Roxton Commercial Builders Pty Ltd v Immix Property Group Pty Ltd
[2022] VCC 1976
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Building Cases List
Case No. CI-22-04373
| Roxton Commercial Builders Pty Ltd (ACN 616 908 073) | Plaintiff |
| v | |
| Immix Property Group Pty Ltd (ACN 616 273 262) | Defendant |
---
JUDGE: | Her Honour Judge Burchell | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | Ex parte on the papers | |
DATE OF JUDGMENT: | 18 November 2022 | |
CASE MAY BE CITED AS: | Roxton Commercial Builders Pty Ltd v Immix Property Group Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 1976 | |
REASONS FOR JUDGMENT
---
Subject: CONTRACTS
Catchwords: Building contract – payment claim – payment schedule – entitlement to unpaid amounts – issuing of payment schedule – failure to issue payment schedule
Legislation Cited: Building and Construction Industry Security of Payment Act2002 (Vic) ss3, 4, 6, 7, 9(1), 9(2), 12(2), 14(1), 14(2), 14(3), 14(4) 15, 15(2), 15(4) 16, 16(2)(a), 17, 17(2)(a)(i), 47, 48; Civil Procedure Act 2010 (Vic) ss61 and 63; County Court Civil Procedure Rules 2018 (Vic) r63A.24; Building Industry Fairness (Security of Payment) Act 2017 (Qld).
Cases Cited:Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; Vanguard Developments v Promax [2018] VSC 386; 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; Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2005) 62 NSWLR 385; 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674; SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449; John Beever v Roads Corporation [2018] VSC 635; Best Fab Pty Ltd v Australian High Bay Installations Pty Ltd [2018] VCC 1053; RHG Construction Fitout and Maintenance Pty Ltd v Kangaroo Point Developments MP Property Pty Ltd & Ors (2021) 7 QR 816.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | -- | Jeremy Johnson & Associates Lawyers |
| For the Defendant | -- | -- |
HER HONOUR:
Summary and outcome
1 In this proceeding, the plaintiff, Roxton Commercial Builders Pty Ltd (“Roxton”), applies for judgment against the defendant, Immix Property Group Pty Ltd (“Immix”), pursuant to s17(2)(a)(i) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (“SOP Act”). Roxton makes the application by summons on originating motion dated 12 October 2022. The application arises out of works which Roxton performed to provide an office fit-out, internal works and external works (“the Works”) for a property development project situated at 90 Foundation Road, Truganina (“the Site”).
2 Roxton submits that it is entitled to judgment because Immix failed to make payment in response to its payment claims. The amount owing in respect of the payment claim and corresponding payment schedule is $24,611.09 (inclusive of GST). Although Immix was served and procedural orders were made for the filing of affidavits and submissions in opposition, Immix did not file a notice of appearance and did not participate in the proceeding.
3 In my judgment, the plaintiff has satisfied the necessary requirements of s14 and s15 of the SOP Act in respect of Payment Claim 15. The defendant, therefore, is liable to pay the claimed amount, being $24,611.09, which is yet to be paid.
4 Accordingly, there will be an order that there be judgment for the plaintiff against the defendant in the sum of $24,611.09 plus interest pursuant to s12(2)(b) of the SOP Act. Further, pursuant to r63A.24 of the County Court Civil Procedure Rules 2018 (“the Rules”), I propose to order that the defendant pay the plaintiff’s costs of and incidental to the proceeding capped in the sum of $15,000.00.[1] I invite the parties to prepare draft orders to give effect to these reasons. I will determine any issue concerning costs on the papers.
[1] See section V5.2 paragraph 576 of the Omnibus Practice Note Commercial Division 2022 PNCO-2-2022.
The relevant facts
5 Roxton relies upon the affidavit of Frank Nadinic, director of Roxton, sworn on 12 October 2022. On 24 October 2022, the plaintiff’s solicitor caused the originating motion, summons, affidavit of Frank Nadinic and the timetabling orders of her Honour Judge Burchell dated 21 October 2022 to be sent to the defendant’s registered office by ordinary pre-paid post. The affidavit of service of Jeremy Johnson sworn on 8 November 2022 was filed together with the plaintiff’s written submissions. A further affidavit of service of Jeremy Johnson sworn on 9 November 2022 was also filed with the Court. According to s160 of the Evidence Act 2008 (Vic), the defendant has been deemed to be served on the seventh working day after the postal article sent by prepaid post has been posted. The defendant was deemed to be served on 3 November 2022. The time by which the defendant was to file a notice of appearance was 14 November 2022. The defendant has not filed a notice of appearance as required by the Rules and, therefore, the application is being determined in the absence of the defendant.
6 The plaintiff deposes that Immix had engaged Roxton on or around 29 August 2021 to perform the Works at the Site under the contract for the contract price of $2,706,364.12 (excluding GST) (“the Contract”).[2] Under the Contract, Roxton was required to carry out and complete the Works as defined under Item 5. The Contract also contained provisions with respect to the plaintiff’s right to submit and claim progress claims.
[2]The relevant contract is exhibited at page 6 to 64 of the affidavit of Frank Nadinic
7 As outlined in Clause N3, in respect of progress claims, Roxton was to submit to the architect one claim for a progress payment each month on the reference date. The reference date or date for submitting progress claims was the 15th day of that month.
8 Relevantly, Chapter N of the Contract at Clause N4(1) reflected that the Architect (Superintendent) must assess a claim for any progress claims and issue to Roxton and Immix a certificate setting out any payment due within 10 business days after receiving a claim from a progress claim. The amount stated as owing in any certificate is to be paid within the period shown in Item 10 of Schedule 1 of the Contract, being 7 days after delivery of the certificate.
9 The Works performed by Roxton commenced in June 2021 and continued until 6 September 2022. At all relevant times, Roxton says that it had submitted progress claims in relation to the Works stating that it was “a payment claim made under the Building and Construction Industry Security of Payment Act 2022”.
10 Progress Claim No. 15 (“Payment Claim 15”), dated 15 August 2022, was sent by email to Immix from Roxton in respect of the Works performed at the Site. Payment Claim 15 relevantly indicated that it was endorsed as a payment claim under the SOP Act, contained information relevant to the Works to which the progress payment related to and indicated the amount of the progress payment claimed to be due.[3]
[3] The relevant Payment Claim 15 is exhibited at page 65 to 70 of the affidavit of Frank Nadinic sworn on 12 October 2022.
11 On 29 August 2022, VJ Agosta, the Superintendent, through their agent Matthew Carr, sent an email to both Roxton and Immix headed “IMMIX Truganina – Roxton Payment Certificate No 15” which provided for the certificate for payment in relation to Payment Claim 15 (“the Payment Schedule”). The Payment Schedule included that the amount of $24,611.09 was authorised by the certificate and certified that in accordance with the terms of the Contract between Roxton and Immix, payment of that amount was due within 7 days.
12 Roxton and Immix were served the Payment Schedule by email on 29 August 2022.[4]
[4] The relevant Payment Schedule is exhibited at page 71 to 74 of the affidavit of Frank Nadinic sworn on 12 October 2022.
13 On 6 September 2022, Immix wrote to Roxton purporting to give notice that the Contract had been terminated.[5]
[5] The Termination Notice is exhibited at page 71 to 74 of the affidavit of Frank Nadinic sworn on 12 October 2022.
The legal context
14 The SOP Act seeks to ensure that people who undertake to carry out construction work can recover progress payments for the performance of that work.[6] Section 4 defines construction contract as a “contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services for another party”. The SOP Act applies to any construction contract whether written or oral, or partly written and partly oral.[7] “Construction work” is defined by s5. There is no dispute that the works the subject of this proceeding is “construction work” within the meaning of s5.
[6] SOP Act s3.
[7] SOP Act s7.
15 Section 16(2)(a) of the SOP Act provides that a claimant may recover from a respondent any unpaid portion of an amount claimed in a payment claim where the respondent fails to submit a payment schedule within time (or at all) in response to the payment claim.
16 Section 17(2)(a) of the SOP Act provides that where a respondent provides a payment schedule within time, a claimant may recover from the respondent any unpaid portion of the amount which the payment schedule states the respondent proposes to pay to the claimant.
23 Section 14 of the SOP Act concerns the form and content of payment claims. Sections 14(2) and (3) relevantly provide that a payment claim:
(a) must be in the prescribed form (if any) and contain the prescribed information (if any) – neither is prescribed;
(b) must identify the construction work or related goods and services to which it relates;
(c) must indicate the amount of progress payment that the claimant claims to be due;
(d) must state that it is made under the SOP Act; and
(e) must not include any “excluded amounts” (being amounts referable to particular categories of variations).
24 Section 14(4) of the SOP Act addresses when a payment claim can be served, where it is not a payment claim in respect of a final, single or one-off progress payment. It provides that such a payment claim may only be served within:
(a) the period determined in accordance with the construction contract “in respect of the carrying out of the item of construction work or the supply of the item of related goods and services to which the claim relates”; or
(b) the period of 3 months after the “reference date referred to in s9(2) that relates to the progress payment”.
25 Sections 14(5), (6) and (7) of the SOP Act concern payment claims claim in respect of a final, single or one-off progress payment and are not relevant for present purposes. Section 14(8) provides that a claimant “cannot serve more than one payment claim in respect of each reference date under the construction contract”. Section 14(9) provides that this limitation does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous payment claim if the amount has not yet been paid.
26 Another important provision informing the formal requirements for payment claims under the Act is s9. Section 9(1) provides that “on and from each reference date under a construction contract” a claimant is “entitled to a progress payment under this Act calculated by reference to that date”.
27 Section 9(2)(a) of the SOP Act provides that a reference date is a date determined by or in accordance with the construction contract as:
(a) a date on which a claim for a progress payment may be made; or
(b) a date by reference to which the amount of a progress payment is to be calculated,
in relation to a specific item of construction work “carried out or to be carried out” or a specific item of related goods and services “supplied or to be supplied” under the contract. The rest of s9 concerns situations where the contract makes no express provision for reference dates.
28 It is now well established in Victoria that unless a payment claim answering the description in s14(1) of the SOP Act is served, there can be no application to a court under s16(2)(a)(i). Although dealing with the alternative option of an adjudication application referred to in the New South Wales equivalent of s16(2)(a)(ii), this follows inexorably from the decision of the High Court in Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd[8] (“Southern Han”). On the other hand, the available defences to a payment claim are very limited.
[8] (2016) 260 CLR 340 at [44].
29 Generally speaking, the available defences concern either the nature of the underlying contract or the form and service of the purported payment claim, and thus whether the payment claim is effective to trigger the procedures established by Part 3 of the SOP Act.[9] More particularly, the defences to a payment claim enlivened by the formal requirements of the SOP Act are, in substance, that the payment claim:
[9] Southern Han at [62].
(a) does not relate to a “construction contract” (including because it does not involve carrying out “construction work”), or it relates to a construction contract excluded from the operation of the Act under s7 (for example, a construction contract that forms part of a loan agreement, or one that is a domestic building contract under the Domestic Building Contracts Act 1995);
(b) fails to satisfy the formal requirements of s14(2) (for example, by failing to identify the construction work or failing to state that it is made under the SOP Act);
(c) was made when no valid reference date existed,[10] including where it is served before an applicable reference date or relies on a reference date that has already been used up by an earlier payment claim;[11]
[10] Southern Han at [61]–[62]; Vanguard Developments v Promax [2018] VSC 386, Kennedy J at [121].
[11] SOP Act s14(8).
(d) includes variations that are “excluded amounts” under s10B; and
(e) was not validly served on the respondent under either the terms of the contract or under s50.
30 Under s47, nothing in Part 3 of the SOP Act precludes bringing or continuing proceedings under the construction contract, including where those proceedings deal with the same issues in dispute in the proceeding relying on Part 3. Thus, a judgment under ss16 and 17 is a provisional judgment in what it grants and what it refuses.[12] The statutory context both contemplates and permits inconsistent judgments.[13] This section is, in effect, the statutory manifestation of the “pay now, argue later” description often given to the policy behind the SOP Act and its counterparts in other states.[14]
[12] Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor (2009) 26 VR 112 [2] and [43]-[46] (Vickery J), cited with approval in Pearl Hill Pty Ltd v Concorp Construction Group (Vic)Pty Ltd [2011] VSCA 99 [11].
[13] Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2005) 62 NSWLR 385 [22] (Handley JA, with whom Santow JA and Pearlman AJA agreed).
[14] Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor (2009) 26 VR 112 [2] and [43]–[46].
31 Further, in considering any purported defences to a payment claim, it is important to be mindful of s48 of the SOP Act. This section provides that the provisions of the SOP Act have effect despite any contractual provision to the contrary. It further provides that any provision in any contract purporting to exclude, restrict or modify the operation of the SOP Act or that may reasonably be construed as an attempt to deter a person from taking action under the Act, is void.
32 This court has endorsed the hearing of applications under the SOP Act on a summary basis by summons on originating motion with affidavit evidence.[15] Such claims are properly assessed on the balance of probabilities,[16] with the quality of the evidence weighed having regard to the fact that the legislation seeks to facilitate a swift but temporary remedy.[17] Occasionally, a plaintiff nevertheless applies for relief under s16 by bringing a proceeding commenced by writ and statement of claim, then issuing a summons seeking summary judgment pursuant to s61 of the Civil Procedure Act 2010 (Vic) (“CPA”).[18] This can add an additional layer of complexity in determining the test to be applied to any defences raised.[19] However, the present proceeding was commenced by summons on originating motion, so questions of the application of the test under ss61 and 63 of the CPA do not arise.
Valid Payment Claim
[15] 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674 [39]–[54]. See also SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805 [26].
[16] Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449, 449-450 (Mason CJ, Brennan, Deane and Gaudron JJ).
[17] 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674 [51]–[54].
[18] John Beever v Roads Corporation [2018] VSC 635; see also Best Fab Pty Ltd v Australian High Bay Installations Pty Ltd [2018] VCC 1053.
[19] SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805 [31].
17 Roxton submits that, on 15 August 2022, it issued Payment Claim 15 to Immix and that Payment Claim 15 complied in all material ways with s15 of the SOP Act.
18 Section 14(1) of the SOP Act reflects that, if entitled to a progress payment, a claimant may issue a payment claim to a respondent who is liable to make payment. The payment claim must identify the construction work to which the progress payment relates; must indicate the amount of the progress payment that the claimant claims to be due; and must state that it is made under the SOP Act.
19 Under s15 of the SOP Act, a person on whom a payment claim is served may reply to the claim with a payment schedule. Section 15(2) requires that a payment schedule must identify payment the claim to which it relates, schedule the amount of the payment that respondent proposes to make and must identify any excluded amounts.
20 A payment claim may be served in accordance with the terms of the construction contract; or the period of 3 months after the reference date referred to in s9(2) of the SOP Act.
21 In my view, Payment Claim 15 satisfies the formal and procedural requirements of s14(1) and (2) of the SOP Act given that it was issued on Immix who is liable to make payment to Roxton and indicates the amount for construction work due, adequately identifies the Works to which the progress payment relates, states that it is made under the SOP Act, has a valid reference date, does not include excluded amounts and was validly served on Immix in accordance with the terms of the Contract.
Issuing of Payment Schedule and Entitlement to Claimed Amount
22 Roxton submits that on 29 August 2022, the Superintendent issued a Payment Schedule to it with respect to Payment Claim 15 which in all material ways complied with the SOP Act. The Payment Schedule authorised the amount of $24,611.09 under the terms of the certificate, which was due within seven days and contends that service of the Payment Schedule on this date was affected on Immix.
23 A respondent must issue a payment schedule as per contractual timeframes or within 10 business days after a payment claim is served, which ever expires earlier. If a respondent does not provide a payment schedule to the claimant within statutory timeframes, the respondent becomes liable to pay the entire claimed amount by the due date (s15(4) SOP Act).
24 Where a respondent becomes liable under s15(4) and fails to pay whole or part of the claimed amount, on or before the due date, a claimant may make an application to recover the unpaid portion under s17(2)(a)(i).
25 The Queensland Court of Appeal in RHG Construction Fitout and Maintenance Pty Ltd v Kangaroo Point Developments MP Property Pty Ltd & Ors[20] (“RHG Constructions”) recently considered the issue of whether a progress certificate issued by a Superintendent (or Architect) was a payment schedule for the purposes of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (“BIF Act”) (equivalent of the Victorian SOP Act).
[20] (2021) 7 QR 816.
26 In RHG Constructions, a contractor served a payment claim under the BIF Act and the Superintendent then issued a payment schedule. Subsequently, the developer issued its own payment schedule a week later. The contractor then made an adjudication application under the BIF Act relying on the Superintendent’s payment schedule as the payment schedule under the Act.
27 The Queensland Court of Appeal concluded that the Superintendent’s schedule was a payment schedule for the purposes of the BIF Act. Specifically, that the Superintendent’s schedule, when read with clauses in the contract, meant that the amount stated in the schedule was the amount the developer proposed to pay.[21] The reasoning of Sofronoff P, McMurdo and Mullins JJA further emphasised how deeming clauses, in a contract, will be effective at making a Superintendent’s schedule a payment schedule for the purposes of security of payment legislation.[22]
[21] Ibid at [27]–[30].
[22] Ibid.
28 In my view, and in agreeance with the reasoning of Sofronoff P, McMurdo and Mullins JJA in RHG Constructions, the deeming provisions of Clause N3 and N4 of the Contract between Roxton and Immix has the effect that the Superintendent’s payment certificate issued on 29 August 2022 is a payment schedule for the purposes of the SOP Act which was validly effected on Immix on that same date.
29 In the event I am wrong, nevertheless, under s15(4) of the SOP Act, Immix has failed to issue a payment schedule in accordance with timeframes stipulated by the Contract of 7 business days, or within 10 business days under statue, of when Payment Claim 15 was served being 15 August 2022. Instead, on 6 September 2022, Immix wrote to Roxton purporting to given notice that the Contract had been terminated.
30 In my view, as Immix has failed to provide a payment schedule to Roxton within the contractual and statutory timeframes, it has become liable to pay the entire claimed amount being $24,611.09 (s15(4) SOP Act). As Immix has failed to pay the claimed amount on or before the due date, Roxton is, therefore, entitled to make an application to the Court to recover the $24,611.09 (s17(2)(a)(i) SOP Act).
31 I am satisfied that based on the material provided and relied upon by the plaintiff that it is entitled to the amount owing according to Payment Claim 15 and the Payment Schedule, being $24,611.09. Further, the defendant has to date not provided any material in opposition of the plaintiff’s application nor addressed how the SOP Act has not been complied with in the circumstances.
Conclusion
32 For the foregoing reasons, there is judgment for the plaintiff in the amount of $24,611.09 together with interest pursuant to s12(2)(b) of the SOP Act and costs capped in the sum of $15,000.00.
- - -
Certificate
I certify that these 11 pages are a true copy of the judgment of Her Honour Judge Burchell delivered on 18 November 2022.
Dated: 18 November 2022
Nikki Thomson
Associate to Her Honour Judge Burchell
0
12
0