IN THE COUNTY COURT OF VICTORIA Revised
Not Restricted
AT MELBOURNE CIVIL DIVISION COMMERCIAL LIST BUILDING CASES DIVISION
Case No. CI-12-00583
METRO PARTITIONS PTY LTD (ACN 064 637 369) Plaintiff v
ICHOR CONSTRUCTIONS PTY LTD (ACN 098 984 082) Defendant
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JUDGE : HIS HONOUR JUDGE GINNANE
WHERE HELD : Melbourne
DATE OF HEARING : 22 February 2012
DATE OF JUDGMENT : 7 March 2012 (Revised 13 March 2012)
CASE MAY BE CITED AS : Metro Partitions Pty Ltd v Ichor Constructions Pty Ltd
MEDIUM NEUTRAL CITATION : [2012] VCC 189
REASONS FOR JUDGMENT
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Catchwords: Building and Construction Industry – security of payment – progress payment claims-final payment – summary judgment - Building and Construction Industry Security of Payment Act 2002 ss 10B, 14, 15 and 16
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APPEARANCES : Counsel Solicitors
For the Plaintiff Mr R Andrew Oldham Naidoo Lawyers
For the Defendant Mr R McCrudden Chamos Legal/ McMahon
Fearnley Lawyers Pty Ltd
HIS HONOUR:
1 Metro Partitions Pty Ltd (Metro) applies for summary judgment for the sum of
$43,344.75 against Ichor Constructions Pty Ltd (Ichor) pursuant to s.16 of the Building and Construction Industry Security and Payment Act 2002 (the Act) and s 61 of the Civil Procedure Act 2010.
2 The application is supported by an affidavit sworn by Mr R Frahamer, a director of the plaintiff. He swears as to service by a debt recovery firm of a final payment claim for $47,565.00 on Ichor on 14 December 2011 and that $43,344.75 remains due and owing. On 2 February 2012 Ichor electronically transferred the sum of $4,156.90 to Metro’s bank account.
3 In August 2011, Metro entered into a building subcontract with Ichor to carry out an office fit-out at Port Melbourne. The contract was evidenced by a written confirmation of acceptance in the amount of $305,000.00 by Ichor. The acceptance of the contract by Ichor stated:
“Further to recent discussions with respect to the PARTITION, CEILINGS & DOORS PACKAGE we confirm acceptance of this in the amount of $305,000.00 and will be entering into a subcontract agreement for the above project with Metro Partitions Pty Ltd and Ichor Constructions Pty Ltd.
We confirm this agreement is subject to the following:
The terms and conditions of Ichor Constructions Major Building Works
Subcontract Agreement.
The Scope of Works pursuant (sic) with the contract tender drawings and specifications.
The Tender Review sheet.
Ichor Constructions Construction Program.
Certificates of Currency for Workers Compensation Insurance. Certificates of Currency for Public Liability, (minimum $10 million).”
4 Most of those documents were not in evidence before the Court.
5 A dispute arose between the parties, particularly about variations to the
contract and back charges, including rubbish removal. As stated, on 14 December 2011, a payment claim by Metro under s.14(1) of the Act was served on Ichor for the sum of $47,501.65.
6 Metro had served a previous payment claim dated 28 August 2011 for the sum of $42,763.00 on Ichor. It appears that Metro served an earlier payment claim of 29 September 2011 on Ichor. Ichor provided payment schedules to the defendant in respect of those two payment claims.
7 The project manager of the defendant, Mr V Furfaro swore an affidavit opposing the plaintiff’s application for summary judgment. In paragraph 11 he swore that on 15 December 2011, namely, the day after the service of the December claim, he left a voicemail message for Mr Frahamer as follows:
“I have received your invoice and I am going to fax the assessment today as per my email on 2nd December 2011. It will be about $4,000.00. You have not responded to our previous assessments and emails where we indicated the sum which you would be paid.”
8 In paragraphs 13 and 14 Mr Furfaro stated:
“I had already prepared a payment schedule for $3,779.00 + GST dated 15 December 2011 in relation to the December claim and I believe that I had faxed the December schedule at 1:50 pm on that day…
In relation to the said fax, the receiving telephone was busy or switched off and the December schedule did not get transmitted. I did not notice this until 17 February 2012 when I received the present Summons the subject of these proceedings and I reviewed the documentation including the facsimile tx report.
Pursuant to the December Schedule, I authorised the payment to the Plaintiff of the $3,779.00 +GST which was paid. The payment was accompanied with a remittance advice… The Plaintiff made no representation to me in relation to that payment of $3,779.00 +GST ($4,156.90) either orally or in writing, nor did he dispute in any manner that he was not paid an appropriate amount pursuant to the construction contract.”
9 In paragraph 15, Mr Furfaro referred Mr Frahamer’s affidavit and stated:
“Having regard to
(a) the conversations which I had with Mr Frahamer; (b) the voicemail which I left for Mr Frahamer;
(c) the emails referred to above; and
(d ) the remittance advice.
I dispute that there was an assumption of ‘part payment’ as referred to in paragraph 9 of Mr Frahamer’s affidavit.”
10 It is then necessary to refer to the provisions of the Act, first to s.16 (1) which provides:
“This section applies if the respondent-
(a) becomes liable to pay the claimed amount to the claimant under section 15(4) as a consequence of having failed to provide a payment schedule to the claimant within the time allowed by that 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.”
Section 16(2)(a) states:
“In those circumstances the claimant-
(i) may recover the unpaid portion of the claimed amount from the respondent as a debt due to the claimant, in any court of competent jurisdiction.”
11 Section 15 (4) provides that: If-
(a) a claimant serves a payment claim on a respondent; and
(b) the respondent does not provide a payment schedule to the claimant- (i) within the time required by the relevant construction contract; or (ii) within 10 business days after the payment claim is served;
whichever time expires earlier –
the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.”
12 Under the provisions of s 61 of the Civil Procedure Act 2010, Metro, in order to obtain summary judgment, has to establish that Ichor’s defence has no real prospects of success.
13 Ichor opposed the application for summary judgment on a number of grounds that I will deal with in turn. First, there was some reference to whether this matter was within the jurisdiction of the Court because the defendant is a company based in New South Wales. This argument was not really pressed. In any event the work about which there is a dispute was carried out at Port Melbourne. Section 36 of the County Court Act 1958 gives the Court jurisdiction where a material part of the cause of action, which in this case was the work the subject of the dispute between the parties, arose in Victoria.
14 The second matter that was raised by way of defence was the similarity, or it was said, the identical features of the December and October payment claims. Mr Furfaro stated in paragraphs 3 and 19 of his affidavit that the claim made by the plaintiff in October 2011 was the final claim. He denied that the December claim on which the plaintiff sues was a final payment claim. The December 2011 claim was a repetition of the claims which were made by the plaintiff in October 2011 and which were assessed by the defendant. Mr Furfaro stated that he authorised two later variations.
15 This argument appeared to have two strands. First, that the plaintiff could not make a second claim for the same items that had been the subject of an earlier claim. Second, that the October claim itself was the final claim and therefore there could not be a subsequent final claim.
16 It is clear under the Act that there can be a second claim, where the amount that has been the subject of a previous claim has not been paid: see s 14(9). It does not appear the October claimed was framed as the final claim, it does not say it was and Mr Furfaro states that there were two subsequent variations which he assessed in the sum of $3,779.00 plus GST.
17 Section 14 (6) and (7) state:
(6) Subject to subsection (7), once a payment claim for a claimed amount in respect of a final, single or one-off payment has been served under this Act, no further payment claim can be served under this Act in respect of the construction contract to which the payment claim relates.
(7) Nothing in subsection (6) prevents a payment claim for a claimed amount in respect of a final, single or one-off payment being served under this Act in respect of a construction contract if-
(a) a claim for the payment of that amount has been made in respect of that payment under the contract; and
(b) that amount was not paid by the due date under the contract for the payment to which the claim relates.
18 The third point raised by way of defence was that a payment schedule as required by s.15 was provided by the defendant to the plaintiff. It was submitted that, in effect, a partly written and partly oral schedule had been provided. Mr Furfaro stated in paragraph 13 of his affidavit that he had prepared a payment schedule but it was not faxed for the reasons I have set out above. No argument was put that there had been valid service by facsimile of the purported payment schedule. Reliance was also placed on the telephone message left by Mr Furfaro which I have mentioned above. However that message does not constitute a payment schedule.
19 Reliance was also placed on paragraph 7 of Mr Furfaro’s affidavit which stated:
“In accordance with the October schedule, the plaintiff was paid $17.983.00 + GST on or about 14 November 2011. A dispute was raised by the plaintiff in relation to the payment. The following emails refer to the dispute.”
There are then annexed a series of exhibits numbered C to J inclusive that contain various emails between the parties concerning the payments alleged to be due and various disputes about the work.
20 Annexure J is an email from Mr Furfaro to Mr Frahamer of 2 December 2011. It commences:
“Please see attached payment advice. Remaining to claim is $3,779.00
+ GST”.
It then attaches various documents and comments on some of them.
21 That email was sent twelve days before the payment claim and therefore cannot constitute a payment schedule. It did not respond to the payment claim and it does not satisfy the other requirements for a payment schedule that are set out in s.15 (2).
22 Mr Furfaro stated in paragraph 20 of his affidavit, that the defendant has made an appropriate and timely response to the claims in respect of a number of items. He also refers to the plaintiff’s letter of 15 September 2011 and to the reference to allowances for items 3,16 and 17. It is not clear that that letter from the plaintiff involves any concession. All it states is that “allowances have been made for the following” as part of the provision of a quotation for the office fit out. Neither the table in paragraph 20 of Mr Furfaro’s affidavit, nor the plaintiff’s letter of 15 September, provides a payment schedule or any evidence that the plaintiff has conceded items which it now claims.
23 Mr Furfaro stated in paragraph 22 of his affidavit that he has prepared a defects claim which exceeds $6,000.00 plus GST. That may be so, but that does not constitute a payment schedule.
24 Mr Furfaro stated in paragraph 23 of his affidavit that items 3, 15, 16, and 17 were the subject to the plaintiff’s payment claim of 29 September 2011 and the defendant’s payment schedule dated 10 October 2011 issued in response. Four of those items were said to be identical with items referred to in the defects claim that he has prepared. I do not consider that any of those matters establish that the defendant has provided a payment schedule as required, or that the plaintiff has conceded that any amounts now claimed by it were amounts that it was not pursuing or had already been paid.
25 The fourth matter that was relied on by the defendant was that part of the claim was for a security retention amount. This argument is referred to in paragraph 9 of Mr Furfaro’s affidavit where he stated:
“On 22 November 2011, I authorised the Defendant to make a payment of $7,644.32 + GST. This payment was a half payment of the security retention to which the defendant was entitled on practical completion.
$7,644.32 is retained by the Plaintiff in accordance with the construction contract. The Plaintiff has claimed the balance of the security retention as part of his December claim, but this is not a valid claim as the Plaintiff is not entitled to the balance of the security retention for 12 months.”
26 A security retention claim is not excluded from claims that can be made under the Act by reason of the exclusion provisions in s.10B. Any dispute about the right of the plaintiff to recover the security retention amount could have been included in a payment schedule. There may have been terms of the contract regulating when the retention payment was due. A payment schedule not having been provided, the defendant’s contentions about the security retention sum are not a basis for refusing summary judgment.
27 I therefore find that Ichor did not provide a payment schedule as required by s.15 of the Act to Metro. The consequence is that the defendant became liable to pay any part of the claimed amount that remains unpaid to the plaintiff on the due date.
28 The defendant’s fifth argument was that the plaintiff was estopped from bringing the claim and could have sought adjudication under the provisions of the Act: see s18(1)(b). This argument was not really developed and does not provide a basis for refusing summary judgment.
29 The sixth matter relied on was Mr Furfaro’s statement in paragraph 6 of his affidavit that in accordance with the October schedule, the plaintiff was paid $17,983.00 plus GST. The argument, as I understood it, was that part of the claim by the plaintiff had already been paid. It is not apparent that any amount that is the subject of the present claim has been paid. Mr Frahamer stated in his affidavit that the sum of $43,344.75 has not been paid and there is no evidence from the defendant that establishes the contrary.
30 I am satisfied that the plaintiff made its claim within the time permitted by the Act.
31 At the hearing the defendant applied for an adjournment of the summary judgment application. I refused that application as no valid reason was advanced for the adjournment.
32 The purpose of this Act must be borne in mind. Vickery J stated in Hickory Developments Pty Ltd V Schiavello (Vic) Pty Ltd:
“The Act also manifests another essential aspiration, that of freedom from excessive legal formality. The provisions demonstrate a pragmatic concern to provide a dispute resolution process which is not bedevilled with unnecessary technicality. The Building and Construction Industry Security of Payment Act 1999 (NSW) has led to a spate of litigation in its relatively short life. If the Victorian Act became prone to challenges founded on fine legal points, an important object of the Act would be defeated by the twin adversaries of cost and time .” 1
33 That statement was quoted with approval by Hargrave AJA with the agreement of Tate JA in Pearl Hill Pty Ltd v Concorp Construction Group (Vic) Pty Ltd2.
34 The evidence establishes that the amount claimed by the plaintiff has not been paid by the defendant.
35 The plaintiff has established that the defendant’s defence has no real prospects of success.
36 The plaintiff is therefore entitled to summary judgment for the sum of $43,344.75.
37 I will hear the parties with regard to interest and costs.
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1 [2009] VSC 156 at [46]
2 [2011] VSCA 99 at [10]