the Act, or the SOP Act).
The application was heard on 13 December 2024 and each party filed submissions and the following affidavits:
(a)For LL - affidavit of Anthony John Webber dated 28 October 2024 (the First Webber Affidavit)
(b)For LL - affidavit of Anthony John Webber dated 11 December 2024 (the Second Webber Affidavit)
(c)For AL - Affidavit of Sarah Wright dated 6 December 2024 (the Wright Affidavit).
Preliminary issue – rule 22.04
In their submissions and in the hearing, AL’s Counsel Mr Caillard raised a procedural issue, which he said is fatal to the plaintiff’s application.
The issue identified by AL was that LL’s affidavits in support of its Summons did not satisfy, purport to satisfy, nor try to satisfy rule 22 of the County Court Civil Procedure Rules 2018 (the Rules), because nowhere in its affidavits did LL include the verification and statements required by rule 22.04(1).
LL’s Counsel Mr Reid conceded that was the case, and sought leave to file a further affidavit at the conclusion of the hearing. AL opposed leave being given. At the conclusion of the hearing I allowed LL to provide the affidavit it would seek to rely on and to make an application for leave to file it.
LL then provided a further affidavit of its director, the third affidavit of Anthony John Webber dated 16 December 2024 (the Third Webber Affidavit).
AL opposed LL being given leave to reopen its case and file further affidavit material. Each party filed written submissions[1] which I have taken into consideration in determining this issue.
[1]Defendants submissions, dated 13 December 2024; Plaintiff’s, submissions dated 3 February 2025.
AL’s objections, in summary, were that it had put LL on notice of the omission in its written submissions prior to the hearing on 13 December 2024. LL filed a further affidavit after receiving the submissions, but did not address the issue. The proposed Third Webber Affidavit does not comply with the time limits set out in rule 22.04(4), namely that supporting affidavits must be served not less than 14 days before the hearing. LL has given no reason for failing to comply with the time limit or why it ought be excused from complying. There must be a finality to litigation.
AL also submitted that there is minimal prejudice to LL if the application to reopen its case and file further evidence is refused. It may still pursue its relief by arbitration, in accordance with what AL says the contract requires.
If the Court allows LL to reopen its case and rely on the Third Webber Affidavit, then AL submitted in the alternative, that that affidavit nevertheless does not cure the issue. It contends that the language used in the Third Webber Affidavit is not a statement of belief, but rather an invitation to the Court of how to consider the language used in the earlier affidavits.
In response, LL submitted that there was arguably, a sufficient statement of belief in the First Webber Affidavit and the Second Webber Affidavit. Mr Webber expanded on this in the Third Webber Affidavit, where he set out what he had said in each of those affidavits and deposed:[2]
In my First Affidavit I say … I understand that by identifying the reasons for why LL was entitled to judgment, I was saying that it was my belief that AL did not have a defence to LL’s claim for payment and it’s defence had no real prospect of success. I thought this was obvious from what I was saying but I acknowledge that I did not expressly use those words.
In my Second Affidavit I said that… Again, what I was saying and what I believe is that AL did not have a defence to LL’s claims and that AL’s defence has no real prospect of success in defending LL’s application.
Therefore, the first affidavit and second affidavit are to be considered as having included my belief that AL has no real prospect of success in defending this application or that AL’s defence or part of its defence has no real prospect of success.
[2]Affidavit of Anthony John Webber, dated 16 December 2024, 1-2 [5] - [7].
LL submitted that it is open to the Court to conclude that the relevant belief was in existence at the time of the First Webber Affidavit, and if so then the service of that affidavit complies with the time limit set by rule 22.04. On the other hand, if the Court is not satisfied that the statement of belief is sufficient, then the Third Webber Affidavit cures the non-compliance and leave should be granted to file it out of time.
LL referred to the case of Hausman v Abigroup Contractors Pty Ltd,[3] where Weinberg and Bongiorno JJA and Williams AJA held, in the context of rules 22.03 and 22.04:
Rule 22.03 provides that an application for judgment shall be made by summons supported by an affidavit verifying the facts on which the claim is based and stating that in the belief of the deponent, there is no defence to that claim, except as to the amount claimed. An affidavit in support of summary judgment may contain a statement of fact based on information and belief, subject to the Court being prepared to act upon it. Such an affidavit must be in proper form and comply with the Rules. What must be verified are the facts necessary to establish a good cause of action. If the affidavit material in support of the application is held to be defective, leave may be granted to file a supplementary affidavit.
…
The annotation to this Rule in Williams, Civil Procedure Victoria, suggests that a defendant, who attends on the hearing of an application for summary judgment, may defeat that application by showing that the plaintiff’s proceedings are irregular. Normally, however, if the defect can be corrected, for example by amending the statement of claim or by making another affidavit, the plaintiff will be given the opportunity to cure the defect. Assuming the plaintiff’s application is properly made, there will be judgment for the plaintiff unless the defendant shows cause against the application to the satisfaction of the Court. The Rule provides that the defendant can show such cause ‘by affidavit or otherwise’.
[3][2009] VSCA 288, 17 & 18, [60] & [62] (citations omitted, emphasis added).
Both parties also made detailed submissions referring to John Beever v Roads Corporation[4] and Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd[5], as to the temporal requirement in rule 22, and whether the belief had to be held at the time the summons was issued or can be formed or deposed to at a later date.
[4][2018] VCS 635.
[5][2013] VSCA 158; 42 VR 27.
LL also referred to the Court’s power under rule 2.04 of the Rules to dispense with strict compliance with rule 22.04, and requested the court to do so if it is minded to accept AL’s submissions about LL’s non-compliance.
I recently had cause to consider these issues in a similar application, in the matter of Ramvek Pty Ltd v Visioneer Builders Pty Ltd[6] (Ramvek). Coincidently, Mr Reid appeared as Counsel in that matter, albeit putting the opposing argument. In Ramvek I set out the relevant legislation and authorities and I will not repeat them here. However I repeat my findings as follows:[7]
Whatever may be the correct interpretation of the temporal requirement in rule 22.04 (if there is any), both parties agreed that the Court has the power under rule 2.04 to waive compliance with the rule. There is no dispute that compliance with the rule is a procedural issue, and non-compliance does not make the proceeding a nullity. The relevant question therefore becomes whether the Court should exercise its discretion to waive compliance and to accept the third [plaintiff] affidavit as the required statement of belief.
…
…In my view, the appropriate course to take in order to give effect to the purpose and intention of the SOP Act and the CPA is to waive compliance with any temporal element in rule 22.04. I do not dispute that a plaintiff must depose to holding a belief that any defence has no real prospect of success. However, the time it makes that deposition, and the time it forms that belief, are not fundamental to the operation of the rule.
I agree with the author of Williams that procedural rigidities should be discarded in favour of a more flexible approach. This is particularly so in the present case, where strict compliance with the rule is not possible. A defendant’s grounds of defence are likely to be unknown until after the defendant is served with the originating motion and the summons for summary judgment. In fact, to require the belief to be held and to be deposed to at a time before any defence is known is illogical and meaningless. A plaintiff will be in a better position to form a belief and to make the required statement just prior to its application being heard, by which time, if it is opposed, the defendant will have notified the plaintiff of its grounds of defence.
Further, a literal reading of the wording of the rule itself produces an unworkable result. Rule 22.04 states that, “an application shall be made by summons supported by an affidavit … stating that in the belief of the deponent the defence to the claim … has no real prospect of success…”[8] This wording assumes that a defence has been filed, as it refers to “the defence”, rather than a defence. As discussed above, that is inconsistent with the procedure established by the SOP Act.
Although it was open to [the plaintiff] to discontinue or withdraw the present application, and to issue a new summons for summary judgment, I do not consider that approach to be consistent with the aims and procedures of the CPA and the SOP Act.
[6][2025] VCC 496.
[7]Ibid, 5, 8-9, [23], [33] – [36].
[8]County Court Civil Procedure Rules 2018 r 22.04 (emphasis added).
The present matter is in my view on all fours with Ramvek. I am satisfied that the Third Webber Affidavit contains the required statement of belief; paragraph 7 cannot be read any other way, despite the interpretation proposed by AL. I am satisfied that LL did not provide the statement of belief strictly in the language required by rule 22.04 at the time the summons was issued. However, I am also satisfied it is appropriate to exercise my discretion to waive compliance with rule 22.04 for the same reasons I expressed in Ramvek, and I allow LL to reopen its case and to rely on the Third Webber Affidavit.
The summary judgment application under s16(2)(a)(i)
The facts
The following facts are not disputed. In July 2020 the parties entered into an amended AS2124-1992 contract (Contract) pursuant to which LL carried out civil and associated works (Works) in connection with the construction of approximately 1,100 residential units and associated works in Lara Victoria (Property). This project is known as the ‘Austin Lara’ project (Project).
The Contract dealt with the removal of clay and rock differently. Any rock encountered by LL during excavation was to be entirely removed and disposed of from the Site within the Contract Sum. Conversely, the Contract contained an express prohibition on the removal of clay from Site, without the prior written consent of the Superintendent. The Contract also required LL to stockpile clay material on Site, for AL’s use, at AL’s discretion.
Around the commencement of the Contract, AL directed LL to stockpile clay excavated material in a particular area, which it did. In December 2022, the Superintendent gave a direction from the Superintendent, for and on behalf of AL, for LL to dispose of some or all of the Clay Stockpile. There is a disagreement about the scope requested, but the parties both agree that LL did remove and dispose of around 46,928 m3 (Partial Clay Disposal). AL paid LL $323,542.00 for this work without issue.
The parties agree that there remained between 4000m3 and 6000m3 of Clay Stockpile (Balance of Clay). In August 2023, the Superintendent made inquiries of LL as to the price to remove the Balance of Clay, and LL replied that it had been unable to source a reasonable price at that time. Nothing material eventuated from the inquiry in the form of any request or direction for LL to dispose of the Balance of Clay at that time. The Balance of Clay remained in situ, and AL was free to do with the Balance of Clay as it wished.
It is not disputed that in 29 January 2024, the parties entered into a deed of settlement, resolving certain disputes between them (Deed of Settlement). The Deed of Settlement did not mutually terminate the Contract and it preserved claims that might arise after the date of the Deed of Settlement.
On 12 March 2024, after the Deed of Settlement had been executed, the Superintendent gave a direction from the Superintendent, for and on behalf of AL, for LL to carry out the disposal of the balance of the clay (Direction), including but not limited to loading the clay, carting, disposing, maintaining and supervising the works (Balance of Clay Works). AL acknowledges that it requested some work to be carried out, but says it did not receive any indication there was more than the estimated 4000m3.
LL carried out the Balance of Clay Works, it says either under Direction from the Superintendent, or under the Contract, or alternatively, they occurred as a separate, alternate construction contract or other arrangement, and they were completed on or about 7 May 2024.
On or around 4 July 2024, LL served AL with a payment claim under the Act claiming $212,718.00 (inc. GST) (Claimed Amount) with respect to the Balance of Clay Works (Payment Claim).
It is agreed that AL was required to provide a payment schedule within 10 business days after 4 July 2024, and it did not do so.
The legal principles
The principles to be applied in determining proceedings commenced under s 16 of the Act are well established and I will not repeat them here. In summary, for the claim to succeed, the plaintiff must demonstrate the matters in s 16(1)(a) and (b) of the Act. In particular, the liability to pay and the right to procure judgment is premised upon:
(a)the existence of a construction contract for the progress payment;
(b)the existence of a reference date for the progress payment;
(c)a valid payment claim for the progress payment;
(d)no payment schedule having been given; and
(e)that the respondent has failed to pay the whole or part of the claimed amount.
It is also well established that in a proceeding issued under s 16(2) of the Act, a defendant is not entitled to raise any defence in relation to matters arising under the construction contract, by reason of s 16(4)(b)(ii). The available defences must concern either the nature of the underlying contract, or the form and service of the purported payment claim, and thus whether the payment claim is effective to trigger the procedures established by Part 3 of the Act. More particularly, the defences to a payment claim enlivened by the formal requirements of the Act are, in substance, that the payment claim:
(a)does not relate to a “construction contract” (including because it does not involve carrying out “construction work”), or it relates to a construction contract excluded from the operation of the Act under s 7 (for example, a construction contract that forms part of a loan agreement, or one that is a domestic building contract under the Domestic Building Contracts Act 1995);
(b)fails to satisfy the formal requirements of s14(2) of the Act (for example, by failing to identify the construction work, or failing to state that the claim is made under the Act);
(c)was made when no valid reference date existed, including where it is served before an applicable reference date, or relies on a reference date that has already been used up by an earlier payment claim;
(d)includes variations that are “excluded amounts” under s 10B of the Act;
(e)was not validly served on the respondent under either the terms of the contract, or under s 50 of the Act; and
(f)in rare circumstances, where a defendant alleges that they are not party to, or are not liable under the contract.
Defences in the nature of estoppel and misleading and deceptive conduct may also be available in certain circumstances.
The issues in dispute
In the present matter, AL defended the summary judgment application on the following four grounds (other than the procedural preliminary issue addressed above):
(a)AL contends that contrary to s 14(8) of the Act, LL has served more than one payment claim in respect of the same works, with the same reference date and seeking payment of exactly the same amount, being $212,718.00;
(b)the payment claim seeks payment of an “excluded amount” for the purposes of section 10B, within the meaning of Yuanda Vic Pty Ltd v Façade Designs International Pty Ltd[9] (Yuanda);
(c)there is a genuine dispute as to the quantum of the works referred to in the payment claim. On 12 March 2024, the plaintiff estimated that there was 4,000m3 of clay to be removed. However, the payment claim now charges for the removal of 11,720m3 worth of clay;
(d)there is a genuine dispute in relation to the Deed of Settlement. AL contends that it was released from its obligation to pay further money to LL. The works that are the subject of the contract claims relates to removal of clay that had commenced prior to the Deed of Settlement being entered into. AL asserts that the Deed of Settlement extended to those works and that the Deed of Settlement concluded any further obligation for AL to pay LL.
[9][2021] VSCA 44, 5-6 [20] - [21] (‘Yuanda’).
Was there more than one payment claim?
AL originally raised an issue with LL’s evidence about the relevant payment claim. AL submitted that LL had seemingly served three payment claims for the same Balance of Clay Works, being invoices dated 13 May 2024, 1 July 2024 and 2 July 2024. AL relied on s 14(8) of the Act which provides that a claimant cannot serve more than one payment claim in respect of each reference date under the construction contract. In response, LL conceded it may have confused AL by its evidence, but there was in fact only one valid payment claim served, which is the one it relies on in this application.
In respect of the 1 July 2024 invoice, LL conceded it had erroneously included the copy of the 1 July 2024 invoice in the First Webber Affidavit. Mr Webber swore the Second Webber Affidavit acknowledging the error, and confirmed that the invoice dated 1 July 2024 exhibited thereto was only a draft, had never been served on AL, and was not part of the payment claim. Following that concession, AL seemed to accept that there was only one payment claim served on 4 July 2024 and it contained the invoice dated 2 July 2024.
In respect of the invoice dated 13 May 2024, LL does not contend that this was a payment claim within the meaning of the Act. The reference date under the contract was 31 May 2024. The invoice dated 13 May 2024 was served before the reference date had arisen. The service of a premature payment claim is now considered as being one of the recognised categories of non-compliance which will result in the nullity of a payment claim for all purposes under the Act.[10] Accordingly, LL agrees that it cannot rely on the 13 May 2024 invoice as a payment claim, and instead the only valid payment claim is the one relied on in this application, being the claim served on 4 July 2024.
[10]Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1, [41] and applied by His Honour Woodward J in Spirito Development Pty Ltd v Sinjen Group Pty Ltd [2020] VCC 1368 to find at [17] “I am therefore satisfied that the prematurely served original version of invoice 1127 was a nullity for all purposes under the Act”. A similar conclusion regarding premature claims was also reached in All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289.
I accept LL’s submission. The earlier two invoices were not payment claims at all; the first because it predated the reference date, and the second because it was a draft and not served. During the hearing AL seemed to accept that there was only one payment claim served on 4 July 2024 and it contained the invoice dated 2 July 2024. Accordingly, I accept that AL’s objection on this ground is not a relevant factor and this is not a reason for not ordering summary judgment.
Did the payment claim include excluded amounts?
AL contended that the amounts claimed in the payment claim were “excluded amounts” for the purposes of s 10B of the Act. It relies on the comments of the Court of Appeal in Yuanda that the Act is “at pains to prevent the recovery of excluded amounts”. [11] In Yuanda, the Court of Appeal stressed:[12]
A tolerably clear statutory scheme emerges, by which, if there is a dispute about the extent to which excluded amounts are being claimed, that is a matter for adjudication. If there is no dispute, a claimant may proceed straight to court seeking recovery. At that point, the Court “is not to” give judgment in favour of the claimant unless it is satisfied that the claimed amount does not include “any” excluded amount. Consistently with the policy of the Act to prevent recovery of excluded amounts and the role of the Court in enforcing a liability determined by statute, the natural meaning of those words is that, if the claimed amount includes any excluded amount, it is not to give judgment.
…
… [R]esort to the Court under section 16(2)(a)(i) should be seen as an option intended to be used only in a clear case. A claimant who chooses not to proceed to adjudication takes the risk that the criteria in s 16(4)(a) might not be met.
[11]Yuanda (n 9), 5 [20].
[12]Ibid, 6 & 7, [21] & [24] (emphasis added).
AL submits that the amounts that are the subject of the payment claim do not fall within the definition of “claimable variations” under s 10A for three reasons, namely:
(a)the extent of the works alleged to have been carried out by LL is disputed;
(b)as there was no change in scope of the construction work to be carried out, the amounts are not claimable variations and are therefore excluded by section 10A(2)(c) and/or section 10A(3); and
(c)the Contract contains a dispute resolution clause (clause 47) which provides an agreed method for resolving disputes.
What is the effect of the dispute over the extent of works authorised or actually carried out?
AL disputes the scope of the works alleged to have been carried out by LL and says, as a matter of fact, there is a real prospect that some or all of the work in the payment claim was not carried out.
It is common ground that on 12 March 2024, Mr Webber wrote to the Superintendent and stated that he could dispose of the balance of clay for $16.50 per m3 plus GST and that he said, “I’m not sure exactly how much of the material is left but I would guess 4000m3”.[13] AL concedes that the Superintendent responded to Mr Webber and authorised the work, but says this was on the understanding that there was 4000m3 of clay to be removed. However, the claim made in the invoice of 2 July 2024 was for the removal of 11,720 tonnes of clay.[14]
[13]Affidavit of Anthony John Webber, dated 28 October 2024, 9 [40] (‘First Webber Affidavit’).
[14]I note the LL invoice refers to tonnes, not cubic metres, and I note that these are not the same. One cubic metre of clay usually weighs more than one tonne. However, no party has suggested that this is material to the claim. Further, I note that the unit price listed in the invoice is $16.50, which is the amount quoted by LL per cubic metre. The amounts in the accompanying dockets are also measured in cubic metres. Accordingly, I will proceed on the assumption that the number 11,720 in the invoice refers to cubic metres of clay, not tonnes.
AL notes that this amount far exceeds the estimate given by LL, whether that was 4000m3 or 6000m3 for the Balance of Clay. No explanation was given by LL for this increase, and LL never contacted AL or the Superintendent at the time to suggest there was any additional clay to be removed. If work was authorised by the Superintendent, the authorisation did not extend to the amount of work purportedly carried out. Accordingly, it cannot be an allowable variation.
In response, LL submits that there is no dispute the works were directed by the Superintendent. That means they fall under the ambit of the contract. The contract allows for variations, and the emails from the Superintendent (set out above) amount to a direction given under clause 40.1 of the Contract. AL’s contention that there is no agreement on the scope of work actually requested or performed does not prevent the variation from being a second class of variation under s 10A(3). The Act allows for a dispute over scope.
I accept LL’s submission. While it is clear that AL disputes the amount of the work authorised and/or carried out, s 10A(3)(c) expressly allows for a variation to be a second class variation even where the parties do not agree as to matters including:
(a)that the doing of the work or the supply of goods and services constitutes a variation to the contract (s 10A(3(c)(i));
(b)the value of the amount payable in respect of the work or the goods and services (s 10A(3(c)(iii)); and
(c)the method of valuing the amount payable in respect of the work or the goods and services (s 10A(3(c)(iv)).
The matters raised by AL concern the extent of the work authorised and carried out. Those arguments do not prevent the variation being a second class of variation under the Act.
Were the Balance of Clay Works a variation to the contract?
Secondly, AL submits that as there was no change in scope of the construction work to be carried out, the amounts are not variations and are therefore do not fall within s 10A(2)(c) and/or s 10A(3). The parties agree that the Balance of Clay Works were not included in the original scope of the Contract. AL submits that the works were not performed under a permitted variation to the Contract (e.g. as contemplated by clause 40 of the Contract) or performed under a new or separate agreement. In support of that proposition, AL relies on the statement of Mr Webber in the First Webber Affidavit that the works that are the subject of the payment claims were “performed under the Contract.”
In response, LL submits that it is unarguable that the work was performed as a variation to the Contract. Clause 40.1 provides as follows:[15]
40.1 Variations to the Work
The Superintendent may direct the Contractor to-
(a) increase, decrease or omit any part of the work under the Contract;
(b) change the character or quality of any material or work;
(c) change the levels, lines, positions or dimensions of any part of the work under the Contract;
(d) execute additional work; and/or
(e) demolish or remove material or work no longer required by the Principal.
The Contractor shall not vary the work under the Contract except as directed by the Superintendent or approved in writing by the Superintendent under Clause 40.
[15]Affidavit of Sarah Wright, 6 December 2024, Exhibit SW-1, 56.
LL submits that the emails from the Superintendent (set out above) amount to a direction given under this clause. LL also pointed out that the statement of Mr Webber relied on by AL in the First Webber Affidavit is more complex than that cited by AL above. Mr Webber’s evidence in full is to the effect that he cannot be certain of the legal basis under which LL carried out the Balance of Clay Works. He says:[16]
The Clay Works were performed pursuant to the Direction.
They were performed under the Contract, on the basis that the Deed of Settlement preserves claims that might arise after the date of the Deed of Settlement. Further, that Deed of Settlement did not mutually terminate the Contract.
Further or alternatively, they occurred as a separate, alternate construction contract or other arrangement, on the basis that LL performed construction work or related goods and services for AL, occasioned by the Direction.
Further, the Clay Works were a separate, alternate construction contract or other arrangement than the contract for the Partial Clay Disposal and therefore, were not subject to the Deed of Settlement.
[16]First Webber Affidavit (n 14), 13 -14 [48] – [51].
I agree with LL’s submission. There is no dispute that LL’s obligation under the Contract was to stockpile clay material on Site for AL’s use. The Contract also expressly prohibited the removal of clay from Site, without the prior written consent of the Superintendent.[17]
[17]Ibid, Exhibit AJW-01, 417, Section 6: Specifications document, cl 15.
In light of the contract term that prohibited LL from disposing of the Balance of Clay unless directed to do so, I am satisfied that the Superintendent’s direction falls within the class of variation set out at clause 40.1(e), namely to “remove material no longer required by the Principal”. Alternatively it falls within clause 40.1(d), namely to “execute additional work”.
Further, Mr Webber’s evidence is not determinative of the legal nature of the works. It is clear from his evidence that his comments are made in the context of the Deed of Settlement and that he does not know the true position. In any event, his opinion does not determine the parties’ legal relationship. Accordingly I do not accept AL’s submission that the works were not carried out as a variation to the Contract.
What is the effect of the alternative dispute resolution clause in the Contract?
AL also submits that if the Balance of Clay Works are a second-class variation, they are not claimable by reason of s 10A(3)(d)(ii), as the Contract was for a sum greater than $5,000,000.00 and the Contract contains a dispute resolution process. Section 10A(3)(d)(ii) provides relevantly as follows:
(3) The second class of variation is a variation where …
…
(d) … the consideration under the construction contract at the time the contract is entered into—
…
(ii) exceeds $5,000,000 but the contract does not provide a method of resolving disputes under the contract …
His Honour Justice Vickery described this section and ss (4) of the Act as follows:[18]
The convoluted drafting style adopted in s 10A(3) and (4) of the Act under consideration in this case suffers from the unworldly characteristics that are reminiscent of the ACT Motor Traffic Ordinance. Although s 10A is intended to be applied in somewhat less demanding physical circumstances than the Ordinance, it nevertheless takes several readings to digest the steps required to apply the provision, and several more steps, combined with a respectable prowess in the science of numbers, to apply it to the case at hand. Although the confounding formula described in s 10A on a close reading is tolerably precise, it fails in the critical task of communicating the legislative stipulations in a ‘user friendly’ and readily comprehensible fashion to its intended audience, which includes the Defendant in this case, Mr Totaro an earth moving contractor and the principal of ‘Ezy Doze It’, and extends more generally to other construction subcontractors in a like position, and further, to any unfortunate Judge who may later be called upon to decipher and apply its contents
Section 10A is simply a way of saying that, in a case such as the present, the variations claimed will be classed as ‘claimable variations’ under the Act, where the original consideration agreed to under the Construction Contract exceeded $150,000, but only where the contract did not provide for a method of resolving disputes arising under the contract.
There will therefore be no ‘claimable variations’ under the Act if the Construction Contract in this case did provide a method of resolving disputes arising under the contract.
[18]Branlin Pty Ltd v Totaro [2014] VSC 492, 10 - 11 [35] – [37] (‘Branlin’).
This is what AL contends is the case here (although it accepts the relevant amount of consideration under the contract is $5,000,000.00, not $150,000.00 as in Branlin, as ss 10A(4) only applies when the amount of the variation claimed exceeds 10% of the contract sum, which is not the case here).
Clause 47 of the Contract and Part A of the Annexure to the Contract combine to contain a dispute resolution clause which provide the following a mechanism if a dispute arises:
(a)a party shall deliver a notice of dispute to the other party and the Superintendent;
(b)a party served with a notice of dispute may give a written response to the notice to the other party and the Superintendent;
(c)the Superintendent shall give to each party the Superintendent's written decision on the dispute;
(d)if either party is dissatisfied with the decision of the Superintendent, or if the Superintendent fails to give a written decision within time, the parties shall confer at least once to attempt to resolve the dispute, and failing resolution of the dispute, to explore and if possible agree on methods of resolving the dispute by other means;
(e)if the dispute cannot be so resolved or either party considers that the other party is not making reasonable efforts to resolve the dispute, either party may refer such dispute to arbitration or litigation;
(f)arbitration shall be effected by a single arbitrator who shall be nominated by the Chairperson of the chapter of the Institute of Arbitrators Australia in Victoria.
AL contends that this is an agreed method for resolving disputes, and given the substantial value of the construction contract (initially $18,833,605.00), LL should have issued a notice of dispute, at which time either party may have had the dispute determined by the Superintendent, or referred the matter to arbitration.
AL referred to the decision of his Honour Justice Digby in Contract Control Services v DET[19] (CCS). The construction contract in that matter contained a dispute resolution clause providing for a notice of dispute in similar terms as the present Contract. His Honour held as follows:[20]
As correctly acknowledged by the parties in this proceeding, the critical issue for determination is whether the Construction Contract provides ‘a method of resolving disputes’ for the purposes of s 10A(3)(d)(ii) of the Act…
[19][2017] VSC 507.
[20]Ibid, 20 [53].
The contract in CCS contained a clause 47 in the same terms as the present Contract. However it included an extra clause, 47.2A, which expressly referred to disputes over second class claimable variations. The dispute resolution mechanism in the contract required a notice of dispute, leading to arbitration in the absence of resolution. The argument in that case concerned whether clause 47.2A would result in a final and binding outcome. His Honour examined the clause and concluded:[21]
Such an arbitration process cannot be said to be a method of resolution which may not result in the resolution of the relevant dispute. Such a method conduces to the identification and resolution of progress payment disputes in respect of second class variations under the contract. Accordingly, this method of resolving disputes will determine whether a claimant is entitled to progress payments for carrying out relevant construction work.
[21]Ibid 24 – 25 [67].
AL submits that although the present Contract does not contain an equivalent clause 47.2A, and does not specifically address disputes over second class variations, it is more than reasonably arguable that the same principles apply to the present clause 47. AL contends that clause 47 does provide a method of resolving second class variation disputes which will result in a final and binding outcome in the ordinary course. It does not matter that it is not compulsory. Accordingly, it says the amounts claimed are not second class variations within the meaning of s 10A(3) of the Act.
On the other hand, LL disputes that clause 47 provides a method of resolving second class variation disputes, as the mechanism provided in the Contract is not compulsory. It referred to the words in the clause “may refer such dispute to arbitration”.
LL relied on several decisions in support of its position. In SSC Plenty Road v Construction Engineering (Aust) Pty Ltd[22] (SSC Plenty Rd) the Court of Appeal considered whether a contractual provision in the relevant construction contract that mandates attendance of the parties at mediation is a ‘method of resolving disputes’ for the purposes of s 10A(3)(d)(ii) of the Act. The adjudicator under the Act, and the trial judge on review[23], both considered that the clause of the contract did not provide a method of resolving disputes under the contract within the meaning of s 10A(3)(d)(ii) of the Act. His Honour Vickery J held that the clause provided for mediation which ‘without more, at best provides an opportunity for resolving disputes’.[24] He said:[25]
A compulsory mediation may be part of the dispute resolution process prescribed in a [construction] contract, and often is. However, without additional mandatory steps being prescribed involving the production of a binding decision by a third party appointed under the construction contract, … a dispute resolution process which stops at mediation, will not be a method for resolving disputes for the purposes of s 10A(3)(d)(ii).
[22]SSC Plenty Road v Construction Engineering (Aust) Pty Ltd [2016] VSCA 119, 32 [61] (‘SSC Plenty Rd’).
[23] SSC Plenty Road v Construction Engineering (Aust) Pty Ltd [2015] VSC 631.
[24]Ibid, 17 [51].
[25]Ibid, 18 [52]
In dismissing the appeal, the Court of Appeal noted the purpose of the Act and of the exception established in s 10A, is “to provide or to ensure that the parties have available to them a means of finally determining an entitlement to a progress payment”.[26] The Court held that mediation does not constitute dispute resolution within the meaning of s 10A(3)(d)(ii). They held:[27]
By itself, the expression ‘dispute resolution’ may be understood to be confined to methods that result in the determination (by a third party) of a dispute. The phrase ‘alternative dispute resolution’ is a broader term, which is commonly understood to include mediation, as well as arbitration. However, that is not the phrase used in the statute. The language used in the statute refers to a ‘method of resolving disputes under the contract’. In our opinion, the meaning of ‘method of resolving disputes’ requires a method that will result in an actual resolution of the dispute, rather than just offering a forum for the discussion of the controversies between the parties, which may or may not lead to their resolution. The word used is ‘resolving’, not ‘addressing’.
[26]SSC Plenty Rd (n22) 119, 32 [61].
[27]Ibid , 29 [54].
The contract in Branlin provided for a process for dispute resolution which included facilities for notification of a dispute, a conference to resolve the dispute, followed by arbitration in the event that these processes have not achieved a resolution of the dispute. The arbitrator could be nominated by the Institute of Arbitrators & Mediators Australia.
In Branlin, his Honour Vickery J referred to earlier decisions involving contracts specifying non-mandatory arbitration to resolve disputes, including A C Hall Air Conditioning Pty Ltd v Schiavello (Vic) Pty Ltd[28] (AC Hall) and Siemens Ltd v Vaughan Constructions Pty Ltd[29] (Siemens Ltd). He did not find them helpful as they were construing a former version of the Act. His Honour stated instead: [30]
What is required under s 10A(3)(d)(ii) is at least a ‘method of resolving disputes’, as opposed to a method which merely provides an opportunity for the parties to negotiate a resolution of their differences. Unless the method identified in the contract is capable of resulting in a binding resolution of the dispute, it will not satisfy the s 10A(3)(d)(ii) requirement.
[28][2008] VCC 1490, [31]-[33].
[29][2006] VSC 452, [32].
[30]Branlin (n 19), 17 [58].
His Honour continued: [31]
In order for a construction contract to provide a method for resolving disputes for the purposes of s 10A(3)(d)(ii) of the Act, at least what is required are three things:
a) a process which could be described as a ‘method’ of dispute resolution;
b) a process which is capable of resulting in a binding resolution of the dispute; and
c) a process which the contract makes it a binding obligation for the parties to enter upon and participate in.
[31]Ibid, 18 [65].
Vickery J concluded that the contract in Branlin did not provide a binding method to be adopted in the event of a continuing dispute requiring further resolution. Instead, the provisions amounted to no more than a suggested course or approach, rather than setting in place a binding process required to be followed. The contract merely exhorted to parties to ‘resolve such disputes fairly and amicably,’ without prescribing any ‘method’ as to how this was to be done.
Discussion and conclusion
It is surprising that after all the years the Act has been operating there appear to be no decisions interpreting clause 47 of this standard form AS 2124-1992 Contract in the context of s 10A(3)(d)(ii) (at least none I was referred to). Instead, I must reconcile authorities which consider dispute resolution clauses ranging from a specific mandatory process expressly dealing with second class variations (CCS), with a mandatory process involving mediation (SSC Plenty Rd), and a process involving arbitration, but which is non-binding (Branlin).
In my view, clause 47 of the Contract does not provide a mandatory or binding process to be followed in the event of disputes. I consider the clause to be more comparable to the contract clauses discussed in SSC Plenty Rd and Branlin than in CCS. It is a crucial difference in CCS that the clause being discussed specifically provides for dispute resolution in the context of second class variations. The present Contract does not do that. Instead, the present clause 47 merely states that the parties “may” refer a dispute to arbitration. In my view, that puts the clause in the category of the clause discussed in SSC Plenty Rd, and in Branlin.
I will follow the decisions of the Court of Appeal in SSC Plenty Rd (which upheld Justice Vickery on appeal) and Justice Vickery in Branlin, and I distinguish the decision of Justice Vickery in CCS. I am not satisfied that AL has a possible defence based on an assertion that this contract offers a binding mechanism for alternative dispute resolution. Therefore this is not a reason to refuse the summary judgment.
Conclusion on the nature of the variation
On the evidence set out above, I am satisfied that the following contentions put by AL are not a reason to refuse summary judgment, as:
(a)even if the extent of the works alleged to have been carried out by LL is disputed, the claim may still be a variation within the meaning of s 10A(3)(c);
(b)the work has been carried out or the goods and services have been supplied under the Contract (within the meaning of s 10A(3)(c)(i));
(c)the Superintendent, being a person acting for AL under the Contract, requested or directed the carrying out of the work (within the meaning of s 10A(3)(c)(ii));
(d)the Contract does not contain a dispute resolution clause (clause 47) which provides an agreed method for resolving disputes.
Accordingly I am satisfied that the payment claim did not include excluded amounts.
Does the Deed of Settlement release AL from further claims?
The parties signed a Deed of Settlement on 29 January 2024 which included payment of an agreed Settlement Sum, and broad releases. Clauses 4(a) and 5(a) provide as follows:[32]
Austin has agreed to pay L&L the Settlement Sum as a lump sum on or before the expiration of thirty (30) Business Days from the date of this Deed, in full and final settlement of all matters, claims, disputes and/or entitlements (whether existing as at the date of this Deed or otherwise) as between the parties.
…
Upon receipt of the total Settlement Sum, and subject to clause 6 herein, the Parties release and forever discharge each other Party from any Action in relation to the Agreement as at the date of this Deed.
[32]First Webber Affidavit (n 14), ExhibitAJW-01, 431 [4(a)] & [5(a)].
AL submits that the release applies to the Balance of Clay Works, as the works were in the parties’ contemplation at the time the Settlement Sum and the Deed of Settlement were agreed. Accordingly, AL says it is released from making any further payment.
In response, LL submits that the release states that it applies in respect of “any Action in relation to the Agreement as at the date of this Deed.” The date of the Deed was 29 January 2024. The Balance of Clay Works were carried out after that date. Accordingly those costs were not captured by the Deed.
I accept LL’s submission. In my view, the release does not apply to the claim for the Balance of Clay Works as the claim had not arisen “as at the date of this Deed”. My view is supported by AL’s own actions, in that AL requested LL to carry out the Balance of Clay Works after the date of the Deed, at which time AL expressly offered to pay LL for the works. That is inconsistent with AL’s current submission that AL contemplated no further payments being made to LL.
Conclusion
As discussed above, I have determined that it is appropriate to exercise my discretion , pursuant to rule 2.04 to waive compliance with any requirement of rule 22.04(1) of the County Court Civil Procedure Rules 2018 that the plaintiff must either form the specified belief at the date the summons is issued, or depose to it in an affidavit filed with the summons.
In respect of the substantive application, I am satisfied that:
(a)There was one relevant payment claim, dated 4 July 2024, which attached the invoice dated 2 July 2024.
(b)The payment claim did not include excluded amounts.
(c)The Deed of Settlement does not operate as a bar to the claim.
Accordingly, I am satisfied that summary judgement should be ordered for the plaintiff LL under s16(2)(a)(i) of the Act.
I will make the following orders unless there are any objections by 25 June 2025 at 4.00pm. The plaintiff should also provide the interest calculations by that date:
(a)The requirements of rules 5.03(1) and 8.03 of the County Court Civil Procedure Rules 2018 are dispensed with.
(b)The plaintiff is authorised to commence this proceeding by originating motion in Form 5C.
(c)Any requirement of rule 22.04(1) of the County Court Civil Procedure Rules 2018 that the plaintiff must either form the specified belief at the date the summons is issued, or depose to it in an affidavit filed with the summons, is dispensed with, pursuant to rule 2.04.
(d)The defendant pay the plaintiff $212,718.00.
(e)The defendant pay interest on the judgment sum pursuant to s 12(2) of the Building and Construction Industry Security of Payment Act 2002 (Vic).
(f)The defendant pay the plaintiff’s costs of the proceeding.
- - -
Certificate
I certify that these 23 pages are a true copy of the ruling of her Honour Judge Kirton delivered on 18 June 2025.
Dated: 18 June 2025
Jessica Meaney
Associate to Her Honour Judge Kirton
0
12
0