Piotto Bros Cement Flooring Pty Ltd v Kyren Pty Ltd - [2021] SADC 17

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
PIOTTO BROS CEMENT FLOORING PTY LTD v KYREN PTY LTD
[2021] SADC 17
Decision of her Honour Judge Thomas
25 February 2021
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - THE CONTRACT - CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS - OTHER MATTERS
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - DEDUCTIONS
The respondent sought the discharge of an interim injunction granted to restrain the respondent from seeking recourse to unconditional bank guarantees provided as security for the performance of the applicant’s obligations under a building subcontract, comprising a formal instrument of agreement, general conditions and contract particulars.
There was a dispute between the parties as to when on the proper construction of the subcontract a credit amount in a payment statement issued by the contract administrator was due for payment by the subcontractor, in circumstances where the payment statement was made outside the monthly progress claim and payment cycle and before a final payment claim was due. The respondent claimed the applicant’s failure to pay the credit amount in the payment statement was a default within the meaning of clause 4.4 of the general conditions because there was a “gap” in the relevant contract particulars. The applicant contended that there was no such “gap” and as the time for payment was not yet due, there was no default. There was further dispute about the proper construction of the subcontract considering a “no obstruction/injunction” clause and the effect of the issue of a notice of dispute under the dispute resolution clause.
In considering whether the interim injunction should be discharged, the parties asked the Court to answer agreed preliminary questions to resolve their disputes as to the proper construction of subcontract.

Held: (1) On a proper construction of the payment clause and relevant contract particulars in the subcontract, the payment statement in question is due and payable within 14 days after the end of the month in which the next payment statement is made, which would include the final payment claim when made. There was no “gap” in the relevant contract particulars.
(2) Since there has been no further payment claim made since the payment statement in question, the credit due to the respondent is not yet due and payable. There is no default by the applicant by its failure to pay.
(3) Since there is no default by the applicant, the respondent is not entitled to have recourse to the bank guarantee due to the negative stipulation in clause 4.4 of the general conditions. The negative stipulation is enforceable by injunction regardless of the “no injunction” clause in the subcontract.
(3) Since there is no default enlivening the respondent’s entitlement to have recourse to security, it is not necessary to consider the implications of the issue of a notice of dispute.
Building and Construction Industry Security of Payment Act 2009 (SA), referred to.
Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd (2008) 249 ALR 458; Reed Construction Services Pty Ltd v Kheng Seng (Aust) Pty Ltd (1999) 15 BCL 158; Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd [2015] VSCA 98, applied.

PIOTTO BROS CEMENT FLOORING PTY LTD v KYREN PTY LTD
[2021] SADC 17

Civil
Introduction

On 27 November 2020[1] an interim injunction was granted by this Court restraining the respondent until further order from taking any further steps in seeking recourse to unconditional bank guarantees. The bank guarantees had been provided by the applicant as security for performance of its obligations under a bespoke subcontract for concrete construction works[2] at a mixed-use development at 108 Wakefield Street, in the Adelaide CDB (the Project).
[1] FDN 23.
[2] Concrete, reinforcement and formwork for the substructure and superstructure works.
The factual background to this interlocutory dispute is unusual and concerns the issue by the contract administrator of a payment statement in the respondent’s favour for a credit on account of the contract price outside the monthly progress payment cycle and before issue of a final payment claim. The credit almost entirely comprises the amount paid by the respondent as a debt under the Building and Construction Industry Security of Payment Act (2009) (SA) (the Act) for the claimed amount in a payment claim. That amount had been paid following the respondent’s failure to provide a payment schedule within the required time.[3] Most of the claimed amount in the payment claim was for credits for approved back charges or variations rejected in previous payment schedules.
[3] That is by reason of the contract administrator’s failure to make a payment statement in response to the payment claim within the time required under the subcontract.
In these circumstances, there is a dispute over the proper construction of the payment and recourse to security provisions in the subcontract.
The respondent says on a proper construction of the payment provisions in the subcontract, the credit in the payment statement was due for payment but had not been paid, thereby constituting a default under the subcontract that entitled it to have recourse to the bank guarantees. The applicant says the opposite: the credit in the payment statement is not yet due and the due date will not be triggered until another valid payment claim is made. The applicant’s failure to pay the credit amount in the payment statement is therefore not a default under the subcontract and in the absence of a default, the respondent is not entitled to have recourse to the security.
The parties have asked the Court to answer agreed preliminary questions as the first step in determining whether the interim injunction should be discharged before they proceed to a full hearing for an interlocutory injunction pending the final determination of underlying dispute between the parties over rejected variation claims and disputed back charges.
Background
The applicant, Piotto Bros Cement Flooring Pty Ltd is the subcontractor (Subcontractor) to the respondent, Kyren Pty Ltd (the Main Contractor) under a written lump sum Subcontract for the Project (the Subcontract).[4]
[4] Exhibit JP-9 to the affidavit of Jeffrey Michael Piotto sworn on 26 November 2020 (FDN 17) (the Piotto Affidavit).
The Contract Price[5] as specified in the Contract Particulars[6] is the fixed lump sum of $8,325,000 excluding GST, subject to adjustment in accordance with the terms of the Subcontract.
[5] As defined in the Subcontract. For convenience, such defined terms are italicised.
[6] As annexed to the General Conditions attached to the Formal Instrument of Agreement comprising part of the Subcontract.
Security for the performance of the Subcontractor’s obligations under the Subcontract was provided in the form of two unconditional bank guarantees (the Bank Guarantees)[7] issued by National Australia Bank Limited (the Bank) each in the amount of $208,125 and totalling $416,250 in accordance with the Subcontractor’s obligations under the Subcontract for provision of the “Approved Security”.[8]
[7] Exhibit JP-10 to the Piotto Affidavit.
[8] As defined in the Subcontract.
The Subcontract provides for monthly payment claims to be made by the Subcontractor during the course of the Works.[9] The last payment claim was issued by the Subcontractor on 21 August 2020. No subsequent payment claim has been issued nor is another monthly payment claim anticipated given the Works are complete.
[9] Ibid.
It is this payment claim that became payable by the Main Contractor as a debt due to the Subcontractor under the Act.
The time for giving a final payment claim under the Subcontract has not occurred.
On 5 November 2020, a payment statement (the Payment Statement) [10] was issued by the Contract Administrator[11] assessing a credit due in the Main Contractor’s favour in respect of the Contract Price in the amount of $467,521.25. That amount comprises what is, in effect, a reimbursement of the claim paid by the Main Contractor as a debt under the Act plus a small additional credit assessed by the Contract Administrator.
[10] Exhibit JP-11 to the Piotto Affidavit, p 118.
[11] As defined in clause 1.1 of the General Conditions to the Subcontract.
The Contract Administrator issued the Payment Statement under cover of a written communication that stated in part as follows:
In the circumstances, I have determined that there is a credit due to Kyren Pty Ltd’s favour [the Main Contractor] in respect of the contract price of $467,521.25. In the circumstances, I have issued the attached Payment Statement.
Please note that pursuant to clause 12.8 of the Subcontract that this amount is due and payable to Kyren [the Main Contractor].[12]
[12] Ibid at pages 119-120.
On 24 November 2020, the Subcontractor issued a notice of dispute under clause 15.1 of the General Conditions of the Subcontract disputing the Payment Statement, thereby triggering the dispute resolution process under the Subcontract.
The Subcontractor has not paid the Main Contractor the credit amount in the Payment Statement.
By letter dated 26 November 2020,[13] the Main Contractor made a demand on the Bank for the full amount of the Bank Guarantees.
[13] Exhibit TS-1 to the affidavit of Theo Samara sworn on 27 November 2020 (FDN 18).
Before the Bank had paid on the Main Contractor’s demand, the interim injunction was granted by this Court on the application of the Subcontractor.
Agreed Questions for Determination
The parties have asked this Court to determine the following preliminary questions.
1.    Should the interim injunction be revoked in light of clause 4.5 of the Subcontract?
2.    At what time (if any) under clause 12.8 does a payment statement fall due?
3.    Subject to the answer to 2, having regard to the Subcontract as a whole and in particular, clauses 4.4, 12.7, 12.8 and 15, does the fact that the Subcontractor has issued a notice of dispute under clause 15.1 about a payment statement have the effect of:
3.1.staying an obligation to pay the amount claimed in the Payment Statement when it falls due for payment; and
3.2precluding the Main Contractor from having recourse to the security if the Subcontractor fails to pay?
The Main Contractor concedes that it does not contend that payment statements issued under clause 12.8 of the Subcontract are incontrovertible.
I have answered question two first because a finding as to whether the credit amount in a payment statement is due or not in this case informs the question as to whether there has been a default under the Subcontract that would entitle the Main Contractor to have recourse to the Bank Guarantees in the first place. The primacy of this question was acknowledged in oral argument by counsel for both parties.
Answers to Agreed Questions
For the detailed reasons set out below, I answer the three questions as follows.
Question 2
The amount assessed and set out in a payment statement issued under clause 12.8 falls due for payment within 14 calendar days after the end of the month in which a valid payment claim is made. In this case, the due date for payment of the credit amount in the Payment Statement has not occurred since the Payment Statement was not issued in response to a valid payment claim, there have been no further payment claims made to date and no due date for payment will arise until a further valid payment claim is made.
Question 1
The Subcontractor’s failure to pay the Main Contractor the credit amount assessed in the Payment Statement to date does not constitute a default under the Subcontract because the time for payment has not occurred and payment is not yet due.
Accordingly, regardless of clause 4.5 of the Subcontract, the interim injunction should not be revoked because the Main Contractor’s entitlement to have recourse to the Bank Guarantees is conditioned on the Subcontractor’s default. In short, there is in clause 4.4 a contractual stipulation as between the parties that limits the Main Contractor’s entitlement to insist on payment under the security.
Question 3
It is not necessary to answer the third question given the answer to the second question.
Relevant Contractual Provisions
The Subcontract comprises a Formal Instrument of Agreement, General Conditions and the Contract Particulars. For convenience, a reference to a clause below is a reference to that clause in the General Conditions. Further, the Subcontract expressly provides that headings are for convenience and do not affect interpretation of the Subcontract and I refer to them for completeness only.
Form of Security
Clause 4.1 provides:
4.1FORM
The Subcontractor must provide security in the form and amount set out in the Contract Particulars.
Where security is required to be provided by the Subcontractor in the form of Approved Security the Subcontractor must provide the Main Contractor with the Approved Security within 7 days of signing the Formal Instrument of Agreement.
Recourse to Security
Clause 4.4 provides:
4.4RECOURSE TO SECURITY
The Approved Security shall be subject to recourse by the Main Contractor if:
(a)the Subcontractor defaults under the Contract; or
(b)the Main Contractor suffers or anticipates that it will suffer a loss directly or indirectly as a consequence of a Subcontractor default,
notwithstanding that the Subcontractor may have cured the default giving rise to the Main Contractor’s entitlement to make the call on the Approved Security as permitted by the Contract. In this clause recourse includes converting the Approved Security into cash.
No Obstructions
Clause 4.5 provides:
4.5NO OBSTRUCTIONS
The Subcontractor must not do anything to prevent, delay or obstruct the Main Contractor exercising its rights of recourse to the Approved Security under the Contract, including seeking an injunction to so prevent, delay or obstruct.
Payment
Clause 12 deals with payment of the Contract Price and other amounts payable under the Subcontract. It sets out the contractual framework for the making, determination and assessment and payment of moneys due as between the parties on account during the course of the Works. It also deals with the amount due as between the parties upon issue of a final certificate which evidences the amount finally due and payable between the parties under or in connection with the Subcontract.
Clause 12.1 provides the overarching obligation of the Main Contractor to pay the Subcontractor:
12.1PAYMENT OBLIGATION
Subject to clause 12.17 and to any other right to set-off which the Main Contractor may have, the Main Contractor must pay the Subcontractor:
(a)the Contract Price; and
(b)any other amounts which are payable by the Main Contractor to the Subcontractor under the Contract.
Clause 12.6 relevantly provides:
12.6PAYMENT CLAIMS
The Subcontractor must give the Contract Administrator claims for payment on account of the Contract Price and any other amounts payable by the Main Contractor to the Subcontractor under the Contract:
(a)at the times stated, or upon completion of the milestones described, in the Contract Particulars up to the Date of Completion;
(b)after Completion, within 10 Business Days of receiving a Certificate of Completion;
(c)if and only to the extent that any payment previously claimed remains due, or Work for which the Subcontractor is entitled to payment is performed, after the Certificate of Completion, within the times required by clauses 12.13 and 12.15;
Clause 12.7 read with the Contract Particulars provides that the Contract Administrator must within 15 Business Days of receiving a payment claim under clause 12.6, give the Subcontractor and the Main Contractor a payment statement setting out his determination as to inter alia the amount then payable by the Main Contractor on account of the Contract Price or otherwise under the Subcontract.
Payment of moneys on account by the parties is dealt with in clause 12.8, which is the clause in primary contention here. Relevantly it provides:[14]
[14] Third paragraph omitted.
12.8 PAYMENT
In addition, the Contract Administrator may, at any time, issue a payment statement of the amount then payable by the Subcontractor to the Main Contractor on account of any credit due in the Main Contractor’s favour in respect of the Contract Price and the amount shall be due and payable within the period stated in the Contract Particulars for clause 12.8.
Subject to clauses 12.12[15] and 12.17,[16] the Main Contractor must within the time period stated in the Contract Particulars of receiving a payment statement under clause 12.7, pay the Subcontractor the amount set out as then payable in the payment statement, less any amounts disclosed as unpaid under clause 12.18 and less any unpaid credit amounts the subject of a payment statement in favour of the Main Contractor.[17]
[15] Conditions Precedent to payment including the provision of security.
[16] Rights of set-off.
[17] Both emphases supplied.
The Contract Particulars for clause 12.8 8 provide as follows:

CLAUSE

ITEM

PARTICULARS

Time for payment by Main Contractor or Subcontractor following receipt of a Payment Statement (clause 12.8) Payment to be made within 14 days of the end of the month in which a valid Payment Claim is made.

Neither “Payment Statement” nor “Payment Claim” are defined terms in the Subcontract and nothing turns on their capitalisation in the Contract Particulars.[18]
[18] Clause 1.2(c).
The Contract Particulars for clause 12.8 are expressed in the form of a complete sentence rather than simply specifying a time period: “within 14 days” etc. Whilst a literal insertion of the particulars does not work naturally, the sense of what is intended is clear and nothing turns on this drafting anomaly.
The Contract Particulars for clause 12.8 link the time for payment to a “valid” payment claim. There was no issue between the parties as to what is meant by “valid” or whether this qualification affects the questions to be determined in any way. I have proceeded on the basis that it means a payment claim made in conformity with the Subcontract.
It is clear from the express words of clause 12.9 (in addition to the express references to such payments being on account in the clauses 12.6 to 12.8 above), that any payment of moneys under clauses 12.7 and 12.8 is on account of the Contract Price.
Notably, the Main Contractor is not obliged to make any payment to the Subcontractor under clause 12.8 unless the Subcontractor has provided the Main Contractor with the Approved Security for the amount provided in clause 4.1 of the Subcontract. That is two unconditional bank guarantees, each for 2.5% of the Contract Price.
Clause 12.13 deals with the completion or final payment claim that is required to be given within 28 days of issue of a Notice of Completion. As noted above, the time for the final payment claims has not occurred.
Clause 12.13 provides relevantly:
12.13COMPLETION PAYMENT CLAIM
Within 28 days after the issue of a Notice of Completion for the Works, the Subcontractor must give the Contract Administrator:
(a) a payment claim marked “final payment claim”, which must include all amounts which the Subcontractor claims from the Main Contractor on account of the Contract Price or otherwise under the Contract; and
(b) notice of any other amounts which the Subcontractor claims from the Main Contractor,
in respect of any fact, matter or thing arising out of, or in any way connected with, the Subcontractor’s Activities or the Contract which occurred prior to the Date of Completion.

Clause 12.16 permits the Contract Administrator in any payment statement to correct an error or modify any previous payment statement at any time.
Clause 12.17 provides the Main Contractor with rights of set-off against any moneys dues from the Main Contractor to the Subcontractor whether under the Subcontract or otherwise.
Clause 15 provides relevantly:
15DISPUTES
15.1NOTICE OF DISPUTE
If a dispute or difference arises between the Subcontractor and the Main Contractor (including via the Contract Administrator) in respect of any fact, matter or thing arising out of, or in any way connected with, the Subcontractor’s Activities, the Works or the Contract, or either party’s conduct before the Contract was entered into by them, the dispute or difference must be determined in accordance with the procedure in this clause 15.
Where such a dispute or difference arises, either party may give a notice in writing to the Contract Administrator and the other party specifying:
(a)   the dispute or difference;
(b)   particulars of the party’s reasons for being dissatisfied; and
(c)   the position which the party believes is correct.
15.2DISPUTE NEGOTIATIONS
(a)   Within 14 days of the delivery of a Notice of Dispute pursuant to clause 15.1, the persons nominated in the Contract Particulars, or their nominees, who have authority to bind the Main Contractor and the Subcontractor respectively, must meet and attempt to resolve the dispute or difference in negotiations. If they are unsuccessful in resolving the dispute or difference in negotiations, they must attempt to agree in writing to a dispute resolution process that is an alternative to litigation and a timetable for the attempted resolution of the dispute or difference by the alternative dispute resolution process.
(b)   If the dispute or difference remains unresolved after 35 days from the delivery of the Notice of Dispute, then either party may commence litigation in connection with the dispute or difference.
(c)   Subject to clause 15.3, neither party may commence litigation in respect of a dispute or difference until the relevant time period specified in clause 15.2(b) has expired.
15.3LEGAL RIGHTS
Nothing in this section prevents either party from taking action at any time to enforce a payment due under a payment statement in accordance with this Contract or a payment otherwise expressed to be due and payable under this Contract or to seek urgent court relief to prevent the detrimental action, actual or anticipated, of the other party.
15.4SURVIVE TERMINATION
This clause 15 will survive the termination of the Contract.
15.5CONTINUATION OF WORKS
Despite the existence of a dispute or difference between the parties, including Court proceedings under 15.3, the Subcontractor must:
(a)   continue to carry out the Subcontractor’s Activities; and
(b)   otherwise comply with its obligations under the Contract.
Question 2: At what time (if any) under clause 12.8 does a payment statement fall due?
The Parties’ Contentions as to Clause 12.8
The Main Contractor[19] submits that the Subcontract Particulars for clause 12.8 do not provide a time for payment of an amount payable by the Subcontractor because the only time specified is the time for payment of an amount payable to the Subcontractor. There is, in short, a “gap” in the relevant Contract Particulars.
[19] Written outline at [41].
The Main Contractor further submits that this construction is supported by the fact that the second paragraph of clause 12.8 deals with the time by which the Main Contractor must pay the Subcontractor following receipt of a payment statement issued under clause 12.7.[20] The reference to a “valid Payment Claim” in the Contract Particulars is then said to “delimit” those particulars to an instance where there is a payment obligation on the part of the Main Contractor[21] and not vice versa. This results in a “gap” for payment statements made under clause 12.8, such as the Payment Statement in this case, which was not issued in response to a payment claim (unlike a payment statement made under clause 12.7).
[20] Written outline at [42].
[21] Written outline at [43].
The Main Contractor contends that, in light of this “gap”, there are five possibilities as to when the Subcontractor’s payment obligation for a payment statement made under clause 12.8 is due:
(1)immediately upon being served; or
(2)when directed by the Contract Administrator to do so; or
(3)on an implied basis within 14 days of the payment statement being delivered; or
(4)on an implied basis within 14 days of the end of the month in which the payment statement is delivered; or
(5)never.
Of these possible interpretations, the Main Contractor’s first position is that the credit amount is due to be paid to the Main Contractor immediately on a payment statement made under clause 12.8 being served on the Subcontractor. Its second position is that such a payment statement is due when directed by the Contract Administrator. In both cases, the Payment Statement under consideration here was issued on 5 November 2020 (and before the Main Contractor sought recourse to the Bank Guarantees on 26 November 2020).
In the third alternative, the Main Contractor contends the credit amount in the Payment Statement in question here is due and payable on an implied basis within 14 days of delivery of the Payment Statement, being 20 November 2020. Whilst, on my counting, “within 14 days” of 5 November is 19 (not 20) November, nothing turns on this error.
In the fourth alternative, the Main Contractor contends the credit amount in a payment statement is due and payable on an implied basis within 14 days of the end of the month in which the Payment Statement in question was delivered, being 14 December 2020. The Main Contractor contends this is the outer limit for payment by the Subcontractor of the credit amount in the Payment Statement.
In oral argument, counsel for the Main Contractor contended for a further possibility as an “outer limit”: 20 calendar days from issue of the Payment Statement in question, being 25 November 2020.[22]
[22] T32-33.
The last alternative, “never”, was ultimately not pressed in argument by counsel for the Main Contractor.
Putting aside for now the second argument based on the Contract Administrator’s direction, the Main Contractor’s position depends on there being a “gap” in the Contract Particulars as to the time for payment of a payment statement issued in favour of the Main Contractor under clause 12.8. The different possibilities urged by the Main Contractor reflect different iterations as to what it is submitted should be implied by the Court as a reasonable time for payment in the circumstances of this Subcontract.
The Subcontractor takes a contrary position that the amount of any credit on account of the Contract Price in the Payment Statement issued under clause 12.8 in this case must await the issue of a further payment claim under the terms of the Subcontract and, until that has occurred, the credit payable in the Main Contractor’s favour is not due.[23]
[23] Written outline at [15].
Discussion
Clause 12.8 (as set out above in full) deals with the payment of amounts determined in payment statements issued in two instances:
·a payment statement issued under clause 12.7 in response to a payment claim made under clause 12.6 by the Subcontractor claiming payment on account of the Contract Price and other amounts payable under the Subcontract; and
·a payment statement issued under clause 12.8 at any time on account of any credit due to the Main Contractor’s favour in respect of the Contract Price.
The Main Contractor submits correctly that the introductory words to clause 12.8 “In addition” reinforce the obvious conclusion that a payment statement can be issued in two instances.
In support of its position that there is a gap in the relevant Contract Particulars, the Main Contractor contends there are two independent payment obligations in clause 12.8 that correspond with each instance of payment statement. That is, each of the two paragraphs in clause 12.8 is said to deal with a different instance of the two types of payment statements that may be issued. It submits that since the singular time period in the relevant Contract Particulars is linked to the making of a valid payment claim, those particulars apply to only a payment statement issued in response to a payment claim (that is, a clause 12.7 payment statement, and not a clause 12.8 payment statement).
Although the Subcontract clearly contemplates two instances in which a payment statement may be made, in my view it does not follow that this results in independent or separate payment obligations in each instance that then correspond to each of the two paragraphs in clause 12.8. Such a submission conflates the “issue” of a payment statement with the “payment” of the amount determined as payable in that statement. They are different obligations.
The Main Contractor’s contentions in this regard also ignore the express requirement in the second paragraph of clause 12.8 that the payment to the Subcontractor of the amount in the payment statement is “less any unpaid credit amounts the subject of a payment statement in favour of the Main Contractor.” In this way, payment of a credit amount (due to the Main Contractor) in a clause 12.8 payment statement is expressly linked to payment of the amount due to the Subcontractor in a clause 12.7 payment statement.
Counsel for the Main Contractor submitted that the words “then payable” used in the first paragraph of clause 12.8 contemplated an existing debt and not something payable in the future. I reject this submission. The words used are not “due and payable” and the clause expressly references a later time period as to when the credit amount shall be due and payable that is inconsistent with it being immediately due and payable.
Counsel for the Main Contractor submitted that there was no good reason to link the time for payment of a clause 12.8 payment statement to the time a payment claim was made. The explanation advanced by counsel was that it is unbalanced that there would be monthly adjustments of payments due to the Subcontractor on one hand but the Main Contractor’s entitlement would effectively sit in abeyance at the whim of the Subcontractor.
I do not accept that submission. In the first place, there is no genuine unfairness in this case when it is considered that the Payment Statement was issued under clause 12.8 to redress the consequences under the Act of the Contract Administrator’s failure to issue a clause 12.7 payment statement in response to the Subcontractor’s August 2020 payment claim. Secondly, there is nothing unusual about the time for payment by either the Main Contractor or the Subcontractor in the Contract Particulars being referenced to one time period linked to the making of a payment claim and not two different time periods applying to each instance of payment statement.
To the contrary, there is in my view, very good reason why the time for payment of a payment statement (whether issued under clause 12.7 or 12.8) is linked to the making of a payment claim. Such a risk allocation in the Subcontract reflects common commercial practice that the contractor in a building contract is to be paid progressively on account during the course of the works and the monthly claim and assessment process begins with a payment claim. There is no ultimate unfairness to either party because the payment process concludes with a determination of the amount finally due and payable as between the parties in response to the final payment claim.
It is also incorrect to say that the Main Contractor’s entitlement would never be triggered or would sit in abeyance at the whim of the Subcontractor. The Subcontractor’s obligations to complete the works, give a notice of completion and submit a final payment claim under the Subcontract are fundamental and cannot be carried out at a whim.
Clause 12.6 contains an express acknowledgment by the Subcontractor that the Main Contractor is relying on the Subcontractor “claiming, progressively and in a timely way, all entitlements to payment it believes it has from the Main Contractor …”. This acknowledgement is clearly inconsistent with any characterisation of the Main Contractor’s entitlement to be paid as being held in abeyance at the whim of the Subcontractor.
Further, it is also important to note that the first paragraph of clause 12.8 is not the only provision contemplating and providing for a payment of moneys by the Subcontractor to the Main Contractor. The third paragraph of clause 12.14 provides in part that:
The amount certified as due and payable shall be paid by the Main Contractor or Subcontractor within 14 days of the delivery of the final certificate.
A further difficulty with the Main Contractor’s submission is that the clause 12.8 Contract Particulars do not link the time for payment to the payment claim to which the payment statement responds, either expressly or impliedly. The clear sense of the words used is to specify the due date for payment to the month in which any valid payment claim is made.[24]
[24] Emphasis supplied.
In the unusual case, as is this case, whereby a payment statement under clause 12.8 was issued in a month where there was no payment claim made by the Subcontractor, there is in my view no reason why payment of the credit amount in the Payment Statement should not await a further payment claim, whether that be a further payment claim made under clauses 12.6(b) and (c) (if any) or the final payment claim.
By contrast, until Completion, the credit amount in the Payment Statement would have been deducted from the monthly payment statement made under clause 12.7 in response to the next monthly payment claim. Counsel for the Subcontractor acknowledged that this would have been the result had circumstances been different.
The difficulty in this case is a commercial one because the dispute concerning the parties’ rights and obligations regarding payment of moneys on account has arisen before any final determination has been made as to what is finally due and payable as between the parties. As noted above, the Payment Statement in question was issued to redress the consequences under the Act of a failure to issue a payment statement in response to the August 2020 payment claim, at a time when there are no monthly payment claims being made and the final payment claim is not yet due. The linking of the time for payment of a credit due in favour of the Main Contractor to a valid payment claim results in the Main Contractor waiting at the latest until the final payment claim is made.
The result in this case reflects the express words of clause 12.8 when read with the relevant Contract Particulars.
Direction to Pay
Counsel for the Main Contractor submitted that, in the alternative, the Contract Administrator’s written statements in the Aconex message covering the Payment Statement in question[25] constituted a direction to pay the credit amount in the Payment Statement immediately and filled the “gap” in the clause 12.8 Contract Particulars as to the time for payment.
[25] As set out above in full at [13].
I reject this submission. These statements by the Contract Administrator merely directed attention to the basis of the claim for payment of the credit amount determined to be due in the Main Contractor’s favour as set out in the attached Payment Statement as arising under clause 12.8. The Subcontract does not grant the Contract Administrator authority to determine the time when assessed amounts in payment statements are due and payable. That time period is specified in the clause 12.8 Contract Particulars.
Conclusion
I do not consider that there is a “gap” in the Contract Particulars when read with clause 12.8 as to the time for payment of a payment statement issued under clause 12.8. I find that the time for payment of the credit amount in the Payment Statement in question here will be 14 days after the end of the month in which the next valid payment claim is made, which would include the final payment claim required to be given under clause 12.13 within 28 days after the issue of a Notice of Completion for the Works.
It is therefore not necessary or appropriate to imply in the relevant Contract Particulars a reasonable time for payment of a credit amount in a payment statement issued under clause 12.8 and consider the various possibilities contended for by the Main Contractor.
I find that clause 12.8 and the relevant Contract Particulars provide that the due date for payment of the credit amount in the Payment Statement in favour of the Main Contractor has not occurred. Payment will not be due until 14 days after the month in which the next valid payment statement is made, which in the circumstances of this case is likely to be the final payment claim.
Question 1: Should the interim injunction be revoked in light of clause 4.5 of the Subcontract?
Clause 4.5
Clause 4.5 (as set out above) is in a form commonly referred to as a “no injunction” clause. Counsel for the Subcontractor submitted that clause 4.5 was void as against public policy as an ouster of the court’s jurisdiction. Counsel for the Main Contractor submitted the opposite and contented that even if it were void (which was denied), this clause was available as an aid in construing the parties’ contractual intention regarding the Main Contractor’s rights of recourse to the Bank Guarantees under the Subcontract as being unfettered.
It is not necessary for me to resolve these issues in answering this question given my answer to the second question.
No Default Under Clause 4.4
It is well-established principle that the court will restrain a party from acting in breach of contractual promise made by it not to have recourse to a performance guarantee in particular circumstances.[26]
[26] Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd (2008) 249 ALR 458 at [77], citing Reed Construction Services Pty Ltd v Kheng Seng (Aust) Pty Ltd (1999) 15 BCL 158 at 164 (Austin J); Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd [2015] VSCA 98 at [138] per Kaye JA.
In clause 4.4, there is a contractual stipulation as between the parties that limits the Main Contractor’s entitlement to insist on payment under the security: that is, the occurrence of a Subcontractor’s “default”.
In this case, the Main Contractor relies on the Subcontractor’s failure to pay the credit amount in the Payment Statement as a default under clause 4.4(a) thereby entitling the Main Contractor to have recourse to the Bank Guarantees.[27] Since there has been no further payment claim made since the Payment Statement in question, the credit due in the Main Contractor’s favour is not yet due and payable and there is no default by the Subcontractor within the meaning of clause 4.4.
[27] The only default relied on is the alleged failure to pay the credit amount in the Payment Statement subsisting at the time the Main Contractor made demand on the Bank to pay the full amount of the Bank Guarantees. T47.3.
Accordingly, regardless of clause 4.5 of the Subcontract, the interim injunction should not be revoked because the Main Contractor’s entitlement to have recourse to the Bank Guarantees is conditioned on the Subcontractor’s default. The limitation or negative stipulation in clause 4.4 is enforceable by injunction.
Further Matters
I will hear the parties as to the timetable for further hearing the application for an interlocutory injunction including issues as to whether damages are an adequate remedy and the balance of convenience.

CLAUSE	ITEM	PARTICULARS
Time for payment by Main Contractor or Subcontractor following receipt of a Payment Statement (clause 12.8)	Payment to be made within 14 days of the end of the month in which a valid Payment Claim is made.