DISTRICT COURT OF QUEENSLAND
CITATION: Penfold Projects Pty Ltd v Securcorp Limited [2011] QDC 77
PARTIES: PENFOLD PROJECTS PTY LTD ACN 091 451 311
(Applicant)
v
SECURCORP LIMITED ACN 088 919 377
(Respondent)
FILE NO/S: BD 811/2011
DIVISION: Civil
PROCEEDING: Originating Application
ORIGINATING
COURT: District Court, Brisbane
DELIVERED ON: 18 May 2011
DELIVERED AT: Brisbane
HEARING DATE: 25 March 2011
JUDGE: Irwin DCJ
ORDER: Application dismissed
CATCHWORDS: CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS – PAYMENT CLAIMS – where the applicant and the respondent entered into a construction contract – where a Construction Manager was the third party to the contract – where in December 2010 and January 2011 the applicant sent by email to the Construction Manager documents addressed to the respondent care of the Construction Manager – where those documents were headed as “Progress Claim” and contained the statement, “This is a progress claim under the Building and Construction Industry Payments Act 2004” – where neither claim had been paid in part or in full by the respondent – where there was evidence on behalf of the respondent that the applicant at no time served, delivered or in any other way provided a copy of the claims to the respondent and that the Construction Manager at no time provided to both the applicant and the respondent, a progress certificate as required by the Contract – where the applicant sought orders that the respondent pay it $276,782.01 as a debt owing pursuant to s 19(2)(a)(i) of the Building and Construction Industry Payments Act 2004 together with interest – whether the December 2010 and January 2011 claims were payment claims for the purpose of s 17 of the Act – whether the claims were validly served on the respondent under s 17(1) of the Act – whether the payment claims could be validly served on the respondent by service on the Construction Manager as its agent – whether the construction contract provided a way in which a payment claim could be served on the respondent for the purposes of s 103(1) of the Act – whether the Construction Manager was the respondent’s authorised agent for the service of payment claims under the Act, and in particular under s 17(1) of the Act – whether the respondent had been served by the payment claims coming to its attention – whether service by email sufficient.
Acts Interpretation Act 1954 (Qld), s 39
Building and Construction Industry Payments Act 2004 (Qld), s 3, s 5, s 7, s 8, s 10, s 12, s 13, s 15, s 17, s 18, s 19, s 20, s 21, s 100, s 103, Sch 2
Building and Construction Industry Security of Payment Act 1999 (NSW) s 3, s 13, s 31
Building and Construction Industry Security of Payment Act 2002 (Vic), s 14(1), s 50(1)
Corporations Act 2001 (Cth), s 109X
Electronic Transactions (Qld) Act 2001 , s 7A, s 11(2), Sch 1 Queensland Building Services Authority Act 1991 (Qld), s 67P
Uniform Civil Procedure Rules 1999 (Qld), r 5, r 7, r 11, r 292, r 296, r 658
Australian Finance Direct Limited v Director of Consumer Affairs Victoria (2007) 234 CLR 96, cited.
Brookhollow Pty Ltd v R & R Consultants Pty Ltd [2006] NSWSC 1, cited
Coldham-Fussell & Ors v Commissioner of Taxation [2011] QCA 45, cited.
Construct Assist Pty Ltd v PDMS Group Pty Ltd [2008] QDC 303, cited.
Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232, cited
Dey v Victorian Railways Commissioners (1964) 112 CLR 125, cited
Emag Constructions Pty Ltd v Highrise Concrete Contractors (Aust) Pty Ltd [2003] NSWCC 903, applied
F K Gardiner & Sons Pty Ltd v Dimin Pty Ltd [2007] 1 Qd R 10, cited
Falgat Constructions Pty Limited v Equity Australia Corporation Pty Limited [2006] NSWCA, considered
Fancourt v Merchantile Credits Ltd (1983) 154 CLR 87, cited
Gisley Investments Pty Ltd v William & Anor [2010] QSC 178, cited
Hope v Hope (1854) 4 De G M & G 328, cited
Howship Holdings Pty Ltd v Leslie (1996) 41 NSWLR 542, cited
J Hutchinson Pty Ltd v Galform Pty Ltd & Ors [2008] QSC 205, cited
J Hutchinson Pty Ltd v Thunder Investments Pty Ltd [2009] QDC 90, cited
Lucas Stuart Pty Limited v Council of the City of Sydney [2005] NSWSC 840, cited
Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199, considered
Minimax Firefighting Systems Pty Ltd v Brenmore Engineering (WA) Pty Ltd [2007] QSC 333, applied
National Vegetation Management Solutions Pty Ltd v Shekar Plant Hire Pty Ltd [2010] QSC 3, cited
Neumann Contractors Pty Ltd v Peet Beachton Syndicate Limited [2011] 1 Qd R 17, cited
Pacific General Securities Ltd and Anor v Soliman & Sons Pty Ltd & Ors [2006] NSWSC 13, cited
Paynter Dixon Constructions Pty Ltd v JF & CG Tilson Pty Ltd [2003] NSWSC 689, cited
Pino v Prosser [1967] VR 835 at 837, cited
Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq) [2003] 1 Qd R 259, cited
Readiplumb Services Pty Ltd v MKM Construction (Aust) Pty Ltd [2009] QDC 67, considered
Rudd v John Griffiths Cycle Co Ltd (1897) 23 VLR 350, cited
Spankie & Ors v James Trowse Constructions Pty Limited [2010] QCA 355, applied
Taylor Projects Group Pty Ltd v Brick Dept Pty Ltd [2005] NSWSC 439, cited.
Tenix Alliance Pty Ltd v Magaldi Power Pty Ltd [2010] QSC 7, cited
The Owners Strata Plan 56587 v Consolidated Quality Projects [2009] NSWSC 1476, considered
COUNSEL: S F Downes for the applicant
G J Handran for the respondent
SOLICITORS: HWL Ebsworth Lawyers for the applicant
Tucker & Cowan for the respondent
Introduction
The proceeding
[1] The applicant, Penfold Projects Pty Ltd (“Penfold”) seeks orders that the respondent, Securcorp Limited pay it $276,782.01 as a debt owing pursuant to s 19(2)(a)(i) of the Building and Construction Industry Payments Act 2004 (“BCIPA”) together with interest on that sum calculated at the rate pursuant to s 67P of the Queensland Building Services Authority Act 1991 (“QBSAA”).
Background to the Works and the Construction Contract
[2] Penfold carries on the business of landscape design and construction. Securcorp is a money lender and fund manager. It is conducting the unit development of Altitude Apartments at 122 Walker Street, Townsville as mortgagee in possession (“Altitude Project”). It does not carry on business as a property developer.
[3] Securcorp and Penfolds entered into a written contract for landscaping the unit development. The contract which is headed as a “Formal Instrument of Agreement” states that the agreement was made on 16 August 2010. Securcorp is the “Principal” and Penfold is the “Trade Contractor” under the contract.
[4] However, there is evidence from which it can be inferred that there was a pre-existing oral agreement between the parties. Messrs Penfold and Martin, who are respectively the Managing Director and North Queensland Manager of Penfold each depose in their affidavit to the existence of a document dated 19 July 2010 and described as “ALWAIN INV01” relating to work done under the contract. This 1 Affidavit of Todd Ewan Penfold, filed 17 March 2001, para [2(b)]. document which was emailed by Penfolds to Carol O’Shannessy, Office Manager of Matrix Projects (Qld) Pty Ltd (“Matrix”) is described as the “Progress Claim for July.” Matrix was the third party to the written contract as the “Construction Manager.” The parties agreed that I should proceed on the basis that any oral arrangement existing between the parties prior to the written contract was reflected in the contract.
[5] A series of 10 documents can be identified by the 16 August 2010 agreement as comprising the Contract between the parties. They include the Australian Standard Construction Management Trade Contract – General Conditions (AS 4917-2003).
[6] The total value of the “Works under Contract (‘WUC’)”, excluding GST, was $49,935.00. The date for practical completion was 18 September 2010. The governing law was Queensland. There is no dispute that the Contract was a construction contract within the meaning of Schedule 2 of the BCIPA, nor that the work undertaken was construction work under s 10(1).
[7] The contract also incorporates “AS 4917-2003 Annexure Part A – Schedule to General Conditions” (“Schedule”) which, inter alia , identifies the “Principal”
“Trade Contractor” and “Construction Manager” and their addresses.
[8] The Principal, Securcorp is described “As mortgagee in possession” consistent with Ms Borthwick’s affidavit. Its address is given as:
“Suite 7B “Chevron Renaissance”
3240 Surfers Paradise Blvd, Surfers Paradise.
Phone 5538 6688 Fax 5538 144”
[9] The Trade Contractor, Penfold’s’ address is given as:
“12 Gumley Street
Garbutt, Qld, 4814
Phone: 07 4728 7098 Fax: 07 4728 6651”
[10] The Construction Manager, Matrix’s address is given as:
“Level 1, 2 Industrial Ave, Stratford 4870
Phone: 07 4058 9700 Fax: 07 4058 1048”
[11] Clause 1 which relates to the “Interpretation and construction of Contract” defines “Trade Contractor” to mean “the person bound to carry out and complete WUC ”. In turn “WUC (from ‘work under the Contract’)” is defined as “the work which the Trade Contractor is or may be required to carry out and complete under the Contract and includes variations , remedial work, construction plant and temporary works .”
[12] “Construction Manager” means “the person stated in Item 5 as the Construction Manager …”
[13] Clause 2.1 of the contract deals with performance and payment. It provides:
“ 2 Nature of Contract
2.1 Performance and payment
The Trade Contractor shall carry out and complete WUC in accordance with the Contract and directions authorised by the Contract .
The Principal shall pay the Trade Contractor :
a) for work for which the Principal accepted a lump sum, the lump sum; and
b) for work for which the Principal accepted rates, the sum of the product ascertained by multiplying the measured quantity of each section or item of work actually carried out under the Contract by the rate accepted by the Principal for the section or item, adjusted by any additions or deductions made pursuant to the Contract :”
[14] Clause 7 of the contract deals with service of notices. It reads as follows:
“ 7 Service of Notices
A notice (and other documents) shall be deemed to have been given and received:
a) if addressed or delivered to the relevant address in the Contract or last communicated in writing to the person giving the notice; and
b) on the earliest date of:
i) actual receipt;
ii) confirmation of transmission of fax; or
iii) 3 days after posting.”
[15] Clause 20 requires there to be a Construction Manager. It provides:
“ 20 Construction Manager
The Principal shall ensure that:
a) at all times there is a Construction Manager and that the Construction Manager fulfils all aspects of its roles and functions; and
b) where the Construction Manager does not act as the Principal’s agent for:
i) pricing variations
ii) certifying amounts due to the Trade Contractor or the Principal , the Construction Manager fulfils all aspects of these roles reasonably and in good faith.
Except where the Contract otherwise provides, the Construction Manager :
a) acts as the Principal’s agent in the roles and functions to the exclusion of the Principal ; and
b) may give a direction orally but shall as soon as practicable confirm it in writing. If the Trade Contractor in writing requests the Construction Manager to confirm an oral direction , the Trade Contractor shall not be bound to comply with the direction until the Construction Manager does so.”
[16] Clause 37 deals with payment. Of particular reference subcl 37.1 deals with progress claims and subcl 37.2 deals with certification. Subclause 37.4 deals with the final payment claim and certificate, and subcl 37.5 is concerned with interest. I set out those subclauses:
“ 37 Payment
37.1 Progress Claims
The Trade Contractor shall claim payment progressively in accordance with Item 28.
An early progress claim shall be deemed to have been made on the date for making the claim.
Each progress claim shall be given in writing to the Construction Manager and shall include details of the value of the WUC done and may include details of other moneys then due to the Trade Contractor pursuant to provisions of the Contract .
37.2 Certificates
The Construction Manager shall, within 14 days after receiving such a progress claim, issue the Principal and the Trade Contractor :
a) a progress certificate evidencing the Construction Manager’s opinion of the moneys due from the Principal to the Trade Contractor pursuant to the progress claim and reasons for any difference (‘ progress certificate ’) and;
b) a certificate evidencing the Construction Manager’s assessment of the retention moneys and moneys due from the Trade Contractor to the Principal pursuant to the Contract .
If the Trade Contractor does not make a progress claim in accordance with Item 28, the Construction Manager may issue the progress certificate with details of the calculations and shall issue the certificate in paragraph (b).
If the Construction Manager does not issue the progress certificate within 14 days of receiving the progress claim in accordance with subclause 37.1, the progress claim shall be deemed to be the relevant progress certificate .
The Principal shall within 7 days after receiving both such certificates, or within 21 days after the Construction Manager receives the progress claim, pay to the Trade Contractor the balance of the progress certificate after setting off such of the certificate in paragraph (b) as the Principal elects to set off. If that setting off produces a negative balance, the Trade Contractor shall pay that balance to the Principal within 7 days of receiving written notice thereof.
Neither a progress certificate nor a payment of moneys shall be evidence that the subject WUC has been carried out satisfactorily. Payment other than final payment shall be payment on account only.
37.4 Final payment claim and certificate
Within 28 days after the expiry of the last defects liability period , the Trade Contractor shall give the Construction Manager a written final payment claim endorsed ‘ Final Payment Claim ’ being a progress claim together with all other claims whatsoever in connection with the subject matter of the Contract .
Within 42 days after the expiry of the last defects liability period the Construction Manager shall issue both the Trade Contractor and the Principal a final certificate evidencing the moneys finally due and payable between the Trade Contractor and the Principal on any account whatsoever in connection with the subject matter of the Contract .
The moneys certified as due and payable shall be paid by the Principal or the Trade Contractor as the case may be, within 7 days after the debtor receives the final certificate . The final certificate shall be conclusive evidence of accord and satisfaction, and in discharge of each party’s obligations in connection with the subject matter of the Contract except for:
a) fraud or dishonesty relating to WUC or any part thereof or to any matter dealt with in the final certificate.
b) any defect or omission in the Works or any part thereof which was not apparent at the end of the defects liability period , or which would not have been disclosed upon reasonable inspection at the time of the issue of the final certificate ;
c) any accidental or erroneous inclusion or exclusion of any work or figures in any computation or any arithmetical error in any computation; and
d) unresolved issues the subject of any notice of dispute pursuant to clause 42 served before the 7th day after the issue of the final certificate .
37.5 Interest
Interest in Item 30 shall be due and payable after the date of default in payment.
…”
[17] Clause 38 which concerns payment of works and subcontractors was also referred to during argument. It provides:
“ 38 Payment of workers and subcontractors
38.1 Workers and subcontractors
The Trade Contractor shall give in respect of a progress claim, documentary evidence of the payment of moneys due and payable to:
a) workers of the Trade Contractor and of the subcontractors; and
b) subcontractors, in respect of WUC the subject of that claim.
If the Trade Contractor is unable to give such documentary evidence, the Trade Contractor , shall give other documentary evidence of the moneys so due and payable to workers and subcontractors.
Documentary evidence, except where the Contract otherwise provides, shall be to the Construction Manager’s satisfaction.
38.2 Withholding payment
Subject to the next paragraph, the Principal may withhold monies certified as due and payable under the progress claim until the Trade Contractor complies with subclause 38.1 .
The Principal shall not withhold payment of such moneys in excess of the moneys evidenced pursuant to subclause 38.1 as due and payable to workers and subcontractors.
38.3 Direct payment
Before final payment the Principal , if not aware of the relevant relation back day (as defined in the Corporations Law) may pay unpaid moneys the subject of subclause 38.1 to a worker or 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 Trade 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 subclause 37.4 as the case may be.”
Other factual matters
[18] Mr Martin deposed that in his role as North Queensland Manager of Penfold he was involved daily with the administration of the contract and the management of the works provided by Penfold in accordance with it; and his daily contact regarding the works was always with a representative of Matrix.
[19] He deposes that Penfold carried out and completed variations to the works as directed by Matrix.
[20] On 12 July 2010 Mr Martin received an email from Carol O’Shannessy, who as indicated was the Office Manager of Matrix at the relevant times. The email was in the following terms:
“ Subject: RE: 2010.07.12 – End of month claims
Dear All
Just a reminder that all invoices are due by COB Tuesday 20th July 2010.
Any invoice that is submitted after this time will not be reviewed until the following month.
Please send them to carol.oshannessy@matrix.com.au.”
The “Dear All” included John Copelin who Mr Martin describes as the Project Manager/Contract Administrator of Matrix. The other email addresses to which the email was directed do not include a reference to anyone “@Securcorp”. Consistent with the subject matter, the nature of many of the addresses, and the general reference to invoices it can be inferred that the email was addressed to other contractors who were carrying out works on the Altitude Project.
[21] As also indicated at para [4] of this judgment a document dated 19 July 2010 and described as “ALWAIN INV 01” relating to work done under the contract was emailed to Carol O’Shannessy. This document was sent by “Reception North Queensland [nqreception@penfoldprojects.com.au]” with copies to “johncopelin@ matrix.com.au; Penfold Accounts; Chris Martin”, under cover of an email in the following terms:
“ Subject : Progress Claims July
Attachments: Progressclaimjulyaltitude.190710.pdf.
Hi Carol,
Please see attached Progress Claim for July.
If you have any questions please do not hesitate to contact our office.”
Again there is no evidence that the email and its attachment were sent to Securcorp.
[22] The document attached is identified as “Claim Number: ALWAINV01”. It is headed as “ Progress Claim ” with the “Claim Date” recorded as “19-07-10”. It is:
“ Re: Landscape and Irrigation
AT: Altitude Apartments ”
It is addressed:
“ Matrix Projects (qld) Pty Ltd
john.copelin@matrix.com.au.”
It is also directed to the attention of John Copelin at the fax number identified at Item 6 of the Schedule but with reference to a different telephone number. The phone number is not one identified in the Schedule.
[23] Under a further heading of “ Progress Claim for Landscape Works ” information is listed under the headings of “ Item ”, “ % Complete ”, “ Contract Value ” and “ Value of Work Complete ”. The Contract value, consistent with the contract is given as $49,935.00. Reference is then made to a variation to the value of $7,109.30. A Matrix Variation Advice and a Notice of Variation from Penfold to Matrix are attached in support of this. No previous payments are shown. The total amount of the invoice is $17,493.63 (including GST). Beneath this there is a statement:
32 Mr Martin’s affidavit, filed 17 March 2011, Annexure “CM-23” at 155-156.
“Thank you for allowing us the opportunity to complete this work if you should have any queries regarding the content of this invoice please have no hesitation in contacting us on the numbers listed below.”
Mr Martin has then signed the document.
[24] There is then a related document also headed “ Progress Claim ” and addressed to:
“ Matrix Projects (qld) Pty Ltd
john.copelin@matrix.com.au.”
The same phone and fax numbers appear as in the other document.
[25] Below this is the following statement:
This is a progress claim made under the Building and Construction Industry Payments Act 2004
Under this is a heading of “ Contract Details ”. Relating to this the “Project” is identified as “ Altitude Apartments ”, the “Reference Date” as “19-07-10” and the “Total amount of this invoice Excluding GST” is itemised as “$15,903.30”.
Below this the following statement appears:
The construction work or related goods and services in respect of which this progress claim is made and the method of calculation of the total amount of the claim are set out in the attachment(s) to this progress claim
The attachments are the Variation Advice and the Notice of Variation to which reference has been made.
[26] An email dated 20 August 2010 was sent from the same Penfold related address to Carol O’Shannessy with copies to the same people, not including a Securcorp related address. It was in the following terms:
“ Subject : Progress Claim August 2010
Attachments : Progressclaimaugustaltitude 2008.10pdf
Carol,
Please see attached Progress Claim for August regarding Altitude Apartments.”
[27] The attachments were again two documents headed as “ Progress Claim ” and a Notice of Variation from Penfold to Matrix.
[28] The first “ Progress Claim ” document had a “Claim Date” of “20-08-10” and a “Claim Number” of ALWAINV02.” It is in the same terms as the July document except for the value of the work identified as being complete, the payment of $15,903.30 identified as being paid for “INVO1”, and the subject of further variations with a resulting total invoice amount of $14,709.20 (including GST); and most significantly, having regard to the issues which arise for determination, it was addressed not solely to Matrix with a reference to Mr Copelin’s email address, but to:
“Michael Woodbry of
Securcorp Limited
Suite 7B ‘Chevron Renaissance’
3240 Surfers Paradise 4217
Care of John Copelin of
Matrix Projects (Qld) Pty Ltd
Level 1, 2 Industrial Av. Stratford 4870”
The Surfers Paradise address is the Principal’s address identified for Securcorp at Item 2 of the Schedule. Although again the fax number is that of Matrix at Item 6. The phone number is the same as in the previous documents, and is not identified in the Schedule. This document was again signed by Mr Martin.
[29] The second “ Progress Claim ” document is also in the same terms as the July document with the exception that it is also addressed as set out in paragraph [28] of this judgment, has a reference date of “20-08-10”, it is dated on this date, and shows as the total amount of the invoice (excluding GST) “as $13,372.00”.
[30] Although both Mr Penfold and Mr Martin refer in their affidavits to a claim for work done, described as, “20 September 2010 – ALWAIN INVO3”, the document with relevant “Claim Number: ALWA INVO3”, which I take to be the same, relates to a “Claim Date” of “20/10/2010.” There are no annexed documents relating to a claim in September 2010. I proceed on the basis that the reference to September 2010 is in error for October 2010.
[31] With reference to October 2010, an email dated 20 October 2010 was sent from the same Penfold related address, but to “john.copelin@matrix.com.au” rather than to Carol Shannessy. On this occasion she is recorded as a person to whom the email was copied together with Penfold Accounts and Chris Martin. Again there is no reference to a Securcorp related address.
[32] This email was in the following terms:
“ Subject : Progress Claim October
Attachments : ProgressClaimAltOct10.pdf
Good afternoon John,
Please see the Progress Claim attached.
Let me know if you have any queries.”
[33] Each of the two “ Progress Claim ” documents are addressed in the same manner as the August documents as set out in paragraphs [28] to [29] of this judgment. Other than the expected differences to the detail of the items claimed resulting in an invoice total (including GST) of $49,905.32 and $42,641.20 (excluding GST) the documents are in the same terms, subject to a reference to a reduction for the payment of each of the previous invoices in the total amount claimed. On this occasion both documents were signed by Mr Martin. The claim is supported by attached Matrix Variation Advices and a Site Instruction, and Penfold Quotations and a Notice of Variation to Matrix.
[34] An email dated 22 November 2010 was sent from the same Penfold related address to John Copelin and Carol O’Shannessy with copies to Penfold Accounts and Mr Martin. Again no copies were directed to a Securcorp related address. This email was in the following terms:
“ Subject : Progress Claim November
Attachments : Progress Claim November.221110.pdf
Good Afternoon,
Please see attached progress claim for the month of November.
Please contact our office if you have any queries.”
[35] Again each of the two “ Progress Claim ” documents were addressed as set out in paragraphs [28] to [29]. Both were signed by Mr Martin. The first document had a “Claim Date” of “22/11/10” and was “Claim Number: ALWAINVO4.” The only other difference were the details of the items claimed. On this occasion the invoice total (including GST) was $75,124.39, and $68,249.90 (excluding GST). There was also a reference to a reduction for the payment of the three previous invoices in the total amount claimed. The claim was supported by Penfold Quotations and Notices of Variation to Matrix.
[36] Consistently with the reference in the “ Progress Claim ” documents to July, August and October claims being paid in full there is no dispute with the evidence of Messrs Penfold and Martin that this was the case in relation not only to them but also the November claim.
[37] An email dated 20 December 2010 was sent from the same Penfold related address to Carol O’Shannessy. This time it was copied to John Copelin, matthew.salmon@matrix.com.au, Penfold Accounts and Chris Martin. Mr Salmon is recorded on Matrix Variation Advices as Project Manager. This email was in the following terms:
“ Subject : Progress Claim December
Attachments : ProgressClaimDecemberAltitude.201210.pdf.
Hi Carol,
Please see attached Progress Claim for the Month of December.
Please contact our office if you have any queries.”
[38] Each of the “ Progress Claim ” documents which were signed by Mr Martin are addressed as set out in paragraphs [28] to [29]. The first document had a “Claim Date” of “20/12/2010” and was “Claim Number: ALWAINVO5”. Again the only differences were the details of the items claimed. On this occasion the invoice total was $259,868.02 (including GST), and $236,243.65 (excluding GST). The first document confirms that the November claim was paid in full by reducing the total amount claimed to reflect previous payments of this and each of the earlier invoices. The claim was supported by Penfold Notices of Variation and Quotations to Matrix; together with Tax Invoices to Penfold.
[39] However this claim has not been paid in part or in full. Instead on 27 January 2011 Mr Martin received as email which on its face was from John Copelin [John.Copelin@matrix.com.au]. The email does not show it was copied to any other person. It stated that Matrix’s recommendation was to approve payment of $162,770.50. This and the other values referred to in the email are said to exclude GST.
[40] The email commences as follows:
“ Subject : 2011.01.27 – Dec 10 Assessment Altitude – Instant.
Chris,
As you are aware, all claims on the Altitude project are recommended by Matrix, with the same recommendation reassessed, approved and paid by Securcorp.
Your December claims as received were as follows (all values excl GST):
1. December claim: $236,243.65
Our recommendation was as follows:
1. 162,770.50 approved Retention - $8,017.13”
[41] The differences of assessment are explained as being based on part payments made on account until a full breakdown is received for items which are particularised, to replace lump sum figures given. Other issues with these figures are then explained, including what is said to be a double up with what had previously been approved. Two of the issues are explained as follows:
“Re VO17: Original quote given to Matrix for Block work c/o Harries bros was $11 k – excluding render
This was forwarded to Penfolds to manage – please advise why there is now a $15 k increase.
Re: V007 & 008 (as per Matrix ref No. 5) Client still requires breakdown and m2 rate for Concrete slab and walls.” (emphasis added)
In other words further information was being requested from Penfold to explain the identified variations.
[42] The email concludes:
“Please note, the revised payment date is now due for Securcorp release on the 3rd February 2010, noting that from COB 3rd February it may take up to 24 or even 48 hours for your bank to process the payment from that point.
Please only advise if payment has not been received by Close of Business 4th February.”
[43] There is no evidence from either Mr Penfold or Mr Martin that they or anyone on behalf of Penfold expressly responded to the issues raised by this email. Perhaps this is because prior to the receipt of the email on 27 January 2011, another email, dated 20 January 2011 had been sent from the same Penfold related address to Carol O’Shannessy and copied to the same persons as the 20 December 2011 email. This email simply contained:
“ Subject : RE: Progress Claim January – Attached
Attachments : ProgressClaimJanuaryAltitude.200111.pdf”
This is followed by “Attached” and a smiley face symbol.
There is no suggestion in this message, that at any time between 20 December 2010 and 20 January 2011 Securcorp had failed to serve a Payment Schedule on Penfold in response to the December 2010 claim within the time allowed by s 18 of the BCIPA. In fact in the first document headed as “ Payment Claim ” the invoice total was reduced on the basis that the December 2010 claim was one of five previous payments.
[44] Again the “ Progress Claim ” documents attached to this email, both of which were signed by Mr Martin, were addressed as set out in paragraphs [28] to [29]. The first document has a “Claim Date” of “20/01/2011” and was “Claim Number: ALWAINV06”. As expected, the only difference from the previous documents was as to details of the items claimed. The invoice total, taking into account previous payments which as indicated were particularised as including payment of the December 2010 claim, was $16,913.99 (including GST), AND $15,376.35 (excluding GST). The claim was supported by Penfold Notices of Variation and Quotations to Matrix, and a site instruction, and Matrix Variation Advices to Penfold.
[45] This claim has also not been paid in part or in full. Instead on 11 February 2011 Mr Martin received an email which on its face was from John Copelin [JohnCopelin@matrix.com.au] which does not show it was copied to any other person. It stated that Matrix’s recommendation was to approve payment of $41,503.80. This and other values referred to in the email are said to exclude GST.
[46] This email commences as follows:
“ Subject : 2011.02.11 – January 11 Assessment Attitude – Penfolds
Attachments : Penfolds January Claim.xisx
Chris,
As you are aware, all claims on the Altitude project are recommended by Matrix, with the same recommendation then reassessed, approved and paid by Securcorp.
Your January claims as received were as follows:
(all values excl GST):
1. December claim $105,409.10
Our recommendation was follows:
1. 41,503.80 approved Retention - $768.82.”
The introductory paragraph is in the same terms as the 27 January 2011 email. Neither counsel adverted to the fact that while the email commenced with reference to the January claim it proceeds to identify it as a December claim for an amount which bears no resemblance to the amount of either the December 2010 or the January 2011 claim.
[47] The email proceeds to list a series of items and values in connection with what I interpret in context to be Matrix reference numbers under the heading of “December Claim”. The words “on the gross value claimed to date less what has been paid by Securcorp and what has been recommend by Matrix” appear at the right hand margin on the second page of this document. There are then some values in a line towards the end of the document. These are arranged as if they are associated with columns, but without headings. These include the three values set out in the document and at paragraph [46] above. Some of the wording at the right margin is cut off. Therefore the document appears to have been afflicted by a printing error. It is regrettable that more care was not taken with the configuration of a document presented as evidence.
[48] The email concludes with a similar paragraph to the 27 January 2011 email. It is as follows:
“Please note, the revised payment date (caused by a one week loss of time from cyclone Yasi) is now due for Securcorp release on the 18 th February 2011, noting that from COB 18th February it may take up to 24 or even 48 hours for your bank to process the payment from that point.
Please only advise if payment has not been received by Close of Business 21st February.”
[49] The email attached an excel spreadsheet headed “Matrix Sub-Contract Review” created on 5 July 2010 and modified on the previous day, 10 February 2011 which describes the works by virtue of Matrix reference numbers and calculates the sum of $41,503.80 said to be approved in the email. Although neither counsel took me through this document, it is reasonable to conclude that this amount has been calculated as the balance payable having regard to what has previously been claimed, and paid or approved for payment.
[50] There is also evidence on behalf of Securcorp from its General Manager, Ms Borthwick in an affidavit filed and read by leave in these proceedings.
[51] Having reviewed Securcorp’s records in relation to the Altitude Project she deposes that:
at no time did Penfold serve, deliver or in any other way otherwise provide a copy of the July, August, October, November and in particular the December 2010 and the January 2011 claims to Penfold, whether in accordance with cl 7 (Service of Notices) of the contract (being to Penfold’s address set out in Item 2 of the Schedule) or at all; and
at no time did Matrix provide to both Penfold and Securcorp in respect of those claims, a progress certificate as required by subcl 37.2 (Certificates) of the contract within the time provided under the contract or at all.
[52] She also deposes that prior to 16 August 2010 she was not familiar with the BCIPA because as indicated, Securcorp is conducting the Altitude Project as a mortagee in possession, and does not carry on business as a property developer. Accordingly, she says, construction contracts such as this, are not agreements which Securcorp enters into on a regular basis in the ordinary course of its business.
[53] Her evidence is that at no time prior to, or since the parties’ entry into the contract had there been any agreement or discussion between Penfold and Securcorp that a progress claim issued by Penfold under cl 37 was to be treated as, or having been served as, a payment claim under the BCIPA.
[54] Further, she deposes that the course of conduct by Penfold in respect of the purported service of progress claims on Matrix under the BCIPA, was undertaken for its own reasons, and was neither suggested, encouraged or held out as appropriate by Securcorp.
[55] Her evidence also is that at no time prior to these proceedings, had Penfold purported to enforce the BCIPA in respect of any progress claim made by it.
[56] She asserts that Matrix performed the role of independent certifier of “progress claims” made by Penfold under cl 37 of the contract, and it neither made an assessment of any such claims nor make any representations, on behalf of Securcorp. According to her, Matrix’s decisions bound Securcorp in the manner provided in cl 37.
[57] Further she deposed that, from her view of cl 37 of the contract, in respect of any progress claims made in reliance on that clause, she didn’t believe it afforded Securcorp any opportunity to be heard prior to Matrix issuing a progress certificate and certificate evidencing Matrix’s assessment of retention moneys, or offer any response, whether by payment schedule or otherwise in respect of any of the WUC (as that term is defined in the contract) claimed.
[58] Finally she deposed that the originating application the subject of these proceedings and the affidavits of Messrs Penfold and Martin were served on Securcorp at approximately 4 pm on Friday 18 March 2011. This is relevant to a submission by Mr Handran that the application has not been served in accordance with UCPR 296 and Penfold has not sought that time to be abridged under UCPR 7. He also submits that there is no material before the court to demonstrate why I should exercise my discretion to shorten the time.
The issues
[59] Ms Downes submits on behalf of Penfold that it is entitled to the relief sought because the BCIPA provides a statutory mechanism for the recovery of payments pursuant to a construction contract.
[60] She submits that Penfold is a company entitled to progress payments pursuant to a construction contract for carrying out building works; and Securcorp is liable under the Contract to make such payments to it.
[61] It is submitted that the 20 December 2010 and 20 January 2011 progress claims were payment claims served on Securcorp under s 17 of the BCIPA for $259,868.02 and $16,913.99 respectively.
[62] Service is submitted to have been effected by email on Matrix, as Securcorp’s authorised agent.
[63] It is submitted that Securcorp failed to serve payment schedules on Penfold in response to either of the payment claims within the time allowed under s 18 of the BCIPA and also failed or refused to make payment of the whole or any part of the amount claimed.
[64] In these circumstances it is submitted that Penfold is entitled under s 19(2)(a) of the BCIPA to recover the amount of the unpaid claims from Securcorp as a debt owing to it, in a court of competent jurisdiction.
[65] It is argued that Securcorp is prevented by s 19(4)(b) of the BCIPA from bringing a counterclaim against Penfold or raising any defence in relation to any matters arising under the Contract.
[66] Consequently, it is submitted that Penfold is entitled to judgment against Securcorp for the amount claimed together with interest and costs.
[67] In response Mr Handran on behalf of Securcorp put in issue whether Penfold validly served the progress claims on Securcorp under the BCIPA by the emails to Matrix.
[68] It is submitted that s 17(1) of the BCIPA contains a number of essential requirements, with which Penfolds must strictly comply, and one of these is service. The argument is that the provision clearly and unambiguously requires that a payment claim may only be served “on the person who, under the construction contract concerned, is or may be liable to make the payment.” It is submitted that the plain effect of this is that a claimant may only serve a payment claim on Securcorp, and that it is not sufficient to serve the claim on any agent of the company.
[69] Alternatively, it is submitted that even if service on any agent of the person, who under the contract concerned, is or may be liable to make payment, is sufficient compliance with s 17(1), Matrix was not Securcorp’s agent for service of payment claims under BCIPA.
[70] It is submitted that the BCIPA is a separate and distinct regime which stands apart from and provides statutory mechanisms different to the construction contract. It is said to provide a separate procedure which, at the election of the claimant, may be followed in addition or instead of the contractual entitlement.
[71] Mr Handran submits that there is nothing to suggest that the parties to the contract intended that payment claims made under the BCIPA were to be provided or assessed in the same way as progress claims made under the Contract. It is argued that properly construed the Contract runs against any assumption as to conformity between the contract and the BCIPA.
[72] It is also submitted that at no time prior to, or since the Contract was made was there (or has there been any agreement) or discussion between Penfold and Securcorp that a progress claim made under cl 37 of the Contract was to be treated as, or having been served as, a payment claim made under the BCIPA. Reference is also made to Penfold not enforcing the provisions of the BCIPA in respect of any of the progress claims made by it between July and November 2010.
[73] Further and in the alternative it is submitted that the December 2010 and January 2011 progress claims do not comply with the strict requirement of s 17(2)(c) that a payment claim “must state that it is made under this Act.”
[74] It is also submitted that Penfold have not satisfied the court that the progress claims were due and payable under the Contract in the absence of documentary evidence of the kind required under cl 38 of the Contract, as to payment of employees and subcontractors being given to the Construction Manager’s satisfaction.
[75] Mr Handran also complained that Penfold has inappropriately commenced the proceedings by originating application in circumstances where the issue about validity of service is complex, and questions of law and fact arise for the court’s consideration.
[76] He submits Penfold can not show that it is so certain that the question of service must be answered in Securcorp’s favour that it would amount to an abuse of process of the court to allow the action to go forward for determination according to appointed modes of procedure.
[77] Further and in the alternative he submits this is in truth an application for summary judgment which has not been served in compliance with UCPR 296, and about which the court can not be satisfied, Securcorp has no real prospect of successfully defending the money claims at trial and there is no real need for a trial of those claims.
[78] In response, Ms Downes submits that Penfold did validly serve the progress claims under the BCIPA by email to Matrix under the construction contract because service on an agent of the person who, under the construction contract concerned, is or may be liable for payment, is sufficient compliance with s 17(1) of the BCIPA; Matrix was Securcorp’s agent under the contract, including for the service of progress claims, and that service on Matrix by email was sufficient service on Securcorp under the contract, and for the purpose of s 17(1) of the BCIPA. In any event she submits that Securcorp itself had been served by email at its address for service in the contract.
[79] She also made submissions rebutting the other contentions advanced on behalf of Securcorp.
Building and Construction Industry Payments Act 2004 (Qld)
[80] The issues which I have to determine may be more readily understood by first referring to the relevant provisions of the BCIPA.
[81] The object of the BCIPA is expressed in s 7. It is to ensure that a person who undertakes to carry out construction work or to supply related goods and services under a construction contract is “entitled to receive” and “able to recover” progress payments. Section 8 provides that the object is to be achieved by granting an entitlement to progress payments whether or not that is provided in the contract, and by establishing a procedure that involves the making of a payment claim by the person claiming payment and response by way of a payment schedule, referral of a disputed or unpaid claim to an adjudicator, and payment of the progress payment decided by the adjudicator. However, it is intended that the BCIPA does not limit any other entitlement that a claimant may have under a construction contract or any other remedy that a claimant may have for recovering that other entitlement.
[82] The first aspect of the statutory object, the entitlement to progress payments, is created by s 12, which is in Part 2 (“Rights to progress payments”). Section 12 provides that “From each reference date under a construction contract, a person is entitled to a progress payment if the person has undertaken to carry out construction work, or supply related goods and services, under the contract.” The expression “reference date under a construction contract” is defined to mean, so far as is presently relevant, “a date stated in, or worked out under, the contract as the date on which a claim for a progress payment may be made for construction work carried out or undertaken to be carried out, or related goods and services supplied or undertaken to be supplied, under the contract.” Section 13 relevantly provides that the amount of a progress payment to which a person is entitled in relation to a construction contract is the amount calculated under the contract.
[83] The due date for a progress payment so far as is presently relevant is provided for under s 15 as follows:
“ 15 Due date for payment
(1) A progress payment under a construction contract becomes payable -
(a) if the contract contains a provision about the matter that is not void under section 16 or under the Queensland Building Services Authority Act 1991 , section 67U or 67W – on the day on which the payment becomes payable under the provision; or
…..”
[84] Under section 15(3) interest for construction contract is payable on the unpaid amount of a progress payment which becomes payable at the penalty rate under s 67P of the Queensland Building Services Authority Act 1991 (“QBSAA”).
[85] The second aspect of the statutory object, to ensure that the relevant person is able to recover progress payments, is implemented in Part 3 (“Procedure for recovering progress payments”). In Construct Assist Pty Ltd v PDMS Group Pty Ltd Tutt DCJ said of s 17, that it “is a core section… and contains the specific provisions for the recovery of a progress payment under the BCIPA and the mechanism to achieve that payment.” In so far as is relevant s 17 provides:
“ 17 Payment claims
(1) A person mentioned in section 12 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 (the respondent ).
(2) A payment claim -
(a) must identify the construction work or related goods and services to which the progress payment relates; and
(b) must state the amount of the progress payment that the claimant claims to be payable (the claimed amount ); and
(c) must state that it is made under this Act. …
(4) A payment claim may be served only within the later of -
(a) the period worked out under the construction contract; or
(b) the period of 12 months after the construction work to which the claim relates was last carried out or the related goods and services to which the claim relates were last supplied.
(5) A claimant can not serve more than 1 payment claim in relation to each reference date under the construction contract.
(6) However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim.”
[86] The effect of ss 18 to 20, in summary, is to entitle a respondent served with a payment claim to serve a payment schedule stating the amount the respondent proposes to pay and the reasons for withholding payment of any of the claimed amount, to render a respondent liable to pay a claimed amount in default of timely service of a payment schedule, and to entitle the claimant either to recover judgment for any unpaid amount the respondent proposed to pay or was made liable to pay or to make an adjudication application in relation to the payment claim, and to suspend work under s 33.
[87] Section 18 sets out what a respondent to a payment claim may do in reply to a claim and that is to serve a payment schedule which complies with that provision on the claimant. It also specifies the consequences of failing to serve a payment schedule within the requisite time and that is the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the claim relates. Section 18 provides:
“ 18 Payment schedules
(1) A respondent served with a payment claim may reply to the claim by serving a payment schedule on the claimant.
(2) A payment schedule -
(a) must identify the payment claim to which it relates; and
(b) must state the amount of the payment, if any, that the respondent proposes to make (the scheduled amount ).
(3) If the scheduled amount is less than the claimed amount, the schedule must state 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) Subsection (5) applies if –
(a) a claimant serves a payment claim on a respondent; and
(b) the respondent does not serve a payment schedule on the claimant within the earlier of -
(i) the time required by the relevant construction contract; or
(ii) 10 business days after the payment claim is served.
(5) 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.
[88] If a respondent, by not serving a payment schedule within the time allowed, becomes liable to pay the amount claimed, by virtue of s 19 the claimant may recover the unpaid amount as a debt in any court of competent jurisdiction. Section 19, in so far as is relevant provides:
“ 19 Consequences of not paying claimant if no payment schedule
(1) This section applies if the respondent -
(a) becomes liable to pay the claimed amount to the claimant under section 18 because the respondent failed to serve a payment schedule on the claimant within the time allowed by the section; and
(b) fails to pay the whole or any part of the claimed amount on or before the due date for the progress payment to which the payment claim relates.
(2) The claimant -
(a) may -
(i) recover the unpaid portion of the claimed amount from the respondent, as a debt owing to the claimant, in any court of competent jurisdiction;
or
…
(4) If the claimant starts proceedings under subsection (2)(a)(i) to recover the unpaid portion of the claimed amount from the respondent as a debt –
(a) judgment in favour of the claimant is not to be given by a court unless the court is satisfied of the existence of the circumstances referred to in subsection (1); and
(b) the respondent is not, in those proceedings, entitled -
(i) to bring any counterclaim against the claimant; or
(ii) to raise any defence in relation to matters arising under the construction contract.
[89] As stated by Tutt DCJ in Construct Assist Pty Ltd v PDMS Group Pty Ltd : “Although Part 3 of the BCIPA has “guillotine – like” consequences for a respondent which fails to reply under s 18 to a “payment claim”, a respondent is not forever excluded from challenging the merits of the debt incurred, as s 100 preserves a respondent’s rights under “a construction contract” to pursue “any civil proceedings” to establish or enforce any right which may accrue to a respondent under a construction contract.”
Section 100 relevantly provides:
“
…
(2) Nothing done under or for part 3 affects any civil proceedings arising under a construction contract, whether under part 3 or otherwise, except as provided under subsection (3).
(3) 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 part 3 in any order or award it makes in those proceedings; and
(b) may make the orders it considers appropriate for the restitution of any amount so paid, and any other orders it considers appropriate having regard to its decision in the proceedings.”
As put by Margaret Wilson J in National Vegetation Management Solutions Pty Ltd v Shekar Plant Hire Pty Ltd by virtue of this provision “a party may “claw back” progress payments recovered from it under the Act in subsequent civil proceedings.”
[90] In J Hutchinson Pty Ltd v Galform Pty Ltd & Ors Chesterman J explained the effect of s 100 is:
“to make progress payments enforced by the statutory procedures for … entering judgment ‘only payments on account of a liability that will finally be determined otherwise …’. per Hodgson JA in Brodyn at 440-1. Payments made pursuant to the Act are meant to effect a quick resolution of payment disputes between parties to a construction contract on an interim basis without extinguishing a party’s ordinary contractual rights to obtain a final determination with respect to the dispute by a court of competent jurisdiction. See Intero Hospitality Projects at para 46.
…
A judgment obtained pursuant to Part 3 of the Act is conclusive, final and binding, unless and until a court pronounces judgment in a proceeding brought by virtue of the contractual rights preserved by s 100, which is inconsistent with the earlier judgment. Unless and until a court gives judgment which affects the rights of the parties determined by a judgment obtained pursuant to Part 3 that judgment stands.
[91] Therefore a losing party who has paid or is forced to pay monies may ultimately obtain a final determination of its rights by civil proceedings outside the statutory regime. In such proceedings a court or tribunal considering such an application may make the appropriate order (including for restitution of the money paid).
Consideration
Submissions on behalf of Penfold
[92] On the undisputed basis that the contract was a construction contract for the carrying out of construction work within the meaning of the BCIPA so that this legislation applies to it as provided for in s 3(1), Ms Downes submits, Penfold was entitled to a progress payment “from each reference date” for the works carried out under it. Item 28 of the Schedule of the contract provided that progress claims may be issued on the 20th day of the month for work under the contract. As both the December 2010 and January 2011 claims, which she submits were payment claims, were served on the 20th day of the relevant month, Penfold had a right to serve them by virtue of s 12 of the BCIPA.
[93] She submits that the December 2010 and January 2011 claims were calculated under the contract in accordance with s 13 of the BCIPA:
(a) The contract price;
(b) Variations as directed by Matrix, as agent for Penfold and as allowed under cl 36 of the contract; and
(c) Amounts previously paid in relation to the past claims.
[94] It is submitted that Securcorp became liable to pay the amount of $259,868.02 claimed under the December 2010 claim on 11 January 2011 pursuant to subcl 37.2 of the contract and s 15 of the BCIPA, and similarly it became liable to pay the amount of $16,913.99 on 11 February 2011. Because it is argued that Securcorp defaulted in payment of each of these claims, Ms Downes asserts that the penalty rate of interest under s 67P(3)(a) of the QBSAA applied to each of the overdue payments.
[95] As indicated Ms Downes’ argument on behalf of Penfold is that the 20 December 2010 and 20 January 2011 progress claims were payment claims which it was entitled to serve on Securcorp, which was at all material times liable to make the payments under s 17(1) of the BCIPA. She submits that each claim complied with s 17(2) in that it:
(a) identified the construction work to which the progress payment related;
(b) stated the amount that the applicant claimed to be payable; and
(c) stated that it was made under the BCIPA.
[96] Ms Downes submits that at all material times Matrix was the duly appointed agent of Securcorp, having regard to cl 20 of the contract and had actual authority to accept payment claims on its behalf as well as the actual authority to direct Penfold as to the manner in which the claims were to be provided. As such it is submitted both claims were validly served on Matrix in accordance with the terms of the contract and in accordance with the directions of Matrix. This is a reference to the email of 12 July 2010 from Carol O’Shannessy that Securcorp provide all progress claims by way of email on the 20th day of each month.
[97] In reliance on Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd (“ Metacorp ”) it is submitted that the service of a payment claim on an authorised agent by way of email is good service. It is therefore submitted that service of each claim in this manner on Securcorp’s agent, Matrix is proper service satisfying the requirements of s 17. Further it is submitted that such service is also consistent with the specific request of Matrix in this capacity and in line with the established manner for the provision of earlier claims, which are purported to be payment claims, each of which were provided to Matrix in this capacity and paid by Securcorp. She goes so far as to submit that there is an inference that these claims, including the December 2010 and January 2011 claims had come to Securcorp’s attention.
[98] Pursuant to s 18(1) of the BCIPA it is submitted that Securcorp, having been served in this way with Penfold’s payment claims, was entitled to reply to Penfold by serving a payment schedule response to each of those claims.
[99] In relation to the December 2010 claim Ms Downes’ submits that pursuant to cl 37.2 of the contract and s 18, a progress certificate (which was in effect a payment schedule for the purposes of s 18) was due to be provided in response to 4 January 2011 (taking into account the New Years Day public holiday on 3 January 2011; and, as noted above, payment of the claim was due on 11 January 2011.
[100] Further she submits that by Matrix not providing a payment schedule to Penfold until its 27 January 2011 email which assessed $162,770.50 as the amount payable in response to that claim, Securcorp failed to serve a payment schedule in response to that claim within the time allowed by s 18 (i.e. 10 days after the claim was served); and failed to pay the whole or any amount claimed in the claim in the sum of $259,868.02 (inclusive of GST) and the sum remains outstanding.
[101] In relation to the January 2011 claim it is submitted that pursuant to subcl 37.2 of the contract and s 18, a progress certificate was due to be provided in response by 4 February 2011; and, as noted above, payment of the claim was due on 11 February 2011.
[102] Further, the submission is that by Matrix not providing a payment schedule to Penfold until its 11 February 2011 email which assessed $41,503.80 as the amount payable for the January claim, Securcorp failed to serve a payment schedule in response to that claim within the time allowed by s 18 (i.e. 10 days after the claim was served); and failed to pay the whole or any amount claimed in the claim of $16,913.99 (inclusive of GST) and the sum remains outstanding.
[103] Therefore it is submitted that pursuant to s 18(5), Securcorp became liable to pay each of the amounts claimed on the respective due dates for the December 2010 and January 2011 progress claims.
[104 In support of this proposition reference is made to the decision of Alan Wilson SC, DCJ (as he then was) in J Hutchinson Pty Ltd v Thunder Investments Pty Ltd , where his Honour said, in consideration of s 18:
“If the respondent does not serve a payment schedule within (here) ten business days after the payment claim is served, it becomes liable to pay that claim.”
[105] It is submitted that as Securcorp failed to serve a payment schedule in relation to both the December 2010 and January 2011 claims, and failed to pay the whole or any part of the claimed amounts on or before the due dates for the progress payments to which they relate, s 19(2)(a) of the BCIPA provides that Penfold is entitled to recover the unpaid portion of those amounts from Securcorp, as a debt owing to it, in any court of competent jurisdiction.
[106] Further, I am referred to s 19(4)(b) by which Securcorp is prevented in these proceedings from bringing any counterclaim against Penfold or raising any defence in relation to matters arising under the contract. It is submitted that this includes arguments relating to the value of the work carried out, the quantum of the claim, defects in the subject work or the entitlement to liquidated damages.
Nature of the proceedings
[107] Proceedings have been commenced by originating application for an amount, claimed to be recoverable as a debt owing pursuant to s 19(2)(a)(i) of the BCIPA. Judgment is sought to be entered in favour of Penfold against Securcorp under UCPR 658. As Margaret Wilson J said in National Vegetation Management Solutions Pty Ltd v Shekar Plant Hire Pty Ltd :
“Ordinarily a proceeding to recover a debt should be brought by claim and statement of claim, and the plaintiff may make an application for summary judgment at any time after the defendant files a notice of intention to defend [UCPR, rr 10, 292]. Under r 11(a) of the UCPR, a proceeding may be commenced by originating application if the only or main issue in the proceeding is an issue of law and a dispute of fact is unlikely. Of course, if a proceeding is commenced in an incorrect way, the court may order that it continue as if commenced in the correct way and give any necessary directions. [UCPR, rr 13, 14].”
[108] In J Hutchinson Pty Ltd v Thunder Investments Pty Ltd Alan Wilson SC, DCJ said with reference to UCPR 658:
“… it might reasonably be ventured that the tests surrounding the question whether judgment ought be given under this rule are different from those arising under the summary judgment provisions of the UCPR [ch 9 Pt 2].”
[109] In National Vegetation Management Solutions Pty Ltd v Shekar Plant Hire Pty Ltd , no point was taken about the commencement of proceedings by originating application. Her Honour observed that in these circumstances her determination of the substantive issues should not be taken as approval or disapproval of the use of this form of originating process.
[110] However in this case, although Ms Downes submits that pursuant to UCPR 11 these proceedings were appropriately started by originating application, as indicated, Mr Handran’s submissions are to the contrary. He asserts this is in truth an application for summary judgment. He complains it has not been served in compliance with UCPR 296. He submits that Penfold does not seek to abridge time under UCPR 7; and nor does the material demonstrate why any discretion to shorten time should be exercised. He also submits that the discretion to grant summary judgment is not enlivened unless the court is satisfied that Securcorp has no real prospect of successfully defending the money claims at trial and there is no real need for a trial of those claims.
[111] However, Mr Handran accepted during argument that it was not an application for summary judgment, but was dressed up as one. His primary submission was that the application should be determined in accordance with the common law approach to applications for final relief sought to be determined summarily. He relied in particular on Fancourt v Mercantile Credits Ltd where the High Court said:
“The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.”
Accordingly he submitted, there is a “real question” here unless Penfold can show that it was so certain that [the question of service] must be answered in the [applicant’s] favour that it would amount to an abuse of the process of the court to allow the action to go forward for determination according to the appointed modes of procedure.” It is submitted that Penfold cannot show this.
[112] Because I have come to the conclusion that I can determine the substantive issues raised on this application, it is ultimately not necessary to resolve this question.
Whether the December 2010 and January 2011 claims are payment claims
[113] As I have noted Mr Handran puts in issue whether Penfold validly served the December 2010 and January 2011 progress claims on Securcorp under the BCIPA by the emails to Matrix.
[114] In the alternative he submitted that Penfold have not satisfied the court that those progress claims comply with the strict requirement of s 17(2)(c) of the BCIPA, according to which a payment claim “must state it is made under this Act.”
[115] If I was to find in Penfold’s favour on the primary issue as to whether Securcorp was validly served with these claims as required by s 17(1) of the BCIPA it would not be necessary to determine this alternative issue. However, I proceed to do so as it assists in the analysis of the statutory regime and its interrelationship with the regime established by the Contract.
[116] The alternative submission is based on the fact that the documents which Penfold relies on as the December 2010 and January 2011 payment claims are headed “ Progress Claim ” and contain the following statement:
This is a progress claim made under the Building and Construction Industry Payments Act 2004
It is argued that the non compliance with s 17(2)(c) arises from the reference to a “progress claim” as opposed to a “payment claim” under the BCIPA because the reference to “progress claim” invites confusion between the distinct and separate regimes under the legislation on the one hand and the construction contract on the other.
[117] I agree with Mr Handran that the framework of the BCIPA establishes “a dual system for the payment of progress claims under the construction contract, so that the contractual regime sits alongside the statutory regime. The Act does not seek to alter the existing rights of the parties under the contract which they have negotiated.”
[118] The means by which the BCIPA seeks to ensure that a person is entitled to receive a progress payment is by granting a statutory entitlement to that payment in accordance with the procedure provided for. Broadly, the procedure involves:
(a) the making of a payment claim by the person claiming payment; and
(b) the provision of a payment schedule by the person by whom the payment is payable; and
(c) the referral of any disputed claim to an adjudicator for determination; and
(d) the payment of the amount of the progress payment determined by the adjudicator; and
(e) the recovery of the progress payment in the event of a failure to pay.
[119] As previously observed, the BCIPA does not limit any other entitlement that a claimant may have under a construction contract or any other remedy that a claimant may have for recovering that other entitlement.
In Metacorp Vickery J said that the fact the legislation employs language which is derived from terms commonly used in standard contracts in the building industry, such as “payment claim” and “payment schedule” does not detract from the position that there are in fact two systems in operation, side by side, which may be utilised by a claimant seeking payment of a progress claim.
[120] Thus, in respect of any one progress claim, and depending on the terms of the construction contract, a claimant could make a payment claim relying on the contractual provisions and a separate payment claim relying on the BCIPA, or a simultaneous claim which is made both under the Contract and the BCIPA in one common document.
[121] Against this background I understood Mr Handran to accept that if a claim made under the contract also complied with s 17 of the BCIPA, the contractor would have a choice as to whether to proceed under the contract or the legislation, or alternatively both processes could be followed.
[122] However I disagree that the description of the December 2010 and January 2011 claims by the term “Progress Claim” and the inclusion of the statement “This is a progress claim made under the Building and Construction Industry Payment Act 2004 ” has the effect that they are not payment claims because of non compliance with s 17(2)(b) by virtue of which “A payment claim must state it is made under this Act.”
[123] There are statements of the Supreme Court of Queensland that “failure to adhere strictly to the statutory regime has been held to preclude reliance on the special statutory rights under the [BCIPA].”
[124] Without derogating from this principle I consider that the approach to be taken to ascertain whether a document is a payment claim for the purpose of those special statutory rights is to be determined in the same manner as determining whether a document is a payment schedule in accordance with the decision of Chesterman J (as he then was) in Minimax Fire Fighting Systems Pty Ltd v Brenmore Engineering (WA) Pty Ltd . ( Minimax ). His Honour said:
“[20] The Act emphasises speed and informality. Accordingly one should not approach the question whether a document satisfies the description of a payment schedule ( or payment claim for that matter ) from an unduly critical viewpoint.
No particular form is required. One is concerned only with whether the content of the document in question satisfies the statutory description. To constitute a payment schedule the applicant’s email of 14 December had to:
(i) identify the payment claim to which it related, and
(ii) state any amount which the recipient of the payment claim proposed to make in response to it.
(iii) Importantly, if that amount is less than the amount claimed in the payment schedule it must state why it is less.
[21] If these three criteria are satisfied the document will be a payment schedule. How they are expressed, with what formality or lack of it, and with what felicity or awkwardness, will not matter .” (emphasis added)
In that case his Honour held that an email which satisfied the statutory criteria would be a payment schedule.
Although this decision related to what was required to constitute a payment schedule, it is notable that his Honour expressed his approach to this in a manner which he also expressly extended to payment claims.
[125] In J Hutchinson Pty Ltd v Thunder Investments Pty Ltd Alan Wilson SC, DCJ applied the decision of Chesterman J to purported payment claims.
In that case his Honour rejected a submission that a payment claim was not valid because it failed to properly identify the construction work or related goods and services to which the claim related, as required by s 17(2)(a) of the BCIPA. Having considered the evidence his Honour held that the documents relied upon constituted a sufficient payment claim. In coming to this conclusion he said:
“Section 17(2) provides that a payment claim must identify the construction work (or related goods and services) to which the progress payment relates; state the amount that the claimant claims to be payable; and, shows on its face that it is made under the Act (‘ …state(s) that it is made under this Act’ )” (emphasis added)
[126] With reference to Minimax his Honour said:
“… Chesterman J (as his Honour then was) has observed that the Act emphasizes speed and informality, and the question whether a document satisfies the description of a payment schedule, or a payment claim, should not be approached from an unduly critical view point. No particular form is required and the only question is whether the content of the documents satisfies the statutory description.”
His Honour was satisfied of this despite there being no suggestion in his description of the documents that any reference was made to their being a “payment claim”. As set out in the judgment:
“Hutchinson sent a document described on its face as ‘PROGRESS CLAIM NO. 8 (30th January 2009)’ and ‘FINAL CLAIM’ together with an invoice for the subject amount bearing the words ‘ Building and Construction Industry Payments Act 2004 (Qld) or to the Building and Construction Industry Payments Act 2002 (Vic), whichever is applicable to the site .”
[127] In conclusion his Honour said:
“the documents are relatively terse but, in terms of the contract between the parties and the history of their past dealings, sufficient to identify the construction work (or related goods and services) to which the progress claim relates – they make specific reference to the project name, and the project number; they state the amount claimed; and, contain a sufficient reference to the Act . That, it seems to me, is enough to meet the Act’s requirements.” (emphasis added).
[128] Similarly I consider that the December 2010 and the January 2011 Progress Claims, described on their face as being made under the BCIPA, contain “a sufficient reference to the Act” to meet its requirements. I find that each is a payment claim under the BCIPA and a progress claim under the Contract, simultaneously made in one common document.
Whether the December 2010 and January 2011 payment claims were validly served
[129] It is therefore necessary to consider the primary submission that Penfold did not validly serve the December 2010 and January 2011 payment claims on Securcorp under the BCIPA by the emails to Matrix.
[130] The effect of Mr Handran’s submission is that service of the payment claims on the Construction Manager, Matrix was not service on “the person who, under the construction contract concerned, is or may be liable to make the payment (the respondent )”. Secondly he submits that service by email was flawed because it was not countenanced in the circumstances of this case.
[131] In relation to the first issue it was submitted that because the claims were served on Matrix and not on Penfold, a basic and essential requirement of the legislation had not been met, with the result that everything which followed service of the claims was invalid.
[132] As to the second matter, it was submitted that service on Matrix by use of an email was not a prescribed method of service under the BCIPA or the Contract because it was not an address for service set out in cl 7 read in conjunction with Item 2 of the Schedule.
[133] Penfold, on the other hand contended that service by email upon Matrix, which it submitted was Securcorp’s agent for the purpose, was valid service of the payment claims under the BCIPA. In any event, Ms Downes submitted that Securcorp itself had been served because the emails had been addressed to the address for service set out in cl 7 read in conjunction with Item 2 of the Schedule. This was because payment claims attached to the emails have been addressed to:
“Michael Woodbry
Securcorp Limited
Suit 7B ‘Chevron Renaissance’
3240 Surfers Paradise Blvd, Surfers Paradise, 4217
Care of:
John Copelin of
Matrix Projects (Qld) Pty Ltd
Level 1, 2 Industrial Av, Stratford 4870”
As indicated, the Principal’s address by virtue of Item 2 is “Suit 7B “Chevron Renaissance”, 3240 Surfers Paradise Blvd, Surfers Paradise.”
[134] In addition to Metacorp , Ms Downes particularly relies on The Owners Strata Plan 56587 v Consolidated Quality Projects (“ Quality Projects ”) and Falgat Construction Pty Limited v Equity Australia Corporation Pty Limited (“ Falgat ”) in support of these arguments.
[135] Under the statutory regime the trigger commencing the process which leads to the statutory rights of a claimant under the BCIPA is the service of the payment claim. Therefore a payment claim which is never served on the respondent under s 17(1) cannot set in motion the machinery of Pt 3 so far as the recovery of a progress payment is concerned.
[136] The onus is on Penfold to prove that the two payment claims were served as required by s 17(1) of the BCIPA.
Whether service on Matrix was sufficient
[137] In resolving this issue the first question which arises is whether service upon Matrix is sufficient, or whether service on Securcorp is required. This involves the interpretation of what is meant by s 17(1) when it requires service “on the person who, under the construction contract concerned, is or may be liable to make the payment (the respondent )”.
[138] Mr Handran submits that the starting point for this question of interpretation is the text of s 17(1), which is clear and unambiguous. It is argued that read literally, in accordance with its terms, a payment claim may only be served “on the person who, under the construction contract concerned, is or may be made liable for payment” and there is no reason to read down the words of the section.
[139] He submits that “procedure” laid down by s 8(b) of the BCIPA does not import the contractual procedure for the entitlement to progress claims, otherwise there would be no point to the procedure under the BCIPA, unless there were no contractual procedure at all.
[140] It is submitted that s 5 plainly provides that the BCIPA does not limit the entitlement a claimant may have under the construction contract. It is therefore a separate procedure which, at the election of the claimant, may be followed in addition to or instead of the contractual entitlement (if any).
[141] Accordingly, it is said, the BCIPA is a separate and distinct regime, which imports time frames under the construction contract (if any), but otherwise provides for default times. It is submitted that it does stand apart and provide statutory enforcement mechanisms different to the construction contract.
[142] Therefore it is submitted, the plain effect of s 17(1) is that a claimant may only serve a payment claim on Securcorp.
[143] Reference is then made to s 103 of the BCIPA which provides:
“ Service of notices
(1) A notice or other document that under this Act is authorised or required to be served on a person may be served on the person in the way, if any, provided under the construction contract concerned.
(2) Subsection (1) is in addition to, and does not limit or exclude, the Acts Interpretation Act 1954 , section 39 or the provisions of any other law about the service of notices.”
It is submitted that when read with this provision, the BCIPA facilitates service of a payment claim “on the person, who under the construction contract concerned, is or may be liable to payment”, in accordance with any manner permitted or provided for under the construction contract.
[144] It is submitted that proposition is reinforced by s 18(1) which provides that it is only the party, being the “respondent served with a payment claim” that “may reply to the claim by serving a payment schedule on the claimant”. The point is then made that the consequences of non-service of a payment schedule are only visited by s 19(1), on a respondent who “becomes liable to pay the amount to the claimant” under s 18 because the respondent failed to serve a payment schedule on the claimant within the time allowed by the section. In this context, it is submitted that by reason of s 17 and s 18 “liable to pay” can only mean the person liable to make payment under the construction contract and who does not reply with a payment schedule within the time calculated under s 18(4).
[145] It is submitted that s 18(4)(b) is significant because it is said to expressly provide the respondent with an opportunity to serve a payment schedule irrespective of whether the construction contract did so.
[146] Further, it is submitted that if the construction urged by Penfold was correct ss 8, 17(1) and 18(1) of the BCIPA would be rendered meaningless. On Penfold’s argument, it is said that the respondent does not need to be afforded an opportunity to make any assessment, nor be heard, on a payment claim and instead is bound by or wholly reliant on the Construction Manager, Matrix, in such a case as this. It is argued that if Parliament had intended this to occur, it would have included words to the effect “or its superintendent (if any)” after the words “may serve a payment claim on the person who, under the construction contract, is or may be liable to make the payment” in s 17(1).
Mr Handran accepts that because of s 103(1) of the BCIPA the strict requirement under s 17(1) for service of the payment claim on “the person who, under the construction contract concerned, is or may be liable to make the payment” rather than service on a Construction Manager (or superintendent, which is the term used in some contracts) is subject to an express contractual provision. He submits that this is not the position in the present case, and Metacorp is distinguishable on that basis.
[147] As indicated at paragraph [97] of this judgment, in reliance on Metacorp , Penfold submits that the service of a payment claim on an authorised agent by way of email is good service.
[148] Metacorp was a proceeding for judicial review of an adjudication determination under the equivalent provisions of the Victorian Act. Metacorp claimed that the adjudication determination was void. It was alleged that the payment claim the subject of the adjudication was in breach of some of the basic and essential requirements of the legislation, with the result that any purported adjudication of that payment claim based upon it was a nullity. Metacorp pressed two matters relating to the service of the payment claim. It was said that service upon the Superintendent (who was equivalent to the Contract Manager in the present case) was not service upon the party who is or may be “liable to make the payment”, namely Metacorp and the purported service thereby contravened the legislation.
Secondly, it was said that service by email was not countenanced by the Victorian Act. It is readily apparent that these are arguments advanced on behalf of Securcorp. In Metacorp Vickery J rejected these arguments and held that service of a payment claim by email on the Superintendent was in accordance with the requirements of both the Contract and the legislation.
[149] Section 14(1) of the Victorian Act, the equivalent provision to s 17(1) of the BCIPA provided:
“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.”
[150] In support of its argument Metacorp relied on s 50 of the Victorian Act which provides for the service of documents, including a payment claim and cl 7 of the Contract which made provision for the service of notices under it.
[151] Section 50(1) is in the following terms:
“50. Service of notices
(1) Any notice or document that by or under this Act is authorised or required to be given to or served on a person may be given to or served on the person –
(a) by delivering it to the person personally; or
(b) by lodging it during normal office hours at the person’s ordinary place of business; or
(c) by sending it by post or facsimile addressed to the person’s ordinary place of business; or
(d) in such manner as may be prescribed for the purposes of this section; or
(e) in any other manner specified in the relevant construction contract.”
Paragraphs (a) to (d) are similar to s 39 of the Acts Interpretation Act 1954 (Qld) (“AIA”). Paragraph (e) is similar to s 103(1) of the BCIPA.
[152] Vickery J observed that the contractual regime for service applied to notices under the Victorian Act by operation of s 50(1)(e) and set out cl 7 as follows:
“ 7 SERVICE OF NOTICES
Any notice required to be given to or served upon a party under the Contract may be given to or served:
a) By delivering it to that party personally;
b) By lodging it during the normal office hours at the party’s address stated in the Contract or last communicated in writing to the person giving the notice; or
c) By sending it by post or facsimile addressed to the party’s address stated in the Contract or last communicated in writing to the person giving the notice.
The giving or service of a notice that is sent to a party’s address is taken to have been effected in the case of posting, 2 business days after the day on which the notice was posted and in the case of a facsimile, at the time the facsimile is received. However, if the facsimile is received after 4.00 pm on any day, it will be taken to have been received on the next business day.
For the purposes of this Clause 7, a business day is a day that is not Saturday or Sunday or a day that is wholly or partly observed as a public holiday throughout Victoria.
The Principal, the Contractor and the Superintendent shall each notify the others of a change of address.
Without limiting the generality of “notice”, it includes a document.
If the Contractor gives or serves upon the Principal any notice which the Security of Payment Act requires the Contractor to give to or serve upon the Principal, the Contractor shall give to the superintendent a copy of such notice at the same time that it is given to or served upon the Principal.”
It is noted that there is no similar paragraph in cl 7 of the Contract in the present case to the last paragraph of cl 7 of the Contract in Metacorp, making specific reference to the BCIPA.
[153] Penfold places particular reliance on the following statements by Vickery J:
“[141] Section 14(1) of the Act provides that a payment claim is to be served “on the person who, under the construction contract concerned, is or may be liable to make the payment.” This provision does not operate in a commercial vacuum. It needs to be read in the practical context of the building industry. Builders, more often than not, whether they are incorporated or unincorporated, act through their servants or agents.
[142] Section 14(1) does not seek to remove the service of a payment claim from this reality. Accordingly, a payment claim may be served upon any person who, under the construction contract concerned, is or may be liable to make the payment, or has the actual or ostensible authority of such a person to accept service.
[143] Receipt of a payment claim by a respondent or its servant or agent with actual or ostensible authority to receive it, for the purposes of s 14(1) of the Act, constitutes service.
…
[158] Clause 7 of the Contract does not override the requirement for service of a payment claim as required by s 14(1) of the Act, when it is read in the context of the common law of agency. Service of the payment claim upon the agent of the person who is liable to make the payment, whether acting pursuant to an actual or ostensible agency, is service upon the principal. In this event, cl 7 of the Contract is satisfied by service upon the Superintendent, who, for the purposes of receiving service of a payment claim, acts as both the Superintendent and the Principal.”
[154] Accordingly, his Honour held in that case the Superintendent was acting as the agent of Metacorp, when he received the payment claim, having its actual or ostensible authority to do so; and service on its Superintendent was service upon Metacorp, being the person who “is or may be liable to make payment” within s 14(1) of the Victorian Act.
[155] His Honour then went on to consider the issue of service of the payment claim by email. This is an issue to which I will return.
[156] Vickery J interpreted the equivalent provision to s 17(1) of the BCIPA to permit service of a payment claim not only upon any person who, under the construction contract concerned, is or may be liable to make the payment but also upon any person who has actual or ostensible authority of such a person to accept service, despite reliance by Metacorp on the admitted obiter remarks to the contrary by Einstein J in Emag Constructions Pty Ltd v Highrise Concrete Contractors (Aust) Pty Ltd. (Emag) .
[157] In Emag the question was whether there had been proper service under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the “NSW Act”) of an adjudication application. The document in question had been served on a firm of solicitors acting for Emag Constructions Pty Ltd. Like the Victorian Act the NSW Act is comparable legislation to the BCIPA. Einstein J, found as a fact that the solicitor had stated that his firm had no instructions to accept service. Further, his Honour held that “there was neither actual authority in the plaintiff’s solicitors to receive a copy of the adjudication nor ostensible authority in that regard”. It was held that, there being neither actual authority in the plaintiff’s solicitors to receive a copy of an adjudication application nor ostensible authority to do so, the adjudicator did not have jurisdiction to entertain the adjudication.
[158] Einstein J said in conclusion:
“ The service provisions of the Act require to be complied with in terms . Prudence dictates that those responsible for complying with the service provisions take steps to be in a position to strictly prove service in the usual way. One only example of the difficulties which may arise is where a solicitor who may have been instructed to act in relation to an adjudication application has his/her instructions withdrawn. There are no provisions similar to those to be found in the Supreme Court Rules 1970 for notices of ceasing to act and the like. The Act here under consideration simply proceeds by requiring particular steps to be taken by the parties and by the adjudicator and proof of strict compliance with the Act is necessary for the achievement of the quick and efficient recovery of progress payments and resolution of disputes in that regard.” (emphasis added)
As Vickery J observed in Metacorp , although the finding as to actual or ostensible authority was sufficient to dispose of the issue in Emag , Einstein J then went on to say by way of obiter dictum that:
“In my view the character of the subject legislation is such that the general principles of actual or ostensible authority in solicitors to receive service of copies of relevant notices must yield to the strictures of the strict requirement to prove service. The service provisions of the Act require to be complied with in terms .” (emphasis added)
[159] As Habersberger J observed in Abigroup Contractors Pty Ltd v River Street Developments Pty Ltd (“ Abigroup ”), the rationale of his Honour’s approach in Emag was to be found in an earlier passage in his judgment, where he said:
“Service being effected in accordance with the Act is critical as it governs the commencement of the time limitations following such service. The consequences of non-compliance with the time limitation periods is harsh . As was submitted to the court by counsel for the plaintiff the Act exhibits “zero tolerance” for delay. To borrow a phrase from the world of contract, and in particular conveyancing, in a real sense time is of the essence .” (emphasis added)
[160] In Emag Einstein J also referred to “the high significance in terms of the Act … that service within the meaning of the Act can be strictly proved to have taken place. The whole of the stepped procedures being dependent upon compliance with rigid time lines, each of the formal requirements stipulated by the Act must be complied with to the letter.”
[161] As Vickery J also observed in Metacorp , these views were echoed by Einstein J in the later decision of Taylor Projects Group Pty Ltd v Brick Dept (Pty) Ltd where his Honour said further on the subject:
“In my view it is simply critical for a rigid approach to be taken to compliance with the terms of the Act, particularly for the reason that the legislation provides for a fast dual-track interim determination, reserving the parties’ final legal entitlements for subsequent determination.”
[162] Similarly Einstein J said in Lucas Stuart Pty Ltd v Council of the City of Sydney that the legislative scheme “is concerned and only concerned with strict compliance by each party with every parameter of the legislation”.
[163] Although the issue in Emag was whether there had been proper service under the NSW Act of an adjudication application, I consider that the observations are applicable to service of payment claims which govern the commencement of time limitations following such service. There is nothing in the decision of Metacorp or Abigroup which were concerned with the service of payment claims to suggest otherwise.
[164] In Metacorp Vickery J accepted that underpinning these observations is the fact service of a payment claim is not without serious consequences for a respondent. As previously stated his Honour recognised that the obligation to serve a payment schedule within a limited time frame is triggered by service of the payment claim. As his Honour said with reference to the equivalent provision of the Victorian Act to s 18(4) of the BCIPA:
“if (a) a claimant serves a payment claim on a respondent and (b) if the respondent does not provide a payment schedule to the claimant within the time required by the relevant construction contract or 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.”
[165] Consistent with Mr Handran’s submission, his Honour recognised that a failure by a respondent to provide a payment schedule to the claimant within the time required, not only triggers a liability for payment, it may initiate other serious consequences. Pursuant to the equivalent provision to s 19(2)(a) of the BCIPA, a failure by the respondent to provide a payment schedule within the prescribed time would entitle a claimant to recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction, or under the equivalent provision to s 21(1)(b) make an adjudication application in relation to the payment claim. It also entitles a claimant to serve notice on the respondent of the claimant’s intention to suspend carrying out construction work under the construction contract or to suspend supplying related goods and services under the construction contract (see for example s 19(2)(b) of the BCIPA).
[166] Abigroup , which was relied upon by Mr Handran, was an application for summary judgment against River Street Developments Pty Ltd (RSD) pursuant to the Victorian Act. The primary issue relied on by RSD in support of its submission that there was a real question to be tried was that there had been no service of the relevant payment claim under the equivalent provision to s 17(1) which required that the payment claim be served “on the person who under the contract is liable to make payment.” As Habersberger J said, clearly this person was RSD, but instead of serving RSD with the payment claim, Abigroup faxed it to the Quantity Surveyor referred to in the Contract, with a copy to the Superintendent. It was submitted on behalf of RSD that this service satisfied neither the requirements of the Victorian Act nor the provisions of the Contract.
[167] That Contract was in different terms to the Contract in this case. It required claims for payment to be delivered to a Quantity Surveyor and the Superintendent. It was the duty of the Quantity Surveyor to assess the claims and issue a payment certificate (which was similar to a payment schedule). In certain circumstances the Superintendent was required to issue a progress certificate which was deemed to be a payment certificate, after which the Principal was to pay the amount in the certificate due to the contractor. There was an express provision in the Contract that the Quantity Surveyor and (where applicable) the Superintendent act as the agents of the Principal in issuing payment certificates and all related functions.
[168] Abigroup commenced the proceedings, claiming that a particular payment schedule issued by the Quantity Surveyor as agent for RSD did not satisfy the relevant legislative provision, with the result that it was entitled to recover the amount claimed from RSD under the Victorian Act.
[169] As Habersberger J said:
“Abigroup’s application for summary judgment was squarely based on the proposition that RSD was served on that day by virtue of it being faxed to its agent, WTP. If that proposition is not established to the requisite degree of certainty then Abigroup’s application must fail at the outset.”
[170] It was submitted on behalf of Abigroup that as the Quantity Surveyor acted as “the agent” of RSD “in issuing payment certificates and exercising all related functions”, it acted as the agent for RSD in receiving payment claims. Whilst acknowledging that there had to be a strict compliance with the Act, it was submitted that the Act did not displace the operation of the common law principles of agency in relation to the service of payment claims.
[171] On behalf of RSD, his Honour was referred to Emag and the obiter dictum observations by Einstein J.
[172] It was also submitted that, properly construed, there was nothing in the contract to suggest that the parties intended that the agency, which is identified in the last sentence of paragraph [167] of this judgment, would extend to accepting service of notices under the Act on behalf of the Principal. It was argued that the exercising of “all related functions” was concerned with the assessing and determining of payment claims so that payment certificates could be issued and possibly even “provided” by the agent, but not with the agent accepting service of the claims. It was further submitted that if the parties had intended that the Quantity Surveyor or the Superintendent be the agent of the Principal for the purposes of service of payment claims, it would have been a very easy matter to say so.
[173] It was acknowledged on behalf of Abigroup that there would have been no issue if Abigroup had also served the progress claim on RSD. It was submitted, however, that this would unnecessarily increase the amount of paper passing between the parties to achieve the obvious and only imaginable outcome, which was that the second document was handed on to the Quantity Surveyor who had to respond to it. It was submitted that such a construction of the Act did not sit easily with the stated objects of the Act and would make the Act unworkable.
[174] Habersberger J concluded that a number of issues, including the issue of service raised a real question to be tried. His Honour did not say any more about why he considered this to be the case, other than that his reasons are to be found in some of the relevant submissions made by RSD. Therefore the most that Securcorp can derive from that decision is that it is accepted by his Honour that the lack of service proposition could not be dismissed as unarguable for some of the relevant reasons advanced by RSD. The decision of Vickery J in Metacorp on which Penfold relies, is not so limited.
[175] However the decision considered together with Metacorp demonstrates (as stated by McDougall J in Quality Projects in answering a similar question) that the question, although narrow in compass, is not an easy one. It also demonstrates that arguments of the nature advanced on behalf of Securcorp are not without merit. It also illustrates that in answering the question much will depend on the actual terms of the relevant contract, which may vary from case to case.
[176] Quality Projects also involved the determination of whether delivery of a payment claim to the Superintendent under a construction contract was valid service for the purposes of the NSW Act, on the Principal, the owners corporation. As McDougall said:
“It is common ground that the only way that service was effected (if it were effected at all) was by the delivery of the payment claim to the superintendent under the contract (RHM). There is no doubt that progress claims, in accordance with the payment regime set out in the contract were to be given to RHM as superintendent. The essential issue is whether, in all the circumstances, a progress claim that was also a payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) can also be served on RHM so as to constitute valid service, for the purposes of the Act, on the owners corporation.”
His Honour concluded that the payment claim was served in a manner authorised by the Contract, and thus that it was validly served for the purposes of the NSW Act.
[177] The “service of notices” clause of the Contract in that case was in the same terms as cl 7 of the present Contract. There was also a clause in similar terms to the third paragraph of cl 37.1 of the contract in this case, requiring that each “progress claim” be given in writing to the Superintendent. Despite this, his Honour said:
“It is sufficient to note that there is nothing in the contract that expressly authorises the service of payment claims on [the Superintendent] so as to effect service on the owners of the corporation.”
[178] Clause 15 of the Contract in Quality Projects required there to be a Superintendent, just as cl 20 of the present Contract required there to be a Construction Manager. It is only necessary to set out the terms of cl 15 to appreciate the difference between it and cl 20. It provided:
“15 Superintendent
The Principal shall ensure that at all times there is a Superintendent , and that the Superintendent fulfils all aspects of the role and functions reasonably and in good faith. Except where the Contract otherwise provides, the Superintendent may give a direction orally but shall as soon as practicable confirm it in writing. If the Contractor in writing requests the Superintendent to confirm an oral direction , the Contractor shall not be bound to comply with the direction until the Superintendent does so.”
In particular cl 15 does not contain any reference as to whether or not the Superintendent is the Principal’s agent in certain circumstances, whereas there is such a reference concerning the Construction Manager in cl 20 of the present contract.
[179] Clause 23 of the Contract in Quality Projects dealing with payment was in similar terms to cl 37 of the present contract dealing with this issue. However there is a significant difference in the terms of subcl 23.2 when compared with the terms of subcl 37.2. Subcl 23.2 relevantly includes:
“ 23.2 Certificates
The Superintendent shall, within 14 days after receiving such a progress claim assess the claim and shall issue a progress certificate stating the moneys due to the Contractor or the Principal , as the case may be. The Superintendent shall set out in the progress certificate the calculations employed to arrive at the amount certified and, if the amount is more or less than the amount claimed by the contractor , the reasons for the difference.
Within 21 days after receipt by the Superintendent of such a progress claim, the Principal or the Contractor , as the case may be, shall pay:
a) the amount certified, if the Superintendent has issued a progress certificate with respect to the progress claim; or
b) the amount of the progress claim, if the Superintendent has not so certified.”
The words “assess the claim” appear in subcl 23.2 before the requirement to issue a progress certificate; and whereas the requirement imposed on the Superintendent under subcl 23.2 is to issue a progress certificate “stating the moneys due”, the Construction Manager’s obligation under subcl 37.2 is to issue a progress certificate evidencing its “opinion of the moneys due.” I consider this to be an important distinction. Further, whereas the obligation of the Principal under subcl 23.2 is to pay the amount certified or the amount of the progress claim if the Superintendent has not so certified, the Principal’s obligation under subcl 37.2 is to pay to the Trade Contractor the balance of the progress claim after deducting retention moneys and setting off such of the certificate in paragraph (b) as the Principal “elects” to set off. This is also an important distinction.
[180] In support of the argument that service on the superintendent was valid, stress was placed on the course of dealing between the parties. Twenty-five earlier payment claims had been served, each in terms “addressed to, and presumably delivered to, the owners corporation in care of RHM’s postal address. Each was in terms a progress claim (numbered from 1 to 25) under the contract. Each contained a notation that it was a payment claim under the Act.” RMH was the Superintendent under the Contract. In accordance with the regime established under the Contract, RHM assessed each of those claims and issued a progress certificate. In some cases the assessment was in the amount of the claim. In some cases, it was less than the amount claimed. There was only one substantial discrepancy. One dispute was sent to adjudication. There was nothing to suggest that the issue raised on that occasion had anything to do with the mode of service of the payment claim.
[181] McDougall J accepted the general proposition flowing both from the decision of Einstein J in Emag and from the decision of Hodgson JA in Brodyn that service of a payment claim is an essential matter if the processes of the Act are to be engaged. However, his Honour said that does not answer the question, but simply focuses attention on the real question which was whether the payment claim in this case was served on the owner’s corporation. He said that the answer to this question must take into account the requirements of s 31 of the NSW Act which provides for the service of notices, which it was accepted by the parties (in his view, correctly so) included a payment claim. His Honour said that it followed from s 31(1)(e) that it must also take into account any relevant provision of the construction contract. Section 31 is identical to s 50 of the Victorian Act which is set out in paragraph [151] of this judgment.
[182] His Honour said:
“24 The starting point of the analysis is to observe that service, for the purposes of s 13 (read in conjunction with s 31) can only be valid if in some way RHM had been authorised to receive service of payment claims on behalf of the owners corporation. I do not think that it is correct to say that RHM should be regarded as the agent of the owners corporation. The owners corporation is required to ensure there is a superintendent to fulfil all aspects of the role of the superintendent to the contract “reasonably and in good faith.” It follows from that that the superintendent should not be beholden to, or more specifically owe obligations to, one of the parties to the contract that could compromise the independence, or ability to act in good faith, of the superintendent. If the superintendent were the agent of the owners corporation for a particular purpose, it would presumably owe fiduciary duty obligations to the owners corporation. It is not hard to see that, in an appropriate case, those fiduciary duty obligations might conflict with the ability of the superintendent to act reasonably and in good faith.
[183] However, it did not follow from this conclusion that the Superintendent was not authorised to receive payment claims on behalf of the owners corporation; and whether or not that was so depended “in the first place on an analysis of cl 23 of the contract read in conjunction with the Act.”
[184] His Honour’s view was:
“…, the Act operates supplementary to, and not to the exclusion of, relevant provisions of the contract . If the contract gives a right to progress payments, and does so in a manner that cannot be seen to offend s 34 of the Act, the contractual regime has to be made to coexist with the statutory regime.” (emphasis added)
[185] Consistently with what Vickery J said in Metacorp about the Victorian Act establishing a dual system for the payment of progress claims under a construction contract, so that the contractual regime sits alongside the statutory regime, and that in respect of any one progress claim, and depending on the terms of the construction contract, a claimant could make a payment claim relying on the contractual provisions and a separate payment claim relying on the legislation, or a simultaneous payment claim which is made both under the Contract and the legislation in one common document, McDougall J said with reference to the NSW Act:
“A progress claim under a contract, given in relation to a contractual right to receive a progress payment, may be a payment claim under the Act if it includes the statement required by s 13(2)(c). In those circumstances it will have a dual character. Relating that to the circumstances of this case, one aspect of the dual character is that it is a progress claim which initiates the progress of assessment and payment set out in cl 23. The other aspect of that dual character is that it is a payment claim that initiates the enforcement mechanism set out in Part 3 of the Act.”
Section 13 is the equivalent provision of the NSW Act to s 17 of the BCIPA.
[186] His Honour went on to say:
“The parties should not be taken to have contracted unaware of the provisions of the Act. Accordingly, it seems to me, if one looks at the matter objectively, the intention of cl 23 of the contract should be taken to be that it deals with claims to progress payments not only having regard to their contractual character but also having regard to their statutory character. Looking at the matter objectively, it seems to me that the parties could not have intended that there should be a dual track mechanism whereby contractual claims were provided and assessed in one way and statutory claims were provided and assessed in quite a different way. That would be a most unbusiness-like way to go about the administration of their contract.”
[187] Reference was then made to the fact that under the Contract the Superintendent had 14 days to assess a progress claim whereas under the legislation a respondent to a payment claim had 10 days within which to provide a payment schedule. This is relevant because under the Contract in the present case the Construction Manager has 14 days to issue a progress certificate and a certificate evidencing its assessment of retention moneys and moneys due from the Trade Contractor to the Principal pursuant to the Contract (subcl 37.1(a) and (b)), whereas under s 18(4) of the BCIPA the respondent to a payment claim also has 10 business days within which to provide a payment schedule. Accordingly there is a similarity between the Contracts and legislation to this extent. McDougall J said:
“Although the difference may be noted, it is unlikely ever to be of real practical significance given that any period of 10 business days will, of necessity, include at least two weekend days. In any event, it is possible to comply with both regimes by ensuring that certification is effected within 10 business days if that is a lesser period of time than 14 days.”
[188] However his Honour considered that the most helpful way of understanding the parties’ objective intention was that they appeared to have engaged in a regime whereby documents purporting to be both progress claims under the Contract and payment claims under the NSW Act were delivered as one document, “to the owners corporation in care of [the Superintendent].”
His Honour observed:
“The parties appear to have treated that, in at least one case, as being capable of giving rise to a dispute that could be referred to adjudication. That would only be possible if the document that was served had been served on the owners corporation.”
[189] For these reasons McDougall J concluded that as a matter of construction the regime set out in cl 23 of the Contract should be taken to extend not only to progress claims strictly so called but also to the parallel statutory mechanism for payment claims, and therefore that the payment claim was served in the manner authorised by the contract, and this was validly served for the purposes of the legislation.
[190] His Honour concluded that in the event he was wrong, the contract included a practice or arrangement whereby, the parties agreed or arranged that payment claims for the purposes of the legislation could be served on the owners corporation by being served, in their dual capacity as progress claims under the Contract, on the Superintendent. This was because on 25 prior occasions, a document purporting to be both a progress claim under the Contract and a payment claim under the legislation was served on the owners corporation care of the Superintendent, and was assessed and paid; and on the one occasion when the failure to pay it gave rise to a reference to adjudication, no point as to service was taken.
[191] Neither party has been able to provide me with a Queensland authority which answers the precise question I have to resolve, as to whether a progress claim under a construction contract that is also a payment claim under the BCIPA can be validly served for the purpose of that legislation not only by service on “the person who, under the construction contract concerned, is or may be liable to make the payment”, in this case, Securcorp, but also by service on a Construction Manager (or Superintendent as the case may be) under the construction contract, in this case Matrix.
[192] The Supreme Court decisions of Vickery J in Metacorp and McDougall J in Quality Projects concerning the comparable Victorian and New South Wales legislation respectively, which answer these questions in the affirmative are persuasive but not decisive. For reasons which I will give, I also consider that they are distinguishable having regard to the terms of the applicable construction contracts.
[193] I consider that subject to an express contractual provision, the question is to be answered in the negative for the obiter reasons of Einstein J concerning the NSW Act in Emag .
[194] I also agree with Mr Handran that the starting point for the interpretation of s 17(1) of the BCIPA is the clear and unambiguous text of s 17(1) which is that a payment claim may only be served “on the person who under the construction contract concerned, is or may be liable for payment” and is referred to as “the respondent”.
[195] The decision of Einstein J was made in the context of his view that the equivalent NSW Act required particular steps to be taken by the parties and by the adjudicator and “proof of strict compliance with the Act is necessary” for the achievement of the quick and efficient recovery of progress payments and resolution of disputes in this regard. Accordingly his Honour concluded that “the service provisions of the Act require to be complied with in their terms.” This is consistent with the statements of the Supreme Court of Queensland to which I have referred at paragraph [123] of this judgment that failure to adhere strictly to the statutory regime has been held to preclude reliance on the special statutory rights under the BCIPA. As I have also said at paragraph [124] I do not consider that the observation of Chesterman J in Minimax which I have applied in deciding that the December 2010 and the January 2011 progress claims are each payment claims under the BCIPA and progress claims under the Contract, simultaneously made in one common document, derogates from this principle. In that case, although his Honour was of the view that it is the content of the documents rather than the particular form that is relevant to determine whether a document is a payment schedule, he nonetheless said that the content must satisfy the three statutory criteria specified in s 18(2) and (3) of the BCIPA.
[196] As was recognised by McDougall J in Quality Projects it follows from the decision of Einstein J in Emag and Hodgson JA in Brodyn that service of payment claim is an essential matter if the processes of the legislation is to be engaged. As Tutt DCJ said of s 17, in Construct Assist Pty Ltd v PDMS Group Pty Ltd , it “is a core section and contains the specific provisions for the recovery of a progress payment under the BCIPA and the mechanism to achieve that payment.” In these circumstances, notwithstanding McDougall J considered this simply focuses attention on the real question of whether the payment claim was served on the Principal under the construction contract in that case, I consider that service of a payment claim under s 17(1) is a matter which must be strictly complied with in accordance with its terms. These terms are that it be served “on the person who under the construction contract, is or may be liable for payment” and not the agent of this person.
[197] This is particularly so, when as Einstein J recognised in Emag service being effected in accordance with the legislation is critical as it governs the commencement of time limitations following such service, and the consequence of non compliance with these time limitations period is harsh. As recognised by Vickery J in Metacorp one of these time limitation periods applies to the obligation to serve a payment schedule which is triggered by service of the payment claim. The serious consequences of a failure by a respondent to provide a payment schedule to the claimant within the time required are that it triggers a liability for payment (s 18(5) of the BCIPA); entitles the claimant to recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction (s 19(2)(a) of the BCIPA) or make an adjudication application in relation to the payment claim (s 21(1)(b) of the BCIPA); and entitles a claimant to serve notice on the respondent of the claimant’s intention to suspend carrying out of construction work under the construction contract or to suspend supplying related goods and services under the construction contract (s 19(2)(b) of the BCIPA). These were regarded as serious consequences, notwithstanding that their Honours must have appreciated that ultimately the respondent may be able to claw the amount back as a debt in civil proceedings.
[198] It is important to appreciate that these are serious consequences which attach to “the respondent”, and to no other person. That is to say, these serious consequences attach only to “the person who, under the construction contract concerned, is or may be liable to make the payment” under s 17(1).
[199] For these reasons I conclude strict compliance with the matter of service of the payment claim requires that in accordance with the terms of s 17(1) the payment claim may be validly served only on this person, in this case, Securcorp and not the agent of this person, in this case, Matrix, subject to any express contractual provision.
[200] My conclusion is subject to this qualification because s 103(1) of the BCIPA provides that a notice which for this purpose includes a payment claim, may be served on a person under the Act, in any way provided under the construction contract concerned.
[201] The conclusion is not inconsistent with my view that the BCIPA establishes a dual system for the payment of progress claims under the construction contract, so that the contractual regime sits along side the statutory regime. It is also not inconsistent with my finding that each of the December 2010 and January 2011 progress claims is a payment claim under the BCIPA and a progress claim under the Contract, simultaneously made in one common document. While I also accept, as stated by McDougall J in Quality Projects , that the contractual regime has to be made to coexist with the statutory regime, to the extent the claimant elects to rely on s 19(2)(a) of the statutory regime to recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant in any court of competent jurisdiction, it is essential that the payment claim be served in accordance with that statutory regime. I consider that if the contractual regime which sits alongside the statutory regime provides a separate and distinct mechanism which the claimant may elect to follow for the recovery of progress claims, this mechanism, including in relation to service of a claim, is not available for the purpose of recovering the unpaid portion of the claimed amount when it is elected to do so under the statutory regime. In such circumstances the construction contract does not provide a way in which a payment claim may be served on a person for the purpose of s 103(1) of the BCIPA.
[202] This is clearly illustrated by a comparison of the contractual regime with the statutory regime in the present case.
[203] With reference to the statutory regime, consistent with what was said by McDougall J in Quality Projects , cl 7 of the Contract in this case does not expressly authorise the service of payment claims on Matrix, as Construction Manager, so as to effect service on Securcorp. However contrary to Mr Handran’s argument I interpret the following part of cl 20 to apply:
“Except where the Contract otherwise provides, the Construction Manager :
(a) acts as the Principal’s agent in the roles and functions to the exclusion of the Principal .”
[204] Therefore I proceed on the basis that in providing that “Each progress claim shall be given in writing to the Construction Manager ”, subcl 37.1 has the effect that such claims are given in writing to Matrix as the agent for Securcorp. I see no reason to conclude that the term “given” has any different meaning to “served”.
[205] Subcl 37.2 then commences by providing:
“The Construction Manager shall, within 14 days after receiving such a progress claim, issue to the Principal and the Trade Contractor :
(a) a progress certificate evidencing the Construction Manager’s opinion of the moneys due from the Principal and the Trade Contractor pursuant to the progress claim and the reasons for any difference (‘ progress certificate ’); and
(b) a certificate evidencing the Construction Manager’s assessment of retention moneys and moneys due from the Trade Contractor to the Principal pursuant to the Contract .”
While I proceed on the basis that the issue of the certificates by Matrix to Penfold pursuant to this subcl, is done as Securcorp’s agent, it could hardly be regarded as acting in this capacity when issuing them to Securcorp itself.
[206] I also note that unlike the construction contract in Metacorp , the legislative terms “payment claim” and “payment schedule” are not adopted in the present contract. However this is not a distinguishing feature from the contract in Quality Projects . Of more significance is that despite Ms Downes characterising the “progress certificates” as being in effect “payment schedules” I consider that this is not so. As stated by Chesterman J in Minimax , to constitute a payment schedule a document must:
(i) Identify the payment claim to which it related, and
(ii) State any amount which the recipient of the payment claim proposed to make in response to it.
(iii) Importantly, if that amount is less than the amount claimed in the payment schedule it must state why it is less.”
In my view criteria (ii) is not satisfied because an expression of Matrix’s “opinion” of the moneys due from Securcrop to Penfold is not a statement of “any amount which the recipient of the progress claim proposed to make in response to it.” This is to be distinguished from the contractual requirement in Metacorp that the Superindent issue a payment schedule to the Contractor showing “the amount certified as being due for payment to the Contractor by the Principal.” It is also distinguishable from the requirement imposed on the Superintendent by the Contract in Quality Projects to assess the claim and issue a progress certificate “stating the moneys due”.
[207] Importantly subcl 37.2 (a) and (b) must be read in conjunction with the penultimate paragraph which is as follows:
“The Principal shall within 7 days after receiving both such certificates, or within 21 days after the Construction Manager receives the progress claim, pay to the Trade Contractor the balance of the progress certificate after setting off such of the certificate in paragraph (b) as the Principal elects to set off. If that setting off produces a negative balance, the Trade Contractor shall pay that balance to the Principal within 7 days of receiving written notice thereof.”
This clearly invests Securcrop with rights under the Contract. For this reason I disagree with Mr Handran’s submission that Securcorp was bound by Matrix’s assessment. I consider that once Matrix has expressed its opinion as to the moneys due from Securcorp to Penfold in the progress certificate and issues the second certificate under paragraph (b) evidencing its assessment of retention moneys and moneys due from Penfold to Securcorp, it is left to Securcorp to determine the amount of the payment which it proposes to make in response to the payment claim. Securcorp has the right to make an election as to how much of the certificate under (b) it sets of. For this reason also, the progress certificate issued by Matrix does not “state any amount which the recipient of the progress claim proposed to make in response to it.” This is a matter solely in the province of Securcorp to decide. This amount may be further reduced in the discretion of Securcorp in circumstances where subcl 38.1 applies. In such circumstances by virtue of subcl 38.2 Securcorp “may” withhold so much of the moneys certified as being due and payable until Penfold complies with subcl 38.1, provided such moneys do not exceed the moneys evidenced as due and payable to workers and subcontractors pursuant to subcl 38.1. This is again distinguishable from the contracts in Metacorp and Quality Projects . In Metacorp the Principal was required to pay to the Contractor or the Contractor was required to pay to the Principal, “an amount not less than the amount shown in the payment schedule as due to the Contractor or the Principal as the case may be.” And in Quality Projects there was an obligation on the Principal to pay the amount certified or the amount of the progress claim if the Superintendent had not so certified.
[208] Because subcl 37.2 requires this payment to be made by Securcorp “within 7 days after receiving both such certificates, or within 21 days after the Construction manager receives the progress claim” in circumstances in which Matrix was required to issue these certificates to Securcorp and Penfold “within 14 days of receiving such a progress claim”, Securcorp, which makes the final decision on the amount of payment to be made to Penfold, will not be able to serve a payment schedule on the claimant within 10 business days after the claim is served on Matrix, as required by s 18(4)(ii) of BCIPA with the serious consequence of entitling Penfold to recover the unpaid portion of the amount claimed from Securcorp, as a debt due to it, in any court of competent jurisdiction under s 19(2)(a)(i).
[209] In Quality Projects McDougall J proceeded on the basis that the parties should not be taken to have contracted unaware of the provisions of the Act. Assuming this to be the case notwithstanding Ms Borthwick’s evidence that Securcorp does not enter into construction contracts on a regular basis in the ordinary course of business, the distinction between the essential requirements for the processes of the statutory regime under the BCIPA to be engaged and for the contractual regime to be engaged in order to make Securcorp liable to pay the claimed amount, is such that if one looks at the matter objectively, the intention of subcl 37.1 and subcl 37.2 of the contract should be taken to be that of dealing with claims to progress payments (including service of those claims) having regard to their contractual nature. It can not have been the intention of the parties that by providing under the Contract for a separate and distinct mechanism which the claimant may elect to follow for recovery of progress claims, Securcorp would be liable to pay the claimed amount in circumstances where by complying with the contractual regime it has failed to comply with the strict requirements of the statutory regime.
[210] This is emphasised by further differences between the statutory and contractual regimes. By virtue of the second paragraph of subcl 37.2 Matrix “may issue the progress certificate with details of the calculations and shall issue the certificate in paragraph (b)” even if Penfold “does not make a progress claim in accordance with Item 28”. The penultimate paragraph then has the effect that Securcorp shall within 7 days after receiving these certificates pay Penfold the amount it determines in accordance with the terms of the paragraph. Accordingly Securcorp can be required to pay an mount to Penfold for construction work done under the Contract, despite the absence of service of a payment claim under the statutory regime.
[211] Further, the third paragraph of subcl 37.2 deems the progress claim to be the relevant progress certificate if Matrix does not issue the progress certificate within 14 days after receiving it as required by subcl 37.1. Such a deemed progress certificate could not “state any amount which the recipient of the payment claim proposed to make in response to it” with the result that criteria (ii) of what is required to constitute a payment schedule would not be satisfied.
[212] I have already indicated some reasons which distinguish the Contract in this case and its relationship with the statutory regime from what was involved in Metacorp . The conclusion of Vickery J in that case is also distinguishable because the Contract with which his Honour was concerned made specific reference to the Victorian Act; the relevant Progress Claim complied with the requirements for a payment schedule prescribed by the Victorian Act; and the Contract contained a term that “For the avoidance of doubt, in issuing a payment schedule to the Contractor, the Superintendent does so on behalf of and as agent of the Principal.”
[213] I consider that Quality Projects is distinguishable from the present case for the reasons which I have already given in distinguishing between the contractual terms in each case. Further in my view, looking at the matter objectively the intention of subcl 37.1 and subcl 37.2 is clear and unambiguous, so that it is not necessary to have regard to the course of conduct involved in the prior occasions when claims were submitted by Penfold and paid. Even if regard was had to this course of conduct, the cases are distinguishable. In Quality Projects there were 25 prior occasions in which a document purporting to be both a progress claim under the Contract and a payment claim under the legislation was served on the owners corporation care of the Superintendent, and was assessed and paid; and on the one occasion, when the failure to pay it gave rise to a reference to adjudication, no point as to service was taken. This is significantly different from the present case in which only four previous progress claims, each described as “a progress claim under the Building and Construction Industry Payments Act 2004” had been emailed to Matrix and subsequently paid. These were the progress claims of July, August, October and November 2010. Only the final three were addressed to “Michael Woodbry of Securcorp Limited” with the address identified for Securcorp at Item 2 of the Schedule. The July 2010 progress claim was simply addressed to:
“ Matrix Projects (qld) Pty Ltd
johncopelin@matrix.com.au”
These claims were attached to emails directed by Penfolds to Matrix’s email addresses after Mr Martin received an email from Carol O’Shannessy on 12 July 2007 requesting that they be sent to her email address. The October 2010 email was directed to Mr Copelin’s email address rather than to Mr O’Shannessy. The November 2010 email was sent to both of their email addresses. There is no evidence that any of these emails and their attachments were sent to Securcorp.
[214] Ms Borthwick’s evidence is that Penfold’s course of conduct in respect of the purported service of progress claims on Matrix under the BCIPA, was neither suggested, encouraged, or held out as appropriate by Securcorp. Further she deposes that at no time did Penfold serve, deliver or in any way otherwise provide a copy of the July, August, October and November 2010 claims to Securcorp, whether in accordance with cl 7 of the Contract (being to Securcorp’s address set out in Item 2 of the Schedule) or at all, and at no time did Matrix provide to both Penfold and Securcorp in respect of those claims, a progress certificate as required by subcl 37.2 of the Contract within the time provided under the Contract or at all. As I interpret this evidence, although Ms Borthwick does not expressly so, it is to the effect that Securcorp was unaware of all progress claims because it never received them or the progress certificates.
[215] In light of Ms Borthwick’s evidence and the absence of evidence that any of these emails and attachments were sent to Securcorp, notwithstanding Mr Handran’s concession that Securcorp paid the July, August, September and November claims, I am not satisfied Penfold has established that the contract included a practice or arrangement whereby, the parties agreed or arranged that payment claims for the purpose of the legislation could be served on Securcorp, by being served in their dual capacity as progress claims under the Contract on Matrix. As Mr Handran submits, although the document may have a dual character, this is not a course of conduct which unequivocally demonstrates that any payment was made on the basis it was a payment claim under the BCIPA as opposed to a progress claim under the separate and distinct contractual regime. Therefore the factual situation in this case is different from Quality Projects .
[216] To emphasise that any course of conduct related to the subsequent payment by Securcorp of the July, August, September and November 2010 claims was not unequivocally made on the basis of a payment claim under the statutory regime as opposed to a progress claim under the contractual regime, it is relevant that these payments were made in the context of the 12 July 2010 email to Mr Martin from Carol O’Shannessy of Matrix, which included:
“Just a reminder that all invoices are due by COB Tuesday 20th July 2010.
Any invoice that is submitted after this time will not be reviewed until the following month.”
[217] The date of 20th July 2010 is a reference to Item 28 of the Schedule by virtue of which the “Times for progress claim” was the 20th day of each month for WUC done to the last day of that month. This is the reference date for the purpose of s 12 of the BCIPA. As a consequence of that provision, Penfold had a statutory entitlement to a progress payment on the 20th day of each month (“each reference date”) for unpaid amounts for work done under the Contract to the end of that month whether or not the work was done in that month.
[218] As a result of subcl 37.2 of the Contract Penfold having given a progress claim in writing to Matrix on 20 July 2010, Securcorp became liable to pay it by 10 August 2010 (being the last day of the 21 day period after Matrix received the progress claim). This was also the date Securcorp became liable to pay the claimed amount under a payment claim by virtue of s 18(5) with the consequences of not paying the claimant if there is no payment schedule.
[219] However Mr O’Shannessy’s email was to the effect that if an invoice for a progress claim was not submitted until after 20 July it would not be reviewed until August 2010. The reasonable inference is that it would not be reviewed until after 20 August 2010 by which date the next invoice would be due. That is if a progress claim was not made until 21 July 2010 it would not be reviewed within a 21 day period. Whatever effect this had on liability under the contract, if the intention was that the invoices would be both progress claims under the contract and payment claims under the BCIPA the respondent for the latter purpose would be unable to comply with the requirement to serve a payment schedule on the claimant within 10 business days after the payment claim was served and would not pay the whole or any part of the claimed amount on or before the due date for progress payment to which the claim related. Again this would have the serious consequence of entitling Penfold to recover the unpaid portion of the amount claimed from Securcorp, as a debt due to the claimant in any court of competent jurisdiction under s 19(2)(a)(i).
For the reasons I have previously given, if one looks at the matter objectively this can not have been the parties’ intention. In these circumstances I consider that the email of 20 July 2010 was intended to be directed only to a progress claim under the contractual regime. At best for Penfold it cannot be said to unequivocally relate also to the statutory regime. It is this email that governed any course of conduct involved in the payment by Securcorp of the August, October and November 2010 claims. This is supported by the fact that Penfold sent by email these claims on 20 August, 20 October and 22 November 2011. I note that the December 2010 and January 2011 claims were also sent by email on the 20th day of each of those months. Further, as indicated at paragraph [43] of this judgment there was no suggestion in the email message accompanying the January 2011 claim, that at any time between 20 December 2010 and 20 January 2011, Securcorp failed to serve a payment schedule on Penfold in response to the December 2010 claim. In fact in the first document headed as “ Payment Claim ” the invoice total was reduced on the basis that the December 2010 claim was one of five previous payments.
[220] For these reasons I find that:
(a) in accordance with the terms of s 17(1) the payment claim could only be validly served on Securcorp and not on Matrix as its agent, subject to any express contractual provision.
(b) the construction contract in this case does not provide a way in which a payment claim may be served on Securcorp for the purposes of s 103(1) of the BCIPA because the provisions of the contract in relation to the service are limited to the service of progress claims under the separate and distinct contractual regime.
[221] In the event I am wrong, I will address the issues on the assumption that Ms Downes’ is correct in her submission on the basis of Metacorp that the service of a payment claim on an authorised agent is good service.
[222] However for the reasons I have given, although I also proceed on the basis that under subcl 37.1 of the Contract, progress claims are given in writing to Matrix as agent for Securcorp, and Matrix also acts in that capacity in issuing progress certificates to Penfold pursuant to subcl 37.2, I consider that these subclauses are intended to be limited to dealing with claims for progress payments (including service of those claims) under the separate and distinct contractual regime. As such I conclude that Matrix was not Penfold’s authorised agent for the service of payment claims under the BCIPA, and in particular under s 17(1) of that legislation.
[223] For the reasons I have also given, this conclusion is not effected by the fact that the December 2010 and January 2011 claims were sent by email to Matrix pursuant to its specific request of 12 July 2010 and in line with the established manner for the provision of earlier claims which had been paid by Securcorp. As I have said, I consider that the 12 July 2011 email was intended to be directed only to progress claims under the contractual regime, and at best for Penfold it cannot be said to unequivocally relate also to the statutory regime.
Whether Penfold had been served by the December 2010 and January 2011 claims coming to its attention
205 Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259 at [58] per Hodgson JA is distinguishable for this reason. It is quoted at para [226] of this judgment.
[224] Alternatively Ms Downes argues there is an inference that these claims, including the December 2010 and January 2011 claims had come to Securcorp’s attention. As a consequence it is submitted that Securcorp has been served. She refers in support of this submission to the 27 January 2011 and 11 February 2011 emails, which on their face were from John Copelin.
[225] Each of these emails commences:
“As you are aware, all claims on the Altitude project are recommended by Matrix, with the same recommendation reassessed, approved and paid by Securcorp.”
The 27 January 2011 email concludes:
“Please note, the revised payment date is now due for Securcorp release on 3rd February 2010, noting that from COB 3rd February it may take up to 24 or even 48 hours for your bank to process the payment from that point.
Please also advise if payment has not been received by Close of Business 4th February.”
Similarly the 11 February 2011 email concludes:
“Please note, the revised payment date (caused by a one week loss of time from cyclone Yasi) is now due for Securcorp release on the 18 th February it may take up to 24 or even 48 hours for your bank to process the payment from that point.
Please also advise if payment has not been received by Close of Business 21st February.”
I note that neither of these emails was copied to Securcorp.
[226] Ms Downes relies on the judgment of Hodgson JA (with whom the other members of the court agreed) in Falgat where his Honour said:
“In the first place, in my opinion it is clear that if a document has actually been received and come to the attention of a person to be served or provided with the document, or of a person with authority to deal with such a document on behalf of a person or corporation to be served or provided with the document, it does not matter whether or not any facultative regime has been complied with: see Howship Holdings Pty Ltd v Leslie (1996) 41 NSWLR 542; Mohammed v Farah [2004] NSWSC 482 at [42]-[44]. In such case, there has been service, provision and receipt.”
[227] In Metacorp Vickery J also cited the decision of Young J in Howship Holdings Pty Ltd v Leslie with approval, observing:
“In Howship Holdings Pty Ltd v Leslie Young J considered the position where the substantial dispute was whether service of a summons at a document exchange box was good service. His Honour held that the ordinary meaning of “service” being personal service , merely means that the document in question must come to the notice of the person for whom it was intended . His Honour referred to authorities supporting the proposition that the means by which the person obtained the document were usually immaterial . …”
[228] His Honour also said with reference to the Victorian Act: “Service of a payment claim under s 14(1) of the Act may therefore include delivery into the possession of the intended recipient by whatever means, which may be taken to be effected upon receipt of the document by that person.”
[229] Despite Mr Handran’s submission that email service does not fall with cl 7 of the Contract I consider that provided Securcorp has been served, email service is countenanced under the Contract and the BCIPA. This is consistent with the decision in Metacorp , albeit concerning different contractual and legislative provisions for the service of notices. The service provision of the Victorian Act is in effect a combination of the modes of service under s 39 of the AIA and s 103(1) of the BCIPA. I note that s 103(2) applies so as not to limit or exclude s 39 of the AIA or the provisions of any other law about the service of notices, e.g. s 109X of the Corporations Act 2001 (Cth). There is no basis on which to distinguish the decision of Vickery J in Metacorp on this issue.
[230] In Metacorp his Honour said:
“Section 50 of the Act is facultative, it is not mandatory. It will be noted that the opening words used in subs (1) are “may be given to or served”. Section 50 is not a code. The section does not operate so that if there is no service under any of its limbs there is no service at all. The service provisions under s 50 of the Act are in addition to and do not limit or exclude the common law or the provisions of any other applicable legislation with respect of the service of notices, for example s 109X of the Corporations Act 2001. Further, under s 50(1)(e) of the Act, service may be effected “in any manner specified in the relevant construction contract”.
To a similar effect in J Hutchinson Pty Ltd v Thunder Investments Pty Ltd Alan Wilson DCJ held that s 103 of the BCIPA does not prescribe a mandatory method of service. His Honour made this observation in circumstances where the respondent had received purported payment schedules by email and facsimile. Although his Honour did not understand it to be suggested that service by these means were insufficient, he framed his observation in such a manner as to suggest that he accepted service by email and facsimile was sufficient.
[231] The purported schedule in Minimax was in the form of an email. Although Chesterman J held that this was not a payment schedule, it was for a reason other than it being an email. His Honour never suggested that an otherwise complying payment schedule could not be in the form of an email.
[232] Similarly to the provision of the Victorian Act dealing with the service of notices, while making no mention of service by email, s 103 of the BCIPA does not prohibit this mode of service. More significantly, s 103(2) by expressly not limiting or excluding s 39 of the AIA permits the service of notices in accordance with s 39(1)(b) which provides:
“ 39 Service of documents
(1) If an Act requires or permits a document to be served on a person the document may be served –
…
(b) on a body corporate – by leaving it at, or sending it by post, telex, facsimile or similar facility to, the head office, a registered office or a principal office of the body corporate.” (emphasis added)
In my view in context, “or similar facility” is wide enough to extend to email. As such I consider s 103(2) of the BCIPA envisages email service of notices, including payment claims.
[233] I consider that the service provision found in cl 7 of the Contract, is similarly facultative. It opens with the words: “A notice (and other documents) shall be deemed to be given and received” [emphasis added]. These words do not provide a contractual code of mandatory service. They do not exclude other modes of service, but merely deem that service be effected in the circumstances specified. It does not exclude, service by email. If the relevant address in the contract or last communicated in writing is an email address, para (a) is wide enough to deem a notice to have been given and received on the date of actual receipt of an email under para (b)(i).
[234] For these reasons, service of a payment claim by email would be in accordance with the requirements of the Contract and the BCIPA. However in order for service to be valid it must be otherwise served in accordance with the contractual or legislative requirements, e.g. as I have found a payment claim in this case could only be validly served on Securcorp and not on Matrix as its agent.
[235] With reference to Ms Downes’ submission that the December 2010 and January 2011 claims have been served on Securcorp, I find that Penfold has failed to discharge its onus to satisfy me that these claims had come to the attention of Securcorp, let alone that they were given to or received by it.
[236] In the first place there is the evidence of Ms Borthwick, which as I have said I interpret as being to the effect that Securcorp was unaware of all progress claims (including those of December 2010 and January 2011) because it never received them or the related progress certificates. I give greater weight to her sworn evidence as General Manager of Securcorp who has been directly involved with managing the Altitude Project than the unsworn statements by Matrix in the emails relied upon by Penfold. These statements by Mr Copelin on behalf of Matrix are not binding on Securcorp.
[237] I also agree with Mr Handran’s submission in reply that at best for Penfold these statements are ambiguous. As he submits, a statement that “all claims… are recommended by Matrix, with the same recommendation reassessed, approved and paid by Securcorp”, does not assert that the claims were forwarded to Securcorp as opposed to the recommendations. Consistently with this, I note that under subcl 37.2, after Matrix is given the progress claim, it is required to issue a progress certificate in paragraph (b) to Securcorp, and not the progress claim.
[238] Penfold’s argument that Securcorp has been served for the purposes of s 17(1) of the BCIPA is not assisted by reference to cl 7 of the Contract. As I have held, the construction contract does not provide a way in which a payment claim may be served on Securcorp for the purposes of s 103(1) of the BCIPA because the provisions of the contract in relation to service are limited to the service of progress claims under the separate and distinct contractual regime.
[239] In any event I do not accept Ms Downes’ argument that by virtue of cl 7 of the Contract there has been service on Securcorp because it was addressed to the relevant address in the Contract, and that this service occurred on the date of the email which is the earliest date of actual receipt. This submission relies on part of cl 7 which provides:
“A notice (and other documents) shall be deemed to have been given and received:
(a) if addressed … to the relevant address in the Contract ; and
(b) on the earliest date of:
(i) actual receipt;
(ii) confirmation of correct transmission of fax; or (iii) 3 days after posting.”
[240] Ms Downes relies on the December 2010 and January 2011 progress claims being addressed to “Michael Woodbry of Securcorp Limited” followed by the address identified for Securcorp at Item 2 of the Schedule”, as complying with the mode of service under cl 7 by virtue of which the notice was deemed to have been given and received on the date of actual receipt.
[241] However in each case, this address appeared above the words:
“Care of
John Copelin of
Matrix Projects (Qld) Pty Ltd
Level 1, 2 Industrial Av, Stratford 4870”.
This was Matrix’s address in its capacity as Construction Manager at Item 6 of the Schedule. Each document contained the fax number of Matrix at Item 6 and a phone number that is not identified in the Schedule, despite the fax and phone numbers for Securcorp being specified at Item 2. As previously stated these claims were emailed to Carol O’Shannessy of Matrix and were not copied to any Securcorp email addresses.
[242] Despite Securcorp’s street address appearing in the claim I do not consider that the claim was addressed to it as required by cl 7 in the circumstances set out in paragraph [241]. In reality the claim was addressed to Matrix, which by virtue of the email was intended to actually receive the documents. The addresses of Securcorp and Matrix at Items 2 and 6 of the Schedule respectively, were irrelevant when the mode of service was email and not fax. As Mr Handran correctly submitted a notice is not deemed to be given and received under cl 7 until it is both addressed and received, and subcl 7(b)(ii) and (iii) are irrelevant in circumstances in which the claims were neither transmitted by fax or posted. It is subcl 7(b)(i) which relates to the date of actual receipt and is relied upon by Penfold in support of its argument, which is relevant. Therefore the claims were addressed by email to Matrix and delivered to it by this means. They were not addressed to or received by Securcorp pursuant to the chosen means of service.
[243] It is for these reasons that I reject Ms Downes’ argument that there has been service on Securcorp by virtue of cl 7 of the Contract.
[244] Penfold is not assisted by s 39 of the AIA because, as is apparent from the preceding discussion the claims have not been sent by email to “the head office, a registered office or a principal office” of Securcorp.
[245] Section 109X of the Corporations Act 2001 (Cth) also does not assist. In so far as is relevant this section provides:
“ Service of documents
(1) For the purposes of any law, a document may be served on a company by:
(a) leaving it at, or posting it to, the company’s registered office; or
(b) delivering a copy of the document personally to a director of the company who resides in Australia or in an external Territory; or
(2) For the purposes of any law, a document may be served on a director or company secretary by leaving it at, or posting it to, the alternative address notified to ASIC under subsection 5H(2), 117(2) 205B(1) or (4) or 601BC(2). However, this only applies to service on the director or company secretary:
(a) in their capacity as a director or company secretary; or
(b) for the purposes of a proceeding in respect of conduct they engaged in as a director or company secretary.” (emphasis added)
In this case the claims have not been left at or posted to Securcorp’s registered office or delivered personally to one of its directors, including at any alternative address notified to ASIC.
[246] While as recognised by Young J in Howship Holdings Pty Ltd v Leslie as applied in Emag, s 109X, is also facultative and not mandatory and does not disqualify a document from service if it came into the possession of Securcorp, as I have held at paragraph [235], Penfold has failed to discharge its onus to satisfy me that these claims had come to Securcorp’s attention, let alone that they were given to or received by it.
Conclusions and orders
[247] For these reasons I conclude that Penfold has not discharged the onus to prove that the December 2010 and January 2011 payment claims were served as required by s 17(1) of the BCIPA.
[248] Therefore I find that these payment claims were not validly served.
[249] As a payment claim which is not served on the respondent under s17(1) cannot set in motion the machinery of Pt 3 so far as recovery of a progress payment is concerned, the applicant is not entitled by virtue of s 19(2)(a)(i) to recover the unpaid portion of the claimed amount from the respondent in any court of competent jurisdiction.
[250] Accordingly the order of this court is:
application is dismissed
[251] I will hear the parties in respect of the costs of the application.