Rapid Concrete Developments Pty Ltd v Lorem Constructions Pty Ltd
[2020] VCC 858
•18 June 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-20-00634
| Rapid Concrete Developments Pty Ltd | Plaintiff |
| v | |
| Lorem Constructions Pty Ltd | Defendant |
---
JUDGE: | Judicial Registrar Burchell | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | On the papers | |
DATE OF JUDGMENT: | 18 June 2020 | |
CASE MAY BE CITED AS: | Rapid Concrete Developments Pty Ltd v Lorem Constructions Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 858 | |
REASONS FOR JUDGMENT
---
Subject: CONTRACTS
Catchwords: Building contract – payment claim – whether payment claims constituted contracts or variations- whether work was claimable variation- whether reference date available for payment claim – whether payment claim adequately identified the construction work to which it related – whether amounts claimed included excluded amounts
Legislation Cited: Building and Construction Industry Security of Payment Act 2002 (Vic) ss4, 9, 10A, 10B, 1214(2), s16(2); Civil Procedure Act 2010 (Vic) s61
Cases Cited:APN DF2 Project 2 Pty Ltd v Grocon Constructions (Victoria) Pty Ltd [2014] VSC 596; Cat Protection Society v Arvio [2018] VSC 757; Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391;
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 & Anor [2010] VSC 106; Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor (2009) 26 VR 112; Pearl Hill Pty Ltd v Concorp Construction Group (Vic)Pty Ltd [2011] VSCA 99; John Beever (Aust) Pty Limited v Paper Australia Pty Ltd [2019] VSC 126; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805; Vanguard Developments v Promax [2018] VSC 386; 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | B.J. Murphy | Ardent Lawyers & Business Advisors Pty Ltd |
| For the Defendant | Dr K Weston-Scheuber | Arro Lawyers |
JUDICIAL REGISTRAR:
INTRODUCTION
1 In this proceeding, the plaintiff (“RCD”) makes an application by summons on originating motion dated 11 February 2020, for judgment against the defendant (“Lorem”) under s16(2) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (“SOP Act”). The application arises out of various concreting works (“Works”) (the construction of a set of townhouses) at 15 Kireep Road, Balwyn (“Site”) pursuant to a contract with Lorem.
2 RCD asserts that it is entitled to judgment because there was a suite of construction contracts between the parties. These contracts resulted in nine payment claims (“payment claims”) issued by the plaintiff, to which no payment schedule was provided, and which remain part paid or unpaid by the defendant. Therefore, RCD seeks judgment by originating motion in the amount of $321,587.57 against Lorem as a debt due under a contract pursuant to s16(2)(a)(i) of the SOP Act.
3 Lorem opposes the giving of judgment on the following grounds:
a) that payment claims 1 to 9 were made pursuant to two construction contracts, not six contracts as the plaintiff alleges;
b) accordingly, payment claims 6 to 9 are claims for variations pursuant to the two construction contracts and must be dealt with as claims for variations, which is relevant to the assessment of the reference dates for the payment claims;
c) no reference date arose under either of the two construction contracts due to the plaintiff’s failure to complete the work;
d) payment claim 7 failed to adequately identify the construction work to which it related; and
e) payment claim 7 claimed for excluded amounts in the form of a non-claimable variation.
4 In my judgment, grounds (a)-(c) and (e) relied on by the defendant in opposition to the plaintiff’s claim are made out. My reasons in respect of each ground are set out below.
5 There will therefore be an order that the plaintiff’s summons on originating motion be dismissed and that the plaintiff pay the defendant’s costs of and incidental to the summons on the standard basis, in default of agreement, unless either party has a basis for seeking a different order as to costs. I will invite the parties to prepare draft orders to give effect to these reasons, and will determine any issue concerning costs on the papers.
BACKGROUND
6 The application is supported by two affidavits sworn by Mr Cain Rattray, the sole director of RCD. Lorem engaged RCD to provide concreting services on the Site.
7 In March 2019, Lorem requested that RCD provide a quotation for the Works. On 10 May 2019, Mr Rattray emailed Quotation QU-0114 (“Contract One”) to Mr Munur, sole director of Lorem, for an agreed price of $213,000.00 (inc GST). Mr Munur signed the quotation that day.[1]
[1] Page 12-13 of the Exhibits to the affidavit of Cain Rattray sworn 11 February 2020.
8 On 29 August 2019, RCD emailed a second quotation, QU-0122 (“Contract Two”) to Mr Munur for various works for an agreed price of $550,000 (inc GST). Mr Munur signed QU-0122 on 2 September 2019.[2]
[2] Page 15-16 of the Exhibits to the affidavit of Cain Rattray sworn 11 February 2020.
9 RCD commenced works on the Site on 16 May 2019. On 29 November 2019, Mr Munur emailed Mr Rattray to inform him RCD was no longer required onsite and a new concreter would be engaged to complete the work. In the six months between the execution of Contract One in May 2019 and the termination of the contractual relationship in late November 2019, RCD conducted various works pursuant to Contracts One and Two and subsequent variations, which will be explored in more detail below.
10 There is some disagreement between Mr Munur and Mr Rattray as to whether Mr Rattray attended the offices of Mr Munur on or about 22 November 2019 and whether they discussed payment. Mr Rattray deposes he did attend the offices and that Mr Munur represented to him that RCD would be paid on 25 November 2019.[3] Mr Munur denies that such a meeting occurred on this date and further denies making any statement regarding payment being made to RCD on 25 November 2019.[4] In any case, despite the disagreement as to this meeting, it is clear that RCD and Lorem both believed their contractual relationship was at an end, as of late November 2019.
Quotation QU-0114 (Contract One)
[3] Affidavit of Cain Rattray sworn 11 February 2020 at [24].
[4] Affidavit of Erol Munur sworn 13 March 2020 at [32].
11 The quotation relevantly provided the following:
· The document is entitled ‘Quote’; and notes it is for ‘capping beam and shotcrete walls’.
· Under ‘Terms’, the following phrase appears: ‘payments are to be made on or before 30 days from invoice date.’
· The second page of the document is entitled ‘Payment Schedule’ and provides a breakdown of the works and their respective costs (though no dates by which payment is to be made). The Schedule also states ‘NB: All variations will be invoiced separately and will be an additional cost to the contract sum price above.’
· Further, it states that “Lorem Constructions accept [sic] the above payment schedule in conjunction with quote number QU-0114 for works at 15 Kireep Rd, Balwyn VIC 3103.”
· Importantly, it provided the following reference date: ‘Payments will be made to Rapid Concrete Developments on completion of works as outlined above in accordance with our payment terms being on or before 30 days from invoice date.’
12 It is clear that both parties intended on this document being the contract for the Works, which Mr Rattray deposes commenced on or about 16 May 2020.[5] Mr Rattray further deposes that he spoke with Mr Munur by text and phone that day regarding defects in the work done by previous concreting contractors, namely, the defects being the screw piles being out of place and at the wrong height.
[5] Affidavit of Cain Rattray sworn 11 February 2020 at [9].
13 Mr Rattray deposes that he and Mr Munur agreed for RCD to rectify these works, and that any additional costs would be covered. Mr Munur deposes that the conversation took place, however no additional quote was received. He deposes that the works done by RCD did not conform with discussions held, the screw piles were not rectified and that the works in general were defective and incomplete.
14 On 29 August 2019, RCD issued a payment claim (Invoice 0612) (“Payment Claim 1”) for $99,000.00 via email to Lorem. On 25 October 2019, payment was received by RCD for the amount of $87,000, leaving a balance of $12,000. Mr Rattray deposes no payment schedule was served by Lorem.
15 Mr Munur deposes that the balance of Invoice 0612 was not paid due to the works being incomplete.
Quotation QU-0122 (Contract Two)
16 The works to be done pursuant to Contract Two were more substantial than those in Contract One. They included concrete footings, a ground slab, a suspended slab, and two sets of stairs. The features of this Contract were similar to those in Contract One, including:
· the same requirement for payments to be made on or before 30 days from the invoice date; and
· a ‘payment schedule’ providing a breakdown of the works and their respective costs - though again no dates by which payments were to be made;
· the same agreement to the payment schedule in conjunction with quote QU-0122; and
· the same agreement that payment will be made to RCD on completion of the works in accordance with the payment terms.
17 RCD issued four payment claims via email to Lorem for works completed under Contract Two (together, “Contract Two Payment Claims”), which are outlined as follows:
· On 5 September 2019, RCD issued a payment claim by way of invoice number INV-0613 for the amount of $103,400 (“Payment Claim 2”). On 25 October 2019, RCD received part payment for $48,000, leaving a balance of $55,400. No payment schedule was served by Lorem.
· On 25 September 2019, RCD issued a payment claim by way of invoice number INV-0617 for the amount of $35,200 (“Payment Claim 3”). On 25 October 2019, RCD received part payment in the amount of $20,000, leaving a balance of $15,200. No payment schedule was served by Lorem.
· On 1 November 2019, RCD issued a payment claim by way of invoice number INV-0621 for the amount of $119,680 (“Payment Claim 4”). Mr Rattray does not specify whether payment was made, and the defendant submits in its Annexure to Written Submissions that it was not paid. No payment schedule was served by Lorem.
· On 29 November 2019, RCD issued a payment claim by way of invoice number INV-0624 for the amount of $82,500 (“Payment Claim 5”). No payment nor payment schedule was served by Lorem.
18 Mr Munur deposes that the works pursuant to Contract 2 were not completed.
Additional Works undertaken by RCD (‘Additional Works’)
19 There are four additional payment claims made by RCD for Additional Works undertaken by RCD at the Site.
20 Mr Rattray deposes that on 27 August 2019, Mr Munur confirmed via email for RCD to perform the first of the Additional Works, the moving of the leading-edge board forward to increase the thickness of the shotcrete walls, which would accommodate for the incorrect piles.
21 On or around 20 September 2019, Mr Munur requested RCD remove soil from the Site, the second of the Additional Works. Mr Rattray deposes they reached an agreement that RCD would charge $90 an hour, plus tip fees. In his affidavit, Mr Munur agrees a conversation took place, but denies that an agreement was reached regarding the rate, and no formal variation or quote was received.
22 Mr Rattray deposes that in November 2019, the third lot of Additional Works was requested by Lorem. Mr Munur deposes that he does not recall requesting any such works. The details of these Additional Works remain unclear, but the relevant invoice states it was for ‘additional works by/with surveyor and correspondence with consultants’.
23 On or about 20 November 2019, Mr Munur requested RCD replace the block work with the form work in the common area, in the aim of speeding up the building works. Mr Munur agrees such a conversation took place, but no formal variation or quote was received.
24 RCD issued four payment claims for the Additional Works (together, the “Additional Works Payment Claims”).
25 The payment claims are as follows:
·On 25 September 2019, RCD issued a payment claim by way of invoice number INV-0618 for the amount of $27,818.33 (“Payment Claim 6”). No payment nor payment schedule was served by Lorem.
·On 9 December 2019, RCD issued a payment claim by way of invoice number INV-0633 for the amount of $5591.72 (“Payment Claim 7”). No payment nor payment schedule was served by Lorem.
·On 1 October 2019, RCD issued a payment claim by way of invoice number INV-0619 for the amount of $1,865.35 (“Payment Claim 8”). No payment nor payment schedule was served by Lorem.
·On 9 December 2019, RCD issued a payment claim by way of invoice number INV-0634 for the amount of $1,523.50 (“Payment Claim 9”). No payment nor payment schedule was served by Lorem.
26 Mr Munur does not dispute the Additional Works Payment Claims were not paid and deposes the following as to why:
· In relation to Payment Claim 6; there was no formal variation notice or quote was received from RCD for these works and the works were not complete or defective.
· In relation to Payment Claim 7; this invoice claimed payment for ‘additional works by/with surveyor and correspondence with consultants’. He does not recall requesting any ‘additional works’, and any and all correspondence between RCD and consultants and the surveyor formed part of the works quoted in Contracts 1 and 2.
· In relation to Payment Claim 8: no hourly rate was agreed for the truck hire for the removal of the soil. No formal variation notice or quote was received from RCD for these works.
· In relation to Payment Claim 9: while discussions were held for additional formwork, no formal variation notice or quote was received from RCD for these works and the works were not complete.
27 In support of the defendant’s allegations that the works were incomplete or defective, the expert report from Mr Bob Lorich from Australiawide Building (“Expert Report”) is referred to and exhibited to Mr Munur’s affidavit. This report is dated 15 January 2020, and notes substantial defects in the concreting works and that several of the works remain incomplete.
The SOP and the legal test
28 The object of the SOP Act is to ensure that anyone who undertakes to carry out construction work, or to supply goods and services under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the performance of that work and the supply of those goods and services (SOP Act s3).
29 A construction contract is defined by s4 of the SOP Act to mean 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”. Subject to s7 of the SOP Act, the Act applies to any construction contract, whether written or oral, or partly written and partly oral, and applies even if the contract is expressed to be governed by the law of a jurisdiction other than Victoria. There was no dispute that the work, the subject of the proceeding, fell within the definition of “construction work” in s5 of the SOP Act.
30 The right of a claimant to recover, by Court action as a debt due, the unpaid portion of a claimed amount is provided for under s16(2)(a) of the SOP Act where a payment claim is served an no payment schedule is provided. Under s16(4), the Court must be satisfied of a number of matters before it may give judgment in favour of the claimant.
31 Section 14 of the SOP Act sets out the requirements for serving a valid payment claim, which must be read together with s9. Critically in this case, the reference date provisions of s14 must be complied with. Subsection 9(2)(a)(i) provides that the reference date is a date on which a claim for a progress payment may be made in relation to a specific item of construction work or related goods and services and which is determined by or in accordance with the terms of the contract.
32 By s9(1), a person is entitled to a progress payment “on and from each reference date”. A payment for a “final, single or one-off claim” may be served only within the period determined by or in accordance with the terms of the Construction Contract (s14(5)(a)).
33 A judgment entered under SOP Act s16 is, by reason of s47, effectively a provisional judgment, both in what it grants and what it refuses. [6] The specific statutory context is one in which inconsistent judgments are contemplated and allowed.[7]
[6]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].
[7]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].
34 The applications permit only limited defences to be raised by the SOP Act, including whether:
a) the claim is in respect of a “construction contract”;
b) the progress claim satisfied the formal requirements of the Act (s14(2));
c) the claim was made prematurely before the applicable reference date;
d) variations were properly claimable;
e) the timing and sufficiency of any payment schedule complied with the Act.[8]
[8]Fulconstruction Pty Ltd v ABP Consultants Pty Ltd (2016) VCC 1732 at [8] per Anderson J.
35 This Court has previously endorsed the hearing of cases under SOP Act s16 as determinable on a summary basis by proceedings on summons on originating motion with affidavit evidence.[9] Such claims were properly assessable on the balance of probabilities[10]
[9]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].
[10]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).
36 In the present case I will adopt the approach taken in 3D Flow Solutions and recommended in SJ Higgins.
Analysis
Did more than two contracts arise under which the plaintiff can claim?
37 The parties substantially disagree as to the amount of contracts that existed in this proceeding. As my finding on this matter affects the other issues in this proceeding, it is necessary to address this as a preliminary issue.
38 The plaintiff submits that there were six contracts. It submits that the two signed quotations dated 10 May 2019 (QU-0114) and 2 September 2019 (QU-0122) were the first two contracts. The remaining four arise from subsequent interactions, both written and oral, between Mr Rattray and Mr Munur, summarised as follows[11]:
[11] As outlined at [6] of the plaintiff’s written submissions.
· Alleged contract three was the email exchange between Mr Rattray and Mr Munur on 27 August 2020 regarding the shotcrete walls, confirming on onsite discussions.
· Alleged contract four was the oral conversation in or about November 2019, between Mr Rattray and Mr Munur for RCD to carry out further construction works.
· Alleged contract five was a further oral conversation on or about September 2019 between Mr Rattray and Mr Munur for RCD to carry out further works, namely the removal of soil.
· Alleged contract six was a further oral conversation on or about 20 November 2019 between Mr Rattray and Mr Munur for RCD to carry out further works, namely the block work.
39 Should I accept the interpretation proposed by the plaintiffs, this would result in the creation of six reference dates under which payment claims could be made.
40 The defendant submits that only the signed quotations (Contracts One and Two) are contracts. It submits that the remaining payment claims were variations to these two contracts. In support of that proposition, it refers to the express term in both signed quotations that ‘all variations will be invoiced separately and will be an additional cost to the contract sum price above.’[12]
[12] [3] of the defendant’s submissions dated 7 April 2020 and as exhibited to Mr Rattray’s affidavit on pages 13 and 16.
41 In my view, the Additional Works Payment Claims are variations of Contracts One and Two. The plaintiff has adduced limited evidence to support its interpretation.
42 The Act defines variation as “a change in the scope of the construction work to be carried out, or the related goods and services to be supplied, under (a construction contract)”.[13]
[13] Section 4 of the SOP Act.
43 I set out my reasons for determining that these works are variations and not individual contracts below.
44 The first of the four Additional Works Payment Claims, Payment Claim 6, was a variation pursuant to Contract One, the contract under which the defendant was to provide services for capping beams and shotcrete walls. The description in the invoice of this Payment Claim states that the works for were ‘works involved with the shotcrete walls’. The further work on the shortcrete walls constitutes a change in the scope of work to be carried out under Contract One (s4 SOP Act). This is particularly so in circumstances where the plaintiff’s evidence is that the thickness was to be increased.[14] Pursuant to the term of the contract requiring any variations to be invoiced separately, it was open to the plaintiff to issue the invoice (Payment Claim 6), however, it cannot be considered its own individual contract.
[14] [26] of the first affidavit of Mr Rattray sworn 11 February 2020.
45 The second of the four Additional Works Payment Claims, relating to the work and correspondence with the surveyor and consultants, could, as the defendant submits, be applicable to any of the works under the scope of Contracts One and Two. No further evidence was adduced by the plaintiff. The affidavit evidence of Mr Rattray is silent on the issue except to provide that he agreed on behalf of the plaintiff to conduct further works in the presence of a “form worker and the surveyor”.[15] The use of the word “further” in the payment claim suggests a variation to the scope of work. Therefore, I conclude that this work falls within the meaning of a variation under either of the contracts.
[15] [29] of the first affidavit of Mr Rattray sworn 11 February 2020.
46 The third of the Additional Works Payment Claims, being the tandem tipper hire for soil removal on 20 September 2019, which was the date of the works completed pursuant to Payment Claim 6. Payment Claim 6 had noted that the cost of the tipper hire would be invoiced separately. In my view, it is clear the hire of the tandem tipper was integral to performing the soil removal works under payment claim 6. It is also clear the removal of the soil constitutes a change in the scope of works under Contract One, and therefore is captured by the definition set out in s 4 of the Act, and therefore the correct interpretation is also that the tipper hire was a variation under Contract One.
47 Finally, payment claim 9, I conclude that the additional formwork to replace the blockwall, is also a variation pursuant to Contract Two. Mr Rattray deposes that Mr Munur requested that he “replace the blockwork with the formwork in the common area to speed up the building works.”[16] The defendant submits that ‘building works’ means the building works pursuant to Contract Two.
[16] [35] of the first affidavit of Mr Rattray sworn 11 February 2020.
48 Mr Munur deposes that RCD ‘last carried out work onsite in relation to Contract Two in mid-November 2019 and did not attend the site after that.’[17] Mr Munur further deposes he understood that Mr Rattray attended the offices of the new concreter between 18 and 21 November 2019 to conduct a handover.[18] Mr Munur alleges, as is supported by the Expert Report that the additional formwork pursuant to this claim was not complete,[19] however, it is not alleged by the defendant that the plaintiff was no longer working onsite.
[17] [26] of the affidavit of Mr Munur sworn 13 March 2020.
[18] [24] of the affidavit of Mr Munur sworn 13 March 2020.
[19] [19(d)] of the affidavit of Mr Munur sworn 13 March 2020.
49 Absent a clear time at which RCD stopped working at the site, I conclude that as the plaintiff was still onsite for the purposes of the formwork, it may still have been performing other works and the formwork was to assist RCD’s works. As neither party has submitted anything to the contrary, I conclude that the formwork was again a variation under Contracts.
50 Given that there were two contracts, with variations, it is necessary to consider s14(8) of the SOP Act. Since there were only two contracts, the plaintiff cannot serve more than one payment claim in respect of each reference date under the relevant contract.[20] However, it is noted that pursuant to s14(9), the plaintiff may have made a subsequent payment claim for the balance of Payment Claim 1 to 3, but it has not done so.
[20]APN DF2 Project 2 Pty Ltd v Grocon Constructions (Victoria) Pty Ltd [2014] VSC 596 at [58] per Vickery J.
51 I therefore conclude that payment claims 1 to 9 were made pursuant to two constructions contracts. Accordingly, payment claims 6 to 9 are claims for variations pursuant to the two construction contracts and must be dealt with as claims for variations. I must then consider the assessment of the reference dates for the payment claims.
Was there a reference date available in respect of a payment claim?
52 In my view, there was no reference date at the time the payment claims were made. Contracts One and Two contemplate that the reference date be upon the completion of works. The relevant term of each contract is on page two, entitled ‘Payment Schedule’, as follows:
“Lorem Construction accept [sic] the above payment schedule in conjunction with quote number QU-0122 for works at 15 Kireep Rd, Balwyn VIC 3103.
Payments will be made to Rapid Concrete Developments on completion of works as outlined above, in accordance with our payment terms being on or before 30 days from invoice date.” [Emphasis added].
53 The defendant submits that the second paragraph above constitutes the reference date.
54 The plaintiff was silent on the issue of reference dates in both its submissions and affidavit material. It submits that it was a term of Contracts One and Two that the defendant would pay on or before 30 days from the invoice date and this term was repeated on each invoice issued in accordance with these contracts.[21]
[21] Plaintiff’s submissions at [10].
55 A reference date is distinct from contractual terms regarding the payments of invoices. The two cannot be merged in order to obtain a benefit under the SOP Act. A reference date is a date, determined by or in accordance with the terms of the contract, to be a date on which a progress payment may be made, or a date by reference to which the amount of a progress payment is to be calculated.[22]
[22] S9(2)(a)(i)-(ii) of the SOP Act.
56 The defendant relied on the decision of Kennedy J in Vanguard Developments v Promax [2018] VSC 386, in which her Honour states the importance of reference dates as ‘a precondition to the making of a valid payment claim, which, in turn, is an essential precondition to the subsequent steps under Pt 3 of the Act.’[23]
[23]Vanguard Developments v Promax [2018] VSC 386 at [121].
57 The contract in the present proceeding provides that payments would be made at the completion of works. The distinction in the payment claim between payment upon completion and the terms of the contract, being ‘in accordance with our payment terms being on or before 30 days from invoice date’, reinforce that proposition. In my view, the parties intended that the 30 day payment of invoices term be separate from the reference date payment for the completion of works payment - the reference date.[24]
[24] Defendant’s submissions at [8].
58 I conclude that the reference date and the due date for payment are distinct. The reference date is upon completion of the works. The due date for payment is on or before 30 days of the invoice. To the extent that the plaintiff suggests the due date for payment is the reference date, it is incorrect.
59 On a proper construction of ss 9(2)(b) and (c) of the SOP Act, these provisions are only engaged if the Contract “makes no express provision with respect to the matter.” That is, if the contract is silent as to the reference date. In this case, the Contracts do specify the reference dates. Therefore, ss9(2)(b) and (c) of the SOP Act are not relevant to the present case.
60 The question then is whether the works reached completion such that there was the existence of a valid reference date which is a necessary precondition for the service of the payment claims the subject of this proceeding.
Did a reference date arise?
61 The defendant asserts that the reference date under Contracts One and Two was completion of the works. It further submits that since the works pursuant to Contracts One and Two were incomplete, no reference date arose. The defendant submits that the reference date in the contract is a ‘single or one-off payment claim’, that was the day on which all works were completed pursuant to each contract.’[25]
[25] Ibid at [9].
62 Therefore, the relevant question is whether the works were complete.
63 The defendant submits that the works pursuant to Contract One (namely, the shotcrete walls) were also incomplete. Mr Munur deposes that half of the capping beams were finished on 21 June 2019 and that the plaintiff worked on the issues with the screw piles but the work did not conform with discussions between the parties as the screw piles were not rectified and the work undertaken was defective.[26]
[26] [21] of Mr Munur’s affidavit.
64 I accept the defendants’ submissions that, in circumstances where the reference date in the contract is a ‘single or one-off payment claim’, the time by which service of a payment claim is crystallised is when everything required of the contractor has been fulfilled, and when rectification of defects and other outstanding matters have been addressed.[27]
[27]Vanguard Developments v Promax [2018] VSC 386 at [100].
65 I further rely on the Expert Report of Mr Lorich filed on behalf of the plaintiff, which attests to the status of the works as at 15 January 2020. Mr Lorich concludes that:
“The works to date completed by the concreter would not exceed 70% of the quoted tender for the Ground Slab works as the basement floor is incomplete, there are no stairs (9 sets in total) formed up and the suspended slab over the basement has not been constructed. At this time only partial formwork exists. Further to this, there are many defects evident in the completed work.”
66 I note that the ground slab, stairs and suspended slab formed a part of the works pursuant to Contract Two.
67 In addition, the evidence of Mr Rattray in relation to Contract Two indicates that:
· the plaintiff issued INV-0617 for columns for 15% of suspended slab;
· the plaintiff issued INV-0621 for 80% of ground slab;
· the plaintiff issued INV-0624 for formworks for 50% of suspended slab;
· the plaintiff was unable to complete the stairs and other works as the defendant arranged another contractor to continue the work without informing plaintiff;
· the plaintiff issued INV-0618 for piling of shortcrete walls; additional concrete;
· the plaintiff issued INV-0633 for additional works by surveyor with setout and correspondence with consultants;
· the plaintiff issued INV-0619 for soil removal; and
· the plaintiff issued INV-0634 for the replacement of block work with the form work in the common area to speed up the works was performed.
68 Finally, the evidence of Mr Munur in relation to Contract Two indicates that:
· on 29 November 2019, Mr Munur phoned Mr Rattray and said that the plaintiff was no longer required on site and a new concreter would complete the work;
· Mr Munur alleges that between 18 and 22 November 2019, Mr Rattray had discussions with new concreter regarding handover of work, at the new concreter’s offices;
· Mr Munur alleges that the last time the plaintiff did work on site was mid-November 2019;
· on 4 March 2020, Australiawide Building Consultants provided a report regarding work in which Mr Bob Lorich notes works incomplete at date of inspection;
· works the subject of INV-0621 (ground slab) were incomplete;
· works the subject of INV-0624 (formwork) were only 35% complete;
· work the subject of INV-0613 (footings) were completed by Concrete Constructions Pty Ltd and was the subject of a variation notice by them dated 19 December 2019;
· works the subject of INV-0617 (columns) were completed by Concrete Constructions Pty Ltd and was the subject of a variation notice by them dated 19 December 2019;
· the defendant paid Concrete Constructions to complete the work that the plaintiff failed to complete.
69 Therefore, on the evidence before me, I am of the view that the works were incomplete as the date of the issuing of the plaintiff’s payment claims and the reference date for Contract One and Two did not arise.
Did a reference date arise after termination?
70 The defendant contends, and it does not seem to be disputed by the plaintiff, that both contracts were terminated as of 29 November 2019. Payment Claims 5, 7 and 9 were all served after this date- post termination of the contract. The works were subsequently completed by another contractor.
71 For the reasons set out above, no reference date had arisen at the time of termination. The contract did not provide for a reference date post-termination. Therefore, Payment Claims 5, 7 and 9 cannot be valid payment claims as there is no applicable reference date[28].
Work outside the scope of the construction contract?
[28]Cat Protection Society v Arvio [2018] VSC 757 at [40]-[42].
72 Given my prior findings that:
a) there is no reference date as the works were not complete;
b) there is no reference date after termination;
c) there were only two Contracts (and not 6 as submitted by the Plaintiff); and
d) the plaintiff cannot bring more than 2 payment claims,
it is not necessary to determine the remaining grounds raised by the parties. However, if I had to consider these matters, then I make the following findings.
73 There were a number of alleged variations to the scope of the works for the Contracts which are described in the factual background, being the four ‘Additional Works Payment Claims’. As outlined above, the plaintiff is of the view that Payment Claims 6-9 constituted individual contract and not variations to Contracts One and Two. Therefore, for the sake of clarity, all four variations will therefore be considered as a second class of variation, disputed variations, pursuant to s10A(3) of the SOP Act.
74 The Contracts both relevantly provided that “variations will be invoiced separately and will be an additional cost to the contract sum price above.” The alleged variations gave rise to payment claims 6-9, which I will address individually.
75 Payment Claim 6, the works for the additional concrete and works involved in the shotcrete walls, was arranged by way of phone call between Mr Munur and Mr Rattray and confirmed by email on 27 August 2019. However, while Mr Munur agrees these conversations took place, he deposes that no formal variation or quote was received.[29] Mr Rattray exhibits the email to confirm the variation, which relevantly states:
“We will bring the shotcrete walls in .50mm where the piles are petruding [sic] the actual face of the concrete. There will obviously be additional concrete for this. As discussed all additional concrete from the walls due to this and the over excavation from the plumbers we will sit down, and im [sic] happy to just have the exact cost of the concrete and pump covered over the allowance.”
[29] [19(a)] of Mr Munur’s affidavit.
76 Mr Munur responded that day via email to the effect that he had already told Mr Rattray this. It is reasonable that Mr Rattray took this as an agreement to the confirmed variation. Mr Munur deposes that the works under this variation were defective and incomplete[30] and references the Expert Report. This report identifies a number of defects, which potentially relate to this particular payment claim, which states:
[30] Ibid.
C. Perimeter spray/shotcrete walls were constructed short in several areas with reinforcement therefore being exposed and corroding.
D. The south side wall is not plumb in several sections.
E. The render finish to walls is unacceptably rough.
H. Cracking is occurring to the south side wall in the vicinity of the ramp.
I. Incomplete wall sections are evident to the front wall with water draining thru [sic] the wall itself.
77 The Expert Report concludes that there are ‘many defects evident in the completed work’ and the work to date completed by the contractor would not exceed 70% of the quoted tender for the ground slab works.’[31]
[31] Expert report of Mr Bob Lorich dated 15 January 2020, page 2.
78 In the absence of any expert reports filed by the plaintiff to counter the expert evidence, I accept Mr Munur’s view that the work was incomplete and defective, given the various problems identified with the walls by Mr Lorich. In light of this evidence, and the evidence as deposed by Mr Munur of the need to engage a different concreting contractor, I am of the view it fails to meet the first criterion of s10A(3)(a), that the work has been carried out.
79 Judicial Registrar Matthews in Gordon McKay Pty ltd v Advanced Controls Pty Ltd [2018] VSC 639[32], held that the ‘both elements in s10A(3)(a) and (b) are required for it to be a claimable variation’. Therefore, this payment claim is an excluded amount pursuant to s10B(1) of the SOP Act and must not be included in a claimed amount in a progress claim (s14(3)).
[32][2018] VSC 639 at [20].
80 Payment claim 7, the additional works with surveyor and correspondence with consultants is viewed differently by Mr Rattray and Mr Munur in their respective affidavits. Mr Rattray deposes that “Mr Munur requested RCD do these works”, these works being “further” works.[33] Mr Munur deposes he does not recall requesting Mr Rattray to do any additional works referred to in the relevant invoice and any such correspondence between the plaintiff and consultants and the surveyor formed part of the works under the Contracts.[34] The defendant submits that this a non-claimable variation as Mr Munur does not recall requesting the additional work pursuant to the invoice and there is no written record. Neither party has adduced any evidence to support either the request for the work to be done, or indeed, what work was completed under this payment claim.
[33] Mr Rattray’s first affidavit at [29].
[34] Mr Munur’s affidavit at [19(c)].
81 Mr Rattray in his affidavit in reply, had the opportunity to directly address Mr Munur’s evidence that he did not request the works and he did not do so. The plaintiff’s response regarding payment claim 7, was that the defendant never served payment schedules in respect of any of the payment claims.
82 Payment claim 7 is made further problematic by the lack of identification of work done. On the evidence before me, I am not convinced that the defendant directed or requested the plaintiff to conduct this work and this payment claim is not a claimable variation and is an excluded amount. It therefore must not be taken into account in calculating the amount of a progress payment to which the plaintiff is entitled under the construction contract.
83 Payment claim 8, the tipper hire for the soil removal, was made verbally between Mr Munur and Mr Rattray. Mr Munur deposes he does not agree discussing an hourly rate for such works.[35] There seems to be no dispute as to the performance of the works under this payment claim. While the hire rate may have been left in doubt, Mr Munur did request or direct that the works be done. Therefore, this constitutes a claimable variation under the construction contract pursuant to s10A(3) of the SOP Act, however, given my previous findings, it was premature of the plaintiff to issue its payment claims and only one payment claim can be issued in respect of each contract.
[35] Mr Munur affidavit at [19(b)].
84 Payment claim 9, the formwork to replace the blockwall at the site, was again a verbal arrangement between Mr Rattray and Mr Munur. Mr Rattray deposes that as Mr Munur requested, ‘those works were performed.’ [36] Mr Munur deposes discussions were held but no formal variation or quote was received, and the work was not complete.[37] The Expert Report again addresses the formwork, which states at the time of inspection, was 35% complete.[38] Similarly to payment claim 6, I find that this work was not ‘carried out’ as required by s10A(3)(a) of the SOP Act to render it a claimable variation. Therefore, it is an excluded amount pursuant to s10B(1).
[36] Mr Rattray’s first affidavit at [35].
[37] Mr Munur’s affidavit at [19(d)].
[38] Expert report of Mr Lorich at page 2.
Did payment claim 7 adequately identify the construction work?
85 The defendant submits that payment claim 7 does not satisfy the statutory requirements of s14(2)(c) of the SOP Act, because it does not identify with the necessary precision the construction work or related goods and services to which the progress payment relates.
86 I have already determined that Payment Claim 7 failed to meet the criterion outlined in s10A(3) of the SOP Act, in that the defendant did not direct or request the plaintiff to undertake the work with the surveyor and, therefore, that it is not a claimable variation. However, for completeness I shall summarise my view below.
87 The authorities recognise that the court is to consider the payment claim as a whole, and in context.[39] The defendant submits that Payment Claim 7 fails to satisfy this threshold. It asserts that it does not sufficiently identify the construction work, the subject of the claim, which is a requirement of a valid payment claim pursuant to s14(2) of the SOP Act.
[39]Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391 at 40].
88 The defendant relied on Gantley Pty Ltd & Ors v Phoenix International Group Pty Ltd & Anor.[40] Justice Vickery found that ‘what is necessary is an identification of the work which is sufficient to enable a respondent to understand the basis of the claim and provide a considered response to it.’[41]
[40] [2010] VSC 106.
[41]Gantley Pty Ltd & Ors v Phoenix International Group Pty Ltd & Anor [2010] VSC 106 [51].
89 The description of work in Payment Claim 7 refers to “additional works by surveyor with setout and correspondence with consultants”. As raised by the defendant, it does not specify what additional works Rapid carried out and Mr Rattray’s affidavit provides no further explanation of the works.
90 The plaintiff has not sought to engage on this issue as to the validity of Payment Claim 7. It does submit that all of the payment claims complied with s14(2)(e) of the SOP Act, which requires that a payment claim must state it is made under the Act. The plaintiff submits all payment claims were endorsed with the words:
“This is a payment claim made under the Building and Construction Security Payment Act 2002”
91 I accept the plaintiff’s submissions that the requirement under s14(2)(e) was met, however, the requirements under s14(2)(a)-(e) of the SOP Act are cumulative and payment claims must meet them all to be considered valid under this section.
92 I have concluded that the description of the work in Payment Claim 7 is sufficient.
93 The question of whether a payment claim satisfies s14(2) is objective but is not assessed from the perspective of a complete stranger to the development. The relevant context comprises both industry conventions and “the usage adopted by parties in their earlier contractual dealings”.
94 Justice Lyons in John Beever (Aust) Pty Limited v Paper Australia Pty Ltd,[42] summarised the jurisprudence as to what is the standard required of information in a payment claim. After extracting and summarising the relevant passages from the leading authorities,[43] his Honour distils the following principles:[44]
[42] [2019] VSC 126.
[43]John Beever (Aust) Pty Limited v Paper Australia Pty Ltd [2019] VSC 126, per Lyons J at [60]-[82].
[44] Ibid at [83].
“(1) the test of whether a claim is a payment claim for the purpose of the Act is objective;
(2) however, the manner in which compliance is tested is not overly demanding and should not be approached in an unduly technical manner or from an unduly critical point of view;
(3) for the purposes of the identification requirement, it is necessary 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 i.e. from the perspective of a reasonable party who is in the position of the recipient;
(4) in evaluating the sufficiency of the identification of the work, it is appropriate to take into account the background knowledge of the parties from their past dealings and prior exchanges of information including correspondence passing between them before and at the time of the payment claim. To that extent, the Court may go beyond the face of the document itself.”
(see also, Vickery J in Gantley Pty Ltd v Phoenix International Group Pty Ltd).[45]
[45] [2010] VSC 106 at [51].
95 I am satisfied that a reasonable observer in the position of the defendant, on receiving Payment Claim 7, would have readily comprehended from the documents comprising Payment Claim 7 that:
· the claim related to the plaintiff’s work on the Site in engaging with the surveyor and consultant; and
· the reasonable observer in position of defendant would have discerned the claim as covering liaising with the consultants and surveyors and making any necessary preparations or adjustments to works following these discussions.
96 Therefore, Payment Claim 7 satisfies the criteria under s14(2) of the SOP Act. However, it does not meet the statutory requirements under ss14(4) and (8) or s10A(3) of the SOP Act.
97 Accordingly, for the purposes of this proceeding, the plaintiff’s claims do not constitute a valid payment claim and thus do not fall within the SOP Act. The plaintiff’s summons on originating motion is dismissed.
- - -
Certificate
I certify that these 25 pages are a true copy of the judgment of Judicial Registrar Burchell delivered on 18 June 2020.
Dated: 18 June 2020
Randa Rafiq
Associate to Judicial Registrar Burchell
0
15
0