Lucas Stuart v Hemmes Hermitage [2009] NSWSC 477 (15 May 2009)

 

Last Updated: 3 June 2009

 

NEW SOUTH WALES SUPREME COURT

 

CITATION:

Lucas Stuart v Hemmes Hermitage [2009] NSWSC 477

 

JURISDICTION:

Equity Division

Technology & Construction List

 

FILE NUMBER(S):

55002/09

 

HEARING DATE(S):

14/05/09 and 15/05/09

 

EX TEMPORE DATE:

15 May 2009

 

PARTIES:

Lucas Stuart Pty Limited (Plaintiff)

Hemmes Hermitage Pty Limited (Defendant)

 

JUDGMENT OF:

McDougall J

 

LOWER COURT JURISDICTION:

Not Applicable

 

LOWER COURT FILE NUMBER(S):

Not Applicable

 

LOWER COURT JUDICIAL OFFICER:

Not Applicable

 

COUNSEL:

M A Ashhurst SC / M Dolenec (Plaintiff)

S A Kerr (Defendant)

 

SOLICITORS:

BCP Lawyers & Consultants (Plaintiff)

Deacons Lawyers (Defendant)

 

CATCHWORDS:

 

BUILDING AND CONSTRUCTION CONTRACTS - plaintiff served payment claim - whether defendant provided payment schedule - whether defence in these proceedings arises under the contract.

 

BUILDING AND CONSTRUCTION CONTRACTS - provision of payment schedule - whether can be provided by an agent - agent can only provide payment schedule where provision would bind principal.

 

LEGISLATION CITED:

Building and Construction Industry Security of Payment Act 1999

 

CATEGORY:

Principal judgment

 

CASES CITED:

 

TEXTS CITED:

 

DECISION:

See paragraphs [45] to [47] of the judgment.

 

JUDGMENT:

 

IN THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION

TECHNOLOGY & CONSTRUCTION LIST

 

McDOUGALL J

 

15 May 2009 (ex tempore – revised 18 May 2009)

55002/09 LUCAS STUART PTY LTD v HEMMES HERMITAGE PTY LTD

 

JUDGMENT

 

1 HIS HONOUR: The plaintiff (Lucas Stuart) as contractor and the defendant (Hemmes Hermitage) as principal entered into a construction contract dated 8 November 2006. By that contract, Lucas Stuart undertook the design and construction of a project known as "Ivy" in George Street, Sydney. Lucas Stuart and Hemmes Hermitage are in dispute over a number of matters, including a payment claim, number 27, served by Lucas Stuart on Hemmes Hermitage on 6 November 2008.

 

2 Lucas Stuart says that Hemmes Hermitage, having failed to provide a payment schedule in time, owes the amount of the payment claim: in excess of $4.1 million. Hemmes Hermitage says that it did provide a payment schedule in time. In any event, Hemmes Hermitage says, the payment claim was invalid because it was not made in accordance with a mandatory requirement of the contract.

 

The issues

 

3 The issues that were argued were three:

 

(1) in circumstances where Hemmes Hermitage did not raise, in the document purporting to be its payment schedule, any argument as to the validity of the payment claim based on non-compliance with the relevant provisions of the contract: is Hemmes Hermitage entitled to dispute liability on that basis in these proceedings?

 

(2) If question 1 is answered "yes": are the relevant contractual provisions void and of no effect? '

 

(3) Was a certain document sent by a firm of quantity surveyors, Davis Langdon Australia Pty Ltd (Davis Langdon), to Lucas Stuart on 20 November 2008 a payment schedule?

 

First issue: validity of the payment claim

 

4 The contract was a construction contract for the purposes of the Building and Construction Industry Security of Payment Act 1999 (the Act). In terms, payment claim number 27 was expressed to be a payment claim made under the Act.

 

Relevant provisions of the contract

 

5 The clauses on which this issue turns are found in part 13 of the contract. I set out clauses 13.1 (so far as it is relevant), 13.2 and 13.4:

 

13.1 The contractor must make an application for payment by the end of the first business day of each month during which design and construction work required by the contract is being performed.

 

13.1.1 The application must state each of the following:

 

 

13.1.2 The progress claim must also be accompanied by a completed and signed contractor's statement in the form stated in schedule 8. if this statement is not given as required by this clause, the application will not be a progress payment application recognised under this clause.

 

13.1.3 If the progress payment application is late, all the steps to be subsequently taken by the project director may be delayed by the number of calendar days the application is late.

 

13.1.4 The project director may request any reasonable verification of any part of the application.

 

Validity of progress payment applications

 

13.2 A progress payment application will only be valid under the contract if it strictly complies with all the requirements of clause 13.1 and the contractor has complied with all its obligations under part 6.

 

Reference dates

 

13.4 Subject to clause 13.4.1, the reference dates under the Building and Construction Industry Security of Payment Act 1999 (NSW) will be the first business day of each month during which work required by the contract is performed.

13.4.1 If the contractor does not give the project director a progress claim strictly in accordance with clause 13.1 for any month, there will be no reference date that month. The next reference date will be the first business day of subsequent month for which the contractor does give the project director a progress claim strictly in accordance with clause 13.4.1.

 

13.4.2 The purpose of this provision is to ensure that the principal has sufficient cash-flow from its financiers to pay the contractor's claims each month. If the contractor makes a payment claim after first business day , that claim may not be included in the principal's monthly claim under to the financier. That will mean that the principal will not have money from the financier to pay the contractor's late claim until the principal has an opportunity to claim that money under the finance facility in the next progress payment cycle.

 

6 The "project director" referred to was Caverstock Group Pty Ltd (Caverstock). Caverstock was not a party to the contract. By cl 3.4.2 of the contract, Lucas Stuart and Hemmes Hermitage agreed that Caverstock should "act as decision-maker in relation to the parties' rights under the contract in relation to" a number of matters including "certifying progress payments under part 13". By cl 3.2 Caverstock, in performing those duties, was required to act reasonably and honestly.

 

Relevant provisions of the Act

 

7 I set out ss 8, 13(1), (4), 14 and 15:

 

8 Rights to progress payments

 

(1) On and from each reference date under a construction contract, a person:

 

(a) who has undertaken to carry out construction work under the contract, or

 

(b) who has undertaken to supply related goods and services under the contract,

 

is entitled to a progress payment.

 

(2) In this section, "reference date", in relation to a construction contract, means:

(a) a date determined by or in accordance with the terms of the contract as the date on which a claim for a progress payment may be made in relation to work carried out or undertaken to be carried out (or related goods and services supplied or undertaken to be supplied) under the contract, or

 

(b) if the contract makes no express provision with respect to the matter-the last day of the named month in which the construction work was first carried out (or the related goods and services were first supplied) under the contract and the last day of each subsequent named month.

 

13 Payment claims

 

(1) A person referred to in section 8 (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.

...

(4) A payment claim may be served only within:

 

(a) the period determined by or in accordance with the terms of 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),

whichever is the later.

 

14 Payment schedules

 

(1) A person on whom a payment claim is served (the "respondent") may reply to the claim by providing a payment schedule to the claimant.

 

(2) A payment schedule:

 

(a) must identify the payment claim to which it relates, and

 

(b) must indicate the amount of the payment (if any) that the respondent proposes to make (the "scheduled amount").

 

(3) If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent’s reasons for withholding payment.

 

(4) If:

 

(a) a claimant serves a payment claim on a respondent, and

 

(b) the respondent does not provide a payment schedule to the claimant:

 

(i) within the time required by the relevant construction contract, or

 

(ii) within 10 business days after the payment claim is served,

 

whichever time expires earlier, the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.

 

15 Consequences of not paying claimant where no payment schedule

 

(1) This section applies if the respondent:

 

(a) becomes liable to pay the claimed amount to the claimant under section 14(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.

 

(2) In those circumstances, the claimant:

(a) may:

 

(i) 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

 

(ii) make an adjudication application under section 17(1)(b) in relation to the payment claim, and

 

(b) may serve notice on the respondent of the claimant’s intention to suspend carrying out construction work (or to suspend supplying related goods and services) under the construction contract.

 

(3) A notice referred to in subsection (2)(b) must state that it is made under this Act.

 

(4) If the claimant commences 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 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 cross-claim against the claimant, or

 

(ii) to raise any defence in relation to matters arising under the construction contract.

 

The parties' submissions

 

8 Mr M A Ashhurst of Senior Counsel, who appeared with Ms M Dolenec of counsel for Lucas Stuart, accepted that payment claim 27 was not served in accordance with cl 13 of the contract. The payment claim related to work performed during October 2008. The first business day of November 2008 was the 3rd. The payment claim was not served until 6 November 2008.

 

9 Mr Ashhurst submitted that:

 

(1) because a payment claim may be submitted by "a person ... who claims to be entitled to a progress payment" (s 13(1)), the document was a payment claim for the purposes of s 13.

 

(2) The contractual point (as he put it) could have been, but was not, raised in a payment schedule provided pursuant to s 14(4);

 

(3) Section 15(4)(b)(ii) therefore prevented Hemmes Hermitage from relying on the cl 13 defence in these proceedings.

 

10 Mr S A Kerr of counsel, who appeared for Hemmes Hermitage, accepted that the cl 13 defence had not been raised in what he said was his client's payment schedule. However, he submitted, s 15(4)(b)(ii) applies only to defences arising solely out of the contract. This point, he submitted, "arises as a result of the provisions of the Act". Thus, he submitted, it was available to Hemmes Hermitage in these proceedings.

 

Decision

 

11 The issue requires attention to the words "any defence arising under the contract". It is not necessary to decide their precise ambit, or the exact nature of the relationship established between the two subjects – the defence and the contract by the word "under". It is sufficient to say that a defence relying on a barring provision of a contract is a defence arising under that contract.

 

12 It is correct to say, as Mr Kerr submitted, that s 13(4) recognises - indeed, enforces - the relevant provisions of the contract. But that does not mean that the defence arises under s 13(4). Absent the relevant words of cl 13, s 13(4) would have no application. By contrast, absent s 13(4), the relevant words of cl 13 could still be enforced as a matter of contract.

13 Hemmes Hermitage is not entitled in these proceedings to dispute the validity of the payment claim on the ground that it was not served in accordance with the mandatory requirements of cl 13.

 

Second issue: section 34

 

14 It is unnecessary to consider this issue, having regard to what I have just said as to the first issue. There is no disputed question of fact which must be resolved to enable the second issue to be considered. The parties' written submissions will remain on file, and their oral submissions have been taken down.

 

Third issue: did Hemmes Hermitage provide a payment schedule in time

 

15 To understand this issue, it is necessary to look in some detail at the facts, and to bear in mind the relevant requirements of s 14 of the Act.

 

Factual background

 

16 Although the contract charged Caverstock with the responsibility of deciding and certifying the amount to be paid on payment claims, Caverstock yielded that decision-making authority to Hemmes Hermitage. No point was taken as to this, or as to how Caverstock, in so doing, could be said to be complying with its duty under cl 3.2 of the contract.

 

17 The course of conduct proved by the evidence was that:

 

(1) Lucas Stuart made payment claims under the Act (which were also progress claims under the contract) monthly.

 

(2) Caverstock retained Davis Langdon to assess the payment claims.

 

(3) When Lucas Stuart served payment claims, it did so, generally, by delivering them by email to Caverstock, with copies to Davis Langdon.

 

(4) However, on occasions, Lucas Stuart sent claims to Davis Langdon, with copies to Caverstock. In the instances where this happened, although the claims may have been progress claims under the contract, they do not appear to have been payment claims under the Act. That is because they did not bear the statement required by s 13(2)(c) of the Act.

 

(5) Davis Langdon, usually through Mr Vasili Alembakis, would assess the payment claims and report to Caverstock.

 

(6) Caverstock, usually through Mr Gregory Sullivan, would seek the approval of Mr Justin Hemmes of Hemmes Hermitage.

 

(7) Once Mr Hemmes authorised the amount, Caverstock would prepare a payment schedule (described as a "progress payment certificate") and provide that document to Hemmes Hermitage and to Lucas Stuart. The payment schedule would be supported by an "assessment of works executed" prepared by Davis Langdon, which itself would have supporting schedules.

 

(8) The scheduled amount would then be paid.

 

18 It was common ground that Caverstock had authority to provide payment schedules to Lucas Stuart on behalf of Hemmes Hermitage, following the procedure that I have just outlined.

 

19 The first question underlying this issue is whether Davis Langdon also had authority to provide payment schedules (or, in particular, the document relied upon in answer to payment claim 27 as a payment schedule). The second question is whether a document provided by Davis Langdon to Lucas Stuart on 20 November 2008 (the last day for provision of a payment schedule replying to payment claim 27) ought be regarded as a payment schedule.

 

Payment claim 27

 

20 Payment claim 27 was served on 6 November 2008. It was sent by email to Mr Sullivan of Caverstock, with copies to (among others) Mr Patrick Gocher, the Managing Director of Caverstock, Mr Andrew Kovac, another employee of Caverstock, and Mr Alembakis. Mr Gocher and Mr Kovac were copied in because Mr Sullivan was (or was going) on leave, and they were to handle the payment claim in his absence.

 

21 In the usual way, Mr Alembakis considered the payment of claim 27.

 

22 On 18 November 2008, Mr Gocher asked Mr Alembakis to produce a draft assessment for the following morning. Mr Gocher made this request because he was to meet Mr Hemmes the next day, and wanted to obtain Mr Hemmes' approval to pay the assessed amount.

 

23 Mr Alembakis sent his draft assessment to Mr Gocher on the morning of 19 November. Mr Gocher met Mr Hemmes. They discussed, among other things, the draft assessment. Mr Hemmes approved it for payment.

 

24 Mr Gocher telephoned Mr Alembakis after this meeting, at about 12.20pm. He asked Mr Alembakis to provide him with a final copy of the assessment. Mr Alembakis agreed to do so. He did do so, about one and a half hours later.

 

25 Mr Gocher's evidence was that he also asked Mr Alembakis to send a final copy of the assessment to Lucas Stuart. I do not accept that evidence. My reasons are as follows:

 

(1) Mr Alembakis does not support it. He said only that Mr Gocher asked for a final copy of the assessment to be sent to him.

 

(2) Mr Alembakis did not send a final copy of the assessment to Lucas Stuart, that day or at all.

 

(3) There was no reason for Lucas Stuart to have a final copy of the assessment at that point of time. The procedure that had been followed was that the final copy of the assessment (once approved by Mr Hemmes) was given to Caverstock, so that Caverstock could prepare the payment schedule. The documents supporting the payment schedule, including the final version of the Davis Langdon assessment, were given to Lucas Stuart (and Hemmes Hermitage) when the payment schedule was delivered.

(4) When Mr Alembakis did send a document to Lucas Stuart the next day, it was not his final assessment. Further, his email sending the document on 20 November 2008 made no reference to having provided already any form of final assessment.

 

(5) To the extent that questions of demeanour are helpful, they do not favour acceptance of Mr Gocher's evidence. I did not think that he was an overly impressive witness. In particular, in what was a relatively brief cross-examination, he was frequently argumentative, and gave non-responsive answers. Whilst I do not say that Mr Gosher was lying, I am quite satisfied that this aspect of his evidence cannot be accepted.

 

Mr Alembakis' documents of 20 November 2008

 

26 In the morning of 20 November, Mr Alembakis sent an email to Mr Michael Ghobrial of Lucas Stuart. Mr Ghobrial had prepared and submitted payment claim 27. He did not give evidence, although he had sworn an affidavit (it was not read).

 

27 The email (omitting formal parts) read:

 

“I've revised your progress claim and variation register so that it is in line with my Progress Claim Assessment No.27, which was sent to Caverstock yesterday."

 

28 There was a number of documents attached to the email. One was described as "Progress Claim Draft current (revised by DL)". I shall refer to this as "Mr Alembakis' 20 November document". It was in form a spreadsheet in a format prepared by Mr Ghobrial and submitted as part of payment claim 27. The figures had been revised by Mr Alembakis to reflect his assessment. The result of the revision, as shown by this document, was to reduce the "total nett claim" from in excess of $4.1 million to $262,960.50.

 

29 That amount, in substance, was the amount approved for payment by Mr Hemmes. (There was a variation of a few cents, apparently because of rounding. This variation was not suggested to be of any significance.) The amount was also, with the same qualification, the amount (before GST) certified in Caverstock's progress certificate number 27, dated and faxed on 24 November 2008.

30 The other documents attached to Mr Alembakis' email were reworkings of other schedules that had been provided in support of payment claim 27.

 

Progress certificate number 27

 

31 On 24 November 2008, Caverstock wrote to Hemmes Hermitage, with a copy to Lucas Stuart. (This was the way in which all previous progress certificates, or payment schedules, had been provided.) The letter attached a document described as progress payment certificate number 27 - ie, a certificate for payment in the amount approved by Mr Hemmes in his discussions with Mr Gocher on 19 November 2008. The letter said, amongst other things: "For details of the Progress Certificate, refer to assessment 27 of Quantity Surveyor, Davis Langdon Australia Pty Ltd as received 19 November 2008".

 

32 The Davis Langdon assessment (in its final form) was attached to the letter of 24 November 2008. That assessment comprised:

 

(1) a letter from Davis Langdon to Caverstock dated 19 November 2008;

(2) a one page summary of the assessment; and

(3) about 17 pages of supporting schedules.

 

33 The Davis Langdon assessment referred to in the letter of 24 November 2008 did not include Mr Alembakis' 20 November document, or any copy of that document.

 

The parties' submissions

 

34 Mr Ashhurst submitted that Mr Alembakis' 20 November document was not a payment schedule. That was so, he said, because:

 

(1) the document was not "provided" by Hemmes Hermitage.

 

(2) Davis Langdon was not authorised by Hemmes Hermitage to provide it to Lucas Stuart as a payment schedule (or at all).

(3) Caverstock did not authorise, and as a matter of law could not have authorised, Davis Langdon to provide the document to Lucas Stuart as a payment schedule binding Hemmes Hermitage.

 

(4) The document was not in terms Mr Alembakis' assessment of payment claim 27, but merely a reworking of schedules submitted by Lucas Stuart as part of that payment claim.

 

(5) The document was not a statement by Hemmes Hermitage of the amount it proposed to pay (see s 14(2)(b) of the Act); it was, at most, a statement by an adviser to an adviser to, or delegate of, Hemmes Hermitage as to what Hemmes Hermitage might be obliged to pay

 

35 Mr Kerr submitted that:

 

(1) The dealings between Lucas Stuart and Hemmes Hermitage, Caverstock and Davis Langdon showed that Lucas Stuart knew that its payment claims would be assessed by Davis Langdon.

 

(2) Those dealings likewise showed that Lucas Stuart knew that Hemmes Hermitage would pay the amount assessed by Davis Langdon.

 

(3) Lucas Stuart must have known that the document was a statement of what Hemmes Hermitage was prepared to pay. The Court could be more comfortable in inferring this because of the failure of Lucas Stuart to lead any evidence on the topic.

 

(4) On the evidence, Lucas Stuart knew (or must be taken to have known) that Davis Langdon was Hemmes Hermitage's agent.

 

(5) In any event, Caverstock (through Mr Gocher) had expressly authorised Davis Langdon (through Mr Alembakis) to send Mr Alembakis' 20 November document to Lucas Stuart.

 

36 Mr Kerr also made submissions based on the proposition that payment claim 27 was in effect a rehashing (with minor changes) of payment claim 26, which although for an amount in excess of $4 million had been assessed for payment in a very small amount (relatively speaking: about $50,000). Thus, Mr Kerr submitted, Lucas Stuart must have appreciated that payment claim 27 was likely to suffer a similar fate. Mr Kerr relied on this to support his analysis of the relevant relationships and Mr Alembakis' 20 November document. I fear that I may not have taken in the full subtlety of this submission.

 

Decision

 

37 I do not accept that Davis Langdon had authority from Hemmes Hermitage or Caverstock to provide Mr Alembakis' 20 November document to Lucas Stuart as a payment schedule. Nor do I accept that Hemmes Hermitage or Caverstock intended that document to stand, or to be provided as, a payment schedule. My reasons for those conclusions can be set out quite briefly:

 

(1) There is no evidence that Hemmes Hermitage authorised Davis Langdon to provide the document to Lucas Stuart, let alone to provide it as a payment schedule.

 

(2) Indeed, there is no evidence that Hemmes Hermitage through its relevant personnel, Mr Hemmes or his personal assistant Ms Angela Muller, even knew that Mr Alembakis proposed to send his 20 November document to Lucas Stuart.

 

(3) There was no prior course of dealings in which Davis Langdon communicated direct to Lucas Stuart its assessment of any payment claim. Thus, there is no evidence of conduct from which it could be inferred that Davis Langdon had the authority of Hemmes Hermitage or Caverstock to do so.

 

(4) As I have said, I do not accept Mr Gocher's evidence that he instructed Mr Alembakis to send the 20 November document to Lucas Stuart. That means that there is no evidence of actual authority from Caverstock.

 

(5) In any event, I do not think that Caverstock, as an agent of Hemmes Hermitage, could in law delegate any aspect of its agency. There is no evidence of the precise terms of the relationship between Caverstock and Hemmes Hermitage. Caverstock made recommendations to Hemmes Hermitage, relying on Davis Langdon's assessments in doing so. Hemmes Hermitage then approved payment. Once that was done, Caverstock provided progress payment certificates which doubled as payment schedules. Undoubtedly, it may be inferred that Hemmes Hermitage authorised Caverstock so to act. It does not follow that this authority permitted Caverstock to delegate any function to Davis Langdon.

 

(6) A fortiori, since on the evidence Caverstock (as a matter of fact rather than as a matter of law) had no decision-making authority, it could not have delegated any decision-making authority to Davis Langdon.

 

(7) In this context, insofar as the terms of the contract are relevant (having regard to the way that the parties appear to have disregarded them) they do not appear to permit any delegation.

 

(8) Nor (following from (3) above) is there any evidence of a course of dealings from which it could be inferred that some such delegation had been given - let alone that Lucas Stuart knew, or ought to have known of, or that it accepted, any such delegation.

 

38 I accept that Lucas Stuart must have known that the amounts approved by Hemmes Hermitage, and comprised in payment schedules provided by Caverstock, reflected (and accepted) assessments undertaken by Davis Langdon. Thus, I accept that when Mr Ghobrial received Mr Alembakis' 20 November document, he (and through him Lucas Stuart) would have realised what it was that Hemmes Hermitage would agree to pay, and why. But it does not follow that Mr Alembakis' 20 November document is Hemmes Hermitage's payment schedule replying to the payment claim. Indeed, as will have been seen, the email under cover of which the document was sent does no more than indicate that the document was "in line with" Davis Langdon's assessment provided to Caverstock. It does not indicate that Caverstock or Hemmes Hermitage had accepted that assessment.

 

39 Further, the document sent to Mr Ghobrial was not in terms or form Davis Langdon's assessment, of the kind that had accompanied all prior payment schedules. Its form was quite different. It was a reworking of Lucas Stuart's own document. It indicated the result of the assessment and the means by which that result was reached. But it did not indicate in terms that Hemmes Hermitage proposed (or would propose) to pay. That in any event was not, as I have said, something that Davis Langdon was authorised to do on behalf of Hemmes Hermitage or Caverstock.

 

40 At most, the document indicates what Davis Langdon thought Hemmes Hermitage should pay. It may well have been likely, to the point of being obvious, that Hemmes Hermitage had adopted, or would adopt, Davis Langdon's views. But that information was something that, under s 14(2)(b), Hemmes Hermitage or its delegate or agent was required to indicate to Lucas Stuart.

 

41 The position may be tested quite simply. On Mr Kerr's analysis, it could make no difference that Hemmes Hermitage and Caverstock had already agreed to accept Davis Langdon's assessment at the time Mr Alembakis' 20 November document was provided to Lucas Stuart. Mr Kerr relied on the fact that, in the past, Hemmes Hermitage and Caverstock had always done so, and that Lucas Stuart knew this. But suppose that in this case Mr Alembakis had formed the view that payment claim 27 should be allowed in full, but that Caverstock and Hemmes Hermitage disagreed. If Mr Alembakis provided to Lucas Stuart a written indication of this (hypothetical) assessment, would Hemmes Hermitage be bound by it? The answer must be "no": not because of the disagreement, but because of the lack of actual (or inferred) authority in Davis Langdon to bind Hemmes Hermitage.

 

42 Under the Act, a claimant is entitled to have a written reply from (or binding on) the respondent, so that the claimant can decide whether to accept the scheduled amount or to proceed to adjudication. A claimant should not be required to act upon the basis of informal indications by those who advise the respondent, even if (in a particular case) that adviser is trusted, and its advice has always been followed in the past.

 

43 The other point in connection with this issue, is to note, as I have said, that Mr Alembakis' 20 November document bears no resemblance to the assessments by Davis Langdon that accompanied the 26 previous payment schedules. Nor does it bear any resemblance to the assessment that accompanied the 27th. Viewed objectively, Mr Alembakis' conduct does not suggest that he was intending through his 20 November document to provide a payment schedule in reply to payment claim 27. Nor does his affidavit suggest that, subjectively, that is what he was seeking to do.

 

44 Thus, I conclude that Hemmes Hermitage did not provide to Lucas Stuart within ten business days of service of payment claim 27 a payment schedule in accordance with s 14 of the Act.

 

Conclusion and orders

 

45 Lucas Stuart is entitled to judgment in the amount claimed, together with interest.

 

46 I direct the parties to bring in agreed short minutes of order within five days.

 

47 I stand the matter over to 9.30am on 21 May 2009. If there is any dispute as to the orders to be made (including as to costs) I will deal with it then.

 

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LAST UPDATED:

2 June 2009