MPA Construction Pty Ltd v Profine Construction Pty Ltd
[2020] VCC 1035
•20 July 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
BUILDING CASES LIST
Case No. CI-20-01553
| MPA Construction Pty Ltd | Plaintiff |
| v | |
| Profine Construction Pty Ltd | Defendant |
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JUDGE: | Judicial Registrar Burchell | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the Papers | |
DATE OF JUDGMENT: | 20 July 2020 | |
CASE MAY BE CITED AS: | MPA Construction Pty Ltd v Profine Construction Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 1035 | |
REASONS FOR JUDGMENT
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Subject: CONTRACTS
Catchwords: Building contract – payment claim – whether reference date available for payment claim
Legislation Cited: Building and Construction Industry Security of Payment Act 2002 (Vic) ss 4, 9, 10A, 10B, 12, 14(2), 15, 16(2), 17(2); Civil Procedure Act 2010 (Vic) s 61
Cases Cited:3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674; All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289; Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2005) 62 NSWLR 385; Fulconstruction Pty Ltd v ABP Consultants Pty Ltd (2016) VCC 1732; Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106; Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor (2009) 26 VR 112; MetaCorp Australia Pty Ltd v Andeco Construction Group Pty Ltd (2010) 30 VR 141; MKA Bowen Investments Pty Ltd v Carelli Constructions Pty Ltd [2019] VSC 436; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; Seabay Properties Pty Ltd v Galvin Construction Pty Ltd [2011] VSC 128; Seymour WhyteConstructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317; SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805; Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty & Ors (2016) 260 CLR 340;
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr B Mason | KCL Law |
| For the Defendant | Ms A Hando | C-Stone Project Pty Ltd |
JUDICIAL REGISTRAR:
Introduction
1 In this proceeding, the plaintiff (“MPA”) applies for judgment against the defendant (“Profine”) pursuant to s 16(2) of the Building and Construction Industry Security of Payment Act2002 (Vic) (“SOP Act”). MPA makes the application by summons on originating motion dated 1 April 2020. The application arises out of MPA’s provision of labour, materials, plant and equipment in relation to concreting works at 54-56 Scott Street, Dandenong.
2 MPA submits that it is entitled to judgment because Profine failed to submit a payment schedule in response to a payment claim, namely ‘Claim No. 10’.[1]
[1]Plaintiff’s submissions [2].
3 Profine opposes the application on the basis that Claim No. 10 is invalid because it includes work referenced to a future reference date which cannot be severed.
4 In my judgment, that ground is not made out. My reasons in respect of this ground are set out below. I am otherwise satisfied of the circumstances in s 16(1) of the SOP Act.
5 Accordingly, there will be judgment for the plaintiff in the sum of $135,668.94 together with interest pursuant to s 12(2) of the SOP Act. I also order that the defendant pay the plaintiff’s costs of and incidental to the proceeding on the standard basis, in default of agreement, unless either party has a basis for seeking a different order as to costs. I invite the parties to prepare draft orders to give effect to these reasons. I will determine any issue concerning costs on the papers.
Background facts
6 The plaintiff relies upon two affidavits of Kris Munivrana, the general manager of MPA. In opposition, the defendant relies upon an affidavit of Stipo Sekic, the sole director of Profine.
7 On or about 23 November 2018, Profine engaged MPA to provide labour, materials, plant and equipment for works at 54-56 Scott Street, Dandenong (“the Contract”). The Contract was partly written, partly oral and partly implied.
8 The parties agree that insofar as the Contract was written, it comprised the following documents:
a) MPA’s ‘Letter of Offer’ to Profine dated 15 October 2018, which outlines ‘Conditions of Contract’ (“Letter of Offer”);
b) MPA’s ‘Project Start Up Letter’ to Profine dated 20 November 2018, with introductory remarks in relation to the Scott Street Project;
c) Profine’s Purchase Order number N4022/600 dated 23 November 2018, which provides a contract sum of $3,450,000.00 and a description of the construction work (“The Purchase Order”);
d) an email from Kris Munivrana to Stipo Sekic dated 20 November 2018, which confirmed the contract sum and sought clarifications from Profine;
e) an email from Clement Wong to Stipo Sevic dated 23 November 2018 with a breakdown of the contract sum; and
f) architectural and engineering drawings.
9 Clause 1 of the ‘Conditions of Contract’ provided that ‘MPA will endeavour to provide tax invoices in accordance with [the Act] by the 1st and 28th of each month for the full value of works completed to the date of invoice’[2] [Emphasis added]. Clause 4 provided that ‘[a]ny amount of MPA’s fees not paid by the due date will incur 15% per annum interest, calculated daily and charged monthly’.[3]
[2]Exhibit KM-03 to the first affidavit of Kris Munivrana p 5.
[3]Ibid.
10 The Purchase Order provided that ‘Payment terms are 14 days* […] *invoices will only be processed after Site Supervisor has inspected works & approved to be processed’.[4]
[4]Ibid p 9.
11 The Contract did not specify a time by which Profine was to submit payment schedules. Accordingly, Profine was to submit payment schedules within 10 days of receiving a payment claim.[5]
[5]Building and Construction Industry Security of Payment Act2002 (Vic) s15(4).
12 The parties agree that insofar as it was oral, the Contract comprised telephone conversations between Stipo Sekic and Kris Munivrana on 19 November 2018. The parties agree that the implied terms sought to give business efficacy to the Contract.
13 Between 25 January 2019 and 1 October 2019, MPA issued payment claims 1-9 in relation to the Scott Street Project. Those payment claims are not in dispute.
14 MPA carried out work up to 1 November 2019. Thereafter, on 18 November 2019, MPA issued ‘Claim No. 10’ for the sum of $135,668.94 (including GST). MPA served the payment claim by email dated 18 November 2019 from Clement Wong to Stipo Sekic (copying Mr Munivrana, Roy Eyssens and MPA Construction Accounts). Relevantly, the payment claim:
· identifies the project as ‘DANDENONG, 54-56 SCOTT ST’;
· attentions the claim to Profine Building Group;
· stipulates: ‘Date: 18 November 2019’; and
· stipulates: ‘Claim Period: 18 November 2019’.
15 Profine failed to issue a payment schedule in response to Claim No. 10 within 10 business days or at all. Profine also failed to make payment in accordance with Claim No. 10.
16 The plaintiff claims that the sum of $135,688.94 (inclusive of GST) remains unpaid in relation to Claim No. 10.[6]
The legislative framework
[6]First affidavit of Kris Munivrana [19].
17 The SOP Act seeks to ensure that anyone who undertakes to carry out construction work, or to supply goods and services under a construction contract, can recover progress payments in relation to the performance of that work or the supply of those goods and services.[7]
[7]Building and Construction Industry Security of Payment Act2002 (Vic) s 3.
18 Section 4 defines construction contract as a “contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services for another party”. The Act applies to any construction contract whether written or oral, or partly written and partly oral.[8] It applies even if the contract is governed by the law of a jurisdiction other than Victoria.[9] There was no dispute that the works the subject of this proceeding is “construction work” within the meaning of s 5 of the SOP Act.
[8]Ibid s 7.
[9]Ibid.
19 Section 16(2)(a) provides that a claimant may recover the unpaid portion of a claimed amount (as a debt due) where the respondent fails to provide a payment schedule in response to a payment claim. In order to obtain judgment, the claimant must satisfy the court of the matters in to s 16(4).
20 Section 17(2)(a) provides that a claimant may recover the unpaid portion of a claimed amount (as a debt due) where the respondent fails to submit payment in accordance with a payment claim by the due date.
21 Section 14 enunciates the requirements of a payment claim as follows:
· it must be in the relevant form (if any);
· it must contain the prescribed information (if any);
· it must identify the construction work to which it relates;
· it must indicate the amount of progress payment claimed;
· it must state that it is made under the SOP Act;
· it may include any amount the respondent is liable to pay under s 29(4); and
· it must not contain excluded amounts.
22 Section 14 must be read together with the reference date provisions in s 9. Section 9(1) stipulates that on and from a reference date, the claimant is entitled to a progress payment calculated by reference to that date. Section 9(2)(a)(i) provides that the reference date is a date on which a claim for a progress payment may be made in relation to a specific item of construction work or related goods and services and which is determined by or in accordance with the terms of the contract.
23 The SOP Act permits only limited defences, which include that:
· the claim is not in respect of a “construction contract”;
· the progress claim fails to satisfy the formal requirements of the Act (s 14(2));
· the claim was made prematurely before the applicable reference date;
· variations were not claimable variations; and
· the timing and sufficiency of the payment schedule failed to comply with the Act.[10]
[10]Fulconstruction Pty Ltd v ABP Consultants Pty Ltd (2016) VCC 1732 at [8] per Anderson J.
24 By reason of s 47, a judgment under ss 16 and 17 of the SOP Act is effectively a provisional judgment, in what it grants and what it refuses.[11] The statutory context is one in which inconsistent judgments are contemplated and allowed.[12]
[11]Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor (2009) 26 VR 112 at [2] and [43]-[46] per Vickery J, cited with approval by the Court of Appeal in Pearl Hill Pty Ltd v Concorp Construction Group (Vic)Pty Ltd [2011] VSCA 99 at [11].
[12]Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2005) 62 NSWLR 385, per Handley JA (with whom Santow JA and Pearlman AJA agreed) at [22].
25 This court has endorsed the hearing of applications under s 16 of the SOP Act on a summary basis by summons on originating motion with affidavit evidence.[13] Such claims are properly assessed on the balance of probabilities.[14]
[13]3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674 at [39]-[54]. See also SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805 at [26].
[14]Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449, 449-450 (Mason CJ, Brennan, Deane and Gaudron JJ).
26 Where the plaintiff applies for summary judgment under s 16, it may be appropriate to apply the test for s 61 of the Civil Procedure Act 2010 (Vic): see John Beever v Roads Corporation [2018] VSC 635; see also Best Fab Pty Ltd (ACN 105 906 876) v Australian High Bay Installations Pty Ltd (ACN 612 575 934) [2018] VCC 1053.
27 However, in the present case I will adopt the approach taken in 3D Flow Solutions[15] and recommended in SJ Higgins.[16]
Is Payment Claim No. 10 valid?
[15]3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674.
[16]SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805.
28 The plaintiff submits that Claim No. 10 has a reference date. For the plaintiff, Mr Sekic’s affidavit deposes (at [17]) that the available ‘unexhausted reference dates’ were 28 October 2019 and 1 November 2019. The plaintiff contends that given the time allowed under s 14(4) for claimants to submit payment claims, the available unexhausted reference dates also include 28 August 2019 and 28 September 2019.
29 The defendant relies on Mr Sekic’s evidence that he could not understand why Claim No. 10 stipulated that the claim period was one day and not a range.[17] Consequently, the claim period of the payment claim was not clear to him.[18]
[17]Affidavit of Stipo Sekic [15].
[18]Ibid [16].
30 The plaintiff submits that Mr Sekic’s personal understanding of the payment claim is irrelevant. It submits that Mr Sekic does not explain how the alleged failure of the payment claim to identify the claim period renders it invalid pursuant to the provisions of the SOP Act.
31 The plaintiff notes that the defendant had previously accepted payment claims which specified a single date (payment claims 4-9). The plaintiff further observes that the defendant had also accepted payment claims which failed to specify a date (payment claims 1-3). On those bases, the plaintiff submits that the defendant had no difficulty understanding the periods to which the claims related. The plaintiff submits that any submission about the single day ‘Claim Period’ in Claim No. 10 is a ‘misguided attempt to divert attention away from its payment to submit a payment schedule’.
32 Mr Sekic, for the defendant, says that ‘Payment Claim 10 contains work referable to unexhausted reference dates 28 October 2019 and 1 November 2019, but also works referable to future reference dates that had not arrived when Payment Claim 10 was served – being the reference date 28 November 2019’.[19] On that basis, he contends that ‘works conducted from 2 November 2019 onwards would be claimable on 28 November 2019 at the earliest’, such that the claim is invalid to the extent it covers work performed in that period.[20]
[19]Ibid [17].
[20]Ibid [18].
33 The plaintiff submits that, in making this statement, Mr Sekic accepts that the work the subject of Payment Claim 10 had been performed. For the plaintiff, the question the defendant poses is whether that work was performed before or after 1 November 2019. The plaintiff submits that that distinction is irrelevant because:
a) the Contract provided that the plaintiff ‘endeavour’ to submit payment claims ‘by the 1st and 28th of each month’;
b) section 9 of the SOP Act entitles the plaintiff to submit payment claims ‘on and from’ a reference date (and the plaintiff submitted Claim No. 10 on 18 November 2019); and
c) condition 1 of the Contract provided that the amount claimed may encompass ‘the full value of works completed to the date of invoice’, which allowed claims for all works performed to the date of invoice.
34 The plaintiff submits that, in any event, the work the subject of Payment Claim 10 was performed by 1 November 2019.
35 The defendant submits that Payment Claim 10 is invalid as it fails to comply with section 14 of the SOP Act and condition 1 of the Contract in having served a Payment Claim that includes works referable to future reference dates not yet arrived. It submits that pursuant to condition 1 of the Contract, a reference date arose on 1st and 28th days of each month. It indicates the parties’ agreement that ‘least the 1st day of each month is a reference date’.
36 The defendant submits that Payment Claim 10 fails to identify the period to which it relates because it stipulates a claim period of one day (18 November 2019). For the defendant, the plaintiff’s contention is that it can claim for works up to and including that date, which is impermissible.
37 Section 9(1) of the SOP Act provides as follows (emphasis added in the defendant’s submissions):
9Rights to progress payments
(1)On and from each reference date under a construction contract, a person—
(a)who has undertaken to carry out construction work under the contract; or
(b)who has undertaken to supply related goods and services under the contract—
is entitled to a progress payment under this Act, calculated by reference to that date.
38 The defendant submits that the Contract, together with s 9(1), limited the plaintiff’s entitlement to payment for works already performed on or by the relevant reference date. It submits that the plaintiff did not have a right to progress payments for works referable to a future date. Accordingly, the works performed after any such reference date cannot be claimed until the following reference date.
39 The defendant asserts other deficiencies in Claim No. 10 as follows:
· it is unclear whether the payment claim claims for works conducted on 18 November 2019; on or before 1 November 2019; or up to and including 18 November 2019;
· it is impossible to determine what work was done on or before 1 November 2020, and what after; and
· insofar as Payment Claim 10 related to works performed on or after 2 November 2019, those works were referable to the then future and exhausted reference date of 28 November 2019.
40 The defendant submits that the plaintiff’s reliance upon the second half of condition 1 (‘works completed to the date of invoice’), is problematic. With reference to Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty & Ors[21] and MetaCorp Australia Pty Ltd v Andeco Construction Group Pty Ltd,[22] the defendant submits that the plaintiff ignores the notion of a reference date and the definition of a reference date. The defendant also submits that the plaintiff ignores the text of s 9(1).
[21](2016) 260- CLR 340 at 345.
[22](2010) 30 VR 141.
41 In relation to Mr Munivrana’s evidence that ‘MPA carried out work up to 1 November 2019’,[23] the defendant submits that Mr Munivrana failed to clarify whether works conducted after 1 November 2019 and before 18 November 2019 formed part of Payment Claim 10.
[23]Affidavit of Kris Munivrana sworn on 1 April 2020 [13].
42 Accordingly, the defendant contends that Payment Claim 10 likely contains works referable not only to unexhausted reference dates of 28 October 2019 and 1 November 2019, but also to future reference dates. Therefore, the defendant concludes that Payment Claim 10 is at least partially invalid.
43 The defendant notes that in this situation, part of the claim may be read down and the impugned portion severed. In support of that proposition, the defendant relies on Gantley Pty Ltd v Phoenix International Group Pty Ltd.[24] The defendant submits that the impugned works cannot be severed. This is because Payment Claim 10 fails to identify when the works were completed, as it only stipulates a date of 18 November 2019. Accordingly, the defendant states that Payment Claim 10 is a nullity.
[24][2010] VSC 106.
44 The defendant claims that although it failed to object to previous payment claims with dates that were not the 1st or 28th of the month prior, this does not ‘remove or affect’ its right to object to Payment Claim 10.
45 In reply, the plaintiff emphasises that the defendant’s defence is as follows: that Payment Claim 10 includes work referable to a future reference date; and that the impugned portion cannot be severed.
46 For the plaintiff, the premise of that defence is a single phrase in s 9 that “a person … is entitled to a progress payment under this Act, calculated by reference to that date.” The plaintiff submits that the defendant requires that the phrase be analysed in isolation. The plaintiff says that the defendant ignores the ordinary principles of statutory interpretation.
47 The plaintiff contends that the defendant fails to cite authority in support of its defence. For the plaintiff, the ‘uncontested proposition’ is that a payment claim must have a reference date which has accrued when the payment claim is issued and remains available. In support of that proposition, the plaintiff relies on Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd[25] and MKA Bowen Investments Pty Ltd v Carelli Constructions Pty Ltd.[26] The plaintiff submits that Payment Claim 10 satisfies these requirements as it can attach to various available reference dates, the latest being 1 November 2019.
[25](2016) 260 CLR 340.
[26][2019] VSC 436.
48 The plaintiff then indicates that statutes must be construed as a whole, having regard to their text, context and purpose. The plaintiff submits that the defendant’s submissions are inconsistent with these principles.
49 The plaintiff contends that the defendant’s submissions disregard the text of s 9(1). The plaintiff says that the purpose of s 9(1) is to specify a date on which a claimant becomes entitled to a progress payment.
50 The plaintiff relies on s 9(2)(a)(i), which provides that a reference date accrues on ‘a date determined by or in accordance with the terms of the construction contract as a date on which a claim for progress payment may be made’. That progress payment may be ‘in relation to a specific item of construction work carried out or to be carried out or a specific item of related goods and services supplied or to be supplied under the contract’.
51 The plaintiff submits that s 9(2) allows the contract to determine the work to which the progress payment relates. For the plaintiff, the Contract at issue did just that and provided that MPA could claim ‘for the full value of the works completed to the date of invoice’.[27] The plaintiff submits that this phrase captures work performed after the reference date.
[27]Affidavit of Kris Munivrana sworn on 1 April 2020.
52 The plaintiff submits that the phrase ‘to be carried out’ in s 9(2) reinforces that it may claim for future work.
53 The plaintiff contends that s 10 stipulates that the amount claimed may be calculated ‘in accordance with the terms of the contract’. In reliance upon that provision, the plaintiff submits that Payment Claim10 claimed ‘for the full value of the works completed to the date of invoice’.[28]
[28]Ibid.
54 The plaintiff submits that its analysis is consistent with the High Court discussion of the Building and Construction Industry Security of Payment Act 1999 (NSW) (“NSW SOP Act”) in Southern Han. In Southern Han, the High Court held that the accrual of a reference date differs from the calculation of a progress claim:
Within Pt 2 an important distinction is drawn between a progress payment to which a person is entitled and the amount of the progress payment to which that person is entitled. Cast in the present tense, s 8(1) makes clear that a person who meets the description of a person who has undertaken to carry out construction work or supply related goods and services under a construction contract is immediately by force of that provision “entitled to a progress payment” on and from each reference date under the construction contract. Cast in the future tense, in contrast, s 9 makes clear that the amount of a progress payment to which the person is so entitled is not fixed by force of that section but “is to be” ascertained in the manner prescribed by that section, and quantifies the amount of the progress payment to which a person is entitled by force of s 8(1).’[29]
[29]at [59].
55 The plaintiff submits that the defendant disregards this distinction. The plaintiff says that the defendant would have section 9 determine not only the date on which a reference date accrues, but also how the progress payment entitlement which accrues on a given reference date should be calculated. The plaintiff contends that this overstates the significance of section 9 in the legislative scheme by disregarding the function performed by section 10.
56 The plaintiff submits that the interaction between ss 9 and 10 is often reflected in the contractual provision for claims on a specified day in a calendar month for work performed to the end of that month. It submits that this arrangement is not possible on the defendant’s submissions. It says that on the defendant’s submissions, such a payment claim would only be valid if the work performed after the reference date were precisely specified. The plaintiff submits that the defendant is seeking to read additional language into the criteria for a valid payment claim. It submits that the defendant’s position demands a level of detail not required by the applicable authorities.
57 The plaintiff claims that the defendant’s construction would undermine the SOP Act’s well-recognised function of preserving contractors’ cashflow by providing a statutory entitlement to progress payments and efficient mechanisms for enforcing it. In support of that proposition, the plaintiff refers to s 3 and Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor.[30]
[30]26 VR 112 [36]-[46] (Vickery J).
58 Finally, the plaintiff submits that s 14(4) provides that claimants may serve a payment claim at least three months after the applicable reference date. It submits that further construction work can be carried out in that period. Accordingly, the plaintiff concludes that it is non-sensical to limit the claimant’s entitlement to work performed and goods and services supplied up to three months previously, particularly in the absence of clear language.
59 In reply, the defendant submits that the affidavit of Mr Sekic does not contain admissions that the works the subject of Payment Claim 10 were complete. The defendant claims that the default notice served on MPA on 25 November 2019 in response to Payment Claim 10 suggests that the works had not been completed, that some works needed to be rectified and, in some cases, re-done.
60 For the defendant, the plaintiff’s submission that as the reference date of 1 November 2019 had arisen, that from that date to the date of the invoice MPA may claim all works to the date of the payment claim, is misconceived.
61 The defendant submits that the mere fact that time has passed, the 1 November 2019 reference date cannot mean, when read with condition 1 of the Contract, that the works after that date may be claimed at random. It refers to the fact that the next available reference date, whereby the payment may be calculated by reference to that date, is 28 November 2019.
62 The defendant relies on Seabay Properties Pty Ltd v Galvin Construction Pty Ltd[31], in support of its proposition that the phrase ‘the full value of the works completed to the date of invoice’ in the Contract must be read with the first half of the condition where the reference dates are set. It submits that this interpretation mirrors how section 9 of the Act is set out.
[31][2011] VSC 128, at [34] (Vickery J).
63 The defendant contends that had MPA identified and distinguished the works conducted before 1 November 2019 and those conducted after, the impugned portion could be severed. Alternatively, the court could hold that any such defect is a matter that ought properly be included in a payment schedule and/or argued before an adjudicator. The defendant submits that since the impugned portion cannot be severed, it cannot properly understand Payment Claim 10. It concludes that since no part of the claim is severable, any valid portion cannot operate independently.
Analysis
64 The starting point for an analysis of reference dates is s 9 of the SOP Act. The effect of s 9 is that a payment claim must be submitted ‘on and from’ a reference date. The authorities indicate that ‘on and from’ means ‘on or after’.[32]
[32]All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289 [13]-[14].
65 The statutory entitlement to a progress payment does not arise until a reference date has arrived. The date is determined by the terms of the contract as that date on which a claim for a progress payment may be made in relation to work carried out or undertaken to be carried out under the contract.
66 A reference date is:
“a date set by contractual force as a date for making a contractual claim to be paid the whole or part of the contracted amount … [T]he date is … fixed by operation of one or more express provisions of the construction contract.”[33]
[33]Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340 at [70].
67 In Southern Han, the High Court held that a reference date is the ‘precondition’ to the submission of a payment claim.[34] That is, a reference date must exist before a payment claim can be made upon it.
[34][61]-[62].
68 In MKA Bowen, Digby J considered that he was bound to follow Southern Han and All Seasons. His Honour held that:
In my view … it is sufficiently clear in light of Southern Han and All Seasons that s 9 and s 14 of the SoP Act (Vic) do not operate so as to permit the valid service of a payment claim prior to the relevant reference date which itself establishes a valid foundation for that payment claim to be made under the SoP Act (Vic)…[35]
[35][2019] VSC 436 at [60].
69 Prior to the decision in MKA Bowen, the position in Victoria was that a bona fide payment claim served prematurely could be valid: MetaCorp Australia. Justice Vickery found that an early claim called ‘a prospective claim for payment’, would become valid once the reference date arrived.[36] However, that is no longer the case, even where the relevant construction contract contains a clause deeming an early payment claim as effective only from the next reference date.
[36]MetaCorp Australia Pty Ltd v Andeco Construction Group Pty Ltd & Ors (2010) 30 VR 141 at [107].
70 The adjudication certificate in MKA Bowen was quashed because the payment claim in that case was not served ‘on and from’ the relevant reference date. In the present case, the payment claim has been served after a reference date.
71 The real question for determination is the distinction between when a reference date accrues and how a person’s progress payment entitlement is calculated: Southern Han at [59].
72 Where a construction contract expressly provides a method for calculating the value of a progress payment, it is to be determined in accordance with those terms (s 10(1)(a)). A progress payment becomes payable in accordance with the terms of the contract (s 12(1)(a)).
73 Clause 1 of the Contract stated that the plaintiff would endeavour to provide tax invoices in accordance with the Act by the 1st and the 28th of each month for the full value of the works completed to the date of the invoice. Therefore, there was an available reference date of 28 October 2019 and 1 November 2019. There is a dispute between the parties as to whether the progress claim included works performed by 1 November 2019 or also included works conducted from 2 November 2019 onwards.
74 Applying the principles set out in Seymour WhyteConstructions Pty Ltd v Ostwald Bros Pty Ltd (in liq)[37] the NSW Court of Appeal recognised that progress payment can include advanced payments. Therefore, any distinction of whether work was performed before or after 1 November 2019 is irrelevant.
[37](2019) 99 NSWLR 317 at [228].
75 The expression “ a person … who is or who claims to be entitled to a progress claim … may serve a payment claim” under s 14(1) is a person who has undertaken to carry out construction work or supply related goods and services under the Contract in accordance with s 9(1). Southern Han makes it clear that a person who meets the description in ss 9(1) and 14(1) of a person who has undertaken to carry out construction work is immediately by force of that provision entitled to a progress payment. The provision is cast in future tense.
76 The language of s 9(1), read in light of the analysis in Southern Han and Seymour Whyte, creates an entitlement to a progress payment in an amount to be quantified in accordance with Part 3 of the SOP Act. The entitlement accrues on satisfaction of the each of the conditions that the person had undertaken to carry out construction work under the Contract and a reference date under the Contract has arisen.
77 Both Southern Han and Seymour Whyte stand for the proposition that the progress payment to which a person is entitled as and from the reference date is a payment for work done, or for work undertaken to be done, where some element of advance payment has been agreed under the contract: at [67] and [228] respectively. This is because a progress payment is an amount that a Contract requires to be paid as part of the total price of the construction work: Southern Han at [68] and Seymour Whyte at [228].
78 Seymour Whyte clarifies that the text of the SOP Act distinguishes work undertaken to be carried out and work carried out. Therefore, if Parliament intended s 9(1) to be subject to a requirement that the claimant actually carry out the construction work on the reference date, it would have said so: at [232].
79 As such, the provisions of s 9(1) for an entitlement for a progress payment does not depend on the claimant actually performing the work under the Contract on the reference date: Seymour Whyte at [234].
80 In the circumstances of the present case, the Contract provided that the plaintiff endeavour to submit payment claims by the 1st and 28th of each month; s 9 entitles the plaintiff to submit a payment claim on and from the reference date (the relevant payment claim, here, being 18 November 2019) and condition 1 of the Contract provided that the amount claimed may encompass the full value of works completed to the due date of the invoice. Therefore, the payment claim was calculated by reference to the reference date in accordance with s 9(1).
81 It does not, then, matter whether the payment claim is unclear on its face as to whether the works were conducted on 18 November 2019; on or before 1 November 2019 or up to and including 18 November 2019. On a proper reading of the provisions of the SOP Act and the contractual terms, it was open to the plaintiff to include the full value of works completed to the due date of the invoice.
82 It follows that I am satisfied that Claim No. 10 issued on 18 November 2019 is a valid payment claim, totalling $135,668.94 (inclusive GST).
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Certificate
I certify that these 18 pages are a true copy of the judgment of Judicial Registrar Burchell delivered on 20 July 2020.
Dated: 20 July 2020
Susan Thomas
Associate to Judicial Registrar Burchell
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