One Scaf Pty Ltd v Rudyard Pty Ltd
[2020] VCC 1109
•28 July 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
BUILDING CASES LIST
Case No. CI-20-01396
| One Scaf Pty Ltd (ACN 606 044 204) | Plaintiff |
| v | |
| Rudyard Pty Ltd (ACN 605 072 115) | Defendant |
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JUDGE: | Judicial Registrar Burchell | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the Papers | |
DATE OF JUDGMENT: | 28 July 2020 | |
CASE MAY BE CITED AS: | One Scaf Pty Ltd v Rudyard Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 1109 | |
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 Act2002 (Vic) ss 4, 9, 10A, 10B, 12, 14(2), 15, 16(2), 17(2); Civil Procedure Act 2010 (Vic) s 61; Public Holidays Act 1993 (Vic) ss 8, 8A
Cases Cited: 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674; 470 St Kilda Road Pty Ltd v Reed Constructions Australia Pty Ltd & Anor [2012] VSC 235; Bermingham v Corrective Services Commission of New South Wales (1988) NSWLR 292; BitanniaPty Ltd v Parkline Constructions Pty Ltd [2006] 67 NSWLR 9; 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 & Ors v Phoenix International Group Pty Ltd & Ors [2010] VSC 106; Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor (2009) 26 VR 112; John Beever (Aust) Pty Ltd v Paper Australia Pty Ltd [2019] VSC 126; Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404; Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd & Ors [2010] VSC 199; Mackie Pty Ltd v Counahan & Anor [2013] VSC 694;Momcilovic v R and Others (2011) 280 ALR 221; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (In Liquidation) (2005) 64 NSWLR 462; Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd [2010] QCA 119; Pelligra Build Pty Ltd v Australian Crane & Machinery Pty Ltd [2020] VCC 545; Rudyard Pty Ltd v ASEA 1 Pty Ltd [2019] VCC 1995; Thompson v Goold & Co [1910] AC 409
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A R Morrison | Kalus Kenny Intelex |
| For the Defendant | Dr Michael Wolff | Noble Lawyers |
JUDICIAL REGISTRAR:
Introduction
1 In this proceeding, the plaintiff, One Scaf Pty Ltd (“One Scaf”), has applied for judgment against the defendant, Rudyard Pty Ltd (“Rudyard”), pursuant to s16(2) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (“SOP Act”). One Scaf makes the application by summons on originating motion dated 27 March 2020. The application arises out of One Scaf’s provision and installation of scaffolding equipment (“the Works”) at 16-18 Dalgety Street, Oakleigh (“the Site”).
2 One Scaf asserts that it is entitled to judgment because there was an oral engagement between Rudyard’s site manager, Mr van Soest, and One Scaf based on quotations provided by One Scaf dated 28 May 2018 (revised on 4 December 2018) (“the Quote”). This contract resulted in the issuing of five payment claims in accordance with the SOP Act, to which Rudyard failed to respond, either by way of payment or payment schedules.
3 Rudyard opposes the giving of judgment on the following grounds:
a) that the terms of the contract do not include the plaintiff’s standard terms and conditions and instead incorporates the defendant’s standard terms and conditions;
b) the payment claims were not issued in accordance with the correct reference dates;
c) the plaintiff had ceased providing services pursuant to the SOP Act in mid-October 2019, and therefore the final payment claim issued 12 December 2019 is a nullity;[1]
[1]Defendant’s submissions dated 29 May 2020 [53].
d) that the payment claims were each invalid, either in totality or in part, due to non-compliance with SOP Act requirements;
e) that the payment claims included amounts that were not yet incurred for additional hire of the scaffolding equipment beyond the reference dates; and
f) that the representations by Mr Tigani, director of the plaintiff, that Rudyard did not have to pay the payment claims pursuant to the terms on the face of the payment claims ought mean the plaintiff be estopped from pursuing any of the payment claims.
4 The plaintiff continued works until at least 21 November 2019, being after the relevant reference date of 14 November 2019, triggering the right to issue a further payment claim. Therefore, the grounds raised by the defendant are not made out. Any complaint about claims for works not yet incurred are not for this forum. 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 $63,661.67, together with interest pursuant to s 12(2) of the SOP Act. I also order that Rudyard pay One Scaf’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.
The factual background
6 There has been substantial affidavit material filed on behalf of both parties in this proceeding, namely:
a) four affidavits of Mr Salvatore Tigani, sole director of plaintiff, one sworn 20 March 2020 and three affirmed 8 May 2020, 18 May 2020 and 26 May 2020;
b) three affidavits of Mr Lincoln Daley, director of the defendant, sworn 1 May 2020, 13 May 2020 and 22 May 2020;
c) one affidavit from Mr Peter Walsh, former project manager for the defendant, sworn 1 May 2020;
d) one affidavit from Mr James Tomarchio, operations manager and site supervisor for the plaintiff, affirmed 18 May 2020; and
e) one affidavit from Mr Timothy Knight, occupational health and safety officer for the defendant, sworn 22 May 2020.
7 There have been 10 affidavits filed in this proceeding, 5 on behalf of each party comprising many hundreds of pages of exhibits, provided over a period of 3 months since initiation. Much of the material filed was either only marginally relevant, or not relevant at all, to an SOP Act application given the narrow statutory defences available. The Court refers the parties to the Practice Note, which states that the Building Cases List aims to resolve disputes in a speedy, efficient, just and cost-effective manner. The SOP Act itself is designed to reduce payment delays for subcontractors by providing a procedure for the speedy recovery of progress payments. In addition, given that the quantum claimed was the sum of $63,661.67 plus interest, the overarching obligations under the Civil Procedure Act2010 (Vic) (“the CPA”) such as the obligation to narrow the issues in dispute, to ensure costs are reasonable and proportionate, and to minimise delay, are particularly relevant.
8 It is noted from the affidavit material that there is substantial disagreement between the parties as to the factual background of the matter, and a breakdown in a long standing working relationship between the parties. In or around May 2018, Rudyard invited One Scaf to prepare a quote for scaffolding services for a multi-unit residential construction project at the Site, for which Rudyard was the builder. On 28 May 2018, Mr Tigani sent an email to Mr Daley with the Quote, numbered Q3093, with One Scaf’s terms and conditions. This quotation was not signed by Mr Daley.
9 Subsequently, on 4 December 2018, Mr Tigani, at the request of Mr Daley, sent a revised quotation, also numbered Q3093, which included an allowance for engineering and a shade cloth, if required. This quotation was also not signed by Mr Daley.
10 Mr Tigani deposes in his first affidavit that on 20 February 2019, he attended an on-site meeting with Mr van Soest who he understood to be the site manager retained by Rudyard. Mr Tigani further deposes that Mr van Soest authorised One Scaf to proceed with the Works.[2]
[2]Affidavit of Salvatore Tigani sworn 20 March 2020 at [10].
11 In his second affidavit, Mr Tigani deposes that a meeting was held on 24 January 2019, with Mr Van Soest and Mr Daley, where they discussed the need for staged erection of the scaffolding. Following the meeting, Mr Tigani deposes he had a further discussion with Mr Daley, in which he informed him the Quote had not incorporated “a staged erection and dismantling of the scaffold” and that there would be additional charges, to which Mr Daley responded that the variations could be addressed “at the end”.[3] Mr Daley denies this discussion took place.[4]
[3]Affidavit of Salvatore Tigani affirmed 8 May 2020 at [9].
[4]Affidavit of Lincoln Daley sworn 13 May 2020 at [9].
12 The Works commenced at the Site on 27 or 28 February 2019.
13 Between 24 April 2019 and 23 July 2019, One Scaf issued payment claims to Rudyard, which were paid and are not the subject of dispute in this proceeding.
14 Between 22 August 2019 and 22 December 2019, One Scaf issued a further five payment claims to Rudyard via email, totalling $76,306.18. Mr Tigani deposes that the payment claims were issued pursuant to purchase orders received from Rudyard,[5] via email on 2 May 2019 namely:
[5]Affidavit of Salvatore Tiganie sworn 20 March 2020 at [18].
a) purchase order 101440 for $2,232, back dated to 22 February 2019, for ‘Remainder of allowance for scaffold to stairs and lift as per quote 4025 dated 21/02/2019’;[6]
[6]Ibid, exhibit ‘ST-7’.
b) purchase order 101441 for $3,000, back dated to 22 February 2019, for ‘Hire of scaffold for main central stairs and lift shaft for May, June and July x$1,000 per month’;[7]
[7]Ibid.
c) purchase order 101442 for $1,988.57 for ‘Scaffold hire for March and April’;[8] and
works order 500682 for $55,340 attached to an email from Mr Daley to Mr Tigani dated 22 May 2019 for “Perimeter scaffold to building, shadecloth, access stairs, up/down and 4 weeks hire complete”.[9] Mr Daley subsequently issued an amended version of this works order on 23 May 2019, for a total of $65,840, explaining in his email that the additional costs are the “material for the lift shaft only”.[10]
[8]Ibid.
[9]Ibid, exhibit ‘ST-8’.
[10]Affidavit of Salvatore Tigani affirmed 8 May 2020 at ST-10.
15 Mr Daley deposes that all amounts due under the purchase and works orders had been paid, totalling of $69,546, by August 2019.[11] However, in about August 2019, he realised that much of the work done by One Scaf had been defective or incomplete. He was made aware of such defects by other subcontractors who had incurred further costs in relation to scaffolding issues.[12]
[11]Affidavit of Lincoln Daley sworn 1 May 2020 at [27-31].
[12]Ibid [33-36].
16 Mr Daley deposes that he had a telephone conversation with Mr Tigani on or about 19 September 2019, in which Mr Tigani agreed “not all had been done right” and proposed to bring in a “boom scaffold” to address the issues, at One Scaf’s expense. Mr Daley further deposes that it was agreed between the two that Rudyard “should get all costs first” and then they would consider the total costs and expenses from each party, as it was unclear when the work had been completed whether One Scaf would be indebted to Rudyard or vice versa.[13]
[13]Ibid [37-40].
17 By email dated 20 September 2019, Mr Tigani responded affirmatively to Rudyard’s proposal of the defendant back charging the costs of the operator and spotter to the plaintiff, saying “Yes agree. This will be deducted from next months [sic] claim and not stop any payment due on 30th September. All invoices are required for works by spotter and operator before any payment will be withheld next claim."[14]
[14]Ibid at [42].
18 Mr Tigani deposes to acquiring a knuckle boom from ‘IN2 Access Services’, at the cost of $929.50 (including GST), which was paid. He exhibits the invoice from IN2 Access Services, which shows the boom was on-site from 23 to 30 September 2019.[15]
[15]Affidavit of Salvatore Tigani affirmed 8 May 2020 at ‘ST-22’.
19 Mr Daley deposes to hiring ‘Spotters R Us’ to provide the EWP operator and electrical spotter, at the cost of $28,773.50, which was paid. He exhibits invoices showing that Spotters R Us provided services from about 13 September to 28 October 2019.[16] There is substantial disagreement between the parties as to when One Scaf ceased the Works on the Site. The plaintiff submits that the Works continued until 5 December 2019, when the plaintiff’s transport contractors attended the site to collect the dismantled scaffold. Mr Tigani deposes he was on site on 4 December 2019 to see the dismantling of the scaffold.[17] In support, Mr Tomarchio deposes that he was on site on 4 December 2019 and took a photo showing a One Scaf ute with scaffolding material at the Site.[18]
[16]Affidavit of Lincoln Daley sworn 1 May 2020 at p 14-27 of ‘LJD1’.
[17]Affidavit of Salvatore Tigani affirmed 8 May 2020 at [51].
[18]Affidavit of James Tomarchio affirmed 18 May 2020 at [6]-[7].
20 The defendant submits the plaintiff ceased the Works on or around 17 October 2019 except for the scaffolding in the South-West Corner, which was dismantled on 21 November 2019. The defendant engaged SESS Scaffolding, who installed the scaffolding on 21 October 2019, which was still in place in December 2019.[19] Mr Daley deposes the last load of One Scaf scaffolding was picked up from the site on 18 October 2019, and no material remained on the Site nor services provided by One Scaf after this date.[20] However, in its submissions the defendant submits that the final date the plaintiff carried out construction works was 21 November 2019.[21] I address the significance of the final date of Works carried out below.
Q3093 Quote
[19]Defendant’s submissions dated 28 May 2020 at [20].
[20]Affidavit of Lincoln Daley sworn 1 May 2020 at [67]-[71].
[21]Defendant’s submissions dated 28 May 2020 [21].
21 The original Q3093 was provided via email from One Scaf to Rudyard on 28 May 2018, however, it was seemingly not accepted within the 30 days as stipulated in the quote. Upon request from Mr Daley, Mr Tigani sent a revised Q3093 via email on 4 December 2018. It relevantly summarises as follows:
a) The scaffold to be erected to suit progress of work, with one erections [sic] and one dismantle.
b) Any additional site visits, including inspections, will be charged at an appropriate rate.
c) Inspections of scaffold, as per Australian Standards, are to be performed in intervals no longer than 30 days.
22 The Quote provides the scaffold was to measure approximately 130m long with a maximum of 12m top working platform, being 760mm wide for the purpose of external cladding. The inclusions listed were:
a) 6x levels of boards;
b) 1x stair access;
c) 1x ladder access; and
d) Hop ups where required by One Scaf.
23 The Proposed Item Costings included rates for modular scaffold hire, engineering, shade cloth, labour to erect and dismantle and transport, resulting in a total of $63,820 excluding GST. The hire duration was for a 4 week contract period, with a weekly hire rate of $3,120 excluding GST following the initial 4 week contract period.
24 A set of terms and conditions over pages 2, 3 and 4 is included, with an unsigned execution block. Relevantly, under “Variations”, it provides that “all variations shall be requested in writing and shall only be effected by One Scaf upon the costs of such variation being agreed in writing”. Further, under “Payment”, the terms and conditions provide:
“Unless otherwise stated in writing, all invoices, additional costs and charges of any kind (including hire, delivery, installation and collection charges) is payable net 30 days from date of invoice. Where delivery of Goods is affected by part deliveries, the Company shall be entitled to pro rata progress payments in respect thereof.”
25 Notwithstanding this provision, it is silent on the issue of reference dates. The plaintiff submits, and the defendant does not dispute, that in the absence of a provision in the Quote regarding reference dates, the provisions of the SOP Act, namely s 9(2)(d), apply.
26 Pursuant to the SOP Act provisions, One Scaf served five payment claims via email, as follows:
1. On 22 August 2019, Invoice 467 was issued for $15, 198.85 for “Q3093. Additional hire beyond contract period 1/8/19-31/8/19” (“Payment Claim 1”). It stipulated the due date for payment was 30 September 2019.
2. On 24 September 2019, Invoice 486 was issued for $12,389.14 for “Q3093. Additional hire beyond contract period 1/9/19-10/9/19 ($3120 p/w) and additional hire beyond contract period 11/9/19-30/9/19 (reduced rate $2832 p/w)” (“Payment Claim 2”). It stipulated the due date for payment was 30 October 2019.
3. On 24 October 2019, Invoice 503 was issued for $7,682.07 for “Q3093. Additional hire beyond contract period 1/10/19-14/10/19 (reduced rate $2832 p/w) and additional hire beyond contract period 15/10/19-31/10/19 (reduced rate $914 p/w)” (“Payment Claim 3”). It stipulated the due date for payment was 30 November 2019.
4. On 21 November 2019, Invoice 513 was issued for $3,426.34 for “Q3093. Additional hire beyond contract period 1/11/19-21/11/19 (reduced rate $914 p/w) and additional hire beyond contract period 22/11/19-30/11/19 (reduced rate $290 p/w)” (“Payment Claim 4”). It stipulated the due date for payment was 30 December 2019.
5. On 12 December 2019, Invoice 521 was issued for $37,609.78 for “Q3093. Additional weekly hire beyond contract period 1/12/19-Off hired 4/12/19 (reduced rate $2832 p/w) and additional hire beyond contract period. Transport from site. Labour to dismantle. Variation to Contract 002 (see attached). *CONTRACT COMPLETE*’.” (“Payment Claim 5”). It stipulated the due date for payment was 30 January 2020.
27 Attached to Payment Claim 5 was a further document entitled “Variation to Contract 002”, which stated:
“Rudyard Pty Ltd requested staged delivery and installation & dismantle. One Scaf Pty Ltd’s Quotation Q3093 allowed one scaffold erection and one dismantle. Staged dismantle and additional transport costs as follows:
Labour to dismantle as per schedule $3,360.00
Additional transport costs as per schedule $6,285.00
TOTAL: $9,645.00.”
28 No payment schedules were served by Rudyard in response to the five payment claims. Mr Daley deposes that he did not do so due to representations made by Mr Tigani between September 2019 to December 2019 that the payment claims were for the plaintiff’s internal record keeping purposes only, and not viewed as payment claims under the SOP Act.[22] Further, he deposes that if he were to have served payment schedules, they would have been for scheduled amount of $0 due to the alleged agreement that Rudyard would pay the charges, back charge them to One Scaf and then discuss the balance at the conclusion of the Works.[23] In particular, following the cessation of Works, Mr Daley deposes that he had a telephone conversation with Mr Tigani while he was overseas, on or around 18 December 2019, regarding the payment claims, in which Mr Tigani confirmed the alleged payment claims were not to be relied upon as payment claims and it was for administrative purposes only.[24]
[22]Affidavit of Lincoln Daley sworn 1 May 2020 at [74].
[23]Ibid at [73] and [97].
[24]Ibid at [83]-[87].
29 Mr Tigani denies the allegations and discussions regarding the backcharges, particularly:
a) that the payment claims did not need to be responded to or assessed by Rudyard;
b) that the invoices were issued for record keeping purposes only; and
c) that he spoke to other subcontractors and told them Rudyard did not have to assess claims because it would be worked out later.[25]
[25]Affidavit of Salvatore Tigani affirmed 8 May 2020 at [57]-[58].
30 He also denies that a telephone conversation took place on or around 18 December 2019.[26]
The legal context
[26]Ibid at [65].
31 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.[27]
[27]Building and Construction Industry Security of Payment Act 2002 (Vic) s 3.
32 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.[28] It applies even if the contract is governed by the law of a jurisdiction other than Victoria.[29] 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.
[28]Ibid s 7.
[29]Ibid.
33 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).
34 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.
35 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 or related goods and services to which the progress payment relates;
· it must indicate the amount of progress payment claimed;
· it must state that it is made under this Act;
· it may include any amount that the respondent is liable to pay under s 29(4); and
· it must not contain excluded amounts.
36 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)(b) provides that “reference date”, in relation to a construction contract, means, if the contract makes no express provision with respect to the matter, the date occurring 20 business days after the previous reference date or (in the case of the first reference date) the date occurring 20 business days after construction work was first carried out under the contract, or related goods or services were first supplied under the contract.
37 ‘Business days’ is defined in the SOP Act in s 4 to be a day that is not a Saturday, a Sunday or “a day that is wholly or partly observed as a public holiday throughout Victoria”. Section 6 of the Public Holidays Act 1993 (Vic) defines when the public holidays fall.
38 The SOP Act permits only limited defences, which include that:
a) the claim is not in respect of a “construction contract”;
b) the progress claim fails to satisfy the formal requirements of the Act (s 14(2));
c) the claim was made prematurely before the applicable reference date;
d) variations were not claimable variations; and
e) the timing and sufficiency of the payment schedule failed to comply with the Act.[30]
[30]Fulconstruction Pty Ltd v ABP Consultants Pty Ltd (2016) VCC 1732 at [8] per Anderson J.
39 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.[31] The statutory context is one in which inconsistent judgments are contemplated and allowed.[32]
[31]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].
[32]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].
40 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.[33] Such claims are properly assessed on the balance of probabilities.[34]
[33]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].
[34]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).
41 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; see also Best Fab Pty Ltd (ACN 105 906 876) v Australian High Bay Installations Pty Ltd (ACN 612 575 934).[35]
[35][2018] VSC 635; [2018] VCC 1053.
42 However, in the present case I will adopt the approach taken in 3D Flow Solutions v LTP Armstrong Creek[36] and recommended in SJ Higgins v The Bay Healthcare Group Inc.[37]
Analysis
Terms of the Contract
[36][2018] VCC 674.
[37][2018] VCC 805.
43 I reiterate the extensive affidavit material filed by the parties regarding the alleged conversations, which took place regarding whose terms and conditions would apply to the Works, including the provision of evidence about past agreements between One Scaf and Rudyard. There is further dispute as to the authority of Mr van Soest and his alleged directions to One Scaf at the commencement of the Works.
44 I accept that neither of the parties signed the other’s terms and conditions and that this was, at least on the part of the defendant, due to the lengthy relationship between One Scaf and Rudyard, that this formality was not insisted upon.[38]
[38]Affidavit of Lincoln Daley sworn 1 May 2020 at [17].
45 However, I also accept that, as the defendant has proposed in its submissions, and the plaintiff accepts in its reply submissions, that as neither party can establish the terms and conditions to govern the relationship between the parties, the provisions of the SOP Act apply as they are. Therefore, I will continue on this premise.
46 As to the issue of the authority of Mr van Soest and whether he validly authorised the Works to commence, the incontrovertible fact is that One Scaf was permitted on-site and continued to perform the Works for some at least 7 months, such that the parties gave effect to the agreement as outlined in the Quote.
Were the payment claims validly issued pursuant to the requirements of the SOP Act?
A. Adequate description pursuant to s 14(4)
47 The defendant submits that the validity of the payment claims turn on two factors relevant to this case. Firstly, that the payment claims properly identify the construction work, or related goods to which they relate, pursuant to the requirements of s 14. Secondly, that the payment claims are issued in accordance with, and refer to, the correct reference dates.
48 The defendant opines in some detail that the payment claims simply refer to ‘hire’ which fails the requirements of identification of works requirement in s 14(2)(c), and the test as espoused in John Beever (Aust)[39] that “the payment claim reasonably identifies the construction work to which it relates such that the basis of the claim is reasonably comprehensible to the recipient party when considered objectively”.[40]
[39]John Beever (Aust) Pty Ltd v Paper Australia Pty Ltd [2019] VSC 126.
[40]Ibid at [83(3)].
49 The plaintiff submits that the concerns raised by the defendant’s submissions are “counsels of perfection” and a “lawyer’s construct”.[41] It submits that the payment claims are intended to be understood by those parties involved and refers to the case of Gantley[42] and John Beever(Aust) in support of this view.
[41]Plaintiff’s reply submissions dated 1 June 2020, at [13].
[42]Gantley Pty Ltd & Ors v Phoenix International Group Pty Ltd & Ors [2010] VSC 106 at [51] (Vickery J); John Beever (Aust) Pty Limited v Paper Australia Pty Ltd [2019] VSC 126 at [83] (Lyons J).
50 In order to understand the defendant’s submission on this point, it is necessary to refer to the four affidavits of Mr Tigani regarding the different parts of the Site with separate scaffolding. The defendant submits that there were three different sets of scaffolds.
1. The lift fall protection and access staircase scaffold, which Mr Tigani deposes concluded in August 2019 (“Scaffold 1”).
2. The loading bay scaffold, which is alleged to have finished by June 2019 (“Scaffold 2”).
3. The perimeter scaffold, which is undisputed between the parties (“Scaffold 3”).
51 In relation to Scaffold 1, Mr Tigani deposes One Scaf was engaged in relation to a separate quote ‘Q4025’ to provide fall protection in the lift shaft. These works took place from 5 February 2019 to 31 May 2019. He further deposes that the works were paid in full by Rudyard, totalling $10,085.43, including $3,287.43 for additional weekly hire costs beyond the initial four week period.[43]
[43]Affidavit of Salvatore Tigani affirmed 8 May 2020 at [17].
52 Mr Daley states that Scaffold 1 were referred to in Rudyard’s purchase order 101440, which states “hire of scaffold for main central stairs and lift shaft for May, June and July x$1,000 per month.” He further deposes that the two purchase orders (101440 and 101441) were in response to quote ‘Q4025’.
53 Five invoices were issued by One Scaf in relation to ‘Q4025’, from 21 February 2019 until 22 August 2019, with the final invoice (‘INV468’) stating “Contract Complete” under the description.[44] To my understanding, the defendant does not dispute that Scaffolds 1 and 2 were distinct from the Scaffold 3, the subject of dispute in this proceeding.
[44]Ibid, exhibit ‘ST-11’.
54 Scaffold 2, the loading bay scaffold, was pursuant to a separate quote, ‘Q4031’, dated 9 May 2019. One invoice was issued for this amount, which was paid in full on 25 June 2019, and is not the subject of this dispute.[45]
[45]Affidavit of Salvatore Tigani affirmed 26 May 2020 at [8].
55 The works and payment issued in relation to Scaffold 3, the perimeter scaffold, are the subject of dispute in this proceeding. However, presumably due to the overlap in timing of the three separate scaffolds, the defendant submits the plaintiff failed to meet the requirements in s 14(4) of the SOP Act and as outlined in John Beever(Aust), and it is unclear to which scaffold – 1, 2 or 3 – the payment claims refer.
56 In my view, the defendant selectively relies upon only one of the three principles identified by Lyons J in John Beever (Aust). In considering the three principles together, the identification requirement must be an objective but not overly demanding or technical one. Further, it is sufficient for the payment claim to be clear to the recipient of the payment claims with knowledge and understanding of the background to the payment claims, in this case, Rudyard. It is not required for the identification of the works to be clear to an objective third party.
57 I am not persuaded by the defendant’s submission that a reasonable party in the position of Rudyard would not have understood to which work the payment claims referred. My reasons for this are threefold.
58 Firstly, while the description of the works on the invoices is not detailed, each of the five payment claims in dispute under the description lists ‘Q3093’. This clearly refers to anything the Quote which related strictly to Scaffold 3 and not to Scaffolds 1 or 2. Further, the invoices issued pursuant to ‘Q4025’ also list ‘Q4025’ in the description, providing further distinction between the invoices.
59 Secondly, in the top right hand corner of each invoice, One Scaf has stated to which purchase order the invoice relates, purchase order 500682. While arguably the invoice should state ‘works order’, rather than ‘purchase order’, the intention is clear. The works order was strictly for works relating to the perimeter scaffolding, as outlined in Mr Daley’s email dated 22 May 2019 and in the details of the works order itself.
60 Finally, I accept the plaintiff’s submissions that given the lengthy relationship between the parties, and the plaintiff having issued invoices in a similar form, it is reasonable that the defendant would have had sufficient understanding to which scaffold the invoices related.
B. Were the payment claims issued under valid reference dates?
61 The parties are in agreement that the Quote does not specify when reference dates arise and therefore the provisions at s 9(2) of the SOP Act apply. Pursuant to this section, the reference dates under which payment claims may be issued is every 20 business days after the previous reference dates, the first reference date being the date occurring 20 business days after the construction work first carried out or related goods and serviced were first supplied under the contract.[46]
[46]Building and Construction Industry Security of Payment Act 2002 (Vic) s 9(2)(b).
62 The relevant dates for the five payment claims were, as identified by the plaintiff, as follows:
1. 20 August 2019 for Payment Claim 1, which was served on 22 August 2019;
2. 17 September 2019 for Payment Claim 2, which was served on 24 September 2019;
3. 16 October 2019 for Payment Claim 3, which was served on 24 October 2019;
4. 14 November 2019 for Payment Claim 4, which was served on 21 November 2019; and
5. 12 December 2019 for Payment Claim 5, which was served on 12 December 2019.
63 There has been error on behalf of both parties regarding the calculations of reference dates with the incorrect inclusion or exclusion of public holidays. Pursuant to s 4 of the SOP Act, “business day” does not include “a day that is wholly or partly observed as a public holiday throughout Victoria”.
64 The plaintiff, in its calculations, wrongly excluded the Labour Day holiday on 11 March 2019. The effect is that the plaintiff’s identified reference dates are early by a day until the November reference date. The plaintiff’s calculation of the reference dates had been rectified by the defendant’s incorrect inclusion of the Melbourne Cup Holiday, which in 2019 was not a holiday throughout Victoria as stipulated in s 4. Rather, pursuant to the Public Holidays Act 1993 (Vic),[47] the Minister for Small Business declared in various non-metropolitan Melbourne Councils that Melbourne Cup not be a public holiday.
[47]Public Holidays Act 1993 (Vic) s 8-8A.
65 This debate is all very interesting save for the fact that 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’.[48] In the present case, payment claims 1-4 had all been served after a valid and unexhausted reference date (even incorrectly identified).
[48]All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289 at [13]-[14].
66 For Payment Claim 5, the plaintiff’s original calculations for reference dates pursuant to s 9(2)(b) of the SOP Act were correct as the defendant included Melbourne Cup Day, and Payment Claim 5 was validly issued pursuant to the SOP Act on the reference date of 12 December 2019.[49] I will further address Payment Claim 5, a final payment claim, separately below.
C. Were the payment claims validly served?
[49]Building and Construction Industry Security of Payment Act 2002 (Vic) s 14(4)(b).
67 I will briefly address the issue of service of the payment claims by email. While not contained in the defendant’s submissions, Mr Daley deposes that he believes the payment claims were not served in accordance with the SOP Act.[50]
[50]Affidavit of Lincoln Daley sworn 1 May 2020 at [96].
68 On this point, the plaintiff relies on the case of Metacorp,[51] in which Vickery J accepted that s 50 of the SOP Act is a facultative and not mandatory provision. His Honour held the legislation does not operate so that in the case there is no service under any of its limbs, there is no service at all.[52]
[51]Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd & Ors [2010] VSC 199.
[52]Ibid [161-162].
69 I further rely upon the recent decision of Macnamara J in Pelligra.[53] His Honour concluded that even with the presence of a contractual clause prohibiting service by electronic means, there could be no reason to suppose that Parliament intended the rights of building contractors under the SOP Act to be frustrated in circumstances where a payment claim has come to the attention of the respondent – even if not by an authorised means of service.[54]
[53]Pelligra Build Pty Ltd v Australian Crane & Machinery Pty Ltd [2020] VCC 545.
[54]Ibid [67].
70 In the present case, there is no such clause contained in the unsigned terms and conditions of One Scaf. Even if this was the case, it would be insufficient to deem the payment claims invalid. In my view, it is also significant that the payment claims served between February and July 2019 were also served via email, which were paid, and this method of service was not objected to by the defendant. Therefore, I adopt the reasoning of Vickery and Macnamara JJ and conclude the payment claims were validly served by email.
D. Was the final payment claim validly issued in light of the final date the plaintiff provided services?
71 A further matter of dispute between the parties is the date by which the plaintiff ceased the Works on-site and whether, in light of this final date, Payment Claim 5 was validly issued. It is necessary to refer to the affidavits of Mr Tigani, Mr Daley and two employees of the parties, Mr Tomarchio and Mr Knight.
72 The plaintiff submits that the final date it carried out works on-site was 5 December 2019, and conducted the final dismantling and transport of the scaffolding material off-site.[55] It relies upon various affidavit material in support of this submission.[56]
[55]Plaintiff’s principal submissions dated 15 May 2020, at [13]-[14], and submissions in reply dated 1 June 2020, at [8]-[12].
[56]Affidavit of Salvatore Tigani affirmed 8 May 2020 at [51]-[56], affidavit of Salvatore Tigani affirmed 18 May 2020 [21]-[25], and affidavit of James Tomarchio affirmed 18 May 2020.
73 The defendant submits the final date the plaintiff carried out works on-site was 18 October 2019, except for the south west corner of the site in which the scaffold was finally dismantled on 21 November 2019.[57] It also relies upon various affidavit material in support of its submission.[58]
[57] Defendant’s submissions dated 28 May 2020, at [12]-[26] (under sub-heading “E”).
[58]Affidavit of Lincoln Daley sworn 1 May 2020, at [67-71], affidavit of Lincoln Daley sworn 13 May 2020, at [21-23], and affidavit of Timothy Knight sworn 22 May 2020, at [11-16].
74 As the defendant submits, the affidavit evidence as to this question appears to be “wildly contradictory”.[59]
[59] Defendant’s submissions dated 28 May 2020, at [13] (under sub-heading “E”).
75 In support of his view, Mr Tigani refers to a photograph taken by One Scaf’s operations manager, Mr Tomarchio, on 4 December 2019. This photo shows a One Scaf ute parked outside the Site, and traffic management construction signs on-site and two men with hard hats on.[60]
[60] Affidavit of Salvatore Tigani affirmed 8 May 2020 [51-56].
76 Mr Tigani further refers to the dismantling of rear scaffolding at the site on 20 and 21 November 2019. On both dates, Mr Tigani deposes that there were other subcontractors on-site working.
77 Mr Tigani deposes that the main entrance scaffold belongs to One Scaf, and can be seen in Mr Tomarchio’s photograph slightly above the two men, between the two main building structures. He deposes that this scaffold was dismantled on 4 December 2019, and that it was a common access way that trades were still using in late November 2019. He does not dispute that the other scaffold in the left part of the photograph, as identified by Mr Daley, does not belong to One Scaf.[61]
[61]Affidavit of Salvatore Tigani affirmed 18 May 2020 [20]-[23].
78 In support of his view, Mr Tigani exhibits invoices from One Scaf’s subcontractor ‘Zain Scaffolding Pty Ltd’ (“Zain”) and a text message exchange with Mr Ali (an employee from Zain) on 20 November 2019 discussing that Mr Ali was unable to finish his work that day due to access issues.[62] Mr Tigani further exhibits an extract of his diary recording his attendance on site on 21 November 2019.[63]
[62]Ibid, at exhibit ‘ST-26’.
[63]Ibid, ‘ST-27’.
79 In his affidavit, Mr Tomarchio deposes that he was on-site on 21 November 2019, supervising the dismantling of the rear west perimeter scaffold. He deposes he was on-site on 4 December 2019 and he took the photograph to which Mr Tigani refers in his third affidavit. He deposes he attended the Site to drop off extra scaffolding stillages, to assist One Scaf’s works in dismantling the main entranceway scaffold. He deposes that whilst on-site, he had interactions with One Scaf’s workers and saw other trades on-site working.[64]
[64]Affidavit of James Tomarchio affirmed 18 May 2020 at [7].
80 Mr Daley asserts throughout his affidavits that the final date on which One Scaf completed works was 18 October 2019, and the scaffolding was collected on that date. In the bundle of documents exhibited to his first affidavit, he includes an email from Mr Tigani to Mr Daley, Mr Walsh and Mr Tomarchio dated 30 October 2019, which states:
“The final claim for Oakleigh will have 1x labour variation & transport variation clearly detailed…
The above [picture] is the last load picked up from site on 18th October at 7:47am. Clearly not a full load and the erection of the scaffold has been much of the same.”[65]
[65]Affidavit of Lincoln Daley sworn 1 May 2020, at [92] and exhibit ‘LJD1’.
81 On this question, the defendant also relies upon the affidavit of Timothy Knight, in which Mr Knight deposes he took photographs of the Site on 11 and 12 October 2019, which show the 2 bays of scaffold in place in the main entry north side, and two bays remain intact on the south east corner.
82 Mr Knight deposes the scaffolding to the loading bay was being dismantled at the time he took the photograph on 11 October 2019. This followed discussions he had with Mr Tigani on 8 October that Mr Tigani intended on dismantling the scaffolding on 10 October, with the final scaffold being dismantled by 12 October 2019.[66] He further disputes that One Scaf was removing scaffold in December, as he recalls all scaffolding (including the staircase scaffold) was dismantled by mid-November 2019. He deposes he took a photograph on 5 December 2019 with the new aluminium scaffold by South Eastern Scaffold Services (“SESS”), which shows aluminium scaffolding in the front entry airlock.[67]
[66]Affidavit of Timothy Knight sworn 22 May 2020 at [8].
[67]Ibid at [11]-[12].
83 Relevantly, Mr Knight deposes that he is certain that One Scaf’s materials must have been off-site significantly before 4 December 2019 as the works for the window frames, which he deposes were installed with the new SESS scaffolding, must have commenced in late October or very early November 2019. Further, he deposes that the window installation required the area between the window frames and the street to remain unobstructed to allow bringing in the large window frames. Mr Knight deposes that, due to this requirement, it would be impossible for One Scaf to have dismantled its scaffold on 4 December 2019 as the window sub-contractor could not have installed the window frames if One Scaf’s scaffolding was still in place.[68]
[68]Ibid at [13].
84 Even if the defendant’s evidence is accepted that the plaintiff had dismantled its scaffolding by late October 2019, the scaffolding on the south west corner still remained on Site. The parties disagree on the timing regarding the central entry area only, however, the defendant accepts that the plaintiff did not finish works in the south west corner of the site until 21 November 2019.
85 Given that the south west corner scaffolding was dismantled on 21 November 2019, there were still works going on until this date. As works were done by One Scaf after the reference date of 14 November 2019, the next reference date was triggered, which was 12 December 2019. Therefore, it was open to One Scaf to make an ordinary periodic payment claim, made validly, for Payment Claim 5.
86 Alternatively, Payment Claim 5, dated 12 December 2019, could also be valid as a final payment claim. Although it did not explicitly state it was a final payment claim, it did provide a description of “contract complete”.
87 In Mackie Pty Ltd v Counahan & Anor,[69] Vickery J dealt with the description requirements for final payment claims, being a statement (express or implied) that the claim is a final payment claim, that the works under the contract are complete and a statement of account which sets out with sufficient clarity precisely what is claimed, and how the claim has been calculated or arrived at.[70]
[69][2013] VSC 694.
[70]Ibid at [65]-[68], [70]-[71] and [74]-[75].
88 Mr Daley admits work was done until 21 November 2019, as do the defendant’s submissions. Section 9(2)(d)(iii)(a) provides that the default reference date for a final payment is “the date immediately following…the day that…construction work was last carried out under the contract”. If work was last performed on 21 November 2019, the date immediately following would be 22 November 2019. Thus, the 12 December 2019 payment claim would still be valid as a claim for final payment claim.
E. Did the payment claims include amounts not yet incurred?
89 The defendant submits that Payment Claims 1-4 include payment for works not yet complete and therefore claims for amounts not incurred. It submits that, given there is no opportunity to sever the invalid part of the payment claims from the balance, therefore the entirety of each payment claim is invalid.
1. In relation to Payment Claim 1, the reference date is 20 August 2019 however the description of the works includes hire up to 31/8/19, which is a difference of 8 business days.
2. In relation to Payment Claim 2, the reference date is 17 September 2019 however the description of the works includes hire until 30 September 2019, which is a difference of 9 business days.
3. In relation to Payment Claim 3, the reference date is 16 October 2019 however the description of the works includes hire until 31 October 2019, which is a difference of 11 business days.
4. In relation to Payment Claim 4, the reference date is 14 November 2019 however the description of the works includes hire until 30 November 2019, which is a difference of 11 business days.
90 The defendant refers to the case of Rudyard Pty Ltd v ASEA 1 Pty Ltd[71] in support of its submissions, particularly at [73] where Woodward J held that “there is nothing… to confirm that all of the work covered by the payment claims predates the “Claim Date”. Thus based on the evidence presently available, I cannot be satisfied that each of [the payment claims are] a valid claim under the SOP Act”.
[71][2019] VCC 1995.
91 Rudyard can be distinguished on the facts of that case. The payment claims in that case were determined by or in accordance with the terms of the contract in respect of carrying out the item of construction work already performed on or by the relevant reference date. That is not the present case and different provisions of the SOP Act apply.
92 Section 9(1) of the SOP Act outlines that “on and from each reference date, a person who has undertaken to carry out construction work under the contract… is entitled to a progress payment under this Act, calculated by reference to that date”’ This sub-section’s function is to specify the date by which a claimant accrues its entitlement to a progress payment.
93 A claimant’s entitlement to a progress payment from a reference date under s 9 must be construed in the context of s 10. This provision relevantly specifies that:
“The amount of a progress payment to which a person is entitled in respect of a construction contract is to be –
(a) the amount calculated in accordance with the terms of the contract; or
(b) if the contract makes no express provision with respect to the matter, the amount calculated on the basis of the value –
(i) of construction work carried out or undertaken to be carried out by the person under the contract; or
(ii) related goods and services supplied or undertaken to be supplied by the person under the contract— as the case requires.”[72]
[72]Building and Construction Industry Security of Payment Act 2002 (Vic) s 10(1).
94 The language allows a claimant’s progress payment entitlement to relate to future work or goods or services supplied referring to “the value of construction work carried out (or related goods and services supplied) or undertaken to be carried out”.
95 Southern Han[73] makes it clear that a person who meets the description in ss 9(1) and 14(1) – that 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.
[73]Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340 at [59] and [70].
96 The construction of ss 9 and 10 of the SOP Act must be read in light of the SOP Act’s function of preserving contractor’s cashflow by providing a statutory entitlement to progress payments and the efficient mechanisms for enforcing it (s 3).[74] To contend otherwise would preclude claimants, for example, seeking pre-payment for plant, material and equipment they are to precure in connection with their construction work or related goods or services. This is significant in the construction industry where the lead-in times for costly supplies can be long, particularly in large and complex projects to which the SOP Act applies, and as is the case in the present proceeding.
[74]Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd (2009) 26 VR 112 at [36]-[46] per Vickery J.
97 In Seymour WhyteConstructions Pty Ltd[75] the NSW Court of Appeal recognised that progress payment can include advanced payments.[76] Therefore, any distinction of whether work was performed before or after the reference date is irrelevant.
[75]Seymour WhyteConstructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317.
[76]Ibid at [228].
98 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 or by the reference date, it would have said so: at [232].
99 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].
100 Further, s 14(4) of the SOP Act gives claimants at least 3 months after the applicable reference date to serve payment claim. Further construction work can be carried out in that period and further goods and services can be supplied. The defendant’s construction would limit the claimant’s entitlement to work performed and goods and services supplied up to 3 months previously.
101 The defendant’s submissions on this limb seeks to overcome its failure to submit a payment schedule. These matters are now barred under s 15(4)(b) of the SOP Act.
Should the plaintiff be estopped from asserting its right to the payment claims?
102 The defendant raises the argument, in the alternative, that if the payment claims are considered valid pursuant to the requirements under the SOP Act, the plaintiff ought be estopped by virtue of the alleged representations by Mr Tigani, that the defendant did not need to serve payment schedules.
103 The plaintiff denies the alleged representations were made by Mr Tigani, and submits that even if the alleged representations had been made, the requirements of payment claims issued under the SOP Act are strict and do not require an element of good faith.[77] Therefore, the payment claims would still be valid.
[77]470 St Kilda Road Pty Ltd v Reed Constructions Australia Pty Ltd & Anor [2012] VSC 235 at [47].
104 Mr Daley deposes that between September and December 2019, Mr Tigani made various representations that payment was to be settled upon final reconciliation of the amounts owed, due to the back charges. Mr Daley deposes that each time he raised this issue with Mr Tigani, it was “confirmed that nothing was due until everything had been reconciled”.[78]
[78]Affidavit of Lincoln Daley sworn 1 May 2020 at [77].
105 In particular, Mr Daley deposes that in December 2019, when he was overseas, he received the final payment claim and responded via email to the accounts officer at One Scaf stating:
“I have recently sent through to Sal the back charges for the Oakleigh project and all up they come to roughly $28k+ some. I haven’t done any assessments yet as on the last invoices as a [sic] knew the final wash out would be pretty close. What I want to do (as I think there will only be a couple of thousand in it if anything) is sit down when I’m back in town and run through everything then. Please come back and confirm that you guys are OK with this.”[79]
[79]Affidavit of Lincoln Daley sworn 1 May 2020 at p 31 of ‘LJD1’.
106 Mr Daley deposes that he called Mr Tigani to discuss the final payment claim, when he did not receive a response to his email. He claims Mr Tigani provided further assurance that Mr Daley did not need to respond to the payment claim and that it was “an administrative thing to keep track of [One Scaf’s] costs” and they would work through the back charges and costs when Mr Daley returned.[80]
[80]Ibid at [86].
107 Mr Tigani denies that this conversation, or others, occurred and asserts that he did not tell Mr Daley that invoices had been rendered only for record keeping or internal processes, and that the payment claims were issued with the intention they would be considered so under the SOP Act.[81]
[81]Affidavit of Salvatore Tigani affirmed 8 May 2020 at [65]-[67].
108 The requirements of the SOP Act are strict. Even if I were persuaded that the plaintiff had made representations to persuade Mr Daley that it was not necessary to respond to the payment claims, Mr Daley, as an experienced builder of an established building company would have been aware of the manner in which the SOP Act operates.
109 The plaintiff relies on the case of 470 St Kilda Road v Reed Constructions Australia[82] on the question as to whether the SOP Act required good faith as an essential element for a payment claim to be made validly. Vickery J considered the decisions of Ipp JA and Santow J in Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (In Liquidation),[83] which suggested good faith was a pre-condition to a valid payment claim, and contrasted these remarks with the decision of Basten JA and Hodgson JA in Bitannia Pty Ltd v Parkline Constructions Pty Ltd[84] and Muir JA in Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd,[85] where it was concluded that the remarks by Ipp JA in Nepean Engineering appeared to be obiter only and that, while an obligation to act in good faith should be attributed to an adjudicator under the SOP Act, no such precondition exists as to the making of a payment claim.
[82][2012] VSC 235.
[83](2005) 64 NSWLR 462.
[84][2006] 67 NSWLR 9.
[85][2010] QCA 119.
110 Further, Vickery J concluded that circumstances in which words can be implied into the text of legislation is strictly limited, citing several authorities in favour of this conclusion.[86] Crennan and Kiefel JJ in Momcilovic v R and Others,[87] observed that a court may, when construing legislation, read words into the text, but in order to correct a defect or omission which had been overlooked by Parliament.
[86]Thompson v Goold & Co [1910] AC 409 at [420]; Bermingham v Corrective Services Commission of New South Wales (1988) NSWLR 292 at [302]; Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at [423]; and Momcilovic v R and Others (2011) 280 ALR 221, 387 at [580].
[87](2011) 280 ALR 221.
111 Vickery J’s view as to the implication of words into the SOP Act, which I respectfully adopt, is succinctly put at [44]:
“No enquiry into the bona fides of a claimant is necessary for the effective functioning of these processes. Nor is any such enquiry desirable, given the important objective of providing expedition in the determination of the interim rights of the parties in relation the recovery of progress claims under a construction contract. It would fly in the face of this purpose of the Act, and the robust determination of disputes under the statutory adjudication process, to import an element of good faith as an issue to be considered and determined for a valid payment claim, in addition to the s14 requirements.”[88]
[88]470 St Kilda Road Pty Ltd v Reed Constructions Australia Pty Ltd [2012] VSC 235.
112 The requirements under s 14 are necessarily straightforward, given the objectives of the legislation. A person who is or who claims to be entitled to a progress payment may serve a payment claim on the person who, under the construction contract is or may be liable to make the payment. In my view, the plaintiff has issued the payment claims in accordance with the SOP Act.
113 If this ground were successful, it would operate to provide an unassailable defence in every s 16 application. Should a defendant be able to point to any representation made by a plaintiff in relation to a payment claim that had become contentious and seek to rely upon it to avoid the mechanisms of the SOP Act, this would undermine the intention of the legislation altogether.
114 Therefore, I conclude the plaintiff is not estopped from pursuing the payment claims, and the defendant is not entitled to rely upon this ground as a defence for non-payment or non-service of a payment schedule.
Assessment of payment claims
115 Accordingly, for the purposes of this proceeding, on the basis of the above, I am satisfied that claims 1 – 5 are valid payment claims as stated in the invoices, totalling $63,661.67 (inclusive GST).
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Certificate
I certify that these 31 pages are a true copy of the judgment of Judicial Registrar Burchell delivered on 28 July 2020.
Dated: 28 July 2020
Susan Thomas
Associate to Judicial Registrar Burchell
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