Sass Developments Pty Ltd v Bivoltsis
[2024] VCC 798
•4 June 2024
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
BUILDING CASES LIST
Case No. CI-24-00515
| SASS DEVELOPMENTS PTY LTD (ACN 123 036 028) | Plaintiff |
| v | |
| PETER BIVOLTSIS | First Defendant |
| and | |
| KATHLEEN BIVOLTSIS | Second Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF JUDGMENT: | 4 June 2024 | |
CASE MAY BE CITED AS: | Sass Developments Pty Ltd v Bivoltsis & Anor | |
MEDIUM NEUTRAL CITATION: | [2024] VCC 798 | |
REASONS FOR JUDGMENT
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Subject:BUILDING AND CONSTRUCTION INDUSTRY SECURITY OF PAYMENT ACT 2002 (VIC)
Catchwords: Costs plus contract – Claim by plaintiff under Building and Construction Industry Security of Payment Act 2002 – Identification of reference dates – Whether payment claim included “excluded items” – Whether any of the claims are made prematurely – Whether entitlement to judgment obtained by reason of misleading or deceptive conduct – Whether inclusion of amount claimed prematurely may be severed from balance of claim – When amount claimed prematurely – Judgment for balance of outstanding progress claims for plaintiff contractor
Legislation Cited: Building and Construction Industry Security of Payment Act 2002 (Vic); County Court Civil Procedure Rules 2018 (Vic)
Cases Cited:Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317; Valeo Construction Pty Ltd v Pentas Property Investments Pty Limited [2018] VSC 243; Southern Han Breakfast Point Pty Ltd (in Liquidation) v Lewence Construction Pty Ltd [2016] HCA 52; Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190; Argyle Building Services Pty Ltd v Dalanex Pty Ltd (No 2) [2022] VSC 452; Commercial & Industrial Construction Group Pty Ltd v King Construction Group Pty Ltd & Anor [2015] VSC 426; Yuanda Vic Pty Ltd v Façade Designs International Pty Ltd [2021] VSCA 44; Marques Group Pty Ltd v Parkview Constructions Pty Ltd [2023] NSWSC 625; Spirito Development Pty Ltd v Sinjen Group Pty Ltd [2020] VCC 1368; Brookhollow Pty Ltd v R&R Consultants Pty Ltd & Anor [2006] NSWSC 1; Jemzone v Trytan [2002] NSWSC 395
Judgment: 1. Within 14 days the parties must bring in short minutes to give effect to these reasons
2.Costs reserved
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A R Morrison | Rigby Cooke Lawyers |
| For the Defendants | Mr B Reid | Keypoint Law |
HIS HONOUR:
Background
1According to an affidavit, its director, Mr Peter Siassios (misdescribed as Peter Siassos on the front page), the plaintiff, Sass Developments Pty Ltd (“Sass”) is a commercial and domestic builder carrying on business with an unlimited registration in both commercial and domestic building (paragraph 9). By a contract executed 2 November 2022 between Sass as builder and the defendants, Mr and Ms Bivoltsis, Sass undertook the construction of a childcare centre at 760 Toorak Road, Hawthorn East. The Contract is in the form of AS 4000-1997, incorporating amendments made in 1999 and 2005 (PS-1, pages 21-22). Mr Siassios made a second affidavit dated 3 April 2024 correcting the spelling of his name. He then made a third affidavit, dated 11 April 2024, covering the same general ground as the first affidavit.
2The standard form is covered by a document styled “Formal Instrument of Agreement”. In this document, (PS-1, pages 16-19) Sass was described as “Contractor” and Mr and Ms Bivoltsis were described as “Principal”. Under paragraph 1, headed, “Agreement”, the “Formal Instrument” quoted:
“The Principal and the Contractor agree to perform and complete their respective obligations in accordance with this agreement (Contract).”
3The “Formal Instrument”, aside from the general conditions constituted by the standard form, included Annexure Part A described as “Contract Details”. This annexure provided for practical completion to be “12 months calculated from the date of issue of the stage 2 building permit” (PS-1, page 76). It provided for a “Contractor’s Margin” in the sum of “$400,000 (ex GST) to be claimed in 12 equal instalments” and “Preliminary Costs” in the sum of “$441,000 (ex GST) to be claimed in 12 equal instalments” (PS-1, page 77).
4The standard term described the word “work” to include “the provision of materials” and the expression WUC (being an abbreviation of the phrase “work under the Contract”) to mean “work which the Contractor is or may be required to carry out and complete under the Contract and includes variations, remedial work, construction plant and temporary works” (PS-1, page 33).
5The Contract did not otherwise more specifically deal with the issue of the execution of the Contract works by way of any direct clause or covenant.
| Progress Claim | Invoice No. | Date issued to Superintendent | Dute date for certification/issue of payment schedule | Claimed Amount (ex. GST) | Amounts paid (ex. GST) | Amounts outstanding (ex. GST) |
| 09 | Inv-0761 | 2 Aug 2023 | 9 Aug 2023 | $70,110.00 | $Nil. | $70,110.00 |
| 10 | Inv-0767 | 5 Sep 2023 | 12 Sep 2023 | $322,744.20 | $303,789.65 | $18,954.55 |
| Inv-0768 | 5 Sep 2023 | 12 Sep 2023 | $38,781.00 | $Nil. | $38,781.00 | |
| 11 | Inv-0772 | 2 Oct 2023 | 9 Oct 2023 | $216,147.80 | $151,209.37 | $64,938.43 |
| Inv-0773 | 2 Oct 2023 | 9 Oct 2023 | $36,750.00 | $Nil. | $36,750.00 | |
| 12 | Inv-0774 | 1 Nov 2023 | 9 Nov 2023 | $233,502.51 | $45,454.55 | $188,047.96 |
| Inv-0775 | 1 Nov 2023 | 9 Nov 2023 | $70,083.00 | $Nil. | $70,083.00 | |
| Sub-total: | $48,664.94 (ex. GST) | |||||
| GST: | $48,766.49 | |||||
| Total: | $536,431.43 (inc. GST) |
6In this proceeding, Sass seeks payment of the amounts of the progress claims set out in the table below:
7By email dated 2 August 2023, transmitted by Mark Marino of Sass and addressed to Daniel Galtieri, the Superintendent under the contract, and copied to Mr Nicolas Pitliangas, a company director, who says in an affidavit made 3 April 2024 that he was a company director involved in the “day-to-day management of the project…I am authorised by the Defendants, who are my parents-in-law, to act as their agent” (paragraphs 1 and 2). The email covered what was said to be invoices for “Preliminaries and Margin Claim”, an invoice for cost recovery, current transactions for the month of July, Progress Claim 09 and Progress Claim 09 Summary (PS-1, page 134). A tax invoice expressed to be payable on a “due date” of 29 July 2023 sought payment of $70,110 plus goods and services tax in the sum of $7,011, making a total of $77,121. The invoice sum consisted of some $36,750 expressed to be “Progress Claim of aggreed [sic] Preliminaries billed in adavace [sic]” and a further amount of $33,360 described as “Contractors Margin Claim”. The invoice included the statement, “This is a payment claim under the ‘Building & Construction Industry Security of Payment Act 2002’”. According to the table set out above, referred to in Mr Siassios’s third affidavit, on 10 August 2023, the defendants paid Sass $345,091.26, exclusive of goods and services tax, in relation to Progress Claim 09 (paragraph 25). According to Mr Siassios’s third affidavit (paragraph 26), $70,110, exclusive of goods and services tax, remains outstanding in relation to Progress Claim 09.
8Paragraph 37.2 of the Contract provides as follows:
“37.2 Certificates
The Superintendent shall, within 5 business days after receiving such a progress claim, issue to the Principal and the Contractor a progress certificate:
a)assessing the Costs of the Works up to the date of the progress claim;
b)assessing the Contractor’s Margin and Preliminary Costs up to the date of the progress claim; and
c)evidencing the Superintendent’s opinion of the moneys due from the Principal to the Contractor pursuant to the progress claim and reasons for any difference (‘progress certificate’).
…
If the Superintendent does not issue the progress certificate within 5 business days of receiving a progress claim in accordance with subclause 37.1, that progress claim shall be deemed to be the relevant progress certificate.” (PS-1, page 63)
9According to Mr Siassios’s third affidavit, paragraph 23, the Superintendent did not issue a progress certificate relative to Progress Claim 09 and, so, in accordance with clause 37.2, Progress Claim 09 stood as the progress certificate.
10Nothing which purported to be, or which could be taken as a payment schedule within the meaning of s15 of the Building and Construction Industry Security of Payment Act 2002, was received by Sass within ten business days after the delivery of the email, or at all.
11By email dated 5 September 2023, Mr Marino of Sass sent two invoices, one for Preliminaries Margin Claims and the other for Costs and Recovery. The two invoices claimed $42,659.10, including goods and services tax in the sum of $3,878.10, and $355,018.62, inclusive of $32,274.42 goods and services tax respectively (PS-1, pages 144-5). Each invoice stating that payment was due on 7 September 2023 included the same reference for the Building and Construction Industry Security of Payment Act 2002 as had the previous invoice. Also included was a document titled “Progress Claim Summary” seeking the sum of $397,677.72, inclusive of goods and services tax (PS-1, page 148).
12Once again, as with Progress Claim 09, according to Mr Siassios’s third affidavit (paragraphs 31-32), the Superintendent did not issue a progress certificate within five business days and so Progress Claim 10 stood. As to Progress Claim 10, according to Mr Siassios’s affidavit, a total of $303,789.65, exclusive of GST, was paid by the defendants to Sass over the period of 12 to 15 September 2023. Mr Siassios’s calculation therefore is that $57,735.55 remains outstanding in relation to Progress Payment 10 (ibid, paragraph 35).
13By email dated 2 October 2023, Mr Marino of Sass, directed to Mr Galtieri, two invoices; 0773 for Preliminaries and Margin Claim, 0772 for Cost Recovery, and Progress Claim 11 (PS-1, pages 151-57). The invoices included the same reference to the Building and Construction Industry Security of Payment Act 2002, claiming $237,762.58, inclusive of goods and services tax of $21,614.78; and $40,425, inclusive of goods and services tax of $3,675 respectively (PS-1, pages 153-4). According to Mr Siassios’s third affidavit, the Superintendent did not issue a progress certificate within five working days as required by clause 37.2 of the Contract. Rather, he issued or purported to issue a progress certificate on 11 October, seven business days after the Progress Claim (ibid, paragraphs 40‑41).
14Mr Siassios in his third affidavit therefore said that what he described as the belated certification was ineffective, and the entire amount of the Progress Claim, viz $252,897.80 exclusive of goods and services tax, was payable, and by reason of the Building and Construction Industry Security of Payment Act 2002 the defendants became liable to pay that entire amount. On 12 October 2023 the defendants paid Sass $151,209.37 exclusive of GST, but the remaining sum of $101,688.43 with respect to Progress Claim 11 remained unpaid (ibid, paragraphs 42-44).
15By email dated 1 November 2023 (ibid, page 162), Mr Marino of Sass forwarded Invoice 0775 for Preliminaries and Margin Claim, and Invoice 0774 for Costs Recovery with Progress Claim 12. These invoices once again included the reference to the Building and Construction Industry Security of Payment Act 2002 and were in the sum of $77,091.30 inclusive of GST and $256,852.76 inclusive of GST respectively (PS-1, pages 164-5). Progress Claim 12 sought payment of $333,944.06 inclusive of GST (ibid, page 168).
16Once again, according to Mr Siassios’s third affidavit, the Superintendent did not issue a progress certificate within the five-day time frame required by clause 37.2 of the Contract. Rather, he issued it seven days later on 13 November 2023. Mr Galtieri certified $106,871.94 exclusive of GST (Siassios’s third affidavit paragraph 50 and PS-1, 171-184). He said that on 21 November 2023 the defendant paid Sass $45,454.55 exclusive of GST in respect of Progress Claim 12, but has failed to pay the balance of the progress claim, $258,130.96 (see Mr Siassios’s third affidavit, paragraphs 50‑53).
17Annexure A, item 30, of the contract refers to payment of interest on overdue payments at the rate of 5 per cent per annum (PS-1, page 81).
18Clause 37.5 of the contract terms, under the heading “Interest”, provides “Interest in Item 30 shall be due and payable after the date of default in payment”. Sass claims interest under this provision upon the amounts which it says are due but unpaid. Mr Siassios said that Sass claimed interest under that provision and “[i]n accordance with section 16(2) of the SOP Act”, calculated as at the date of his third affidavit, viz 11 April 2024, as follows (PS-1, paragraph 18, pages 7-8):
Progress Claim Invoice No. Date issued to Superintendent Due date for certification Due date for payment Days outstanding to 30 January 2024 Amounts outstanding (ex. GST) Interest payable at 5% per annum 09 Inv-0761 2 Aug 2023 9 August 2023 16 Aug 2023 168 $70,110.00 $2,709.84 10 Inv-0767 5 Sep 2023 12 Sep 2023 19 Sep 2023 134 $18,954.55 $466.23 Inv-0768 5 Sep 2023 12 Sep 2023 19 Sep 2023 134 $38,781.00 $953.91 11 Inv-0772 2 Oct 2023 9 Oct 2023 16 Oct 2023 107 $64,938.43 $1,018.47 Inv-0773 2 Oct 2023 9 Oct 2023 16 Oct 2023 107 $36,750.00 $576.37 12 Inv-0774 1 Nov 2023 9 Nov 2023 16 Nov 2023 76 $188,047.96 $1,487.90 Inv-0775 1 Nov 2023 9 Nov 2023 16 Nov 2023 76 $70,083.00 $554.52 Sub-total: $7,767.23 (ex. GST) GST: $776.72 TOTAL: $8,543.95 (inc. GST) This proceeding
19Solicitors for Sass filed an Originating Motion dated 31 January 2024 seeking judgment for Sass against the defendants in the sum of $544,975.38 “together with interest pursuant to statute”, together with costs and further or other relief. This matter was referred to me for determination “on the papers” on 7 May 2024.
Statutory framework
20In enacting the Act, on the basis of which the present proceeding has been brought, the Victorian Parliament stated:
“1The main purpose of this Act is to provide for entitlements to progress payments for persons who carry out construction work or who supply related goods and services under construction contracts.”
21In establishing its own special regime for the recovery of progress payments, the statute enacts:
“47(2)Nothing done under or for the purposes of this Part affects any proceedings arising under a construction contract (including any arbitration proceedings or other dispute resolution proceedings), whether under this Part or otherwise, except as provided by subsections (3) and (4).”
This section is found within Part 3 of the Act titled “Procedure for Recovering Progress Payments”. Determinations made under the Act may be revisited in ordinary contractual proceedings between the parties, with amounts awarded under the statute susceptible of restitutionary reversal. The statute establishes a regime of “pay now, litigate later”.
22Section 47(3) provides:
“In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal –
(a)must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order, determination or award it makes in those proceedings; and
(b)may make such orders as it considers appropriate for the restitution of any amount so paid, and such other orders as it considers appropriate, having regard to its decision in those proceedings.”
23Section 5 of the Act provides a detailed definition by way both of inclusions and exclusions of the phrase “construction work”. Neither party suggested that the work in question here did not fall within that phrase as defined.
24The entitlement to progress payments referred to in the introductory purpose section of the Act is provided for in s9, which states as follows:
“(1) On and from each reference date under a construction contract, a person—
(a)who has undertaken to carry out construction work under the contract; or
(b)who has undertaken to supply related goods and services under the contract—
is entitled to a progress payment under this Act, calculated by reference to that date.
(2) In this section, ‘reference date’, in relation to a construction contract, means—
(a)a date determined by or in accordance with the terms of the contract as—
(i)a date on which a claim for a progress payment may be made; or
(ii)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; or
(b)subject to paragraphs (c) and (d), if the contract makes no express provision with respect to the matter, the date occurring 20 business days after the previous reference date or (in the case of the first reference date) the date occurring 20 business days after—
(i)construction work was first carried out under the contract; or
(ii)related goods and services were first supplied under the contract; or
(c)in the case of a single or one-off payment, if the contract makes no express provision with respect to the matter, the date immediately following the day that—
(i)construction work was last carried out under the contract; or
(ii)related goods and services were last supplied under the contract; or
(d)in the case of a final payment, if the contract makes no express provision with respect to the matter, the date immediately following—
(i)the expiry of any period provided in the contract for the rectification of defects or omissions in the construction work carried out under the contract or in related goods and services supplied under the contract, unless subparagraph (ii) applies; or
(ii)the issue under the contract of a certificate specifying the final amount payable under the contract a final certificate; or
(iii)if neither subparagraph (i) nor subparagraph (ii) applies, the day that—
(A)construction work was last carried out under the contract; or
(B)related goods and services were last supplied under the contract.”
25Section 10 headed “Amount of progress payment” provides inter alia:
“(1) The amount of a progress payment to which a person is entitled in respect of a construction contract is to be—
(a)the amount calculated in accordance with the terms of the contract; or
(b)if the contract makes no express provision with respect to the matter, the amount calculated on the basis of the value of—
(i)construction work carried out or undertaken to be carried out by the person under the contract; or
(ii)related goods and services supplied or undertaken to be supplied by the person under the contract—
as the case requires.
…”
26As to the valuation of construction work, s11 provides inter alia:
“(1) Construction work carried out or undertaken to be carried out under a construction contract is to be valued—
(a)in accordance with the terms of the contract; or
(b)if the contract makes no express provision with respect to the matter, having regard to—
(i)the contract price for the work; and
(ii)any other rates or prices set out in the contract; and
(iii)if there is a claimable variation, any amount by which the contract price or other rate or price set out in the contract, is to be adjusted as a result of the variation; and
(iv)if any of the work is defective, the estimated cost of rectifying the defect.
…”
27As to the date when such progress payments are due, s12 provides:
“(1) A progress payment under a construction contract becomes due and payable—
(a)on the date on which the payment becomes due and payable in accordance with the terms of the contract; or
(b)if the contract makes no express provision with respect to the matter, on the date occurring 10 business days after a payment claim is made under Part 3 in relation to the payment.
…”
28The statute contemplates that building contractors and others claiming to be remunerated for construction work may serve payment claims which, if served in accordance with the statute, create a liability to pay the amount claimed in the absence of service of, what the statute describes as, a “payment schedule”. Sections 14 and 15 provide:
“14 Payment claims
(1)A person referred to in section 9(1) who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.
(2)A payment claim—
(a)must be in the relevant prescribed form (if any); and
(b)must contain the prescribed information (if any); and
(c)must identify the construction work or related goods and services to which the progress payment relates; and
(d)must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount); and
(e)must state that it is made under this Act.
(3)The claimed amount—
(a)may include any amount that the respondent is liable to pay the claimant under section 29(4);
(b)must not include any excluded amount.
(4)A payment claim in respect of a progress payment (other than a payment claim in respect of a progress payment that is a final, single or one-off payment) may be served only within—
(a)the period determined by or in accordance with the terms of 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 section 9(2) that relates to that progress payment—
whichever is the later.
(5)A payment claim in respect of a progress payment that is a final, single or one-off payment may be served only within—
(a)the period determined by or in accordance with the terms of the construction contract; or
(b)if no such period applies, within 3 months after the reference date referred to in section 9(2) that relates to that progress payment.
(6)Subject to subsection (7), once a payment claim for a claimed amount in respect of a final, single or one-off payment has been served under this Act, no further payment claim can be served under this Act in respect of the construction contract to which the payment claim relates.
(7)Nothing in subsection (6) prevents a payment claim for a claimed amount in respect of a final, single or one-off payment being served under this Act in respect of a construction contract if—
(a)a claim for the payment of that amount has been made in respect of that payment under the contract; and
(b)that amount was not paid by the due date under the contract for the payment to which the claim relates.
(8)A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract.
(9)However, subsection (8) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim if the amount has not been paid.
15 Payment schedules
(1)A person on whom a payment claim is served (the respondent) may reply to the claim by providing a payment schedule to the claimant.
(2)A payment schedule—
(a)must identify the payment claim to which it relates; and
(b)must indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount); and
(c)must identify any amount of the claim that the respondent alleges is an excluded amount; and
(d)must be in the relevant prescribed form (if any); and
(e)must contain the prescribed information (if any).
(3)If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent's reasons for withholding payment.
(4)If—
(a)a claimant serves a payment claim on a respondent; and
(b)the respondent does not provide a payment schedule to the claimant—
(i)within the time required by the relevant construction contract; or
(ii)within 10 business days after the payment claim is served;
whichever time expires earlier—
the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.”
29Section 16 provides that when a payment schedule has been served and payment is not made, the claimant may recover the amount claimed from the respondent “as a debt due to the claimant, in any court of competent jurisdiction”.
30Section 17 says that if payment is not made by a respondent in accordance with the terms of the payment schedule, the unpaid portion may similarly be recovered “in any court of competent jurisdiction”. It is this jurisdiction which the plaintiff invokes, or purports to invoke, in this proceeding.
31Where a payment schedule indicates a payment less than the amount claimed, the claimant may seek an adjudication from an adjudicator under s18 of the statute. Section 28M and the following sections, make provision for payment by the respondent to the adjudication application of the amount determined by the adjudicator.
Plaintiff’s contentions
32Mr A R Morrison, counsel for the plaintiff, in an outline of submissions dated 4 April 2024, stated:
“The plaintiff seeks judgment on the outstanding balance of four payment claims...totalling $536,431.43 (inc GST) plus interest, pursuant to s 16(2)(a) of the Building and Construction Industry Security of Payment Act 2002 (Vic)...in circumstances where the defendants failed to serve payment schedules”.
Defendants’ contentions
33Mr Benjamin Reid, counsel for the defendants, also filed written submissions dated 4 April 2024, and submissions in reply dated 11 April 2024. In his initial set of contentions dated 4 April 2024 (which extended over some 56 paragraphs), Mr Reid said:
“7. The Defendants refer to the affidavit of Nicolas Pitliangas dated 3 April 2024 that provides that:
a.The Plaintiff resubmitted progress claims 10 (part) and 11 on 25 October 2023 without withdrawing, replacing or otherwise advising that the earlier claims were no longer pursued;
b.The Plaintiff made representations regarding:
i. A reduction in Contractor’s Margin and that it would not claim for Contractor’s Margin;
ii. That the Defendants did not have to pay the preliminaries claimed in claim 10;
iii. No further amount was payable for the cost of undertaking the work claimed by claim 10;
iv. it would not seek any amount for Preliminary Costs and Contractor’s Margin in claim 12 and no such amounts would be sought until the works caught up.
c.The total outstanding to the Plaintiff (if any) is a maximum of $228,606.44 not $536,431.43 given the payments made directly by the Defendants to subcontractors and suppliers of the Plaintiff;
d.There was no approval pursuant to clause 9.2A or any other clause of the Contract, entitling the Plaintiff to claim amounts that are in excess of the Trade Budget Schedule amount for concrete of $950,000 (excl GST). That is, $502,396.71 (excl GST) is not an amount that is calculated in accordance with the Contract;
e.Claims 10, 11 and 12 each contain excluded amounts being time-related costs due to the happening of an event; and
f.The Defendants have paid $307,824.99 directly to subcontractors and suppliers, in addition to the payments it has made to the Plaintiff.”
34In those first set of submissions, Mr Reid raised what he described as a “Preliminary Issue” (paragraph 5), referring to an inconsistency in the spelling of the deponent in the initial affidavit relied on by Sass. This issue seems to have been resolved by the second and third affidavit of the deponent, and it can be put to one side. I reject the contention that these matters cannot be dealt with by a later affidavit or affidavits in this proceeding: see Rule 2.01 of the Court’s Rules.
35Mr Reid also raised another list of objections to the plaintiff’s claim, as follows:
“6.The Defendants resist the Application in respect of one or more of the progress claims on the basis that:
a.The Plaintiff has breached the rule against serving more than one payment claim in respect of each reference date (if there is one reference date):
b.Has made premature claims (as there are two reference dates);
c.The progress claims 10, 11 and 12 each included excluded amounts;
d.The payment claims have not been calculated in accordance with s.10 of the SOP Act;
e.No amount is due to be paid by the Defendant in accordance with s.12 of the SOP Act; and
f.It has possible defences of misleading and deceptive conduct.”
36I turn to deal with those matters.
Reference dates
37The issue of reference dates is dealt with in s9 of the statute quoted above. Mr Reid said that the contract in question provided for two reference dates, referring to clause 37.1 and item 28. Clause 37.1 provides:
“37.1 Progress claims
The Contractor shall claim payment progressively in accordance with Item 28.
Each progress claim shall be given in writing to the Superintendent and shall:
a) include details of:
i)the Costs of the Works;
ii)the portion of the Contractor’s Margin claimed pursuant to the provisions of the Contract; and
iii)the portion of the Preliminary Costs claimed pursuant to the provisions of the Contract (which shall be paid monthly in advance, subject to any final adjustment);
b) indicate the amount of the progress claim the Contractor claims to be due; and
c) include an itemised schedule of variations approved by the Superintendent.
Each progress claim must be supported by evidence (including but not limited to progress claims or tax invoices submitted by consultants and subcontractors and tax invoices from suppliers) of the amount due to the Contractor for the period to which the progress claim relates and such other information as the Superintendent may reasonably require and/or request to enable the Superintendent to fully and accurately determine (without needing to refer to any other documentation or information) the amounts then payable by the Principal to the Contractor under the Contract. Such evidence as the Contactor is required to provide under this clause may be satisfied through use of the Xero portal with access being given to the Superintendent and the Principal.
The Superintendent may request further information from the Contractor in respect of any progress claim. The Contractor shall provide the information requested to the Superintendent within the time and form requested.” (PS-1, page 63)
38Item 28, referred to in clause 37.1, provides:
“28 Progress Claims
(subclause 37.1)
last calendar day of each month for WUC done to the date of the claim other than instalments of Preliminary Costs which shall be paid monthly in advance on and from the date of this Contract such that:
a) the first instalment is paid on the date of this Contract;
b) instalments thereafter be paid to the same timetable as above.”
39Therefore, said Mr Reid, the contract contemplated two claims being made: one for “WUC” other than instalments for Preliminary Costs on the last day of each calendar month; with Preliminary Costs claims being dealt with separately. The effect, he said, was that while Preliminary Costs were claimable in advance, “Costs of the Works” and “Contractor’s Margin” were to be claimed in arrears. Mr Reid said that the plaintiff has proceeded upon the basis that there was only one reference date, being the last day of each calendar month.
40In his contentions in reply dated 11 April 2024, Mr Morrison said “[t]he Contract provides for a single, monthly reference date” (paragraph 6). The single reference date, according to item 28, said Mr Morrison, was “the last calendar day of each month” (paragraph 10).
41Mr Reid said in so far as the plaintiff approached the matter and made its claims on the basis that there was a single reference date, namely the last day of each month, it had acted inappropriately (paragraph 12).
42In submissions in reply, Mr Morrison referred to the decision of the New South Wales Court of Appeal in Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317, 336 [225] (Seymour Whyte case).
43The reference in paragraph (b) to instalments being paid “to the same timetable as above” is problematic. Two timetables are mentioned “above”: one being the “last calendar day of each month”, and the second one is “monthly in advance on and from the date of this Contract”. According to Mr Reid’s interpretation, “Preliminary Costs” are payable on the second of each month: that is, the timetable “as above” refers to the second of the two timetables. According to Mr Morrison, it would seem that the “timetable as above” referred to moneys being paid on “the last calendar day of each month”. It is not clear to me how this issue is elucidated by the quoted passage from Sackville AJA in the New South Wales Court of Appeal in the Seymour Whyte case. The more obvious interpretation is that there are two reference dates: one being the last calendar day of the month, and the other, being for Preliminary Costs, being the second of each month.
44The immediate contention by Mr Reid is that Sass “breached the rule against serving more than one payment claim in respect of each reference date (if there is one reference date)”. By reference to Mr Pitliangas’s affidavit made 3 April 2024, Mr Reid notes the resubmission of claims 10 and 11 (see paragraphs 11-13 of Mr Pitliangas’s affidavit). He said that material emailed on 25 October 2023 represented a revision of Progress Claim 11. According to Mr Pitliangas, “[t]he Contractor did not in its email of 25 October 2023, its claims for payment sent on that day or by any other statement or writing withdraw progress claims 10 and 11 referred to”. In the table to Mr Siassios’s affidavit, in paragraph 19 of his primary contentions, Mr Reid said:
“As Digby J noted in Valeo, in Southern Han Breakfast Point Pty Ltd (in Liquidation) v Lewence Construction Pty Ltd, the High Court of Australia has expressly approved the proposition contained in the decision of the Court of Appeal of New South Wales in Dualcorp Pty Ltd v Remo Constructions Pty Ltd that a subsequent document purporting to be a payment claim, that is in respect of the same reference date as a previous payment claim, is prohibited from being recognised as such under the SOP Act.”
45This contention advanced on behalf of the defendants runs the risks of proving too much. If the resubmitted claims are “prohibited from being recognised as such under the SOP Act”, they are presumably for these purposes nullities. They can be ignored. This is what Sass seems to have done in the way its claim has been framed and supported by the third Siassios affidavit. Moreover, Delany J has recently said that “leaving agreement between the parties to one side, the statutory scheme does not contemplate the unilateral withdrawal or abandonment of a payment claim and the resubmission of a fresh claim” (Argyle Building Services Pty Ltd v Dalanex Pty Ltd (No 2) [2022] VSC 452, [97]). Accepting that service of a second payment claim “in respect of [any] reference date” is prohibited by the statute s14(8), the consequence of doing so would seem to be to have the second and any subsequent claim relative to the same reference date be treated as void. It is not obvious that the first of a multiplicity of claims would, by reference to s14(8) of the Act, be retrospectively rendered void or invalid.
46Next, Mr Reid said that even if there were only one reference date arising under the contract, s14(8) of the statute has still been offended. He said that Vickery J in Commercial & Industrial Construction Group Pty Ltd v King Construction Group Pty Ltd& Anor [2015] VSC 426 concluded that pursuant to the SOP Act a claimant cannot serve more than one payment claim in respect of each payment date (paragraph 22).
47Mr Reid was critical of the covering email, stating:
“None of the covering emails sent by the Plaintiff between 1 to 5 days later, enclosing the two endorsed claims at various times and for various reference dates:
a. described itself as a payment claim under the SOP Act;
b. identified any of the amounts sought to be claimed, that is, the email did not identify any of the amounts sought by the invoices;
c. identified that the work to be undertaken by the Plaintiff was for one type of work; and
d. are for works under contract and a second invoice for variations.” (Paragraph 23)
48In submissions in reply, Mr Morrison on behalf of the plaintiff said:
“Nothing in the Act...requires the relevant endorsement under the Act to appear in the covering email.” (Paragraph 13)
49I accept his contention in that regard. He said:
“The tax invoices included within the Payment Claims that related to WUC and Preliminaries/Margin were not separate payment claims for those amounts. They were constituent parts of the singular payment claim issued for that month.” (Paragraph 12)
Excluded amounts
50Mr Reid also said that each progress claim contained “excluded amounts” (paragraphs 30-32 of his primary contentions). These matters are dealt with in s10B of the statute, which provides as follows:
“10B Excluded amounts
(1)This section sets out the classes of amounts (excluded amounts) that must not be taken into account in calculating the amount of a progress payment to which a person is entitled under a construction contract.
(2)The excluded amounts are—
(a)any amount that relates to a variation of the construction contract that is not a claimable variation;
(b)any amount (other than a claimable variation) claimed under the construction contract for compensation due to the happening of an event including any amount relating to—
(i) latent conditions; and
(ii) time-related costs; and
(iii) changes in regulatory requirements;
(c)any amount claimed for damages for breach of the construction contract or for any other claim for damages arising under or in connection with the contract;
(d)any amount in relation to a claim arising at law other than under the construction contract;
(e)any amount of a class prescribed by the regulations as an excluded amount.”
51Mr Reid said (principal contentions, paragraph 30):
“As identified in the affidavit of Nicolas Pitliangas dated 3 April 2024 at [21] – [23] (inclusive), each of progress claims 10, 11 and 12 contain excluded amounts. These amounts are chiefly time-related costs due to the event of delay. The claims are clear on their face, including the supporting documentation, and the Court need not undertake any further investigation.”
52He referred to Yuanda Vic Pty Ltd v Façade Designs International Pty Ltd [2021] VSCA 44 at [36] and [143]. He said this latter case excluded the possibility of severing “the excluded amount” and entering judgment for the balance. Mr Reid concluded, at paragraph 32:
“The Plaintiff’s repeated claims 10 and 11 are unenforceable due to s.14(8) of the SOP Act and if the original claims are also not valid, these claims are rendered unenforceable by reason of the including of excluded amounts.”
53In his contentions dated 11 April 2024 responding, Mr Morrison said that:
“Time-based billing is the almost universal means by which labour is valued in the construction industry.” (Paragraph 19)
54He continued at paragraph 21:
“Here, the so-called ‘time-related costs’ that the defendants point to are hourly charges from the plaintiff’s concrete suppliers. The plaintiff was liable for those charges, whether the supplier was actively engaged in pouring concrete or whether it was ‘on the clock’ but waiting for an element to be ready. Idle time is a necessary and expected part of most trades. To hold that the plaintiff can only recover the costs of its subcontractors while they are actively pouring, or drilling, or hammering, but that any time they spend idle is an excluded amount whether the plaintiff is liable to them for it or not, would lead to perverse results as substantial parts of any contract would be excluded amounts and therefore unclaimable under the Act.”
55At paragraph 22, Mr Morrison advocated a “far more sensible construction” of the phrase “time-related costs”, giving it a stricter meaning. He did not, however, postulate what that “stricter” interpretation might be. A consideration of paragraphs 21-23 of Mr Pitliangas’s affidavit would indicate that Mr Morrison correctly characterised the relevant contentious and allegedly excluded item. The considerations urged by Mr Morrison are compelling. The difficulty in accepting his contention on this point is that he does not postulate a meaning for the phrase “time-related costs”, which would plainly exclude the contentious items raised by Mr Pitliangas. The phrase may readily be applied to the scenario of a fixed-price contract. It would appear to exclude add-ons by way of prolongation expense, time penalties, and so forth, from being claimable under the regime of the statute. I accept that in the present case of a cost-plus contract it would be untenable to regard time-related costs charged by subcontractors as necessarily excluded from the regime of the Act. Perhaps the basis for adopting a more restrictive meaning of the phrase than advocated by Mr Reid is the phrase in the introductory words of paragraph (b) of ss(2) of s10B, “for compensation”, seeing the “time-related costs” referred to in paragraph (b) as being of the same nature as “damages for breach of the construction contract” as referred to in paragraph (c) of the subsection. I accept Mr Morrison’s contention that these items ought not be regarded as excluded.
Misleading or deceptive conduct
56At paragraph 33 of his principal contentions, Mr Reid on behalf of the defendants gave details of a series of matters which he said constituted misleading or deceptive conduct on the part of the plaintiff, Sass. At paragraph 37, Mr Reid referred to a decision of the New South Wales Supreme Court, Marques Group Pty Ltd v Parkview Constructions Pty Ltd [2023] NSWSC 625 [10] and [11], as establishing “that where a plaintiff sues on a cause of action, one essential element of which has been created by the plaintiff’s misleading conduct, the contravention affords a defence and judgment cannot be obtained.” He said it was sufficient on these matters to establish an arguable defence as a response to the present application.
57Mr Morrison, on behalf of the plaintiff, contended, amongst other things, that since the alleged misleading or deceptive conduct occurred after the rendering of the payment claim, it could not be said that an essential element of its cause of action had been created by the misleading or deceptive conduct. The details of the allegation of misleading or deceptive conduct are to be found in paragraph 24 of Mr Pitliangas’s affidavit. The affidavit paragraph divides the description of the alleged conduct into four categories:
(i) Reduction of claims for Contractor’s Margin,
(ii) Reduction of claims for Preliminary Costs,
(iii) Reduction in claim for Cost of the Works,
(iv) Reduction in claim for Contractor’s Margin and Preliminary Costs,
analysed in some eleven subparagraphs.
58As to the first category, “Reduction of claims for Contractor’s Margin”, Mr Pitliangas refers to email correspondence from the Superintendent, Mr Galtieri, to Sass, commencing 8 August 2023. Mr Galtieri contended in that email that Sass’s figures did not add up. He concluded:
“You have claimed 75% of the builders margin and we still have 7+ months left...if this is correct your monthly claims need to be halved moving forward.
Can you provide me with a detailed breakdown of ‘Special Items’.” (Pitliangas’s affidavit, page 156)
59According to Mr Pitliangas, in the next two progress claims Sass “reduced its claim for Contractor’s Margin (see progress claim 10) and did not present a claim for Contractor’s Margin (see progress claim 11)” (Pitliangas’s affidavit, page 6, paragraph 24(b))
60Next, he noted an email from Mr Siassios to the Superintendent and to him, stating:
“ The other option is to not pay this month’s prelims and see where we land against program at the end of this month.” (Pitliangas’s affidavit, page 157)
61Mr Pitliangas said:
“On behalf of the Principal [viz, the defendants], and in accordance with the above email, I did not pay the then current month’s claim for Preliminary Costs, being the Preliminary Costs set out in progress claim 10.” (Pitliangas’s affidavit, page 7, paragraph 24(d))
62He noted that in this proceeding Sass claims the Preliminary Costs and Contractor’s Margin “despite its representation made in email dated 18 September 2023”.
63As to the allegation relative to “Reduction in claim for Cost of the Works”, Mr Pitliangas said that Mr Siassios wrote to him attaching an amended version of the Costs of the Works for progress claim 10 that stated “ “Less Amount Credited: 20,850.00” and “AMOUNT DUE AUD 0.00”.” (Exhibit NP-1, page 134) Mr Pitliangas said consequently he did not pay the sum of $20,850 inclusive of GST in accordance with the credit. He said:
“I had paid that amount directly to the electrical subcontractor. That amount equals $18,954.55 (excl GST) the subject of progress claim 10.”
64Yet, he said, this amount was claimed relative to progress claim 10.
65As to “Reduction in claim for Contractor’s Margin and Preliminary Costs”, he referred to an email chain at NP-1 158-62 in which, by email of 17 November 2023 to Mr Pitliangas, copied to the Superintendent, Mr Galtieri, Mr Siassios sought to summarise a meeting which he had had with Mr Pitliangas “this morning”, viz 17 November 2023. Mr Pitliangas noted that he responded by an email later the same day adding further points which he said Mr Siassios had apparently forgotten. He said the first of those points was “... margin/prelims need to be in line with what’s happening on site. So until works catch up prelims and margins will remain as they are.” According to the affidavit, Mr Pitliangas said he meant to convey that until the progress of the Works was further advanced “in terms of percentage complete, when compared to the percentage of the fixed sums paid for Preliminary Costs and Contractor’s Margin.” He noted that in a further email of the same day, Mr Siassios had advised Mr Pitliangas and Mr Galtieri: “Noted”. Therefore, said Mr Pitliangas, he did not pay the Contractor’s Margin and Preliminary Costs as set out in claim 12 based on the representation. Yet, in this proceeding, Sass claimed $70,083.00 exclusive of GST for Preliminary Costs and Contractor’s Margin in relation to progress claim 12. No further such amount should be claimed.
66Can it be said in those circumstances that the facts constituting the cause of action now sued upon by Sass were caused or created by this misleading or deceptive conduct? Fundamentally, the cause or causes of action in a proceeding such as this are constituted by the rendering of a payment claim or claim otherwise in accordance with the statute by the plaintiff, and the defendant not making payment and failing to serve a payment schedule in accordance with section 15. Subsection (4) of that section provides:
“(4)If—
(a)a claimant serves a payment claim on a respondent; and
(b)the respondent does not provide a payment schedule to the claimant—
(i) within the time required by the relevant construction contract; or
(ii) within 10 business days after the payment claim is served;
whichever time expires earlier—
the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.”
67It would seem to follow that if a defendant failed to serve a payment schedule in accordance with section 15 within the time limits laid down by sub-section (4) as a result of misleading or deceptive conduct and in reliance thereon, the principle relied on by Mr Reid would be engaged. If, however, the representation or alleged representation were made after the cause of action had already accrued, it could not be said that the accrual of the cause of action was caused by the misleading or deceptive conduct. This latter view is the one which Mr Morrison contends ought be taken.
68Turning then to the particular facts in this proceeding, as to the first of the categories, “Reduction of claims for Contractor’s Margin”, the omission of claims from progress claims 10 and 11 said by Mr Pitliangas to be part of the misleading or deceptive conduct could not be causative of the accrual of the cause of action described above.
69As to the second category, described as “Reduction of claims for Preliminary Costs”, which pertains to progress claim 10, the payment claim was, according to Mr Siassios, served on 5 September 2023. The alleged misleading or deceptive conduct occurred on 18 September 2023. 18 September would appear to be within the 10‑business-day time limit referred to in section 15(4) of the statute. This 10‑business-day limit, however, is only the “fallback” provision. The time limit for the purposes of the subsection is to be derived in the first instance from the contract. The regime under section 37.2 of the contract is that payment of progress claims is to be made “within five business days” of the Superintendent’s progress certificate. As the text quoted earlier in these reasons indicates, if the Superintendent does not issue a progress certificate within five business days of receipt of the progress claim, the progress claim will be “deemed to be the relevant progress certificate”. I take the effect of those provisions to be that if the “deeming” provision is engaged, the Principal (in this case, the defendants) has a total of 10 business days from the issue of the claim to make payment: the initial five business days whilst the Superintendent has the opportunity to consider the claim, and, if no certificate issues within that time, a further five business days. The effect would seem to be that the time limit for payment under section 14, calculated in accordance with the contract, is in this case the same as the “fallback” position in the subsection, viz 10 business days. In the circumstances, as to progress claim 10, the principle relied on by Mr Reid is engaged.
70Turning then to the third category, “Reduction in claim for Cost of the Works”, this depends upon alleged misleading or deceptive conduct constituted by an email dated 25 October 2023. According to the same analysis, any cause of action accruing under the statute relative to progress claim 11 made 2 October 2023 could not have been caused by the alleged misleading or deceptive conduct.
71Turning finally to the fourth category of alleged misleading or deceptive conduct, “Reduction in claim for Contractor’s Margin and Preliminary Costs”, the alleged misleading or deceptive conduct was constituted by an email dated 17 November 2023. According to Mr Siassios’s third affidavit, paragraph 46, this progress claim was made by email on 1 November 2023. Again, this is outside the 10-business-day time limit established by the contract and s15(4) of the statute. The misleading or deceptive conduct, therefore, cannot have been causative of the accrual of the cause of action. The principle relied on by Mr Reid was not engaged.
Premature claims?
72Mr Reid also contended that Sass had made premature claims, noting that the making of claims under the statute was permitted only “[o]n and from each reference date”: (s9(1)) (paragraph 15). He said:
“Clearly the claims made for Preliminary Costs and Contractor’s Margin on each of 31 July 2021 [sic]..., 31 August 2023..., 30 September 2023...and 31 October 2023...were premature...”.
73He said that the serving of a premature claim resulted in a nullity, referring to the remarks of Judge Woodward (as he then was) in Spirito Development Pty Ltd v Sinjen Group Pty Ltd [2020] VCC 1368, [17]. He continued:
“Further, each of Invoices 0761 (claim 9)...and 0775 (claim 12)...offend s.10 of the SOP Act as they are not amounts calculated in accordance with the terms of the Contract. That is, these invoices should only claim Preliminary Costs. Contractor’s Margin is to be claimed with the Cost of the Works. The Defendant says that the inclusion, incorrectly, by the Plaintiff of the Contractor’s Margin in the Preliminary Costs claims is akin to the inclusion of an excluded amount rendering the claim invalid.”
74He referred to the Court of Appeal’s decision in Yuanda Vic Pty Ltd v Façade Designs International Pty Ltd [2021] VSCA 44 (“Yuanda”).
75In his submissions in reply dated 11 April 2024, Mr Morrison said:
“The plaintiff issued payment claims on 2 August 2023, 5 September 2023, 2 October 2023 and 1 November 2023. None was premature. None ‘doubled up’ on a relevant reference date.” (Paragraph 16)
76In submissions in reply dated 11 April 2024, Mr Reid reiterated his contention that there were two reference dates, continuing:
“Preliminary Costs are treated differently as these costs are on account and are not related to works performed.” (Paragraph 1)
77I have accepted the contention by Mr Reid on behalf of the defendants that the contract establishes two reference dates: one for preliminaries, being the same day of the month as the contract bears, viz the second; and, as to the balance, the last day of the month. Putting aside for the moment the issue as to whether claims having different reference dates can be put together and rendered jointly, the only one of the claims involved in this proceeding which might be thought to be premature is progress claim 12, rendered or made on 1 November 2023. This claim would appear to be premature as to preliminary costs, but not premature relative to any other amount.
78Plainly, in accordance with the Court of Appeal’s decision in Yuanda, inclusion in a payment claim of an excluded amount precludes recovery of the whole or any part of the relevant payment claim under the summary procedure established by s16(2) of the statute. The Court reached this conclusion based upon a survey of the repeated language in several sections of the statute prohibiting claiming and recovery of excluded items under the statutory procedure; the mandatory language of s16(4)(a)(ii) stating, inter alia:
“(a)judgment in favour of the claimant is not to be given unless the court is satisfied—
(i)...
(ii)that the claimed amount does not include any excluded amount”.
(Emphasis added)
79The Court rejected any argument based on severance. The inclusion of an “excluded amount” in the payment schedule therefore renders the entire payment claim invalid for the purposes of the summary court procedure under s16. This leaves open, however, resort to the adjudication process provided by the statute: [2021] VSCA 44 [19].
80The Court’s rejection of the severance argument advanced by the respondent depended crucially upon provisions in the statute such as s16(4)(a)(ii) quoted above. It also turned upon the fact that it could not be said that a payment claim involving an excluded item was invalid, because this could be dealt with as part of the adjudication process: [2021] VSCA 44 [31] per McLeish and Niall JJA. Neither of these provisions would exclude the possibility of severance of a premature claim for “Preliminaries”.
Proper calculation
81Mr Reid also contended that the amounts claimed by Sass did not represent a proper calculation of the amounts due under the contract. He noted that:
“The Trade Budget Schedule is at Annexure Part I of the Contract and provides an estimate of (inclusive of GST) the Cost of the Works to be $4,883,981.30 (excl GST). This estimate is derived from the various subcontractor trade estimates.” (Defendant’s Submissions, paragraph 47)
82He said that whilst there was power to vary these amounts by virtue of clause 35 of the contract and clause 9.2A, there was no evidence of such a variation having been made. He said the defendants as Principal acknowledged the Trade Schedule but no “mechanism by which the Contract price may be adjusted” was included in clause 2.7 (ibid, paragraphs 48-50). He noted that clause 9.2A contemplated that the Trade Budget Schedule might be exceeded:
“…however clause 9.2A(b) only allows the Plaintiff to engage a subcontractor whose price to undertake a trade package greater than that allowed for in the Trade Budget Schedule, if it has already sought the Superintendent’s prior written approval to do so. No such approval has been sought by the Plaintiff despite claiming $502,396.71 in excess of the concrete trade budget schedule.” (ibid, 51)
83Therefore, he said, Sass was limited “when it makes a claim for payment and or otherwise is seeking an amount in circumstances where it has breached the Contract (no clause 9.2A approval)” (ibid, paragraph 51). Therefore, he said, any claim for a larger amount was not calculated in accordance with the contract (ibid, paragraph 52). He referred to Brookhollow Pty Ltd v R&R Consultants Pty Ltd & Anor [2006] NSWSC 1 [33]-[34], [41].
84Mr Morrison (Reply Submissions, paragraphs 23-27) contended there was no basis for a defence along these lines. He said that these matters, if they were to be urged, should have been contained in a payment schedule, and s16(4)(b) of the Act “prevents the defendants from raising a defence under the Contract”. I accept that generally contractual defences are not available in a proceeding such as this. Nevertheless, in a number of respects the steps which may be taken to create a liability under the statute are required to be taken in accordance with the terms of the relevant contract. The question here is whether the points urged by Mr Reid relative to the contract are rendered relevant and determinative by the statute.
85Mr Reid has referred to s14(2) and s14(3) of the Act. This latter section relevantly prohibits the inclusion in a payment claim of “any excluded amount”. The application of this provision has been dealt with above. Section 14(2) includes some five mandatory features which an effective payment claim must exhibit. The subsection is quoted above. None of the paragraph renders mandatory that the calculations in the payment schedule be made in accordance with the contract. It would seem, therefore, that Mr Morrison is correct that the point here urged on behalf of the defendants is one which should have been made in a payment schedule, and in the absence of any such payment schedules cannot now be raised.
Due dates
86Mr Reid also contended that in the circumstances there was no “due dates” or date for the relevant progress claims. In his principal contentions, paragraph 43, Mr Reid said:
“The intention of the SOP Act is that the calculation of the ‘due date’ is to be in accordance with the terms of the contract unless the contract is lacking an express provision...”.
87This appears to be the effect of s12(1) of the statute. Mr Reid referred to Jemzone v Trytan [2002] NSWSC 395 [37]. In the following paragraph, Mr Reid said:
“There needs to be a due date and this date must have come to pass, as it is this right, a contractual right / entitlement to payment that the SOP Act allows a claimant, to enforce (the only entitlement in section 9 is the right to make a claim on and from a reference date, its [sic] not a right to enforce payment by the due date, and or to be paid that claim). It is not the issuing of the payment claim that provides a claimant with an entitlement to be paid but rather the expiring of the due date for payment for payment of an amount calculated in accordance with the Contract (s.10 SOP Act).” (Paragraph 44)
88Mr Morrison (Reply Submissions, paragraph 28-31) rejected these contentions. He said at paragraph 29:
“If the Court accepts the plaintiff’s contentions as to when the reference dates arose, and when the Payment Claims were served, then it ought to follow that the Payment Claims were in each case valid. The defendants failed to served [sic] payment schedules within time. They cannot now contest the proper calculation of the Payment Claims.”
89Mr Morrison continued, contending that the combined effect of s12(1) of the statute and the express terms of the contract meant that the “due date” was 10 business days after the making of the claim. Section 12(1) provides that the due date is to be “in accordance with the terms of the contract”, otherwise 10 business days after claim. I have already referred to the terms of clause 37.2, and the effect thereof is that the due date is 10 business days from the making of the claim.
90Crucially, I have not accepted Sass’s contentions as to there being a singular reference date for all classes of claim under this contract. This has led to the consequence that one payment claim, in so far as it pertains to “preliminaries”, is to be regarded as premature. I will turn in due course to the effect of that finding. It is sufficient to note that the plurality of reference dates does not add any further question of validity as to the payment claims relative to the due date. Section 14(2) of the Act does not require the payment claim to include an accurate statement of the due date, nor does s12(1).
Direct payments
91It will be recalled that one of the “[m]atters relied upon by the Defendants” according to paragraph 7 of Mr Reid’s principal contentions was that “[t]he Defendants have paid $307,824.99 directly to subcontractors and suppliers, in addition to the payments it has made to the Plaintiff.” This matter does not appear to have been elaborated upon later in Mr Reid’s contentions. In itself it is not obvious how it would constitute a defence to the present claims. Section 38.3 provides as follows:
“38.3 Direct payment
Before final payment, the Principal, if not aware of a relevant relation-back day (as defined in the Corporations Act 2001 (Cth)) may pay unpaid moneys the subject of subclause 38.1 directly to a worker or a subcontractor where:
a)permitted by law;
b)given a court order in favour of the worker or subcontractor; or
c)requested in writing by the Contractor.
Such payment and a payment made to a worker or subcontractor in compliance with a legislative requirement shall be deemed to be part-satisfaction of the Principal’s obligation to pay pursuant to subclause 37.2 or 37.4, as the case may be.”
92The precise basis upon which any such direct payments were made does not appear. The total amounts so paid are set out at paragraph 14 of the affidavit of Mr Pitliangas. The following paragraphs 15-19 raise issues as to the budget for trade payments being exceeded without Superintendent approval. Clause 9 of the contract, PS-1 paragraphs 42-43, deals with the issue of subcontracting but does not deal with the issue of direct payments to subcontractors, which can be found dealt with in the quoted clause 38.3.
Conclusions
93It follows that the plaintiff’s claim is largely successful, save for one item being premature and one item where the cause of action was brought into existence by misleading or deceptive conduct. The judgment should include interest at the rate of 5 per cent per annum from the due date for payment to the date of judgment. For reasons already explained, the remedy of severance of the invalid from the valid, leaving the latter recoverable, is available generally in this context, save in relation to the inclusion of excluded items in a payment schedule, as explained by the Court of Appeal in Yuanda. Therefore, as to the four progress claims the subject of this proceeding, there should be judgment in favour of the plaintiff, save for those items on which the plaintiff has failed.
Disposition
94I will direct the parties to bring in short minutes to give effect to these reasons.
Costs
95I have heard no submissions on the question of costs, and so they will be reserved.
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