Supreme Court New South Wales Medium Neutral Citation: Kyle Bay Removals Pty Ltd v Dynabuild Project Services Pty Ltd [2016] NSWSC 334 Hearing dates: 22 March 2016; written submissions 24 March 2016 Decision date: 31 March 2016 Jurisdiction: Equity Before: Meagher JA Decision: 1. Dismiss Removals' application under s 459G of the Corporations Act 2001 to set aside the statutory demand dated 11 February 2016. 2. Amended summons otherwise dismissed. 3. Order the amount of $382,015.41 paid into Court by Removals be released and paid to Dynabuild. 4. Order Removals pay Dynabuild's costs of the proceedings. 5. Make no order as to the costs of the second and third defendants and grant liberty to them to apply within 14 days. 6. Direct Dynabuild to notify the second and third defendants of the making of these orders. Catchwords: BUILDING AND CONSTRUCTION – adjudication of payment claim under Building and Construction Industry Security of Payment Act 1999 (NSW) – whether payment claim should be set aside – where payment claim made for same amount and works as earlier payment claim and no works completed after earlier claim – where building contract allowed for later reference date – whether two payment claims made in relation to same reference date contrary to s 13(5) – where earlier payment claim not accompanied by supporting statement contrary to s 13(7) – whether earlier payment claim served for purpose of s 13(5) – whether payment claim made in contravention of s 13(8) Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW), ss 5, 8, 9, 13, 14, 15, 17, 24 Corporations Act 2001 (Cth), ss 459E, 459F, 459G Supreme Court Act 1970 (NSW), s 69 Cases Cited: Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190; 78 NSWLR 393 Clyne v Deputy Commissioner of Taxation (Cth) [1981] HCA 40; 150 CLR 1 Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69; 74 NSWLR 190 Grid Projects NSW Pty Ltd v Proyalbi Organic Set Plaster Pty Ltd [2012] NSWSC 1571 Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602 Nazero Group Pty Ltd v Top Quality Construction Pty Ltd [2015] NSWSC 232 Trustees of the Roman Catholic Church for the Diocese of Lismore v TF Woollam & Son [2012] NSWSC 1559 Veer Build Pty Ltd v TCA Electrical and Communication Pty Ltd [2015] NSWSC 864 Category: Principal judgment Parties: Kyle Bay Removals Pty Ltd (Plaintiff) Dynabuild Project Services Pty Ltd (First Defendant) Philip Martin (Second Defendant) Adjudicate Today Pty Ltd (Third Defendant) Representation: Counsel: T.O. Bland with S.J. McMahon (Plaintiff) M. Christie SC (First Defendant) Solicitors: Benjamin & Robinson (Plaintiff) Gavel & Page Lawyers Pty Ltd (Defendants) File Number(s): 2016/65906 Judgment Overview 1. On 22 January 2016 the defendant builder (Dynabuild) obtained judgment against the plaintiff (Removals) in the District Court for $408,841.56. It did so upon the filing of an adjudication certificate under s 25 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act). The adjudication which resulted in the issue of that certificate was undertaken by the second defendant who has filed a submitting appearance, except as to costs. The application for that adjudication was made to the third defendant as an authorised nominating authority. That defendant has also filed a submitting appearance, except as to costs. 2. The adjudication related to a dispute concerning a progress payment claim made by Dynabuild and dated 23 November 2015 (the November payment claim). That claim was made under a building contract dated 29 October 2014, under which Dynabuild agreed to construct a commercial warehouse in Punchbowl. It is not in issue that the contract was one under which Dynabuild undertook to carry out "construction work", as defined by s 5 of the Act. 3. Removals seeks, in the exercise of this Court's supervisory jurisdiction under s 69 of the Supreme Court Act 1970 (NSW), relief in the nature of certiorari setting aside the adjudicator's determination. See Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190; 78 NSWLR 393. It does so on the basis that the adjudicator's jurisdiction to determine Dynabuild's application under s 17(1) of the Act first depended on that application in fact being made in respect of a "payment claim", meaning a claim in the form required by s 13(2) and served in accordance with that section. 4. Three arguments were put as to why there was no such "payment claim". They included that the November payment claim was served contrary to s 13(5) because an earlier payment claim had been served in respect of the same "reference date"; and that the later claim was served contrary to s 13(8) because the "supporting statement" which accompanied it, was knowingly false in two material respects. 5. Removals also seeks an order under s 459G of the Corporations Act 2001 (Cth) setting aside a statutory demand made by Dynabuild for $382,015.41, being the District Court judgment less an amount of $26,826.15. Relevant provisions of the Act 1. Part 2 of the Act confers and describes the contractor's entitlement to a "progress payment", which is defined to include the "final payment" under a construction contract, a "single or one-off payment" and a payment "based on an event or date": s 4. 2. Section 8(1) provides that entitlement arises "[o]n and from each reference date" under the contract. Sub-section 8(2) defines "reference date" to mean: (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 … 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 … under the contract and the last day of each subsequent named month. 1. The amount of each progress payment is to be calculated in accordance with the terms of the contract, or otherwise in accordance with s 9(b). 2. Part 3 of the Act sets out the procedure for recovering those payments. It provides for the service of a "payment claim", which s 4 defines as a "claim referred to in section 13". 3. Sections 13 and 14 are as follows: 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. (2) A payment claim: (a) must identify the construction work (or related goods and services) to which the progress payment relates, and (b) must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount), and (c) if the construction contract is connected with an exempt residential construction contract, must state that it is made under this Act. (3) The claimed amount may include any amount: (a) that the respondent is liable to pay the claimant under section 27 (2A), or (b) that is held under the construction contract by the respondent and that the claimant claims is due for release. (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. (5) A claimant cannot serve more than one payment claim in respect of 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. (7) A head contractor must not serve a payment claim on the principal unless the claim is accompanied by a supporting statement that indicates that it relates to that payment claim. Maximum penalty: 200 penalty units. (8) A head contractor must not serve a payment claim on the principal accompanied by a supporting statement knowing that the statement is false or misleading in a material particular in the particular circumstances. Maximum penalty: 200 penalty units or 3 months imprisonment, or both. (9) In this section: supporting statement means a statement that is in the form prescribed by the regulations and (without limitation) that includes a declaration to the effect that all subcontractors, if any, have been paid all amounts that have become due and payable in relation to the construction work concerned. 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) … (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. 1. Sections 15 and 16 address the consequences of the respondent to a claim not paying, either where no payment schedule has been served or where the amount proposed by that schedule has not been paid. Section 15(1) and (2) provide: 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. 1. Finally, Div 2 of Pt 3 confers and describes the claimant builder's right to have any dispute in respect of a payment claim determined by an adjudicator. It is sufficient to set out s 17(1): 17 Adjudication applications (1) A claimant may apply for adjudication of a payment claim (an adjudication application) if: (a) the respondent provides a payment schedule under Division 1 but: (i) the scheduled amount indicated in the payment schedule is less than the claimed amount indicated in the payment claim, or (ii) the respondent fails to pay the whole or any part of the scheduled amount to the claimant by the due date for payment of the amount, or (b) the respondent fails to provide a payment schedule to the claimant under Division 1 and fails to pay the whole or any part of the claimed amount by the due date for payment of the amount. 1. Thus, the expression "payment claim" when used in s 17(1) refers to a claim which, as to its form and service, complies with s 13. 2. I will now consider Removal's three arguments as to why the adjudicator did not have authority or jurisdiction to make an adjudication determination under Pt 3, Div 2. Removals' first argument: that Dynabuild "elected" under s 15(2)(a)(i) to recover the claimed amount by commencing proceedings in the District Court 1. This argument, as initially formulated in Removals' written outline, was that an earlier payment claim (the September payment claim) was made for the same work and in the same amount as the November payment claim; that no payment schedule was provided in response to that earlier claim; that the amount of the earlier claim was not paid; that Dynabuild "elected" to recover the claimed amount by commencing proceedings in the District Court in accordance with s 15(2)(a)(i); and that those proceedings were discontinued by consent because Dynabuild conceded the September payment claim when served had not been accompanied by a "supporting statement" as required by s 13(7). In those circumstances it was submitted Dynabuild could not make an application under s 17(1) for adjudication of the November payment claim. 2. In the course of oral argument counsel for Removals accepted that this argument depended on its establishing that the September and November payment claims were in substance the same and made in respect of the same reference date. That was said to be the position because at the time the September claim was made, Dynabuild had completed the construction work called for by the contract (including agreed variations and additions), and because no further work had been undertaken between the date that claim was made (17 September 2015) and the making of the November payment claim (23 November 2015). The reference date for each claim was either 22 August 2015 or the first day of the period in which the final payment claim could be made (see cll 21, 27 in [22] below). 3. If each of these claims was made in respect of the same reference date, the question raised by Removals' second argument arises. That question is whether the November payment claim was served contrary to the prohibition in s 13(5). If it was served contrary to that prohibition, it could not be the subject of an adjudication application under s 17(1): see Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69; 74 NSWLR 190 at [14]-[15] (Allsop P), applied in Trustees of the Roman Catholic Church for the Diocese of Lismore v TF Woollam & Son [2012] NSWSC 1559 at [47]-[48] (McDougall J); Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602 at [21]-[22] (McDougall J); and Veer Build Pty Ltd v TCA Electrical and Communication Pty Ltd [2015] NSWSC 864 at [37] (Darke J). 4. Dynabuild submits in response to Removals' second argument that even if both claims were made in respect of the same reference date, there was no contravention of s 13(5) because that prohibition only applies where an earlier payment claim has been served in accordance with s 13. It is accepted that was not the case here because the September payment claim, made by the head contractor, was not accompanied by a supporting statement as required by s 13(7). For the reasons appearing below in my consideration of the second argument, I accept this submission. It follows that the service of the November payment claim was not contrary to s 13(5). 5. Significantly for Removals' present argument, it also follows that the circumstances in which Dynabuild was entitled to 'elect' under s 15(2)(a) between taking recovery proceedings and making an adjudication application, did not arise. (I use that word without deciding whether the principles relating to an election between inconsistent rights apply in this context.) Removals did not become liable to pay any claimed amount under s 14(4) as a result of the September payment claim. That sub-section requires that the payment claim have been served. The service referred to must be service in accordance with s 13, and not contrary to subss (5), (7) or (8). That conclusion follows from the reasoning in Dualcorp at [14]-[15]. 6. Accordingly, this first argument must be rejected. There could be no binding election by Dynabuild to pursue one of the courses in s 15(2)(a) because the September payment claim was not served in accordance with s 13(7). More relevantly, the argument does not establish any reason why the November payment claim was not a "payment claim" that could be the subject of an adjudication application under s 17(1). Removals' second argument: the November payment claim was served contrary to the prohibition in s 13(5) The argument 1. Removals submits that the reference date for this claim was the same as that for the September payment claim. For that reason, it says that the later claim was served contrary to s 13(5) and could not be the subject of a valid adjudication application. To assist an understanding of this argument, it is necessary to refer to the relevant provisions of the building contract and the circumstances in which the two claims were made. Those circumstances are also relevant to an understanding of Removals' third argument. The building contract 1. Clauses 1, 21, 24, 26 and 27 of the building contract included: 1. INTERPRETATION 1.1 … certificate of practical completion has the meaning in Clause 24; … date of practical completion means: (a) the date evidenced in a certificate of practical completion; or (b) where another date is determined in any expert's decision or litigation, that other date; … 21. CERTIFICATES AND PAYMENTS 21.1 The Builder must claim progressively in accordance with Item 16 and Clause 27, as the case may be. 21.2 Each progress claim given to the Client must: (a) be in writing; and (b) include details of the value of the works carried out and of other moneys then due to the Builder pursuant to the provisions of the contract. 21.3 The Client must, within 7 days after receiving a progress claim: (a) pay the amount of the progress claim; or (b) give the Builder a progress certificate evidencing the Client's opinion of the moneys due from the Client to the Builder pursuant to the progress claim and the reasons for any difference and pay the amount certified. … 24. PRACTICAL COMPLETION 24.1 Upon the date of practical completion, the Builder must give possession of the site and the works to the Client. … 24.4 The Client must, within 7 days of the Builder giving a written request for the issue of a certificate of practical completion, give to the Builder: (a) a certificate of practical completion evidencing the date of practical completion; or (b) written reasons for not doing so. If the Client does not so respond, the Builder's written request given under subclause 24.3 is deemed to be the certificate of practical completion. … 26. DEFECTS LIABILITY 26.1 The defects liability period stated in Item 15 commences at 4.00 pm on the date of practical completion. … 27. FINAL PAYMENT CLAIM 27.1 Within 14 days after the expiry of the defects liability period, the Builder must give the Client a written final payment claim endorsed 'final payment claim' being a progress claim together with all other claims in connection with the subject matter of the contract. 1. Items 15 and 16 of the schedule provided: 15. Defects liability period: 13 weeks (Clause 26) 16. Progress claims: (Clauses 21 and 27) (a) times for progress claims: 22 day of each month for the works done on and off site and materials on site to the 22 day of that month … 1. It was common ground that, for the purposes of the contract, the "date of practical completion" was 24 September 2015. Therefore the defects liability period expired on 24 December 2015. The making of the two payment claims 1. The September payment claim was for an amount of $436,732.17. It was for the original contract works, which were described as "100% Complete", as well as for 14 variations, also described as "100% Complete". The date immediately preceding 17 September 2015 on and from which Dynabuild could have made a progress claim under cl 21.1 was 22 August 2015. 2. In accordance with cl 21.2, that claim was to include "details of the value of the works carried out and of other moneys then due". Item 16 provided that the progress claim could be made on the 22nd day of the month for works done to that date. It did not stipulate that those works had to be undertaken in that month. Accordingly, under the terms of the contract, the fixing of a reference date did not depend on there having been work carried out in the immediately preceding month. 3. Although Dynabuild was a head contractor, the September payment claim was not accompanied by any supporting statement: cf s 13(7). Removals did not reply to that payment claim by providing a payment schedule. Nor did it pay the claim within the seven days provided by cl 21.3 of the contract. On 30 September 2015, Dynabuild commenced proceedings in the District Court to recover the amount of the September payment claim. Later the parties agreed that those proceedings should be discontinued by consent. That occurred on 13 November 2015. 4. On 23 November 2015, Dynabuild served the November payment claim. All of the amounts in that claim had been the subject of the September payment claim and, as in that earlier claim, each of the items of work was described as "100% Complete". However, there was evidence, and I find, that on about 17 November 2015 an electrician, Alexander Millis, undertook electrical services which involved "tidying up" an electrical switchboard. That no doubt minor work was within the works called for under the original contract. 5. The November payment claim was accompanied by a supporting statement signed by Rocco Natoli, a director of Dynabuild. That statement included the following declaration: … I am in a position to know the truth of the matters that are contained in this supporting statement and declare that, to the best of my knowledge and belief, all amounts due and payable to subcontractors, have been paid (not including any amount identified in the attachment as an amount in dispute). 1. The attachment consisted of two schedules. The second made clear that there were no sub-contractors in respect of which an amount was in dispute and had not been paid. The first was headed "Schedule of subcontractors paid all amounts due and payable". There followed a list of sub-contractors and their invoice numbers. That list included: Sub-contractor Contract number/identifier Date of works (period) Prestigious Painting Services 0000175 July 2015 Continuous Vision 00000243 May 2015 Continuous Vision 00000248 September 2015 Prestigious Painting Services 0000177 July 2015 1. In reply to the November payment claim, Removals served a progress certificate (payment schedule) in accordance with cl 21.3 of the contract and s 14(1) of the Act. That certificate disputed that some of the works under the original contract had been completed. It also disputed eight of the 14 variations claimed. Finally, the certificate indicated that Removals did not propose to make any payment of the claimed amount. Accordingly, the "scheduled amount" for the purposes of s 14(2)(b) was nil. 2. Dynabuild applied on 14 December 2015 for the adjudication of the November payment claim. The second defendant was appointed to determine that application. Written submissions were made on behalf of the parties and the adjudicator's written determination was delivered on 11 January 2016. 3. There is one further matter which is relevant to Removals' third argument. In its written submissions to the adjudicator, Removals contended that the November payment claim was not a valid payment claim for two reasons. The second was that the November payment claim had been served contrary to s 13(8) because Dynabuild, by its director Rocco Natoli, knew that the supporting statement was false in two respects. They were that, as at 23 November 2015, there remained amounts due and owing to Prestigious Painting Services and Continuous Vision. The owner of the former was Hakan Gonul, who ran the business with the assistance of his father, Ahmet Gonul. Mr Millis was the owner of the latter business, which provided electrical services. Determination of second argument 1. The argument that the two payment claims were made in respect of the same reference date is put as follows. First, it is said that the September payment claim was the "final" payment claim to be made under the contract. That is said to be so because on 17 September 2015, Dynabuild made a written request for the issue of a certificate of practical completion, and on the same day, issued that claim which described all of the works as "100% Complete". Secondly, it is said that no work was in fact undertaken after 17 September 2015. For those reasons, it is submitted that there could not have been any reference date after the final September payment claim and that the November claim was made with respect to that earlier (and final) reference date. It follows, it is said, that the later claim was served in breach of s 13(5) and not a valid "payment claim" within s 17(1). 2. Dynabuild makes three submissions in response. The first is that, even if the November payment claim was made in respect of the same reference date as the September claim, there was no contravention of the prohibition in s 13(5) because that earlier claim had not been validly served and should be ignored when determining whether there was such a contravention. 3. Secondly, it says that under cl 21 of the contract, it was entitled to make claims progressively on the 22nd day of each month for the value of works carried out to that date. Therefore, by s 8 it was entitled to a progress payment on and from 22 November 2015 in relation to work carried out under the contract to that date. It says that work did not have to be carried out in the period preceding the relevant reference date, as s 13(6) makes clear. Thirdly, Dynabuild argues that even if the two claims were made in respect of the same reference date, the first was withdrawn and the second was able to be made, in accordance with s 13(4), within 12 months of the carrying out of the construction work to which the claim relates. 4. The first of these arguments should be accepted. The reference in s 13(5) to service is to service which has occurred in accordance with s 13. A payment claim served contrary to the prohibition in s 13(7) is not validly served: see Kitchen Xchange at [46], [50], [51]. It follows that even if the November claim was made in respect of the same reference date, no other payment claim had been served in respect of that date for the purpose of s 13(5). 5. As to Dynabuild's second argument, under the terms of cl 21 it was entitled to make claims for progress payments until the final payment claim was made in accordance with cl 27.1. Those progress claims could be made on and from the 22nd day of each month and, in accordance with cl 21 and item 16, could be for the value of works done to that day. 6. Unlike the construction contract considered by McDougall J in Woollam & Son, the effect of the contract here was not that a claim for a progress payment could only be made on and from the 22nd day of a particular month if work had been carried out in the preceding month: [2012] NSWSC 1559 at [17], [32]. Because the contract makes express provision for the dates on which progress claims may be made, it is not necessary to consider the application of s 8(2)(b), and whether on its proper construction it requires that some construction work be undertaken in the "subsequent named month" for the last day of that month to be a "reference date": see Grid Projects NSW Pty Ltd v Proyalbi Organic Set Plaster Pty Ltd [2012] NSWSC 1571 at [21]-[39] (Stevenson J) and Veer Build at [45]. 7. I conclude that the reference dates allowed by the building contract included 22 November 2015 and that Dynabuild was entitled to a progress payment on and from that date in relation to work carried out to that date. As the November payment claim was dated 23 November 2015, it should be treated as made on and from the most recent reference date (22 November 2015). (That is particularly so where the fact is that some additional work was undertaken shortly prior.) 8. It follows that the two claims are in respect of different reference dates and do not contravene the prohibition in s 13(5): Nazero Group Pty Ltd v Top Quality Construction Pty Ltd [2015] NSWSC 232 at [10] (Hammerschlag J). Neither the November nor September payment claim described itself as the "final" claim, which in accordance with cl 27 could only have been made after 24 December 2015. 9. Dynabuild's final responsive argument should be rejected. There was no express withdrawal of the September payment claim. Nor was it necessarily implicit in what happened that the claim was withdrawn. Removals' solicitors responded to the District Court proceedings by pointing out that the claim had not validly been served. In response, Dynabuild agreed to discontinue the proceedings and pay Removals' costs. It did not purport to withdraw the claim and it was not necessary that it do so in order to discontinue the proceedings. Removals' third argument: the November payment claim was served in contravention of s 13(8) because the supporting statement was relevantly false in two respects A preliminary matter 1. Dynabuild submitted that Removals should not be permitted to rely upon this argument because it involved the serious allegation of knowingly making a false statement and was not the subject of any pleading or particulars which identified the specific respects in which Mr Natoli's statement was said to be knowingly false. That is certainly correct in relation to the pleading of the allegation in the Construction List Statement and Amended List Statement; and if that was the only specification of the allegation, I would not have permitted it to proceed. However, as the summary of the relevant events set out at [33] above shows, the two respects in which Mr Natoli's statement was said to be false (namely, that as at 23 November 2015 there were moneys due and owing to Mr Millis and Mr Hakan Gonul) were specified in Removals' submissions to the adjudicator. Both parties filed evidence directed to that allegation of falsity and at the commencement of the hearing, Removals made clear that its allegation as to the contravention of s 13(8) was limited to the statement that there were no moneys owing to those sub-contractors. In those circumstances, I permitted Removals to make this argument. Determination of third argument 1. Mr Millis gave evidence that, as at 23 November 2015, he was not owed any money by Dynabuild, although he accepted that at the time he may have thought he was owed some money "but not a great deal". Joanna Natoli, the accounts and administration manager of Dynabuild, gave evidence that she prepared the supporting statement later signed by Mr Natoli. At the time she did so, she believed that Mr Millis had been paid in full. More relevantly, her evidence established that the three invoices which Continuous Vision rendered for work on Removals' warehouse had been paid on or before 11 September 2015. I find that there were no moneys due and owing from Dynabuild to Mr Millis in respect of work carried out and invoiced as at 23 November 2015. 2. As to Prestigious Painting Services, the evidence was as follows. Each of Mr Natoli and Hakan Gonul said that sometime in September 2015 he had a conversation with the other in which it was agreed that because Dynabuild was having trouble getting paid, Mr Gonul would not insist on his being paid by Dynabuild on the basis that it would make the outstanding payments when able to do so. That evidence was not challenged and I find that there was a conversation to that effect. Whilst such an arrangement may not have been legally enforceable for want of consideration and certainty, Mr Natoli believed that the result was that amounts owing to Mr Gonul were only payable when Dynabuild's cash flow allowed for payments to be made. As he described the position, although the painter as at 23 November 2015 had not been paid all of the money owed, there was a "payment arrangement" under which those moneys were to be paid and payable "periodically". I accept that evidence and find that, although the position in law may have been that all amounts "due and payable" to Prestigious Painting Services had not been paid (see Clyne v Deputy Commissioner of Taxation (Cth) [1981] HCA 40; 150 CLR 1 at 8-9), Mr Natoli of Dynabuild had an arrangement which he believed meant that the amount which remained owing was not payable. 3. It follows that Dynabuild did not serve the payment claim and supporting statement knowing that the latter was false in either of the respects alleged. This conclusion makes it unnecessary to address Dynabuild's argument that a payment claim served in breach of the prohibition in s 13(8) would, for that reason, not cease to be one which could be the subject of an adjudication application under s 17(1). Conclusion 1. On 3 March 2016, Removals paid into Court the amount of $382,015.41 as a condition for Dynabuild's undertaking not to enforce the District Court judgment until judgment is delivered in this proceeding. Both active parties agree that if Removals' application to set aside the adjudicator's determination is dismissed, that amount should be paid out of Court and to Dynabuild. 2. Removals seeks an order that Dynabuild's statutory demand under s 459E of the Corporations Act 2001 be set aside, even if its application to set aside the adjudicator's determination is dismissed. In my view, it is not necessary or appropriate to make such an order. Removals' application to set aside the demand was made within the time allowed by s 459G(2). The effect of s 459F(2) will be to extend the time for compliance with the demand to a period ending seven days after the s 459G application is disposed of. The orders I propose to make provide for the immediate release to Dynabuild of the moneys paid into Court. On receipt of those moneys, the statutory demand will have been complied with within that extended period. 3. I make the following orders: 1. Dismiss Removals' application under s 459G of the Corporations Act 2001 to set aside the statutory demand dated 11 February 2016. 2. Amended summons otherwise dismissed. 3. Order the amount of $382,015.41 paid into Court by Removals be released and paid to Dynabuild. 4. Order Removals pay Dynabuild's costs of the proceedings. 5. Make no order as to the costs of the second and third defendants and grant liberty to them to apply within 14 days. 6. Direct Dynabuild to notify the second and third defendants of the making of these orders. ********** Amendments 01 April 2016 - [41]: 'Difference' changed to 'different' in first sentence; 'the' deleted prior to 'September' in second sentence. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 April 2016