OSB Group Pty Ltd v Complete Hire & Sales Pty Ltd - [2024] WASC 310

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   OSB GROUP PTY LTD -v- COMPLETE HIRE & SALES PTY LTD [2024] WASC 310
CORAM:   MUSIKANTH J
HEARD:   21 JUNE 2024
DELIVERED          :   28 AUGUST 2024
FILE NO/S:   CIV 2374 of 2023
BETWEEN:   OSB GROUP PTY LTD
Plaintiff
AND
COMPLETE HIRE & SALES PTY LTD
Defendant

Catchwords:

Building and construction law - Building and Construction Industry (Security of Payment) Act 2021 (WA) - Statutory scheme - Purpose and operation

Constitutional law - Section 109 Commonwealth Constitution - Whether any inconsistency between Building and Construction Industry (Security of Payment) Act 2021 (WA) s 27(3)(b) and rights under Australian Consumer Law 2010 (Cth)

Practice and procedure - Summary judgment - Whether serious question to be tried - Turns on own facts

Legislation:

Australian Consumer Law 2010 (Cth)
Building and Construction Industry (Security of Payment) Act 2021 (WA) s 27(3)(b)
Rules of the Supreme Court 1971 (WA) O 14 r 1

Result:

The plaintiff's application for summary judgment be refused
The defendant be granted unconditional leave to defend

Representation:

Counsel:

Plaintiff	:	Mr L N Firios
Defendant	:	Mr S K Dharmananda SC

Solicitors:

Plaintiff	:	Squire Patton Boggs
Defendant	:	Hotchkin Hanly

Case(s) referred to in decision(s):

Abigroup Contractors Pty Ltd v Transfield Ltd [1998] VSC 103; (1998) 217 ALR 435
Birdon Pty Ltd v Houben Marine Pty Ltd (2011) 197 FCR 25; [2011] FCAFC 126
Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; (2006) 67 NSWLR 9
BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd [2022] NSWCA 82; (2022) 108 NSWLR 350
Calvin v Carr [1979] 1 NSWLR 1
Casella v Hewitt [2008] WASCA 13; (2008) 36 WAR 1
Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91
Gerovich v Gerovich [2018] WASC 153
Grave v Blazevic Holdings Pty Ltd [2010] NSWCA 324; (2010) 79 NSWLR 132
Mallinson v Scottish Australian Investment Co Ltd [1920] HCA 51; (1920) 28 CLR 66
Mondalephous KT Pty Ltd v Transalta Energy (Australia) Pty Ltd [2017] WASCA 176
Samsung C&T Corporation v Duro Felgura Australia Pty Ltd [2018] WASCA 27; (2018) 52 WAR 281
SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138
Style Timber Floor Pty Ltd v Krivosudsky [2019] NSWCA 171; (2019) 100 NSWLR 133
Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14
The Commonwealth v SCI Operations Pty Ltd [1998] HCA 20; (1998) 192 CLR 285
Theseus Exploration NL v Foyster [1972] HCA 41; (1972) 126 CLR 507
Victoria v Commonwealth [1937] HCA 82; (1937) 58 CLR 618
Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598

MUSIKANTH J:

The plaintiff (OSB) and the defendant (Complete) operate in the construction and mining sectors.
OSB says it undertook to carry out construction work for Complete on a development forming part of an iron ore project in the Pilbara.
According to OSB, it performed that work under a 'construction contract' within the meaning of the Building and Construction Industry (Security of Payment) Act 2021 (WA) (Act) and, in accordance with the Act, issued a payment claim to Complete which Complete did not pay.
Having commenced proceedings in this court to recover the claimed amount as a statutory debt under the Act, OSB now seeks summary judgment against Complete.
Complete resists the application on several grounds.
The only issue I am required to determine is whether any of those grounds raises a serious question to be tried.
For the reasons which follow I consider at least one of them does.
Accordingly, summary judgment will be refused and Complete will be granted unconditional leave to defend.

Statutory scheme

The Act applies to every 'construction contract' formed on or after 1 August 2022 and replaced the Construction Contracts Act 2004 (WA).
The express object of the Act is to provide 'an effective and fair process for securing payments to persons who undertake to carry out construction work, or to supply related goods and services, in the building and construction industry': s 3(1).
This object is achieved by among other things creating a statutory entitlement to progress payments in favour of such persons, and by establishing an expedited process for making and responding to such claims and for the adjudication of disputed ones: s 3(2)(a) and (b).
For the purposes of the Act:
(1)'construction contract' is broadly defined. It means a 'contract, agreement or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party': s 5. (emphasis added)
(2)'construction work' includes '… the construction of buildings, structures or civil works (whether permanent or not) that form, or are to form, part of land … the installation in or on any [such] building, structure or civil work … of fittings that form, or are to form, part of the building, structure or civil work … [and] … any work that is preparatory to, necessary for or an integral part of [any such work] including … excavating, earth-moving …': s 6(1).
(3)'civil works' include '…pavements, ramps [and] slipways …': s 6(2).
The features of the new statutory regime relevantly include the following:
(1)A person who has, under a construction contract, undertaken to carry out construction work or supply related goods and services is entitled to a 'progress payment': s 17(1).
(2)The right to such payments arises from the statute itself. It is separate from (and additional to) any entitlement under the construction contract: s 17(4).
(3)The mechanism by which the right arises is the giving of a 'payment claim' to the person who is or may be liable for the payment (respondent): s 22.
(4)A payment claim must satisfy certain statutory criteria. Essentially, the claim must be in writing, identify the amount of the progress payment claimed (claimed amount), describe the items and quantities of construction work to which the progress payment relates, and state that the claim is made under the Act: s 24.
(5)Where the payment claim is made by a subcontractor, the due date is 25 business days after the payment claim (unless the contract provides a shorter period): s 20.
(6)Interest is payable on unpaid amounts from the due date: s 21.
(7)The respondent has an opportunity to respond by giving a 'payment schedule' to the person making the claim (claimant) within 15 business days (or earlier if required by the contract): s 25(1).
(8)The payment schedule must indicate either an amount of the payment that the respondent proposes to pay (scheduled amount), or that the respondent does not propose making any payment: s 25(2).
(9)If the respondent indicates no amount, or an amount less than the claimed amount, is to be paid the respondent must explain why: s 25(3).
(10)If the respondent does not provide a payment schedule in the prescribed time, the respondent becomes liable to pay the claimed amount by the due date: s 26.
(11)If, by the due date, a respondent fails to pay the claimed amount, or indicates a scheduled amount which is less than the claimed amount, the claimant may either:
(a)commence proceedings, in a court of competent jurisdiction, to recover the unpaid portion of the claimed or scheduled amount as a debt due to the claimant; or
(b)make an adjudication application in relation to the payment claim: s 27(2).
(12)If the claimant does the former, the court is not to give judgment in favour of the claimant unless the court is satisfied that the 'relevant circumstances' exist: s 27(3)(a).
(13)For the purposes of s 27(3)(a), 'relevant circumstances' are confined to the matters stated in s 27(4).[1]
(14)Should the claimant elect to commence recovery proceedings in a court of competent jurisdiction, the respondent is not entitled to bring any cross-claim against the claimant: s 27(3)(b)(i).
(15)Nor is the respondent entitled to raise any defence in relation to matters arising under the construction contract in those circumstances: s 27(3)(b)(ii).
[1] Relevantly in this matter those circumstances are: (a) the respondent's failure to respond to the payment claim by giving a payment schedule to the claimant within the time allowed for the response (s 27(4)(a)(i)); and (b) the respondent having not paid the claimed amount in full on or before the due date for the progress payment (s 27(4)(b)).
The features described in (1) and (2) above form part of a division in the Act headed 'Right to progress payments',[2] whilst those described in (3) to (15) all form part of a division headed 'Procedure for obtaining progress payments'[3] (emphasis added).
[2] Part 2 div 2.
[3] Part 2 div 3.
As statutory successor to the Construction Contracts Act 2004 (WA), the Act was introduced 'to provide better payment protections for contractors working in WA's building and construction industry to ensure they get paid on time, every time'[4] and so that 'any disputes can be resolved quickly and inexpensively so works can continue'.[5] (emphasis added)
[4] Building and Construction Industry (Security of Payment) Bill 2021, Explanatory Memoranda (Legislative Assembly and Legislative Council) (EM), page 3.
[5] EM, page 3.
One of the ways this was to be achieved was to introduce features 'more consistent with [security of payment laws] in other Australian states and territories'.[6]
[6] EM, page 3.
In my view, it may readily be inferred that the Act contemplates, as was the case with its statutory predecessor, a '…"pay now, argue later" system… with the primary aim of keeping the money flowing by enforcing timely payment …' with 'a system of rapid and summary adjudication' if a payment dispute arises.[7]
[7] Cf. Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91 [55] (Pullin JA, Murphy and Newnes JJA agreeing). Citations omitted. See also, also in the context of the former Act, Samsung C&T Corporation v Duro Felgura Australia Pty Ltd [2018] WASCA 27; (2018) 52 WAR 281.
As OSB correctly submits:
(1)The evident purpose of the procedure contemplated by s 25 of the Act is to encourage a respondent to engage with a payment claim.
(2)With the benefit of a payment schedule, the claimant will quickly know whether its claim is accepted or contested (and if contested, the reason why).
(3)The payment schedule serves the important function of informing the claimant of the metes and bounds of the dispute so that the respondent can make an informed choice as to how to proceed.[8]
(4)If the [claimed or scheduled amount owed][9] is not paid by the due date, the Act creates a statutory debt in favour of the claimant which may be recovered in proceedings before a competent court.
(5)In short, the approach reflects a 'clear parliamentary intention of "speak up or pay up"'.[10]
[8] Style Timber Floor Pty Ltd v Krivosudsky [2019] NSWCA 171; (2019) 100 NSWLR 133 [45].
[9] See Act s 24(1)(b), s 25(2)(c).
[10] Cf. McDougall KC, Robert 'The Building & Construction Industry Security of Payment Act 1999', page 13, (September 2004), noted in Jacobs QC, Marcus S Commercial Arbitration Law and Practice: Annotated Building and Construction Industry Security of Payment Acts, Building and Construction Industry Security of Payment Act 1999 (NSW) [SOP15.80] (Thomson Reuters, online).
It is in the above context that the provisions of the Act, including s 27(3)(b), fall to be considered.

Summary judgment principles

According to OSB, a respondent's failure to pay a claimed or scheduled amount owed enables the claimant 'to enforce that statutory debt summarily in recovery proceedings'.
However, as Complete correctly points out, there is nothing within the Act itself which affords an entitlement to summary enforcement.
Rather, it is O 14 of the Rules of the Supreme Court 1971 (WA) which permits such a claimant to apply for summary judgment.
Whether OSB is entitled to judgment summarily must be determined in accordance with the well-established principles relevant to such an application.
Summary judgment will only be granted when there is no real question to be tried.[11]
[11] Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14 [24].
The power to order summary judgment is one that should be exercised with great care.[12] It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial, that summary judgment ought properly to be granted.[13]
[12] Sutton Investments v Realistic Investments [24].
[13] Sutton Investments v Realistic Investments [24].
Actions should not be disposed of summarily when the facts are in dispute.[14] When there is a conflict on the affidavit evidence, the court should approach the application on the basis that the facts set out in the affidavit(s) of the party resisting the application for summary judgment (in this case, Complete) will ultimately be accepted.[15]
[14] Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598, 608; Gerovich v Gerovich [2018] WASC 153 [32].
[15] Webster v Lampard, 608; Gerovich v Gerovich [32].
Whilst the court may determine any difficult question of law on such an application, usually it will be appropriate to leave the determination of such questions for trial.[16]
[16] SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138 [20]; Theseus Exploration NL v Foyster [1972] HCA 41; (1972) 126 CLR 507, 514 - 515; Casella v Hewitt [2008] WASCA 13; (2008) 36 WAR 1 [36].
Further, although intricacy of a transaction does not necessarily disentitle a party from obtaining summary judgment in a 'very clear case', the nature, extent, and complexity of the range of legal questions raised may be such that the ordinary processes of the court should be followed, and the parties' rights determined at trial.[17]

Why does Complete say there are serious questions to be tried?

[17] Mondalephous KT Pty Ltd v Transalta Energy (Australia) Pty Ltd [2017] WASCA 176 [121].

Complete suggests there are serious questions to be tried as to the following matters:
(1)Whether a 'construction contract' existed between the parties in circumstances where, according to Complete, OSB's affidavit evidence reveals that negotiations regarding essential terms continued for many weeks after the date upon which OSB says the contract was formed.
(2)Whether Complete may raise an entitlement to relief under the Australian Consumer Law 2010 (Cth) (ACL) arising from alleged misleading or deceptive conduct by OSB, inducing any 'construction contract' between the parties, as a defence to OSB's claim including by way of equitable set-off.
(3)Assuming Complete is permitted to raise such a defence, and proves OSB engaged in misleading or deceptive conduct, whether a 'construction contract' existed in circumstances where a positive finding on the foregoing matters might lead to a declaration that any contract induced by OSB's alleged misleading or deceptive conduct is void ab initio: ACL s 243(a) read with s 237(1).
(4)Assuming Complete is not permitted to raise such a defence, whether there is an inconsistency between s 27(3)(b) of the Act and Complete's asserted rights under the ACL such as to render the former invalid by force of s 109 of the Commonwealth Constitution to the extent of the inconsistency.
Relevant to the fourth point, Complete also contends that in circumstances where s 27(3)(b)(i) of the Act purports to impose an unqualified prohibition on bringing a cross-claim, s 27(3)(b)(i) is inconsistent with Complete's rights under (and invalid to the extent of its inconsistency with) the ACL such that Complete may bring a cross-claim for relief under the ACL in these proceedings.
Given the nature of the fourth point, notices were served pursuant to s 78B of the Judiciary Act 1903 (Cth).
No Attorney sought to intervene.

Is there a serious question to be tried as to whether a 'construction contract' existed between the parties noting aspects of OSB's evidence?

According to Complete:
(1)A 'construction contract' is a statutory prerequisite for the statutory debt contemplated by s 26 of the Act, the existence of such a contract being a 'basic and essential requirement of the legislative scheme'.[18]
(2)Although OSB in its statement of claim alleges a construction contract was formed on 2 June 2023, OSB's affidavit evidence reveals that the essential terms of any construction contract continued for many weeks after that date.
(3)Section 27(3)(b)(ii) of the Act does not exclude a defence which challenges the existence of a pleaded 'construction contract'.
(4)This is because such a defence is not one which could be said to arise 'under' a construction contract but is, instead, a denial of the existence of any such contract.[19]
[18] BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd [2022] NSWCA 82; (2022) 108 NSWLR 350 [32].
[19] Grave v Blazevic Holdings Pty Ltd [2010] NSWCA 324; (2010) 79 NSWLR 132 [33] - [36].
In response, OSB says that:
(1)OSB's entitlement to (apply for) judgment is not grounded in the existence of any construction contract.
(2)Instead, it depends on the statutory liability arising under s 26 which:
(a)in turn gives rise to a statutory debt recoverable pursuant to s 27(2)(a) of the Act; and
(b)operates independently of the underlying facts.
(3)Regarding the latter, Parliament has expressly stipulated only two 'relevant circumstances' as giving rise to a claimant's (statutory) entitlement; namely the respondent having:
(a)not responded to the payment claim by giving a payment schedule to the claimant within the time allowed for the response; and
(b)not paid the claimed or scheduled amount owed to the claimant in full on or before the due date for the progress payment: s 27(4).
(4)Importing proof of the 'construction contract' as an additional 'relevant circumstance' would be inconsistent with the text, context and purpose of s 27.
(5)In any event:
(a)a payment claim may be made in respect of both actual or putative entitlements[20] or even without a genuine belief as to entitlement;[21] and
(b)it has long been recognised that a statute can create an obligation to pay money upon the satisfaction of conditions, enforceable by an action of debt.[22]
[20] Security of Payment Act, s 22(1); BSA Advanced Property Solutions v Ventia Australia [28].
[21] Birdon Pty Ltd v Houben Marine Pty Ltd (2011) 197 FCR 25; [2011] FCAFC 126 [88].
[22] The Commonwealth v SCI Operations Pty Ltd [1998] HCA 20; (1998) 192 CLR 285, 305 [40] (Gaudron J), 313 [65] (McHugh and Gummow JJ), referring to Mallinson v Scottish Australian Investment Co Ltd [1920] HCA 51; (1920) 28 CLR 66, 70 and Shepherd v Hills (1855) 11 Ex 55; 156 ER 743, 747 (Parke B).
Whilst there is force in several of OSB's contentions, it remains the case that, at least in some circumstances,[23] the denial of the existence of a construction contract is not a defence 'arising under' the contract itself.
[23] Eg. Grave v Blazevic Holdings [36] (denial that party said to be liable to pay the payment claim was a party to the construction contract).
However, it is unnecessary to say any more about the parties' contentions relevant to Complete's first point, for at least the following reasons:
(1)While there may be scope for dispute as to whether a particular agreement falls within the statutory description (of 'construction contract'):
the breadth of the statutory language is apt to limit areas of disputation. In particular, the expansion of the ordinary meaning of 'contract' to include some 'other arrangement' under which one party undertakes to carry out construction work for another will limit the likelihood of disputes as to the legal character of the relationship between the parties.[24]
[24] BSA Advanced Property Solutions v Ventia Australia [32].
(2)According to Complete's own evidence:
(a)Complete relied on what a representative of OSB said about its capabilities to carry out certain works 'in ... permitting OSB to mobilise to site and perform [those works]';[25]
(b)those works were relevantly 'the works required to install … portable buildings and breezeways, to load and transport … buildings to the [s]ite … to unload those buildings at [s]ite, to carry out earthworks, and to install concrete paths…';[26]
(c)Complete 'continue[d] to permit [OSB] to mobilise to the [s]ite and to commence [the above] works';[27] and
(d)OSB was 'meant to have commenced' its work by 28 June 2023.[28]
(3)In my view, the inescapable inference from the above evidence is that there was an 'arrangement' between OSB and Complete by which the former undertook to perform 'construction work'[29] for the latter.
(4)Given the definition of 'construction contract' in the Act, no more is required.
(5)Whether Complete gave its undertaking to perform construction work for OSB on or after 2 June 2023 does not detract from this conclusion.
[25] Affidavit of Emanuel Richard Brian Dillon sworn 14 March 2024 (Dillon affidavit) [30].
[26] Dillon affidavit [6], [37].
[27] Dillon affidavit [62].
[28] Dillon affidavit [68].
[29] None of Complete's foreshadowed defences assert that the work described in the Dillon affidavit was not 'construction work' as defined, and Complete advanced no submission to that effect.

In the circumstances, I do not consider there is a serious question to be tried as to Complete's first point.

Is there a serious question to be tried as to whether Complete may raise an ACL defence, (if so) as to whether any 'construction contract' was void, or (if not) as to whether there is a constitutional inconsistency?

These questions are raised by Complete's second, third and fourth points, respectively.
As to its second point, Complete effectively contends as follows:
(1)OSB made representations to Complete about the resources required to perform and complete certain construction work within the time required by Complete (namely, 61 days).
(2)Complete was induced by those representations into permitting OSB to mobilise its personnel to site and to perform parts of the works.
(3)However, OSB failed or refused to mobilise to site the personnel, plant, equipment and tools required to complete the works within 61 days.
(4)Therefore, Complete itself had to do the mobilisation and complete parts of the works.
(5)This caused Complete to suffer loss and damage.
(6)Complete is therefore entitled to remedies under the ACL which could be raised as a defence to OSB's claim, including by way of equitable set-off.
(7)Such a defence would not be prohibited by s 27(3)(b)(ii) of the Act because it would not be 'in relation to matters arising under the construction contract'. (emphasis added)
As to Complete's third point, Complete says that:
(1)Because such a defence might attract an order that any 'construction contract' is void ab initio, a further question arises as to whether a 'vital ingredient' of the cause of action relied upon by OSB (the 'construction contract itself') existed.
(2)Such a defence would also not fall foul of s 27(3)(b)(ii) of the Act because it would also not be 'in relation to matters arising under' a construction contract but rather a denial of the existence of any such contract.[30]
[30] Grave v Blazevic Holdings [33] - [36].
Regarding its fourth point, Complete effectively contends that:
(1)There is an inconsistency between the rights conferred on Complete by the ACL, on the one hand, and the entitlement relied upon by OSB to payment of a statutory debt under section 26 of the Act, on the other.
(2)The inconsistency arises to whatever extent s 27(3)(b)(ii) of the Act may preclude Complete from raising a defence based on its asserted rights under the ACL, and also in circumstances where s 27(3)(b)(i) of the Act imposes an unqualified prohibition on Complete bringing any cross-claim (relevantly) to seek relief under the ACL, in these proceedings.
(3)The preclusion and prohibition are inconsistent with Complete's rights under the ACL because they alter, impair, or detract from the regulation of conduct in trade or commerce under the ACL, a Commonwealth Act.[31]
(4)Section 109 of the Constitution thus renders invalid any entitlement OSB might otherwise have had to the extent of the inconsistency.
[31] Victoria v Commonwealth [1937] HCA 82; (1937) 58 CLR 618.
Before addressing these three points, it is convenient to turn to Bitannia Pty Ltd v Parkline Constructions Pty Ltd.[32]

Bitannia

[32] Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; (2006) 67 NSWLR 9.

Bitannia is a decision of the New South Wales Court of Appeal in which the operation of provisions in New South Wales legislation were considered.
The provisions were ss 15(4)(b)(i) and (ii) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (NSW Act) which read in terms identical to ss 27(3)(b)(i) and (ii), respectively, of the Act.
The facts in Bitannia were briefly as follows:
(1)The respondents had engaged the claimant to construct a hotel and appointed an architect as their agent to administer the contract (as was indicated in the relevant construction contract).
(2)The claimant issued two payment claims.
(3)On each occasion, the claimant sent the payment claim to the architect, and the architect attended to the payment schedule.
(4)The claimant then made a third payment claim.
(5)However, the third payment claim was sent to the general manager of a company associated with the respondents with a message attached which indicated (incorrectly) that it had previously been forwarded to the architect.
(6)As a result, the architect (on behalf of the respondents) did not provide the claimant with a payment schedule within the period required by the NSW Act, and the respondents became liable to pay the full amount of the claim.
The claimant commenced proceedings in the New South Wales District Court.
The respondents relevantly sought to resist the claim on the basis that in serving the payment claim, the claimant had engaged in misleading or deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth) (TPA) (now s 18 of the ACL).
The claimant obtained judgment, and the respondents took the matter on appeal.
The coram on appeal comprised Hodgson, Tobias and Basten JJA.
Two of the questions considered by the Court of Appeal are relevant for present purposes:
(1)Whether s 15(4)(b)(ii) of the NSW Act precluded a defence to the effect that service of the third schedule was not effective because it involved misleading or deceptive conduct by the claimant in contravention of s 52 of the TPA.
(2)Whether, if such a contention could only be raised by a cross‑claim, s 15(4)(b)(i) of the NSW Act was (constitutionally) invalid to the extent that such a contention was precluded.
Basten JA, who gave the lead judgment, concluded that a defence to the effect that service of the third schedule was not effective because it involved misleading or deceptive conduct by the claimant was not precluded under s 15(3)(b)(ii) of the NSW Act.[33]
[33] Bitannia [124].
In this connection, His Honour considered that:
(1)Although s 15(4)(b)(ii) of the NSW Act prevented a respondent from raising 'any defence in relation to matters arising under the construction contract', in truth the proposed defence could neither be said to 'arise' under the contract nor to have been 'in relation to' a matter arising under it. Rather, it was in relation to misleading or deceptive conduct on the part of the claimant which could lead to relief under the TPA.
(2)The expression 'in relation to' may identify any rational connection between the prohibited defence and a matter arising under the construction contract, and while the entitlement to a progress payment depended in part upon the construction contract and conduct in execution therefore, the expression 'should not be construed so broadly as to prohibit a defence based upon conduct undertaken in service of a payment claim for the purpose of creating a statutory right'.[34] (emphasis added)
[34] Bitannia [96].
Hodgson JA, agreeing with Basten JA,[35] explained that the respondents' proposed defence was relevant to the existence of one of the elements of the cause of action brought against the respondents; namely non-service of a payment schedule in circumstances where the non-service came about because of the claimant's alleged misleading or deceptive conduct,[36] and there was no reason why a set-off could not be claimed in a defence based on misleading conduct by the claimant associated with the circumstances of the claim.[37]
[35] Bitannia [1], [12].
[36] Bitannia [8].
[37] Bitannia [11].
Tobias JA agreed with both of Hodgson JA and Basten JA, for the reasons given by their Honours, that s 15(4)(b) of the NSW Act did not prevent the respondents from raising by way of defence to the claimant's claim that their failure to provide a payment schedule with respect to the claim was induced by the claimant's misleading or deceptive conduct in breach of s 52 of the TPA.[38]
[38] Bitannia [17].
As to whether the NSW Act was inconsistent with the TPA to the extent that such a contention was precluded by s 15(4)(b)(i) of the NSW Act, Basten JA concluded that it was inconsistent.
His Honour's analysis in support of this conclusion appears at [105] ‑ [119] of Bitannia, and the central features of his Honour's analysis were to the following effect:
(1)If the terms of the NSW Act would 'alter, impair or detract from' the regulation of conduct in trade or commerce under the TPA, there would be an inconsistency.[39]
(2)Determining whether there is an inconsistency may require examination of the 'practical effect' of the State law in relation to the Commonwealth right, and in Bitannia the impact of the NSW Act on rights conferred under the TPA was 'direct and significant'.[40]
(3)Although matters of 'procedural regulation' were legitimate and did not give rise to inconsistency, the suggestion that an injured party could bring 'separate proceedings' in relation to misleading or deceptive conduct disregarded an important practical consequence of the State law;[41] namely, the loss which the respondents were seeking to prevent was one which would occur, in a summary way, by seeking judgment in consequence of the respondents' failure to provide a payment schedule within the prescribed period.[42]
(4)The institution of separate proceedings would not avail the respondents in that respect unless they could obtain a stay of those proceedings to allow separate proceedings for relief under the TPA to be completed.[43]
(5)While at best the respondents could apply for a stay on discretionary grounds, it was likely that a court would refuse a discretionary stay on the basis that the respondents were attempting to achieve indirectly the very result which the State Parliament had prohibited it from obtaining directly; namely preventing or delaying a right to judgment on a payment claim by bringing a cross-claim.[44]
(6)In those circumstances, and assuming the respondents' complaint under the TPA could not be raised by way of defence under s 15(4)(b)(ii) of the NSW Act, there was an inconsistency between the NSW Act and the TPA which would result in the NSW Act being 'inoperative' to the extent of the inconsistency.[45]
[39] Bitannia [105].
[40] Bitannia [115].
[41] Bitannia [117] - [118].
[42] Bitannia [118].
[43] Bitannia [118].
[44] Bitannia [118].
[45] Bitannia [119].
Hodgson JA agreed with Basten JA that to place significant procedural obstacles in the way of obtaining relief under the TPA would make s 15(4)(b) of the NSW Act inconsistent with the TPA. However, Hodgson JA considered that there were 'no such obstacles relevant to this case'.[46]
[46] Bitannia [13].
Tobias JA found it unnecessary to consider the constitutional point.[47]

Complete's second and fourth points

[47] Bitannia [19].

The circumstances in Bitannia differ markedly from those in the present matter.
As OSB correctly observes, in Bitannia there was a causal connection between the claimant's alleged conduct and one of the (two) circumstances giving rise to the respondents' (statutory) liability to pay the claimed amount; namely, the respondents' failure to provide a payment schedule.
Thus, the defence raised in Bitannia was based on conduct undertaken in service of a payment claim for the purpose of creating a statutory right.[48]
[48] Bitannia [96].
That is not the position here.
Here, the alleged conduct concerns representations about resources required to perform and complete construction work, under a contemplated construction contract, in circumstances where the representor's non-performance, under the ensuing contract, is relied upon as a basis for asserting that the representations were misleading or deceptive.
In my preliminary view it is difficult to see how such a defence could not be 'in relation to matters arising under' such a contract.
Indeed, it would seem to me that to construe s 27(3)(b)(ii) of the Act in a manner which might permit a defence to be maintained in the above circumstances, by a representee who has not 'spoken up' by filing a payment schedule within the statutorily prescribed time, would not only frustrate the operation of the statutory scheme described earlier in these reasons but would also risk defeating one of its primary objects.
In my preliminary view, it is likely that s 27(3)(b)(ii) would therefore preclude Complete from raising such a defence.
This brings me to Complete's fourth point.
As noted, the factual backdrop against which this point is raised differs from the context in which the constitutional point was advanced in Bitannia.
However, the legal question underpinning it was substantially the same as that raised by Complete's fourth point.
That is, whether precluding a respondent in recovery proceedings brought under a State security of payment law from pursuing its rights under Commonwealth legislation in the face of misleading or deceptive conduct by a claimant gives rise to constitutional inconsistency.
Basten JA's conclusion on the point, whilst obiter, was the product of careful and strongly reasoned analysis by a judge at intermediate appellate level.
I consider that the above leads inevitably to a conclusion that there is a serious question to be tried as to Complete's fourth point in circumstances where:
(1)This application must be approached on the basis that the facts set out in affidavit evidence given by Complete, grounding the contentions summarised in paragraphs 39(1) - (5) above,[49] will ultimately be accepted.
(2)Complete has, accordingly in my view, raised a serious question to be tried as to whether it is entitled to a remedy under the ACL including a remedy which might neutralise the existence, or substantially restrict one or more consequences, of any construction contract.[50]
(3)It could in my view not be said, with a high degree of certainty about the ultimate outcome were the matter to proceed to trial, that Complete would (but for s 27(3)(b)(ii) of the Act) not have been permitted to raise its asserted rights under the ACL for the purposes of any defence.[51]
(4)Absent the availability of such a defence, there is arguably an inconsistency between s 27(3)(b)(i) of the Act and the ACL resulting in the former being 'inoperative' to that extent,[52] noting that:
(a)section 27(3)(b)(i) purports to prohibit Complete from bringing any cross-claim against OSB in these proceedings; and
(b)a court would, in my preliminary view substantially for the reasons explained by Basten JA in Bitannia,[53] likely refuse a discretionary stay pending determination of any separate proceedings by Complete for relief under the ACL.

Complete's third point

[49] Dillon affidavit and Affidavit of Travis Crannage sworn 15 March 2024.

[50] Eg. ACL s 243(a), s 243(c).

[51] Cf. Bitannia [11] (Tobias JA), [90] - [104], [124] (Basten JA).

[52] Cf. Bitannia [119].

[53] Cf. Bitannia [118].

Given my conclusions with respect to Complete's fourth point, it is strictly unnecessary to determine whether there is also a serious question to be tried as to Complete's third point.
That said, it would in my preliminary view seem wrong to treat a construction contract presently in existence as 'void' merely because there is chance a court might at some future time, as a discretionary measure, make such an order should the representee in due course successfully prosecute a claim under the ACL.[54]
[54] Cf. Abigroup Contractors Pty Ltd v Transfield Ltd [1998] VSC 103; (1998) 217 ALR 435 [75]. See also generally Calvin v Carr [1979] 1 NSWLR 1, 8.

Disposition

Having regard to my conclusions with respect to Complete's fourth point, I do not consider this to be an appropriate matter for summary judgment.
I make the following orders:
(1)The plaintiff's application for summary judgment be refused.
(2)The defendant be granted unconditional leave to defend.
I will hear from the parties as to the question of costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JR
Associate to the Judge
28 AUGUST 2024