Thiess Pty Ltd & Anor v Lane Cove Tunnel Nominee Company Pty Ltd & Anor [2009] NSWCA 53 (20 March 2009)

Last Updated: 23 March 2009

NEW SOUTH WALES COURT OF APPEAL

CITATION:

Thiess Pty Ltd & Anor v Lane Cove Tunnel Nominee Company Pty Ltd & Anor [2009] NSWCA 53

FILE NUMBER(S):

40285/08

HEARING DATE(S):

11 March 2009

JUDGMENT DATE:

20 March 2009

PARTIES:

Thiess Pty Ltd - First Appellant

John Holland Pty Ltd - Second Appellant

Lane Cove Tunnel Nominee Company Pty Ltd - First Respondent

Connector Motorways Pty Ltd - Second Respondent

JUDGMENT OF:

Giles JA Tobias JA Handley AJA

LOWER COURT JURISDICTION:

Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S):

ED 5503/08

LOWER COURT JUDICIAL OFFICER:

Hammerschlag J

LOWER COURT DATE OF DECISION:

4 July 2008

LOWER COURT MEDIUM NEUTRAL CITATION:

Thiess Pty Ltd v Lane Cove Tunnel Nominee Company Pty Ltd [2008] NSWSC 729

COUNSEL:

M Christie & V Culkof – Appellants

F Corsaro SC & D Miller – Respondents

SOLICITORS:

Andrew McKeracher, Pyrmont – Appellants

Minter Ellison – Respondents

CATCHWORDS:

Contracts - construction contract - Building and Construction Industry Security of Payment Act 1999 - payment schedule - whether contract required a time for provision of payment schedule - contractual payment schedule replied to contractual progress payment claim - not to statutory payment claim - stated time was not for provision of statutory payment schedule.

LEGISLATION CITED:

CATEGORY:

Principal judgment

CASES CITED:

Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2003] NSWCA 4 ; (2003) 56 NSWLR 576 ;

Clarence Street Pty Ltd v Isis Projects Ltd (2005) NSWCA 391 ; (2006) 64 NSWLR 448 ;

De Martin and Gasparini Pty Ltd v Energy Australia [2002] NSWCA 330 ; (2002) 55 NSWLR 577 ;

Fyntray Constructions Pty Ltd v Macind Drainage & Hydraulic Servies Pty Ltd [2002] NSWCA 238 ; (2002) 18 BCL 402;

Jemzone Pty Ltd v Trytan [2002] NSWSC 395 ; (2002) ACSR 42 ;

Musico v Davenport [2003] NSWSC 977 ;

Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd [2004] NSWSC 116 ; (2004) 20 BCL 27.

TEXTS CITED:

DECISION:

Appeal dismissed with costs.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40285/08

SC 55036/08

GILES JA

TOBIAS JA

HANDLEY AJA

Friday 20 March 2009

THIESS PTY LTD & ANOR v LANE COVE TUNNEL NOMINEE COMPANY PTY LTD & ANOR

Judgment

1 GILES JA : The appellants claimed a sum of money from the respondents as a debt due to them pursuant to s 15 of the Building and Construction Industry Security of Payment Act 1999 (“the Act”), alleging that the respondents had failed to provide a payment schedule in response to their payment claim within the time allowed by s 14 of the Act. The respondents defended the claim on the bases first, that they had provided a payment schedule within the requisite time; and secondly, that if they had not their failure was due to misleading or deceptive conduct, alternatively unconscionable conduct, on the part of the appellants in contravention of s 52 or s 51AA of the Trade Practices Act 1974 (C’th).

2 The trial judge decided that the respondents had provided a payment schedule within the requisite time, and accordingly that the appellants’ claim failed. His Honour made no findings in relation to the conduct of which the respondents complained.

3 This is an appeal from the decision that the respondents had provided a payment schedule within the requisite time. It is agreed that if the appeal is allowed, there must be remission to the Equity Division for decision of the alternative defence to the claim.

4 Section 14 of the Act provides –

“ 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.”

5 The appellants’ claim turned and turns on s 14(4), specifically on whether cl 14.3A of the construction contract between the parties required, within s 14(4)(b), that a payment schedule be provided at a time expiring earlier than ten business days after the payment claim was served. The trial judge held that it did not.

6 For the reasons which follow, in my opinion the trial judge’s decision was correct.

The contract

7 The appellants and the respondents entered into a contract, in the form of a deed dated 3 December 2003, for the design and construction of the Lane Cove Tunnel (“the contract”). The original construction sum was over $1 billion.

8 In the contract the first respondent was referred to as the Trustee and the appellants were referred to as the Contractor. The second respondent was party to the contract as guarantor. The contract sum was called the “D&C Contract Sum”.

9 Clause 14.1(a) provided for payment by the Trustee of –

“ ... the D&C Contract Sum in accordance with this clause 14 and the D&C Payment Schedule, for the progressive performance of the Contractor’s Works.”

10 The D&C Payment Schedule was Schedule 14 to the contract. It provided that the Contractor would be “entitled to claim progress payments in accordance with clause 14 and on the basis of the value of the work completed per Work Item or Lot (listed below)”, and listed work items with amounts and bases of payment. It included a Drawdown Schedule, with alternative 41 month and 40 month “programs” containing a series of “claims payable dates” on the first of the months and amounts for monthly payments.

11 Clause 14.2 provided that a “progress payment claim” had to be submitted by the Contractor to the Trustee at least five business days before each claims payable date for work executed up to the date specified in the claim, and that –

“The payment claim must be accompanied by:

(a) a certificate from the Independent Verifier of the amount assessed to be payable by the Trustee in respect of that progress payment claim;

(b) certificates from the Independent Verifier and the Contractor Quality Manager:

(i) that the work the subject of the Work Item, or Lot where relevant is in all material respects in conformity with the Contractor’s obligations under this deed except for non-conformances identified in accordance with clause 14.2(b)(ii); and

(ii) identifying any non-conformances and distinguishing between those which have been identified for less than one month and those identified for more than one month;

(d) evidence, where applicable, of the matters required under clause 14.3.”

12 The Independent Verifier was defined in the contract as a named company or such other person as might be agreed. The function of the Independent Verifier was relevantly found only in the description of the certificates it was to provide. The Contractor Quality Manager was a named or otherwise notified person, with similar comment as to his function. The Payment Declaration was to do with payment of workers, suppliers and subcontractors, and cl 14.3 required that evidence be provided to the Independent Verifier in relation to unfixed materials and goods. The detail of these accompanying documents or evidence does not matter.

13 Clause 14.3A provided:

“The Trustee must issue a payment schedule within 4 Business Days of receipt of the payment claim (including the payment claim made pursuant to clause 14.6(a)). The payment schedule must identify the payment claim to which it relates and if it is for an amount less than the claimed amount, the payment schedule must indicate why the amount stated in the payment schedule as payable is less and if it is less because the Trustee is withholding payment for any reason, the Trustee’s reasons for withholding payment, provided that the amount stated in the payment schedule may not be less than the amount certified by the Independent Verifier under the certificate referred to in clause 14.2(a) except as otherwise expressly provided by this deed, including clauses 14.5, 14.10 and 14.12.”

14 The payment claim made pursuant to cl 14.6(a) was the final claim. Clauses 14.5, 14.10 and 14.12 referred to circumstances in which there could be adjustment of the payments or payment could be withheld or reduced. By cl 14.5, if either party disputed the amount certified as payable by the Independent Verifier then notice had to be given to the other of the reasons for the dispute, they had to confer within five Business Days to attempt to resolve the dispute, and if it was agreed or determined in accordance with the contract that the disputed amount or any part thereof was or was not due the Trustee or the Contractor had to pay the amount agreed or determined within five Business Days of the agreement or determination. (The clause said “to the Contractor”, which must be a slip since there could also be payment by the Contractor to the Trustee.) By cl 14.10, money could be withheld if sub-contractors had not been paid. By cl 14.12, the Trustee could deduct from money otherwise due to the Contractor “any debt or other moneys due from the Contractor to the Trustee under this deed”.

15 Clause 14.4(a) provided that the Trustee had to pay “the amount in the payment schedule issued under clause 14.3A in respect of a payment claim made by the Contractor which complies with the requirements of clause 14.2”. By cl 14.4(b), subject to cll 14.1A and 14.9 the Trustee had to pay the amount due under cl 14.4(a) “on or by the relevant claims payable date” in the Drawdown Schedule in the D&C Payment Schedule. Clause 14.1A was concerned with the first payment claim. Clause 14.9 stated as “conditions precedent to the Contractor’s right to make a claim under clauses 14.2 and 14.7 [sic: apparently 14.6]” that insurances had been effected and maintained, the security bond had been provided and other such matters.

What happened

16 The appellants served a number of progress payment claims under the contract. On 30 April 2008 they served on the first respondent Progress Payment Claim No. 53 for $10,005,101, to which GST was to be added. The major component of the claim was $8,304,335 for an early completion bonus the subject of cl 10.10 of the contract. The claim was endorsed with the statement that it was a payment claim under the Act, and it was not disputed that it was a payment claim within the meaning of s 13 of the Act. It was accompanied by a Schedule 16 Payment Declaration and a certificate by “TJH Quality Manager”, but was also endorsed –

“The contractual pre-condition with respect to the Independent Verifier is not a requirement under the Act, and in any event, any provision under the deed that purports to exclude, modify or restrict the operation of the Act, including but not limited to clause 5.2(b) [sic: ?], is void under s 34 of the Act.”

17 No document which could constitute a payment schedule was provided by the respondents until 9 May 2008. On that day the first respondent provided to the appellants a letter dated 5 May 2008 and enclosure indicating that it proposed on 9 May 2009 to pay $1,083,397.70 including GST. The enclosure was headed “Payment Schedule”, and said that “[i]n accordance with Schedule [sic] 14.3A” of the contract the first respondent “hereby confirms payment to [the appellants] as follows ... “. Neither the letter nor the enclosure indicated why the amount of the payment was less than the claimed amount, in accordance with cl 14.3A of the contract and s 14(3) of the Act, but the trial judge recorded (at [9]) that it was accepted by the appellants that the “document dated 5 May 2008 ... would have constituted a payment schedule within the meaning of the Act.”

18 The $1,083,397.70 was paid, and a further $347,666 including GST was paid on 16 May 2008. The unpaid amount plus GST was $9,574,547.40.

19 The payment schedule was provided within ten business days after the payment claim was served. The appellants contended, however, that cl 14.3A of the contract required that it be provided within four days of service of the payment claim. If so, it was not provided within time, and the first respondent became liable under the Act to pay the claimed amount on the due date for the progress payment to which it related (s 14(4)) and the appellants could recover the unpaid amount as a debt (s 15(2)).

20 Although the second respondent was not primarily liable under the contract, no distinction was drawn between the respondents in the proceedings below. Any entitlement of the appellants to recover the unpaid amount as a debt pursuant to s 15 of the Act was only an entitlement as against the first respondent. Since the appeal is to be dismissed, this may be passed over.

The trial judge’s decision

21 The trial judge said (at [15]) that the parties agreed that the question was whether, on the proper construction of the contract, the parties intended that its provisions were to supplant the provisions of s14.4(b)(ii). His Honour said (at [16]) that it was also agreed that, as was stated by Mason P in Clarence Street Pty Ltd v Isis Projects Ltd (2005) NSWCA 391 ; (2006) 64 NSWLR 448 at [48] , albeit in a different context, there must be “clear contextual support for the necessary implication that the Contract provided an answer to the particular problem”. He said (at [21]) that “[t]he test is thus whether there is clear contextual support for a necessary implication that the Contract has supplanted the 10 day period in s 14.4(b)(ii) with the 4 business day period in cl 14.3A”.

22 The appellants disputed that the parties had agreed that this test was to be applied, but the dispute was not taken further and the respondents did not suggest that the appellants were tied to the application of the test.

23 The trial judge considered that there was not the necessary clear contextual implication, but rather that there were (at [23]) “clear contextual implications pointing in the opposite direction”.

24 The first of the implications was found in the restriction in cl 14.3A on stating an amount in the payment schedule less than the amount certified by the Independent Verifier. His Honour said –

“[27] There is a clear incongruence between the operation of the Act and the Contract. The Act places no restriction on the amount of the payment claim the recipient may dispute in its payment schedule. The recipient gets four business days to respond to a payment claim which must be accompanied by a certificate from the Independent Verifier of the amount assessed to be payable. These are indications that the parties did not have cl 14.3A in mind as a substitute for the entitlement of the defendants to serve a payment schedule in response to a claim under the Act. The four business days specified in the Contract to respond to the species of payment claim under the Contract (including the Independent Verifier’s certificate and the contractual limitation on disputing it) were not intended to shorten the period given for the delivery of a different species of payment schedule under the Act which neither required the Independent Verifier’s certificate nor involved a limitation on how much of it the defendants could dispute.”

25 The second was expressed by his Honour –

“ [28] The second incongruence is that cl 14.3A places a contractual obligation upon the recipient of a payment schedule [sic: claim] to serve a schedule within fourteen [sic: four] business days. The terminology of the clause closely resembles some of the terminology in the Act, but that is not sufficient.

[29] Under cl 14.5 the defendants had the opportunity to dispute that part of the claim certified by the Independent Verifier by notification to the other party in writing (there is no express specification of when this notification must be given) and thereafter there is a procedure involving two periods of five business days each, at the end of which payment must be made as agreed or as determined under the contract.

[30] If the plaintiffs’ approach was correct after four business days, notwithstanding the presence of cl 14.5, the defendants would be liable to pay not less than the amount certified by the Independent Verifier without the benefit that the operation of cl 14.5 provides.

[31] This is an additional reason why there is a contextual implication against the plaintiffs’ construction.”

26 The third and fourth were expressed by his Honour:

“ [32] Finally, if the notice under cl 14.3A disputing the Independent Verifier’s certification must be given within four business days under the contract (which appears to be the case) there is at least another five business days to attempt to resolve the dispute which would make nine days. This would give the recipient of a payment claim an additional day to serve a payment schedule to protect its position under the Act. This way the provisions of the Contract work together with the time periods in the Act.

[33] Perhaps of minor importance only, is the non-congruence between the definition of the use of “business days” and also the use in cl 14.3A of the term “must” which requires service of a payment schedule rather than provides an option to do so as does the Act.”

27 The non-congruence between definitions was that “business day” is defined in the Act to mean any day other than a Saturday, Sunday or public holiday or 27, 28, 29, 30 or 31 December, while in the contract “Business Day” was defined to mean any day on which banks are generally open for business in Sydney, other than Saturdays, Sundays and public holidays.

The appeal

28 The parties provided lengthy written submissions, to which they spoke at the hearing of the appeal.

29 The substance of the appellants’ submissions was that the trial judge was in error in seeking a contractual intention that the ten day period in s 14.4(b)(ii) had been “supplanted” by the four day period in cl 14.3A, let alone supplanted by necessary implication, and that his Honour was also in error in finding contrary implications in the restriction in cl 14.3A on the amount which could be stated in the payment schedule and the operation of cl 14.5. In their submission, relying in particular on Fyntray Constructions Pty Ltd v Macind Drainage & Hydraulic Services Pty Ltd [2002] NSWCA 238 ; (2002) 18 BCL 402, cl 14.3A dealt with a “contractually analogous” matter to s 14(4)(b), and that was enough to make the contractual time for providing the payment schedule the time for providing a payment schedule under s 14 of the Act.

30 The respondents supported the need for necessary implication that the statutory ten days were to be reduced, and the trial judge’s reasons for determining that cl 14.3A did not have that consequence.

31 The Court raised for the parties’ consideration a view of s 14(4) and cl 14.3A which did not clearly appear in the respondents’ submissions, but led to the same decision as that to which the trial judge had come. The respondents adopted it, and the appellants put submissions against it

32 In Jemzone Pty Ltd v Trytan [2002] NSWSC 395 ; (2002) ACSR 42 at [37] Austin J said that the Act generally left it to the construction contract to define the rights of the parties but “makes ‘default provisions’ to fill in the contractual gaps”. This observation was referred to with apparent approval by Santow JA, with whom Pearlman AJA agreed, in De Martin and Gasparini Pty Ltd v Energy Australia [2002] NSWCA 330 ; (2002) 55 NSWLR 577 at [56] . In Clarence Street Pty Ltd v Isis Projects Ltd , concerned with when a progress payment becomes due and payable as referred to in s 11(1) of the Act, Mason P (with whom Santow JA and I agreed) said at [63] that if there was “a gap in the contractual expression of a due date for making the progress payment, s 11(1)(b) supplied that gap”. The appellants took these observations up, describing s 14(4)(b)(ii) as a default provision and the ten day period as a default period and saying that there were similar default provisions in ss 8(2), 9, 10(1), 11(1), 11(2) and 13(4) of the Act, and submitted that because the ten days was a default period, it was wrong to seek a contractual intention that it be supplanted.

33 I accept the thrust of the appellants’ submission, although I do not think that speaking of a default period greatly contributes to determining whether a construction contract states a time within which a statutory payment schedule must be provided. By the words “whichever time expires earlier” it might be thought that s 14(4) assumes that always there will be two times, one a time required by the construction contract and the other that referred to in s 14(4)(b)(ii), and that the only question is which of the times expires earlier. That is not necessarily so, and s 14(4)(b) must operate in the event that the construction contract makes no reference to a time for provision of a statutory payment schedule. In that sense the ten business days may be a default period, but that is as a consequence of the construction of the contract. Neither a notion of primacy of the ten business days nor the notion of a default period assists in the construction of the contract.

34 The task is first to determine what time, if any, is required by the construction contract for provision of a statutory payment schedule, and then to see whether that time expires earlier than ten business days (as defined in the Act) after the payment claim is served. The first determination does not require a contractual intention, as a matter of necessary implication or otherwise, that the statutory period of ten business days be supplanted.

35 Clarence Street Pty Ltd v Isis Projects Ltd is not to the contrary. The particular problem to which the President referred was whether the contract had made “express provision with respect to” the date on which a progress payment becomes due and payable, within s 11(1)(b) of the Act. His Honour’s reference to necessary implication reflected the need for express provision, which is not found in s 14(4)(b).

36 “Payment schedule” is defined in the Act to mean a schedule referred to in s 14. From s 14(1), a payment schedule is something which replies to a payment claim. “Payment claim” is defined as a claim referred to in s 13, and is what is served by a person who is or claims to be entitled to a progress payment. When s 14(4)(b) refers to the time within which a payment schedule must be provided, then, it means the time within which a payment schedule replying to a payment claim served under s 13 of the Act must be provided.

37 Clause 14.3A requires that a payment schedule must issue within four Business Days of receipt of a payment claim. But the payment claim to which it refers is a progress payment claim submitted in accordance with cl 14.2, one which (amongst other things) is to be accompanied by the Independent Verifier’s certificate. This is an important element of the contractual progress payment claim, since it provides a minimum for the amount to be stated in the payment schedule. The cl 14.3A payment schedule replies to a contractual progress payment claim, not to a payment claim served under s 13, and cl 14.3A does not state a time within which a statutory payment schedule must be provided. That is so notwithstanding that in stating what the payment schedule must do cl 14.3A uses language clearly enough taken from s 14(2) and (3) of the Act.

38 Progress Payment Claim No 53 may have been a payment claim under the Act, but it was not a contractual progress payment claim. It was not accompanied by (at the least) the Independent Verifier’s certificate, and it was asserted that that “contractual precondition” is not a requirement under the Act. Absent the certificate, I do not think that the Trustee was contractually obliged to issue a payment schedule, see Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2003] NSWCA 4 ; (2003) 56 NSWLR 576 at [21] - [42] . I have referred to the importance of the Independent Verifier’s certificate in providing a minimum for the amount to be stated in the payment schedule, and it would no doubt also have practical importance in giving both parties the comfort of an independent assessment. Further, cl 14.4(a) states the Trustee’s obligation to pay the amount in a cl 14.3A payment schedule issued in respect of a payment claim “which complies with the requirements of cl 14.2”. A complying payment claim is fundamental to determining the amount to be paid and the obligation to pay it. This gives point to the cl 14.3A payment schedule being a reply to a contractual progress payment claim, not a reply to a payment claim served under s 13 of the Act. (Although nothing was said of it in the appeal, it may also be that Progress Payment Claim 53 was submitted outside the contractual scheme of submission at least five business days before a claims payable date; I put this aside.)

39 The three preceding paragraphs capture the view of s 14(4)(b) and cl 14.3A raised for the parties’ consideration. Something akin to it can be seen in the trial judge’s reference at [27] to delivery of “a different species of payment schedule under the Act which neither required the Independent Verifier’s certificate nor involved a limitation on how much of it the defendants could dispute”.

40 The appellants submitted that it did not matter that cl 14.3A was concerned with a contractual progress payment claim submitted in accordance with cl 14.2. They said, as I have indicated, that the correct approach was to see whether there was in the contract a provision “contractually analogous” to time required for provision of a statutory payment schedule under s 14(4)(b), and that cl 14.3A was such a provision and had effect rather than the default period in the Act.

41 Fyntray Constructions Pty Ltd v Macind Drainage & Hydraulic Services Pty Ltd was relevantly concerned with s 8(2)(a) of the Act, providing that the “reference date” (that is, the date on and from which a contractor was entitled to a progress payment under the Act) could be “a date determined by or in accordance with the terms of the contract as a date on which a claim for a progress payment may be made”. (Section 8 has since been amended, but the amendments do not affect the point for which the appellants relied on it.) Clause 42.1 of the construction contract provided for delivery of claims to payment. Heydon JA spoke (at [51]) of a legislative intention “to permit payment claims to be made ... by reference to a contractual date for making a claim, that is, under cl 42.1”.

42 The appellants submitted that it was held in Fyntray Constructions Pty Ltd v Macind Drainage & Hydraulic Services Pty Ltd that the construction contract made provision for the date on which a payment claim under the Act could be made, although cl 42.1 was concerned with contractual claims and made no reference to the Act or to a payment claim under the Act. In like manner, they said, cl 14.3A made provision for the time within which a payment schedule had to be provided although it was concerned with a payment schedule replying to a contractual progress payment claim and did not refer to the Act or to a payment schedule under the Act.

43 It may be accepted that a contractual provision in relation to progress payments can be taken up for a matter which under the Act may be determined in accordance with the construction contract, without express reference in the provision to the Act or to the particular matter under the Act. That does not licence taking up a provision because it is analogous to the matter under the Act. It depends on the terms of the Act dealing with the matter and the contractual provision.

44 The appellant’s reliance on Fyntray Constructions Pty Ltd v Macind Drainage & Hydraulic Services Pty Ltd was misplaced. As explained by Barrett J in Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd [2004] NSWSC 116 ; (2004) 20 BCL 27 at [19]-[21], referring also to Musico v Davenport [2003] NSWSC 977 , in finding the reference date from the contractual date for a progress payment the expression “progress payment” in s 8(2)(a) is not given its defined meaning in the Act. The progress payment in s 8(2)(a) is not the statutory progress payment, but the contractual progress payment, and the reference date is the contractual date because s 8(2)(a) says that it is. The appellants relied also on Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd , but it is against their position.

45 Section 14(4)(b) is in different terms from s 8(2)(a), and does not equate the statutory payment schedule with an analogous contractual payment schedule.

46 In my opinion, the view of s 14(4)(b) and cl 14.3A earlier described is correct. Clause 14.3A does not state a time within which a statutory payment schedule must be provided, and therefore s 14(4)(b)(ii) applied and the respondents had ten business days to provide the statutory payment schedule.

47 The appellants pointed out that the payment schedule was provided by the first respondent purportedly in accordance with cl 14.3A, submitting that the respondents “cannot have it both ways” by relying on a contractual payment schedule as a statutory payment schedule. If this was more than unthinking error, the first respondent’s misunderstanding does not alter the parties’ rights and obligations.

The trial judge’s reasons

48 The trial judge did refer to the “different species of payment schedule under the Act”. But I respectfully differ from his Honour’s reasoning to his decision.

49 First, and appreciating that the trial judge said that it was a matter of agreement between the parties, as I have already indicated I do not think it correct to apply a test of clear contextual support for a necessary implication that the contract has supplanted the ten day period in s 14(4)(b)(ii) with the four business day period in cl 14.3A. The question is simply what the contract said, if anything, about the time within which a statutory payment schedule is to be provided.

50 Secondly and consequently, the first incongruence to which his Honour referred was not to the point. In the construction of cl 14.3A the point is not that the Act does not restrict the amount of the payment claim which the first respondent may dispute in its payment schedule. It is that a necessary Independent Verifier’s certificate, which then conditions the response by the payment schedule for which cl 14.3A provides, indicates that the cl 14.3A payment schedule is a reply to the contractual progress payment claim and not a reply to a statutory payment claim, which may be served (as here) with express departure from the requirements of the contractual progress payment claim.

51 Thirdly, I do not think that there was the second incongruence perceived by the trial judge. I have referred to cl 14.5 as a provision for adjustment of payments. A dispute over the amount certified as payable by the Independent Verifier could arise and be resolved within the four days, but it did not have to be resolved within that period, and it was plainly contemplated that it might not be – hence payment by the Trustee or the Contractor, and payment within five Business Days of the agreement or determination. The prospect of payment of not less than the amount certified by the Independent Verifier “without the benefit that the operation of cl 14.5 provides” (trial judge’s reasons at [30]) does not stand against the appellants’ approach. The contract was meant to operate in that way.

52 Fourthly, if cl 14.3A did deal with the time within which a payment schedule as referred to in s 14 was to be provided it would not matter that the time involved a different notion of business days or that compliance with it was said to be mandatory. That would simply be part of what the contract required as to time.

Orders

53 Albeit on different reasoning, in my view the trial judge’s decision was correct. I propose that the appeal be dismissed with costs.

54 TOBIAS JA : I agree with Giles JA.

55 HANDLEY AJA : I agree with Giles JA.

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LAST UPDATED:

20 March 2009