Volan Group Pty Ltd v Prime Build Pty Ltd
[2021] VCC 611
•17 May 2021
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
BUILDING CASES LIST
Case No. CI-20-04683
| Volan Group Pty Ltd | Plaintiff |
| V | |
| Prime Build Pty Ltd | Defendant |
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JUDICIAL OFFICER: | Judicial Registrar Burchell | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF JUDGMENT: | 17 May 2021 | |
CASE MAY BE CITED AS: | Volan Group Pty Ltd v Prime Build Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2021] VCC 611 | |
REASONS FOR JUDGMENT
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Subject: CONTRACTS
Catchwords: Building contract – payment claim – whether defendant paid amounts claimed – whether payment claims contain excluded amounts – whether payment claim had reference dates – whether payment claim stated that it was made under the Act
Legislation Cited: Building and Construction Industry Security of Payment Act 2002 (Vic) ss 4, 9, 10A, 10B, 12, 14(2), 15, 16(2) and 48; Civil Procedure Act 2010 (Vic) s61
Cases Cited:Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; 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; Yuanda Vic Pty Ltd v Façade Designs International Pty Ltd [2021] VSCA 44; All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289; MKA Bowen Pty Ltd v Carelli Constructions Pty Ltd [2019] VSC 436
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | DCM Lawyers | |
| For the Defendant | Ms L Mills | Crisp Law |
JUDICIAL REGISTRAR:
1 In this proceeding, the plaintiff (“Volan”) applies for judgment against the defendant (“Prime Build”) pursuant to s16(2) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (“SOP Act”) in the sum of $175,165.10 (including GST) . Volan makes the application by summons on originating motion dated 20 October 2020. The application arises out of construction work that Volan performed at The Glen Coles, Glen Waverley; Casey Hospital, Casey; Woolworths, Chelsea; BWS, Chelsea; Coles, Ballarat; and RMIT, Melbourne.
2 Volan submits that it is entitled to judgment because Prime Build failed to make payment in response to its payment claims.
3 In opposition to the claim, Prime Build contends that:
a) it has fully paid the amounts claimed in invoices 1344, 1317, 1332 and 1341 and partly paid 1303 (after the commencement of the proceedings).
b) the Court cannot be satisfied that invoices 1288 and 1303 do not contain excluded amounts;
c) invoice 1291 does not have a reference date; and
d) invoice 1342 does not include a statement that it was made under the Act.
4 I uphold grounds (a), (b) and (d). I reject ground (c). My reasons are set out below. Accordingly, I order that Volan’s summons is dismissed in respect of invoices 1288, 1303, 1332 and 1342. I otherwise order that there be judgment for Volan in the sum of $4,030.51 (being invoice 1291 in the amount of $1,202.25 and the interest due on the payment claims paid being 1317, 1332, 1341 and 1344 in the sum of $2,828.26) plus interest on invoice 1291 in accordance with s12(2) of the SOP Act. I order that Prime Build pay Volan’s costs of and incidental to the proceeding on the standard basis, in default of agreement up to 29 January 2021, and thereafter there is no order as to costs (unless either party has a basis for a different order as to costs). I invite the parties to prepare draft orders to give effect to these reasons. I will determine any issue concerning costs on the papers.
The facts
5 Volan relies upon two affidavits of Francis Carragher, its sole director, affirmed 20 October 2020 and 18 February 2021. In opposition, Prime Build relies upon two affidavits of Tim Thompson, its director, affirmed 22 January 2021 and 1 February 2021. Except where otherwise provided, the facts of the proceeding are not materially in dispute.
The Glen Coles Works
6 On or about 25 April 2019, Volan contracted with Prime Build to undertake building and plastering works at the Glen Coles, Glen Waverley. The contract arose when Prime Build accepted a quote of Volan detailing works that Prime Build requested.
7 Mr Carragher alleges that, on or about 7 May 2019, Prime Build orally instructed Volan to complete additional carpentry and plastering works to straighten and complete a bulkhead above the fridges of the Glen Coles. He says this required the supply and installation of plywood panels to the walls and ceilings (“variation works”).
8 On or about 7 May 2019, Mr Carragher emailed a second revised quote to Prime Build detailing the additional cost to complete the variation works and supply extra plywood.
9 At 12.34pm that day, Mr Carragher sent another email to Mr Browne confirming the number and sizes of the extra sheets of plywood and requesting he confirm the variation at his earliest convenience.
10 Mr Carragher deposes that on or about 13 May 2019, Prime Build accepted the second revision to the quote and engaged Volan to complete the variation works.
11 On or about 17 August 2019, Volan completed the Glen works. On 9 June 2019, Volan issued invoice 1288 to Prime Build in the sum of $22,603.90 (including GST). Prime Build failed to issue a payment schedule in response.
12 Mr Carragher deposes that payment was not made. He says that on 3 March 2020, he telephoned Mr Barnes of Prime Build advising him that the invoice remained unpaid. He says Mr Barnes then requested he email the invoice for processing payment.
13 Whereas, Mr Thompson deposes that on 3 March 2020, Volan emailed Dion Barnes of Prime Build attaching a further copy of invoice 1288 marked “paid”. Mr Carragher responds that when he located invoice 1288 in his QuickBooks accounting package and emailed it to Mr Barnes, he did not know it had been marked “paid”.
14 Mr Carragher deposes that on or about 3 March 2020, Mr Barnes rang him querying why the invoice was marked “paid”. He says he responded that it remained unpaid, to ignore the QuickBooks status, and to refer to invoice 1288 as emailed that day and to Prime Build records regarding the status of the invoice.
15 Mr Carragher deposes that he contacted his accountant (Muzz Bhatti of M1 Tax Accounting) asking him about the invoice being marked “paid”. He says Mr Bhatti responded that he had made an error in the bookkeeping. Specifically, he had been “marking off old invoices as paid as the money paid by Prime Build was receipted without matching payment received with the correct invoice it related to”.
16 Mr Carragher deposes that when he became aware of the error, he reconciled the QuickBooks accounts with the "Monthly Remittance Advice and Subcontract Payment Advice” that Prime Build emailed to him each month reconciling Volan's invoices against payments made to Volan by Prime Build.
17 On 6 August 2019, Volan issued invoice 1303 to Prime Build in the sum of $60,440.05 (including GST). Prime Build failed to issue a payment schedule. Mr Carragher deposes that payment was not made.
18 Mr Thompson responds that the following items in invoice 1303 were unapproved variations:
a) $2,760.00 for the line item dated 24 June 2019 for “Carpenters: Labour Hire”;
b) $920.00 for the line item dated 23 July 2019 for “Carpenters: Labour Hire”;
c) $4,025.00 for the line item dated 31 July 2019 for “Carpenters: Labour Hire”;
d) $5,783.00 for the undated line items for “Materials”;
e) $3,680.00 for the line item dated 1 August 2019 for “Carpenters: Labour Hire”;
f) $3,450.00 for the line item dated 10 August 2019 for “Labour Hire”; and
g) $920.00 for the line item dated 17 August 2019 for “Carpenters: Labour Hire”.
19 In response, Mr Carragher deposes that:
a) He quoted the variation works and the quote was accepted by Prime Build;
b) Mr Will Brown of Prime Build requested the additional works be carried out because Coles were not happy with the design of the timber panels and wanted them to be changed back to ceiling grid and tile. He said this was a flagship store, so these decisions were quite normal for Coles;
c) Mr Brown asked him to supply and install all skirting around the cashier checkouts because the floor had been grinded leaving gaps underneath the checkouts; and
d) Mr Brown orally approved on site the hours attributed to these works and materials supplied.
20 Mr Thompson further responds that invoice 1303 contained an amount of $11,730.00 which Prime Build had already paid for invoice 1288, as follows:
a) $460.00 for the line item dated 8 July 2019;
b) $2,300.00 for the line item dated 9 July 2019;
c) $3,450.00 for the line item dated 11 July 2019;
d) $2,760.00 for the line item dated 12 July 2019 (which is claimed in the amount of $3,450.00 in Invoice 1298); and
e) $2,760.00 for the line item dated 18 July 2019.
21 In response, Mr Carragher concedes that the amounts in paragraphs 20(a)-(d) above were claimed in invoice 1288 and that he made an error in claiming them in invoice 1303. However, he says the amount in paragraph 20(e) above was not claimed in invoice 1288 and does not appear in that invoice.
The Casey Hospital Works
22 In or about January 2019, Prime Build engaged Volan to perform construction work at Casey Hospital, Casey.
23 Mr Carragher deposes that on or about 14 June 2019, Mr Browne called him and asked him to urgently fix a broken security door at the hospital. Mr Carragher says he agreed to travel to the hospital and complete that work for his normal hourly rate of $75.00/hour (GST exclusive).
24 Mr Carragher deposes that on 14 June 2019, he worked on the hospital works for 7.5 hours.
25 On 16 June 2019, Volan issued invoice 1291 to Prime Build in the sum of $1,025.25 (including GST). Prime Build failed to issue a payment schedule.
26 Mr Carragher deposes that payment was not made. Whereas, Mr Thompson deposes that on 3 March 2020, Volan sent an email to Mr Barnes attaching a further copy of invoice 1291 marked “paid”.
27 Mr Carragher responds that the reason it was marked “paid” is the same accounting error of Mr Bhatti as for invoice 1288. He notes that in any event, each month Prime Build emailed Volan its Monthly Remittance Advice and Subcontractor Payment Advice which identified which items Prime Build had paid and which had not been paid.
28 He notes that on 31 July 2019 Prime Build emailed Volan their Monthly Remittance Advice and Subcontractor Payment Advice for the month of June 2019 which identifies invoice 1291 as being not paid because only paid invoices are identified and invoice 1291 is not listed on the Monthly Remittance Advice and Subcontractor Payment Advice .
The Woolworths Chelsea Works
29 On or about 5 August 2019, Prime Build engaged Volan to perform construction works at Woolworths, Chelsea (31-33 Bath Street). Mr Carragher deposes that the contract arose when Prime Build accepted a quote of Volan detailing works that Mr Wood (project manager of Prime Build) had requested.
30 Mr Carragher alleges that between 19 and 22 August 2019, Prime Build orally directed Volan to complete additional building and labour works, including plasterboard ceiling works and ceiling repairs, building walls after the portions of the floor were removed, installing a timber bumper rail, and installing bulkheads over fridges.
31 On or about 14 October 2019, Volan completed the works. On 20 October 2019, Volan issued invoice 1317 to Prime Build in the sum of $3,668.50 (including GST). Prime Build failed to issue a payment schedule or make payment.
The BWS Chelsea Works
32 On or about 23 August 2019, Prime Build engaged Volan to perform building and plastering works at BWS, Chelsea (31-33 Bath Street). Mr Carragher deposes that the contract arose when Prime Build accepted a quote of Volan detailing works that Mr Wood had requested.
33 Mr Carragher alleges that between around 24 October and 10 November 2019, Prime Build orally directed Volan to complete additional works, including removing shopfront signage, removing a roller door, providing labour for moving and hoarding, and removal once works were complete.
34 On or about 11 November 2019, Volan completed the BWS works. On 25 November 2019, Volan issued invoice 1332 to Prime Build in the sum of $15,440.00 (including GST). Prime Build failed to issue a payment schedule or make payment.
The Coles Ballarat Works
35 Mr Carragher deposes that on or about 23 April 2019, Ben Kulczychi (estimator of Prime Build) asked him to provide a quote for plaster and ceiling works at Coles Ballarat (Peel Street).
36 Mr Carragher deposes that after he issued a quote to Mr Kulczychi for the works, Mr Kulczychi called him and asked him to include additional works into the quote and send drawings of the works.
37 Mr Carragher alleges that on or about 28 July 2019, Prime Build instructed Volan to perform additional building, construction and plastering works at the Coles. These encompassed further villa board lining, plaster board lining, metal framing, and reframing and plastering on further sections of the ceiling.
38 On 28 July 2019, Mr Carragher provided a revised quote (1014 Rev. B) to Prime Build incorporating the additional works.
39 On or about 6 November 2019, Volan completed the works. On 16 February 2020, Volan issued invoice 1342 to Prime Build in the sum of $66,000.00 (including GST). Prime Build failed to issue a payment schedule.
40 Mr Carragher deposes that payment was not made. Whereas, Mr Thompson deposes that on or about 3 March 2020, Volan sent an email to Mr Barnes attaching a further copy of invoice 1342 marked “paid”.
41 Mr Carragher responds that the reason it was marked “paid” is the same accounting error of Mr Bhatti as for invoices 1288 and 1291. He again notes that in any event, each month Prime Build emailed Volan its Monthly Remittance Advice and Subcontractor Payment Advice which identified which items Prime Build had paid and which had not been paid.
42 He notes that on 31 March 2020, Prime Build emailed Volan their Monthly Remittance Advice and Subcontractor Payment Advice for the months of January and March 2020 which identifies invoice 1342 as being not paid because only paid invoices are identified and invoice 1342 is not listed as paid.
The First RMIT Works
43 Mr Carragher deposes that on or about 27 November 2019, Mr Browne took Mr Carragher to RMIT and asked him to perform various timberwork construction works. Mr Carragher deposes that he orally agreed to undertake the works for his normal hourly rate of $75.00 (GST exclusive).
44 On or about 29 November 2019, Prime Build issued Mr Carragher an induction link giving him access to all relevant documents for the contract. On 5 and 9 December 2019, Mr Browne emailed Mr Carragher and other subcontractors detailing the work to be done.
45 On 4 December 2019, Mr Browne emailed Mr Carragher asking him to order plywood for the RMIT works.
46 On or about 16 December 2019, Volan completed the works. On 6 January 2020, Volan issued invoice 1341 to Prime Build in the sum of $3,513.40 (including GST). Prime Build failed to issue a payment schedule or make payment.
The Second RMIT Works
47 Mr Carragher deposes that on or about 13 January 2020, Jake Heffernan (who worked with Ben Thompson, project manager of Prime Build for the RMIT works), called and asked Mr Carragher if he could complete gymnasium works at RMIT.
48 Mr Carragher deposes that Mr Heffernan described the works over the phone and Mr Carragher orally agreed to complete the works for $75.00/hour (GST exclusive).
49 On 14 and 15 January 2020, Mr Carragher completed the works. On 28 January 2020, Volan issued invoice 1344 to Prime Build in the sum of $2,475.00 (including GST). Prime Build failed to issue a payment schedule or make payment.
Summary
50 Mr Thompson deposes that on 28 January 2021, he paid $2,475.00 to Volan. He deposes that on 29 January 2021, he paid $46,471.15 to Volan. He says that those amounts represent the balance of what Prime Build accepts was owing and payable to Volan. Mr Carragher confirms receipt of those amounts.
51 After reviewing the evidence of Prime Build and conceding that the sum of $8,970.00 was erroneously included in invoice 1303 and the payments made by Prime Build in late January 2021 (after the commencement of the proceeding), Volan now claims the sum of $117,248.95 (including GST) on the unpaid portions of the claims, together with interest (including interest on the recently paid amounts in the sum of $2,828,26 under s12(2) of the SOP Act.)
The legal context
52 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.[1] 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.[2] “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.
[1]s3.
[2]s7.
53 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.
54 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).
55 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”.
56 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.
57 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”.
58 Section 9(2)(a) 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.
59 The rest of s9 concerns situations where the contract makes no express provision for reference dates.
60 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[3] (“Southern Han”). On the other hand, the available defences to a payment claim are very limited.
[3](2016) 260 CLR 340 [44] (“Southern Han”).
61 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 Pt 3 of the SOP Act.[4] More particularly, the defences to a payment claim enlivened by the formal requirements of the SOP Act are, in substance, that the payment claim:
[4]Ibid [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,[5] 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;[6]
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.
[5]Ibid [61]-[62]; Vanguard Developments v Promax [2018] VSC 386 [121] (Kennedy J).
[6]SOP Act s14(8).
62 Under s47, nothing in Pt 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 Pt 3. Thus, a judgment under s16 is a provisional judgment in what it grants and what it refuses.[7] The statutory context both contemplates and permits inconsistent judgments.[8] 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.[9]
[7]Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor (2009) 26 VR 112 [2] and [43]-[46] (Vickery J) (“Hickory Developments”), cited with approval in Pearl Hill Pty Ltd v Concorp Construction Group (Vic)Pty Ltd [2011] VSCA 99 [11].
[8]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).
[9]Hickory Developments (n 7) [2] and [43]-[46].
63 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.
64 This Court has endorsed the hearing of applications under the SOP Act on a summary basis by summons on originating motion with affidavit evidence.[10] Such claims are properly assessed on the balance of probabilities,[11] with the quality of the evidence weighed having regard to the fact that the legislation seeks to facilitate a swift but temporary remedy.[12]
[10]3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674 [39]-[54] (“3D Flow Solutions”). See also SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805 [26].
[11]Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449, 449-450 (Mason CJ, Brennan, Deane and Gaudron JJ).
[12]3D Flow Solutions (n 10)674 [51]-[54].
Payment of the claimed amounts
65 The first ground in opposition of Volan’s application for judgment is that Prime Build has paid invoices 1344, 1317, 1332 and 1341 and part paid 1303 for the amounts claimed since the commencement of the proceedings and judgment can only be given to a claimant recovering unpaid portions of the claimed amount.[13] Prime Build particularises that amount as follows:
[13]s16(4) of the SOP Act.
a) $2,475.00 (including GST) on 28 January 2021 with respect to invoice 1344 (full payment); and
b) $46,471.15 (including GST) on 29 January 2021, of which it says:
a. $3,668.50 (including GST) was paid with respect to invoice 1317 (full payment);
b. $15,777.58 (including GST) (less a credit of $333.58) was paid with respect to invoice 1332 (full payment);
c. $23,845.25 (including GST) was paid with respect to invoice 1303 (part-payment – with a balance of $36,594.80 owing); and
d. $3,513.40 (including GST) with respect to invoice 1341 (full payment).
66 Prime Build refers to its remittance advices which provide a breakdown of the payments with respect to individual invoice numbers. These remittance advices include an “Invoice No.” column and “S / C Inv No” column which records invoice numbers 1344, 1317, 1332, 1303 and 1341, and the corresponding amount paid.
67 Volan submits that Mr Thompson fails to explain the invoices to which the payments relate, nor what contract they were made under, nor how the sums were calculated.
68 Volan further submits that as Prime Build has conceded that this portion of the claim was valid and owed, Prime Build must pay interest on these sums pursuant to s12(2) of SOP Act, calculated up to the day the two sums totalling $48,946.15 were paid to Volan.
69 Prime Build further submits that, in addition to the amount of $28,845.25, paid with respect to invoice 1303 on 29 January 2021, $11,730.00 of the amount claimed in invoice 1303 has been paid.
70 Prime Build refers to Volan’s concession that an amount was erroneously included within invoice 1303, on the basis that they were already included and paid under invoice 129. Volan submits that the amount already paid is $8,970.00 rather than $11,730.00, as the amount of $2,760.00 was not included in invoice 1298. Prime Build responds that Volan has not adduced any evidence in support of that proposition. Further, that the supplementary evidence does not address the issue or dispute Prime Build’s evidence that $11,730.00 has already been paid.
71 In my view, it is immaterial whether the payments specified the invoice or contract to which they relate, or how they were calculated. Such a submission is overly technical and pedantic. The fact remains that part-payments were made. Volan is only entitled to the “unpaid portion of the amounts claimed” (SOP Act s16(4)). In any event, the remittance advices clarify the invoices to which the payments relate.
72 Further, in my view, a further $11,730.00 of invoice 1303 has been paid for the reasons Prime Build gives. Accordingly, I uphold ground 1 in relation to invoices 1344,1317, 1341 and 1303 (in part).
Excluded amounts
73 Next, Prime Build submits that the Court cannot be satisfied on the face of invoices 1303 and 1288, that they do not contain excluded amounts. Prime Build submits that invoice 1303 includes the following unapproved variations:
a) the amount of $2,760.00 in respect of the line item dated 24 June 2019 for variation works comprised of 'Carpenters: Labour Hire';
b) the amount of $920.00 in respect of the line item dated 23 July 2019 for variation works comprised of 'Carpenters: Labour Hire';
c) the amount of $4,025.00 in respect of the line item dated 31 July 2019 for variation works comprised of 'Carpenters: Labour Hire';
d) the amount of 5,783.00 in respect of the undated line items for variations works comprised of 'Materials';
e) the amount of $3,680.00 in respect of the line item dated 1 August 2019 for variation works comprised of 'Carpenters: Labour Hire';
f) the amount of $3,450.00 in respect of the line item dated 10 August 2019 for variation works comprised of 'Carpenters: Labour Hire'; and
g) the amount of $920.00 in respect of the line item dated 17 August 201 9 for variation works comprised of 'Carpenters: Labour Hire’.
74 Prime Build also references the variations in invoice 1288. It impugns both invoices as follows:
a) unlike Yuanda Vic Pty Ltd v Façade Designs International Pty Ltd (“Yuanda”),[14] the invoices are undetailed and do not refer to or provide additional documents (other than 11 pages of handwritten documents referred to as “daybook pages” in invoice 1303);
[14][2021] VSCA 44 (“Yuanda”).
b) the descriptions of the claim items are the only explanations of why they are in the invoice;
c) the invoice does not include any statement (including supporting documents) to show that:
a. the parties agreed that the doing of the work or the supply of the goods and services constitutes a variation to the contract (as required for first class claimable variations) (s10A(3)(a)); or
b. that Prime Build requested or directed the carrying out of the work or the supply of the goods and services, as required for second class claimable variations (s10A(3)(b)).
d) the Court cannot assess extrinsic evidence such as what Volan alleged were oral or written requests for variations; and
e) accordingly, the Court cannot award judgment on the payment claim.
75 Volan responds that:
a) on the face of the payment claims made by Volan, there are no excluded amounts. Invoices 1288 and 1303 clearly identify the work done by Volan, and the amounts claimed for each part of the work. No excluded amounts are apparent.
b) the present case is distinguished from the situation in Yuanda, in which Volan had made a payment claim that included interest. The SOP Act clearly specifies that interest is an excluded amount and the Court was therefore able to identify an excluded amount on the face of the payment schedule.
c) Prime Build provided no evidence to support its claim that these payment claims contain excluded amounts. It is a bald claim. It is made without reference to the evidence in the affidavits of Mr Thompson, and in direct conflict with the clear and detailed evidence given by Mr Carragher about the extra work he was required to do by Prime Build on site.
d) Prime Build seeks to interpret the principles in Yuanda so as to allow any defendant to a s16(2)(a)(i) claim to fatally end a claim against it by simply stating – baldly and without reference to any evidence – that the claimed amount contains an excluded amount. This is the antithesis of the pay now, argue later scheme.
e) Prime Build seeks to interpret the principles in Yuanda to require Volan to “prove” on the face of a payment claim that it does not contain an excluded amount in order to be able to obtain judgment for the claimed amount. This is contrary to the accepted principles of what a payment claim must contain in order to be valid under the Act.
f) although the day books were not re-attached to each of the payment claims, the uncontested evidence of Mr Carragher is that they were provided to Volan and the context, being the construction contract and the entire payment claim, together with documentation expressly or impliedly referred to in the payment claim.[15]
[15]Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37 [49].
76 Prime Build responds that:
a) contrary to Volan’s submissions, the majority in Yuanda considered that the interpretation which gives the Court a limited role is to be encouraged as consistent with the Act’s preference for adjudication to resolve disputes about the contents of a payment claim.[16]
[16]Yuanda (n 14) [44].
b) the majority’s decision does not impose an additional burden on a plaintiff in order to have a valid payment claim. Rather, it makes clear that a plaintiff is not entitled to judgment under s16(4)(a)(ii) with respect to a payment claim where the Court is unable to be satisfied that on its face it does not include any excluded amount.
c) it is a plaintiff’s choice to proceed to Court to seek recovery in the absence of a payment schedule rather than to pursue adjudication: s16(2). The majority considered that resort to the Court “should be seen as an option only in a clear case”.[17]
[17]ibid [24].
d) Prime Build has identified particular excluded amounts in its submissions and the Thompson Affidavit evidences the fact that particular amounts included in invoice 1303 were variations that were not approved by Prime Build and therefore are excluded amounts: s10Aand s10B.
e) Without digging deeper and considering the wider facts and circumstances of the case, the Court cannot be satisfied that the payment claims do not include excluded amounts.
f) Volan’s submission that there are no excluded amounts in invoices 1288 and 1303 as they clearly identify the work done by Volan and the amounts claimed for each part of work is misconceived. This confuses the identification requirements in s14(2)(c) and (d) of the SOP Act and the definition of excluded amounts under s10B. [18]
[18]cf John Beever (Aust) Pty Ltd v Paper Australia Pty Ltd [2019] VSC 126 and Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 at [51].
77 I accept the submissions of Prime Build. There is no evidence “on the face of the payment claim” (including the supporting documents, or references to those documents) that the variations were agreed, requested, or directed. Any extrinsic assertions of Volan to that effect are irrelevant.[19] The Court has a limited role and is not required to conduct a full investigation of the facts and circumstances.[20] The inquiry is be confined “to the material disclosed in the payment claim”.[21] Accordingly, I am prohibited from giving judgment where the claimed amount includes any excluded amount.
[19]Yuanda (n 14)[44] (McLeish and Niall JJA).
[20]Ibid [44] (McLeish and Niall JJA).
[21]Ibid [43] (McLeish and Niall JJA).
78 The majority in Yuanda is clear that the Court has no ability to simply reduce the payment claim or the claimed amount or to “carve out” excluded amounts to give judgment for a lower amount.[22] It is an all or nothing approach.[23]
[22]Ibid [23]-[27] (McLeish and Niall JJA).
[23]See Ibid [132] (Sifris JA).
79 The result of this construction is not that a payment claim that contains an excluded amount is invalid.[24] It is not a question of validity. Further, the doctrine of severance does not apply and this doctrine may not salvage amounts claimed in a payment claim that are not excluded amount. It is a question of whether a statutory liability exists under s15(4) of the SOP Act and whether the Court is prohibited from giving judgment under s16(4)(a)(ii). [25]
[24]Ibid [26] (McLeish and Niall JJA).
[25]Ibid [28]-[36] (McLeish and Niall JJA).
80 Unlike in Yuanda, the purported payment claims issued by Volan in invoices 1288 and 1303 are not “detailed” and do not refer to or provide any supporting documents. Each of the invoices fail to show that the parties agreed that the doing of the work constituted a variation to the contract or that Prime Build requested or directed the carrying out of the work. On the face of these payment claims, the Court cannot be satisfied that they do not include excluded amounts.
81 Accordingly, applying the principles in Yuanda, I cannot award judgment on invoices 1288 or 1303.[26] I uphold ground 2.
[26]Ibid [36] (McLeish and Niall JJA); [143] (Sifris JA).
Reference dates
82 The third ground in opposition of Prime Build is that invoice 1291 does not have a reference date. It notes that the Casey Hospital Contract did not stipulate reference dates. Accordingly, the reference date arose 20 business days after the previous reference date or (in the case of the first reference date) the date occurring 20 business days after construction work was first carried out under the contract (s9(2)(b)).
83 Volan first carried out construction work under the Casey Hospital Contract on 14 June 2019. Therefore, Prime Build submits the first reference date arose 20 business days later, on 12 July 2019. Invoice 1291 was served on 16 June 2019.
84 Volan responds that the work done under invoice 1291 resulted in a “single or one off payment”. Volan reasons that Mr Carragher did the works on a single day, “as a matter of urgency”, and later issued a single claim for a one-off payment. Therefore, it says the contract was oral, urgent and a single event. Therefore, Volan says s9(2)(c) determines the reference date, rather than s9(2)(b).
85 Section 9(2)(c) provides:
(2) In this section, reference date, in relation to a construction contract, means—
(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
86 Applying that section, Volan says the reference date arose on 15 June 2019, the date after the day the construction work was last carried out. Mr Carragher served the payment claim a day later, on 16 June 2019. Therefore, Volan says, the payment claim had a reference date.
87 Prime Build responds that the invoice suggests the construction work was last carried out on 16 June 2019. Prime Build says this is consistent with Volan’s evidence. Therefore, Prime Build says the reference date arose on 17 June 2019, and the payment claim was issued prematurely.
88 I accept the submissions of Volan. In my view, s9(2)(c) applies. For the reasons Volan gives, I am satisfied that this is a case of a single or one off payment. The contract made no express provision for reference dates. The Casey Hospital Contract was an oral agreement between Mr Carragher and Mr Browne by telephone conversation dated on or about 14 June 2019. The only alleged term was that Mr Carragher agreed to travel to the hospital and complete that work for his normal hourly rate of $75.00/hour (excluding GST). Reference dates were not discussed.
89 Accordingly, the reference date arose the day after the construction work was last completed. On the evidence, that date is unclear. On the one hand, Mr Carragher deposes to completing the work on 14 June 2019 for 7.5 hours. He says he bought locks from Locks Galore, and does not specify 16 June 2019 as the day he did so. Further, Mr Carragher discussed buying the locks by email to “Colin” from Locks Galore dated 14 June 2019. On the other hand, the invoice claims for “Services Locks Galore” for 16 June 2019.
90 In my view, on balance, the evidence suggests the works were last completed on 14 June 2019. In my view, the 16 June 2019 date for “Services Locks Galore” was reference to locks that were bought on 14 June 2019. This cannot have been further construction work – Mr Carragher worked for $75/hour, and no hourly rate accompanies the “Services Locks Galore” claim item.
91 Accordingly, the reference date arose on 15 June 2019. The invoice was served on 16 June 2019. The authorities indicate that a payment claim must be submitted on or after a reference date. In Southern Han, the High Court held that a reference date is a “precondition” to a valid payment claim.[27]
[27]Southern Han (n 3) [61]-[62].
92 In All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd,[28] the majority applied Southern Han and held that:
“[A] statutory payment claim served before the relevant reference date is not served ‘on or from’ that reference date for the purpose of the NSW SOP Act, the effect being that the phrase ‘on or from’ when properly construed, is to be understood as meaning ‘on or after’ the relevant reference date.”[29]
[28][2017] NSWCA 289.
[29]Ibid [14].
93 In MKA Bowen Pty Ltd v Carelli Constructions Pty Ltd,[30] Digby J held that:
“In my view … it is sufficiently clear in light of Southern Han and All Seasons that s 9 and s 14 of the SoP Act (Vic) do not operate so as to permit the valid service of a payment claim prior to the relevant reference date which itself establishes a valid foundation for that payment claim to be made under the SoP Act (Vic) ….”
[30][2019] VSC 436.
94 Accordingly, invoice 1291 has a reference date. I reject ground 3.
Statement that claims made under the Act
95 The final ground in opposition of Prime Build is that invoice 1342 does not contain a statement that it was made under the Act (s14(e)). Prime Build refers to Mr Carragher’s evidence that invoice 1342 ‘was endorsed as a payment claim under the Act’. It responds that neither the invoice, nor the covering emails dated 22 January 2020 and 16 February 2020, contain a reference to the Act.
96 Claiming payment under the SOP Act requires contractors to pay close attention to the legislation itself.
97 It is relatively straightforward to comply with s14(2)(e) (that is, state that the claim is made under the “Building and Construction Industry Security of Payment Act 2002”).
98 Invoice 1342 and its accompanying emails do not say it is a claim made under the SOP Act. As such, it fails to comply with s14(e) of the SOP Act and is not a valid payment claim. A defective payment claim that does not fulfil the mandatory statutory requirements cannot be overcome by evidence that the recipient was not misled.[31]
[31]Jemzone Pty Ltd v Trytan Pty Ltd (2002) 42 ACSR 42, [46] (“Jemzone”) cited in Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106, [46].
99 The authorities are clear that the SOP Act places the claimant in a privileged position in the sense that they acquire rights that go beyond their contractual rights.[32]
[32]Jemzone (n 32) [41].
100 Lyons J. in John Beever (Aust) v Paper Australia Pty Ltd (No 2)[33]. acknowledged the significance of the statement requirement as it is of critical importance that the recipient of a claim is aware that the claim is a payment claim for the purposes of the SOP Act. The availability of the rights conferred upon a person seeking payment under the SOP Act should depend upon strict observance of the statutory requirements that are involved their creation.[34]
[33][2019] VSC 575, [91]-[94].
[34]Ibid [93].
101 I accept the submissions of Prime Build. Neither invoice 1342 nor the covering emails indicate that the invoice is a claim made under the Act.
102 Accordingly, I uphold ground 4.
Conclusion
103 For the foregoing reasons, Volan’s summons is dismissed in respect of invoices 1288, 1303, 1332 and 1342. There is judgment for Volan in the sum of $4,030.51, together with interest on invoice 1291 and costs of the proceeding up to 29 January 2021 (inclusive).
104 Given my findings, in my view, a final award of $4,030.51 plus interest on invoice 1291 is not proportionate to the costs incurred subsequent to the payment of the $2,475 on 28 January 2021 and a further $46,471.15 to Volan on 29 January 2021 by Prime Build. I, therefore, unless objections are received by the parties, propose that there be no order as to costs of and incidental to the proceeding after 29 January 2021.
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Certificate
I certify that these 22 pages are a true copy of the judgment of Judicial Registrar Burchell delivered on 17 May 2020.
Dated: 17 May 2021
Julia Despard
Associate to Judicial Registrar Burchell
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