District Court New South Wales Medium Neutral Citation: SMLXL Projects Pty Limited v RIIS Retail A/S [2017] NSWDC 131 Hearing dates: 5 May 2017, 24 May 2017 Date of orders: 31 May 2017 Decision date: 31 May 2017 Jurisdiction: Civil Before: Dicker SC DCJ Decision: (1) Summary judgment for the plaintiff on its Notice of Motion filed on 28 February 2017 under Part 13, Rule 1 of the Uniform Civil Procedure Rules in relation to the Pitt Street payment claim and the Barangaroo payment claim; (2) The application in the Notice of Motion in relation to the alleged T2 payment claim is dismissed; (3) The parties are to bring in short minutes of order within seven days reflecting the amounts in the Statement of Claim for the Pitt Street and Barangaroo payment claims together with any relevant interest; (4) I will hear the parties on costs; (5) Exhibits to be returned after 28 days. Catchwords: Building and construction – summary judgment application - Building and Construction Industry Security of Payment Act 1999 – whether proper detail of work included in a payment claim to comply with section 13(2)(a) - relevance of background knowledge of the recipient of a payment claim - whether need to show contract or agreement to a sum for the building works or a mechanism to establish a sum before the issue of a payment claim –– whether agreement to alleged variations established Legislation Cited: Uniform Civil Procedure Rules Building and Construction Industry Security of Payment Act 1999 (NSW) Cases Cited: Alan Conolly v Commercial Indemnity [2005] NSWSC 339 Ampcontrol SWG Pty Ltd v Gujarat NRE Wonga Pty Ltd [2013] NSWSC 707 Ardnas (No 1) Pty Ltd v J Group (Aust) Pty Ltd [2012] NSWSC 805 Batistatos V RTA (2006) 266 CLR 256 BHW Solutions Pty Ltd v Altitude Constructions Pty Ltd [2012] QSC 214 Brookhollow Pty Ltd v R & R Consultants Pty Ltd [2006] NSWSC 1 Consolidated Constructions Pty Ltd v Ettamogah Pub (Rouse Hill) Pty Ltd [2004] NSWSC 110 Cranbrook School v J A Bradshaw Civil Contracting [2013] NSWSC 430 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 General Steel Industries v Commissioner for Railways (NSW) (1964) 112 CLR 125 Isis Projects Pty Ltd v Clarence Street Pty Ltd [2004] NSWSC 714 IWD No 2 Pty Ltd v Level Orange Pty Ltd [2012] NSWSC 1439 J Hutchinson Pty Ltd v Glavcom Pty Ltd [2016] NSWSC 126 John Holland Pty Ltd v Coastal Dredging & Construction Pty Ltd [2012] QCA 150 Leighton v Arogen [2012] NSWSC 1323 Machkevitch v Andrew Building Constructions [2012] NSWSC 546 Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (In Liq) [2005] NSWCA 409 Okaroo Pty Ltd v Vos Construction and Joinery Pty Ltd [2005] NSWSC 45 Rojo Building Pty Ltd v Jillcris Pty Ltd [2006] NSWSC 309 Southern Han Breakfast Point Pty Ltd (in liquidation) v Lewence Construction Pty Ltd [2016] HCA 52 Spencer v Commonwealth [2010] HCA 28 Tailored Projects Pty Ltd v Jedfire Pty Ltd [2009] QSC 32 Category: Principal judgment Parties: Keystone Lawyers (Plaintiff) Somerset Ryckmans (Defendant) Representation: C Mobellan (Plaintiff) M Rosenblatt (Defendant) File Number(s): 2017/00051328 Judgment 1. Before me is a Notice of Motion filed on 28 February 2017 by the plaintiff seeking summary judgment for the amounts set out in the Statement of Claim pursuant to Part 13.1 of the Uniform Civil Procedure Rules ("UCPR"). 2. Part 13.1 of the UCPR provides as follows: "13.1 Summary judgment (1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief: (a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires. (2) Without limiting subrule (1), the court may give judgment for the plaintiff for damages to be assessed. (3) In this rule, a reference to damages includes a reference to the value of goods." The Statement of Claim 1. The plaintiff filed a Statement of Claim on 17 February 2017. In the Statement of Claim the plaintiff seeks the payment by the defendant of three amounts as follows, together with interest: 1. $11,858 relating to what is described as the Pitt Street Contract; 2. The amount of $96,800 in respect of what is described as the Barangaroo Contract; and 3. The amount of $181,264.50 in relation to what is described as the T2 Contract. 1. The plaintiff, which is a sub-contractor builder, pleads that it and the defendant entered into various contracts for the carrying out of building work by the plaintiff. It seems that the building work was concerned with fit out and related construction. The work was allegedly conducted in relation to three retail outlets called "Joe & The Juice" at the three relevant locations at Pitt Street, Barangaroo and at Terminal 2 at Sydney Airport. 2. Under the Statement of Claim, the plaintiff claims that it is entitled to the amounts in the following way: 1. The three contracts were construction contracts for the purposes of the Building and Construction Industry Security of Payment Act 1999 (NSW) ("the Act"); 2. The plaintiff was entitled to progress claims for work performed by it under the three construction contracts; 3. The plaintiff served tax invoices on the defendant in relation to each contract; 4. Each tax invoice was a payment claim pursuant to Section 13 of the Act; 5. The defendant had 10 business days after service of each payment claim to provide a payment schedule disputing the amount claimed under Section 14 of the Act; 6. The defendant failed to provide a payment schedule to the plaintiff within the time allowed by the Act in relation to any of the three amounts claimed under the contracts; 7. By reason of the defendant's failure to provide a payment schedule in relation to each payment claim, the defendant became liable to pay the amount sought: Sections 11(1B), 14(4) and 15(4) of the Act. 1. The defendant disputes the plaintiff's entitlement to summary judgment as sought under Part 13.1 of the UCPR on the following bases: 1. The plaintiff bears the onus of proof on its summary judgment application. The test to be applied has been variously described as whether the proposed Defence "is so obviously untenable that it cannot possibly succeed", is "manifestly groundless" or "so manifestly faulty that it does not admit of argument": Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 per Dixon J; General Steel Industries v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130; Spencer v Commonwealth [2010] HCA 28 at [53]-[55]; Batistatos v RTA (2006) 266 CLR 256 at [46]. 2. The defendant submits that the plaintiff has not satisfied the heavy summary judgment onus of proof: defendant's Further Written Submissions dated 12 May 2017 ("Further Submissions") at [23]-[26]; 3. The decision of Justice Einstein in Rojo Building Pty Ltd v Jillcris Pty Ltd [2006] NSWSC 309 at [39] emphasizes the need for strict formal compliance by a claimant with the provisions of the Act; 4. Invoice Number 118 in relation to the T2 contract is barred by Section 13(5) of the Act on the basis that a claimant cannot serve more than one payment claim in respect of each reference date under the construction contract: Further Submissions at [16]-[22]; 5. The claim for amounts allegedly owed for variations on the Barangaroo and T2 Projects were unapproved by the defendant. As there was no agreement for the plaintiff to perform (and be paid for) any, let alone unapproved variations, these invoices did not arise under the construction contracts and as such no right to issue a progress claim arises under Section 8(1)(a) of the Act: Further Submissions at [14]-[15]; 6. The various invoices served by the plaintiff are not "payment claims" under Section 13(2) of the Act as they do not properly identify the construction work (or related goods and services) to which the progress payments relate. The failure to comply with Section 13(2) is jurisdictional and renders the document a nullity for proceedings under the Act: Further Submissions at [1]-[2]. The background circumstances to the alleged payment claims do not assist the plaintiff: Further Submissions at [3]. 1. The plaintiff, in summary, says that none of these complaints is justified and there should be summary judgment as sought in the Motion. Relevant statutory provisions 1. The following provisions of the Act appear to be relevant to the Notice of Motion: "4 Definitions (1) In this Act: … construction contract means a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party. construction work is defined in section 5. … payment claim means a claim referred to in section 13. payment schedule means a schedule referred to in section 14. … progress payment means a payment to which a person is entitled under section 8, and includes (without affecting any such entitlement): (a) the final payment for construction work carried out (or for related goods and services supplied) under a construction contract, or (b) a single or one-off payment for carrying out construction work (or for supplying related goods and services) under a construction contract, or (c) a payment that is based on an event or date (known in the building and construction industry as a "milestone payment")." … "5 Definition of "construction work" (1) In this Act, construction work means any of the following work: (a) the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures forming, or to form, part of land (whether permanent or not), (b) the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of any works forming, or to form, part of land, including walls, roadworks, power-lines, telecommunication apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage or coast protection, (c) the installation in any building, structure or works of fittings forming, or to form, part of land, including heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply, fire protection, security and communications systems, (d) the external or internal cleaning of buildings, structures and works, so far as it is carried out in the course of their construction, alteration, repair, restoration, maintenance or extension, (e) any operation which forms an integral part of, or is preparatory to or is for rendering complete, work of the kind referred to in paragraph (a), (b) or (c), including: (i) site clearance, earth-moving, excavation, tunnelling and boring, and (ii) the laying of foundations, and (iii) the erection, maintenance or dismantling of scaffolding, and (iv) the prefabrication of components to form part of any building, structure or works, whether carried out on-site or off-site, and (v) site restoration, landscaping and the provision of roadways and other access works, (f) the painting or decorating of the internal or external surfaces of any building, structure or works, (g) any other work of a kind prescribed by the regulations for the purposes of this subsection. (2) Despite subsection (1), construction work does not include any of the following work: (a) the drilling for, or extraction of, oil or natural gas, (b) the extraction (whether by underground or surface working) of minerals, including tunnelling or boring, or constructing underground works, for that purpose, (c) any other work of a kind prescribed by the regulations for the purposes of this subsection." "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." "9 Amount of progress payment The amount of a progress payment to which a person is entitled in respect of a construction contract is to be: (a) the amount calculated in accordance with the terms of the contract, or (b) if the contract makes no express provision with respect to the matter, the amount calculated on the basis of the value of construction work carried out or undertaken to be carried out by the person (or of related goods and services supplied or undertaken to be supplied by the person) under the contract." "10 Valuation of construction work and related goods and services (1) Construction work carried out or undertaken to be carried out under a construction contract is to be valued: (a) in accordance with the terms of the contract, or (b) if the contract makes no express provision with respect to the matter, having regard to: (i) the contract price for the work, and (ii) any other rates or prices set out in the contract, and (iii) any variation agreed to by the parties to the contract by which the contract price, or any other rate or price set out in the contract, is to be adjusted by a specific amount, and (iv) if any of the work is defective, the estimated cost of rectifying the defect. (2) Related goods and services supplied or undertaken to be supplied under a construction contract are to be valued: (a) in accordance with the terms of the contract, or (b) if the contract makes no express provision with respect to the matter, having regard to: (i) the contract price for the goods and services, and (ii) any other rates or prices set out in the contract, and (iii) any variation agreed to by the parties to the contract by which the contract price, or any other rate or price set out in the contract, is to be adjusted by a specific amount, and (iv) if any of the goods are defective, the estimated cost of rectifying the defect, and, in the case of materials and components that are to form part of any building, structure or work arising from construction work, on the basis that the only materials and components to be included in the valuation are those that have become (or, on payment, will become) the property of the party for whom construction work is being carried out." "11 Due date for payment (1) Subject to this section and any other law, a progress payment to be made under a construction contract is payable in accordance with the applicable terms of the contract. (1A) A progress payment to be made by a principal to a head contractor under a construction contract becomes due and payable on: (a) the date occurring 15 business days after a payment claim is made under Part 3 in relation to the payment, except to the extent paragraph (b) applies, or (b) an earlier date as provided in accordance with the terms of the contract. Note: This Act does not apply to a progress payment to be made by a principal to a head contractor under an exempt residential construction contract. (See section 7(2)(b).) Subsection (1C) applies to progress payments under a construction contract that is connected with an exempt residential construction contract. (1B) A progress payment to be made to a subcontractor under a construction contract (other than a construction contract that is connected with an exempt residential construction contract) becomes due and payable on: (a) the date occurring 30 business days after a payment claim is made under Part 3 in relation to the payment, except to the extent paragraph (b) applies, or (b) an earlier date as provided in accordance with the terms of the contract. (1C) A progress payment to be made under a construction contract that is connected with an exempt residential construction contract becomes due and payable: (a) on the date on which the payment becomes due and payable in accordance with the terms of the contract, or (b) if the contract makes no express provision with respect to the matter, on the date occurring 10 business days after a payment claim is made under Part 3 in relation to the payment. (2) Interest is payable on the unpaid amount of a progress payment that has become due and payable at the rate: (a) prescribed under section 101 of the Civil Procedure Act 2005 , or (b) specified under the construction contract, whichever is the greater. (3) If a progress payment becomes due and payable, the claimant is entitled to exercise a lien in respect of the unpaid amount over any unfixed plant or materials supplied by the claimant for use in connection with the carrying out of construction work for the respondent. (4) Any lien or charge over the unfixed plant or materials existing before the date on which the progress payment becomes due and payable takes priority over a lien under subsection (3). (5) Subsection (3) does not confer on the claimant any right against a third party who is the owner of the unfixed plant or materials. (6) Except as otherwise provided by this section, the rules and principles of the common law and equity apply to the determination of priorities between a lien under subsection (3) over any unfixed plant and materials and any other interest in the plant and materials. (7) Section 73 (2) of the Personal Property Securities Act 2009 of the Commonwealth is declared to apply to liens under subsection (3). (8) A provision in a construction contract has no effect to the extent it allows for payment of a progress payment later than the relevant date it becomes due and payable under subsection (1A) or (1B)." "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) 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." 1. The plaintiff submitted that Section 8(2)(b) of the Act applies as there were no provisions in the relevant contracts on the evidence as to the date on which a claim for a progress payment may be made in relation to the work carried out or undertaken to be carried out under each contract. It was said that as each contract made no express provision with respect to the matter, the reference date for each construction contract was 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. In those circumstances, it was said that the progress payment became due and payable on the date occurring 30 business days after a payment claim: Section 11(1B) of the Act. 2. Counsel for the plaintiff submitted that it did not matter if the contract in fact had an earlier date for payment as the statutory date had also not been complied with by the defendant in relation to each payment claim in dispute. 3. In relation to the requirements of Section 13(2) of the Act, Section 13(2)(b) was not in issue in the case and Section 13(2)(c) of the Act was inapplicable. The plaintiff submitted that pursuant to Section 14(4), as the plaintiff had served a payment claim in relation to the various invoices sought on the defendant and the defendant had not provided a payment schedule to the plaintiff within 10 business days after the payment claim had been served, the defendant became liable under Section 14 to pay the claimed amount to the plaintiff on the due date for the progress payment to which the payment claim relates. That date was 30 days after it was served. Relevant legal principles applicable 1. The principal authorities upon which the plaintiff relied were as follows. 2. In Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (In Liq) (2005) 64 NSWLR 462; [2005] NSWCA 409, Hodgson JA gave the main judgment. His Honour considered a claim by a plaintiff for summary judgment under the Act. Accordingly, the facts are to some extent thereby similar to the current proceedings. 3. Hodgson JA referred to paragraph 37 of the judgment of McDougall J in Isis Projects Pty Ltd v Clarence Street Pty Ltd [2004] NSWSC 714 where his Honour stated as follows: "[37] In principle, I think, the requirement in s 13(2)(a) that a payment claim must identify the construction work to which the progress payment relates is capable of being satisfied where: (1) The payment claim gives an item reference which, in the absence of evidence to the contrary, is to be taken as referring to the contractual or other identification of the work; (2) That reference is supplemented by a single line item description of the work; (3) Particulars are given of the amount previously completed and claimed and the amount now said to be complete; (4) There is a summary that pulls all the details together and states the amount claimed." 1. Hodgson JA, after analysing the authorities, stated the following in paragraphs [34]-[36] and [38]-[39] of Nepean: "[34] In my opinion, a document which purports to be a payment claim does not fail to be a payment claim, within the meaning of the Act, merely because it can be seen, after a full investigation of all the facts and circumstances, not to successfully identify all the construction work for which payment is claimed. This could be the case, for example, if there is some typographical omission or other error in relation to one of a large number of items included in the claim; and the question whether or not the other party, by reason of its knowledge of the project, would have been able to fill in or correct that error could be one depending on a great deal of evidence concerning the circumstances of the case. In my opinion, it is inconceivable that it was the intention of the legislature that the existence of a payment claim under the Act should depend on that kind of consideration. [35] It is true that, if a payment claim does not identify the work in a way comprehensible to the respondent to the claim, the respondent will be in difficulty in formulating a payment schedule, and this may give rise to further difficulty in any adjudication proceedings, inter alia because of the provisions to which I referred in para [18] above. But in my opinion, if a respondent is unable to identify some of the work in respect of which a payment claim is made, it can in the payment schedule say it does not propose to make any payment in respect of that work because it cannot identify the work, and because for that reason it disputes that the work was done or done to a standard justifying payment, or was within the contract or within any variation of it, and that any pre-condition to payment was satisfied. If an adjudicator then determined that the work was not identified in the payment claim, presumably he or she would not award any payment in respect of that work; and if the adjudicator determined that it was identified, the adjudicator could address matters put in issue in that general way by the respondent. [36] That is, I do not think a payment claim can be treated as a nullity for failure to comply with s 13(2)(a) of the Act, unless the failure is patent on its face; and this will not be the case if the claim purports in a reasonable way to identify the particular work in respect of which the claim is made." … "[38] If a payment claim which thus purports to identify the work in respect of which the claim is made is sufficient to support a valid determination, as Basten JA says, it would in my opinion be wholly inconsistent with the scheme of the Act if it was not also sufficient to support a cause of action under s 15 of the Act in a case where no payment schedule is served. Otherwise, a respondent could avoid the effect of the Act by not serving a payment schedule, and defending the s 15 proceedings by raising a question as to identification, which could be as to just one of many items in a claim and could be such as to depend upon a very detailed examination of all the circumstances of the contract. CONCLUSION [39] In the present case, in my opinion the payment claim and accompanying progress claims 5 and 6 did purport in a reasonable way to identify the work in respect of which the claim was made, and there was no submission to the contrary. In those circumstances, it would not be a defence to the cause of action under s 15 of the Act to show that the payment claim was not in all the circumstances entirely successful in identifying all the work; so even though that question could arguably require a final hearing, rather than being one appropriate for summary disposal, this is not enough to raise an arguable defence or to justify setting aside the summary judgment. In case of a payment claim that purports in a reasonable way to identify the work to which the progress payment relates, where the respondent cannot identify all the work in question, the respondent's remedy is not to ignore the payment claim but to serve a payment schedule as discussed in para [35]." 1. Ipp JA stated the following in paragraph [76] of the judgment in Nepean: "[76] In regard to the issue the subject of this application for leave to appeal, for the reasons given by Hodgson JA I would construe the Building and Construction Industry Security of Payment Act 1999 (NSW) as follows. Provided that a payment claim is made in good faith and purports to comply with s 13(2) of the Act, the merits of that claim, including the question whether the claim complies with s 13(2), is a matter for adjudication under s 17 and not a ground for resisting summary judgment in proceedings under s 15. In particular, if no adjudication is sought summary judgment cannot be resisted on grounds that could have been raised by way of a payment schedule leading to adjudication." 1. In Brookhollow Pty Ltd v R & R Consultants Pty Ltd [2006] NSWSC 1 Palmer J stated as follows at paragraphs [33] and [37]-[41]. "[33] Consistently with the reasoning of Basten JA in Climatech, Hodgson JA in Nepean concluded that a payment claim cannot be treated as a nullity for failure to comply with s 13(2)(a) of the Act "unless the failure is patent on its face; and this will not be the case if the claim purports in a reasonable way to identify the particular work in respect of which the claim is made": Nepean at para 36. The corollary of this proposition is that a payment claim can be treated as a nullity if it does not on its face reasonably purport to comply with s 13(2)(a). … [37] The third member of the Court of Appeal in Nepean, Ipp JA, agreed with the reasons of Hodgson JA. Ipp JA, summarised the fundamental proposition thus: … for the reasons given by Hodgson JA I would construe [the Act] as follows. Provided that a payment claim is made in good faith and purports to comply with s 13(2) of the Act, the merits of that claim, including the question whether the claim complies with s 13(2), is a matter for adjudication under s 17 and not a ground for resisting summary judgment in proceedings under s 15. In particular, if no adjudication is sought summary judgment cannot be resisted on grounds that could have been raised by way of a payment schedule leading to adjudication. [38] As I read this passage, his Honour is saying that the validity of a payment claim, in terms of its compliance with s 13(2), is a matter for the adjudicator to determine provided that the payment claim is made "in good faith and purports to comply with s 13(2)". [39] Leaving aside what is meant by the making of a payment claim in good faith, I take his Honour to be saying that if a payment claim does not purport to comply with s 13(2), then its validity is not a matter for adjudication: the payment claim is a nullity for the purposes of the Act. The second proposition which his Honour enunciates concerning the question of summary judgment is prefaced by the words "in particular", which indicate that what his Honour there says is an elaboration of the prior proposition and, like the prior proposition, is subject to the proviso that the payment claim must purport to comply with s 13(2). [40] In other words, if the payment claim does not purport to comply with s 13(2), his Honour would conclude that the nullity of the payment claim could be set up as a defence to an application for summary judgment under s 15(4). [41] The law as to compliance with s 13(2) of the Act as it emerges from Brodyn and Nepean, may be summarised thus: i) a payment claim which is never served on the respondent under s 13(1) cannot set in motion the machinery of Pt 3 so that any purported adjudication of that payment claim and any other enforcement procedures in Pt 3 founded upon that payment claim must be a nullity; ii) there are some non-compliances with the requirements of s 13(2) of the Act which will result in the nullity of a payment claim for all purposes under the Act; there are other non-compliances which will not produce that result; iii) a payment claim which does not, on its face, purport in a reasonable way to: — identify the construction work to which the claim relates; or — indicate the amount claimed; or — state that it is made under the Act fails to comply with an essential and mandatory requirement of s 13(2) so that it is a nullity for the purposes of the Act; iv) a payment claim which, on its face, purports reasonably to comply with the requirements of s 13(2) will not be a nullity for the purposes of engaging the adjudication and enforcement procedures of Pt 3 of the Act; v) in the case of a payment claim which purports reasonably on its face to comply with s 13(2): — if the respondent wishes to object that it does not in fact comply so that it is a nullity for the purposes of the Act, the respondent must serve a payment schedule under s 14(4) and an adjudication response under s 20, in which that objection is taken; — if the respondent does not serve a payment schedule within the time limited under the Act and the claimant ultimately seeks the entry of judgment under s 15(4), the respondent may not resist summary judgment on the ground that the payment claim was not a valid payment claim by reason of non-compliance with the requirements of s 13: the respondent has only one chance to take that objection, namely, in a timeously served payment schedule; vi) in the case of a payment claim which was never served on the respondent or which does not purport reasonably on its face to comply with the requirements of s 13(2): — the payment claim is a nullity for the purposes of the Act; — an adjudication founded upon that payment claim is a nullity, regardless of whether the objection to the validity of the payment claim was taken in a timeously served payment schedule; — an application under s 15(4) for judgment for the statutory debt created by s 14(4) may be defeated on the ground that there was no payment claim in existence for the purposes of s 15(1)(b)." 1. Accordingly, the first issue is whether the payment claim in question does, on its face, purport in a reasonable way to identify the construction work to which the claim relates. If it does, then it is not a nullity and it complies with Section 13(2) of the Act, and if the respondent does not serve a payment schedule within the time limited under the Act and the claimant ultimately seeks the entry of judgment under Section 15(4), the respondent may not resist summary judgment on the ground that the payment claim was not a valid payment claim by reason of non-compliance with the requirements of Section 13. However, where a payment claim has not been served on the respondent which does purport, reasonably on its face, to comply with the requirements of Section 13(2) of the Act then the payment claim is a nullity for the purposes of the Act and an application for summary judgment may be defeated. 2. In Leighton v Arogen [2012] NSWSC 1323 the importance of background knowledge of the recipient of the payment claim was emphasized by McDougall J. His Honour stated the following at paragraphs [69]-[70]: "[69] It is convenient to start with this point. It may be accepted that payment claims and payment schedules are to be understood as the parties to the relevant construction contract would have understood them. Thus, documents which appear to be extremely summary, or to the uninformed but not unintelligent observer brief to the point of incomprehensibility, may be sufficiently meaningful to the parties to enable them to know, respectively, the bases on which a particular payment claim is advanced and the bases on which it is opposed. [70] In this context, it may well be appropriate to take into account, in particular factual circumstances, the background knowledge of the parties as shown (for example) by correspondence passing between them before and at the time the payment claim and payment schedule were exchanged. That material might enable the court to have a more informed understanding of the way that the parties would have perceived, and understood, the real issues sought to be raised." 1. Accordingly, one cannot look at a payment claim in isolation. The court must look at the particular factual circumstances and the background knowledge of the parties as shown by contractual documents or correspondence passing between them. See also Hodgson JA in Nepean, above, at [34]. This principle is of particular importance in the current application. 2. In Ardnas (No 1) Pty Ltd v J Group (Aust) Pty Ltd [2012] NSWSC 805, Hammerschlag J considered the situation where two payment claims were made at the same time. The first defendant in the case directed to the plaintiff two invoices under cover of one facsimile. The invoices claimed separate amounts for separate work but both called on payment 14 days from the date of the invoice. 3. The plaintiff brought proceedings to quash an adjudication determination made under the Act on the grounds that the adjudicator had no jurisdiction to make it because its subject matter was more than one payment claim served in respect of one reference date contrary to Section 13(1) and 13(5) of the Act: at [1]. 4. Hammerschlag J quoted Douglas J in Tailored Projects Pty Ltd v Jedfire Pty Ltd [2009] QSC 32 at [18] where his Honour said: "[18] The second argument, that 19 separate claims were made dated 31 July 2008, is less persuasive. The claims were delivered together in a form where the first document describing itself as a payment claim under the Act contained internal references to the other 18 invoices which made monetary claims by setting out the invoice numbers in a column. Those invoices, with their supporting documents, were then attached behind the covering document. That each invoice also bore the words describing it as a claim made under the Act should not lead to the conclusion that the delivery of these documents at the one time amounted to the service of more than one payment claim. To conclude otherwise would require the triumph of form over substance, even in an area where adherence to form and strict compliance with the Act is important." 1. Hammerschlag J said that the matter should be looked at as a matter of substance rather than form. His Honour stated the following at paragraphs [11]-[12]. "[11] Viewing the matter as a matter of substance rather than form, only one payment claim was made comprising two amounts each reflected in an invoice of the same date. [12] It is, accordingly, not necessary for me to consider the submission that the adjudicator would have had no jurisdiction to have determined two claims with the same reference date." 1. A similar view was taken in Alan Conolly v Commercial Indemnity [2005] NSWSC 339 at [21]-[23] where the two invoices were sent on the same day. 2. In J Hutchinson Pty Ltd v Glavcom Pty Ltd [2016] NSWSC 126 Ball J considered a situation where contractual provisions in a construction contract imposed conditions on the payment of a payment claim by requiring Statutory Declarations to be provided. In paragraphs [26]-[27] Ball J stated as follows: "[26] Section 8 gives a person who performs construction work, or provides related goods and services, under a construction contract a right to receive a progress payment on each reference date, which is a date determined in accordance with the contract or a date fixed by s 8(2)(b). It is apparent from s 8 that the contract can fix a date, or provide a method for fixing a date, other than the date set out in s 8(2)(b). But the section cannot be interpreted as permitting other conditions to be attached to the occurrence of a reference date or a right to receive a progress payment. Any provision that purported to do so would be a provision that sought to modify or to restrict the circumstances in which a person was entitled to a progress payment and would therefore be void under s 34. [27] In my opinion, a provision in a contract that makes the occurrence of a reference date conditional on the provision of a statutory declaration or a true statutory declaration concerning the payment of other amounts owed by the subcontractor falls into that category. That is not a provision which provides a mechanism for fixing a date. Rather, it is a provision that seeks to add an additional condition to the right to obtain a progress payment …" 1. It was submitted in the present case by the plaintiff that any requirement by the defendant that the plaintiff was not entitled to payment until it produced sub-contractor invoices for work completed for the plaintiff was an invalid requirement under the Act in accordance with this authority. I accept that submission. This appears to have been an alleged term of the contract as to entitlement to payment. That is, "it is a provision that seeks to add an additional condition to the right to obtain a …payment." 2. In BHW Solutions Pty Ltd v Altitude Constructions Pty Ltd [2012] QSC 214 Mullins J stated the following in relation to John Holland Pty Ltd v Coastal Dredging & Construction Pty Ltd [2012] QCA 150 at [14] (of Mullins J's judgment): "[14] Fraser JA who delivered the leading judgment in John Holland explained the nature of the statutory entitlement to progress claims conferred by s 12 of the Act at [18]: Section 12 confers upon a person who has undertaken to carry out construction work a statutory entitlement to recover a progress payment from each "reference date under a construction contract", which is defined to mean, so far as is presently relevant, "a date stated in, or worked out under, the contract as the date on which a claim for a progress payment may be made for construction work carried out or undertaken to be carried out, … under the contract …". Accordingly, the contractual provisions to which reference may be made for the purpose of ascertaining the "reference date" are those which state, or provide for the working out of, the date on which a progress payment claim "may be made". The latter expression refers to an entitlement to make a progress claim. It does not comprehend reference to warranties which concern the form and content of progress claims or the consequences of breaching warranties about the form and content of progress claims." 1. Accordingly, provided a party complies with the statutory requirements under the Act, a breach of a warranty about the form and content of progress claims in the contract is irrelevant. 2. In relation to the issue whether a construction contract or "other arrangement" under the Act is required to include in the contract or arrangement a stated amount to be paid for the construction work or terms which show agreement to a variation of the contract or other arrangement in relation to which the payment claim is made, the plaintiff submitted: 1. The plaintiff does not need to prove that the defendant accepted or agreed with the plaintiff's valuation of the works or that a stated sum was referred to in the contract or arrangement provided the work in question was done under a construction contract within the meaning of the Act. Section 13(1) of the Act relates to a person who is or who claims to be entitled to a payment claim…" (emphasis added): plaintiff's written submissions paragraph 22. A recipient of a payment claim from a person who claims to be entitled to payment cannot raise a contractual matter as a defence to the payment claim in circumstances where no payment schedule was served: see Consolidated Constructions Pty Ltd v Ettamogah Pub (Rouse Hill) Pty Ltd [2004] NSWSC 110 at [61]; Ampcontrol SWG Pty Ltd v Gujarat NRE Wonga Pty Ltd [2013] NSWSC 707 at [19]-[23]. Thus the failure to mention an amount for the work or a challenge to agreement to a variation is a matter for a payment schedule. In addition, as discussed further below, a plaintiff does not need to establish an enforceable construction contract as the definition of "construction contract" in section 4(1) of the Act includes other arrangements not amounting to a legally enforceable contract: Machkevitch v Andrew Building Constructions [2012] NSWSC 546 at [25]-[28]; 2. Sections 9 and 10 of the Act were submitted not to relate to the stage concerning a section 13 payment claim (such as the value of the work under a contract where no sum was stipulated in the contract) but rather to the adjudication stage. This permits a payment claim to be made in relation to common costs plus and "do and charge" building contracts: plaintiff's submissions paragraphs 32 and 36-37; IWD No 2 Pty Ltd v Level Orange Pty Ltd [2012] NSWSC 1439 at [33]-[41]; see also Southern Han Breakfast Point Pty Ltd (in liquidation) v Lewence Construction Pty Ltd [2016] HCA 52 at [58]-[60]. It was submitted by the plaintiff that section 9 of the Act should not be used to construe an additional requirement in section 8 (and the definition in section 4 of "construction contract") that there be an agreement on price: plaintiff's submissions paragraph 47; 3. Alternatively, any contention that the plaintiff needed to prove that the defendant accepted or agreed with the plaintiff's valuation of the works the subject of the payment claim is a defence in relation to matters arising under the construction contract which contention the defendant is not permitted to make by reason of section 15(4)(b) of the Act; 4. The defendant's remedy was not to ignore the payment claim but to serve a payment schedule under the Act; 5. As the defendant did not serve a payment schedule under the Act, and did not pay the plaintiff, the defendant does not have any defence to the plaintiff's claims under the Act and there should be summary judgment. The relevant invoices 1. As stated above, the plaintiff asserted that in the present application there were three separate construction contracts giving rise to three separate payment claims under the Act. 2. There was admitted into evidence the following: 1. The plaintiff's Court Book which included a Joint Tender Bundle as Exhibit A; 2. Exhibit TTO-1 to the affidavit of Torben Tvilling Østergaard sworn 1 May 2017, which was the primary affidavit sworn on behalf of the defendant and which became Exhibit 1; 3. A NSW Adjudication Application Form dated 21 April 2017 which became Exhibit 2 on the application. 1. The three payment claims relied upon by the plaintiff to support its summary judgment application have been referred to above in relation to the contracts and the amounts claimed. Further details in relation to these three claims are as follows: 1. Tax invoice INV 0095 dated 24 November 2016 issued by the plaintiff to the defendant relating to Pitt Street seeking $10,780 plus GST ($11,858). The detail appearing in the tax invoice was as follows: Code Description Qty Unit Unit Price (Ex) Disc% Tax Excl Price CLAIM 1 Joe & The Juice Pitt St – Pre Construction Costs 1.000 10,780.00 0.00 % 10.00 % 10,780.00 See page 41 of the Joint Tender Bundle; 1. Tax Invoice Number INV 0106 dated 12 December 2016 from the plaintiff to the defendant relating to Barangaroo for the sum of $88,000 plus GST ($96,800) with the detail appearing in the payment claim as follows: Code Description Qty Unit Unit Price (Ex) Disc% Tax Excl Price CLAIM 1 Progress Claim 3 1.000 88,000.00 0.00 % 10.00 % 88,000.00 Variations to the contract will be issued in a separate invoice See page 49 of the Joint Tender Bundle; 1. Tax Invoice Number INV 0118 dated 23 January 2017 from the plaintiff to the defendant for T2 Food Court Sydney Airport for the sum of $164,785.91 plus GST ($181,264.50) with the following description appearing on the invoice: Code Description Qty Unit Unit Price (Ex) Disc% Tax Excl Price CLAIM 1 Claim 3 (Variations) 1.000 164,785.91 0.00 % 10.00 % 164,785.91 See page 68 of the Joint Tender Bundle. The affidavit evidence Affidavit of Michael Ettrick sworn 17 February 2017 1. This affidavit annexes relevant documents in relation to the three claims and states that the plaintiff has not received any payment schedule from the defendant in respect of the three tax invoices said to constitute payment claims for the three projects. I find as a fact, on the basis of this evidence, that no payment schedules have been served by the defendant in response to the tax invoices said to constitute payment claims served by the plaintiff. Affidavit of Michael Ettrick sworn 29 March 2017 1. This affidavit annexes further documents said to be relevant as background information for the three payment claims. It also provides evidence of payments received by the plaintiff from the defendant for other work completed by the plaintiff. Bank records of the plaintiff are also exhibited indicating where payments have been received from the defendant for work. Affidavit of Dean Ossip sworn 24 March 2017 1. This disputes paragraph 6 of Mr Østergaard's affidavit as to the basis upon which the parties agreed to construct the construction works. Mr Østergaard said that it was a cost plus contract whereas Mr Ossip asserted that the scope of works for one of the contracts had a fixed price which had been confirmed in an email. Affidavit of Mr Østergaard 1. Mr Østergaard is the Project Manager of the defendant. He gives evidence that the defendant typically acts as Project Managers for retail fit outs. He states that in about early to mid-2016 the defendant was engaged by Joe & The Juice to construct the fit-outs for Joe & The Juice franchises in Sydney including at Pitt Street in the Central Business District, Barangaroo and Terminal T2 at the Sydney Airport. Mr Østergaard states that he had day to day carriage of the projects for the defendant and that on the projects he dealt with Mr Ossip and Mr Ettrick who he understood were directors of the plaintiff. 2. Mr Østergaard asserts that in July 2016 he had a conversation with Mr Ossip in which they agreed that for the projects the terms were to be on the basis of costs plus 10% on an "Open Book basis" where the plaintiff would provide the defendant with all of their costs and supporting documents including sub-contractor invoices. 3. Mr Østergaard gives evidence that there were discussions between the parties covering variations beyond the various scope of works provided. In particular, Mr Østergaard gives evidence that there was no agreement for the plaintiff to provide unapproved variations. 4. In relation to the various invoices, Mr Østergaard gives evidence that he has not been provided with what he calls "suitable documentation" in satisfaction of the open book arrangement in connection with the various invoices. 5. In relation to the Barangaroo Project, while Mr Østergaard agrees that there was a reference to a fixed sum contract of $220,000, he asserts that there was never any modification to the plaintiff's obligation to provide sufficient open book documentation in order to be entitled to payment. He also states that there was never any agreement on variations in relation to Barangaroo. The onus on the plaintiff 1. As set out above, the plaintiff carries the onus of establishing that there should be summary judgment in the present case. That is a heavy onus and really requires that there cannot be any defence of the defendant which has been advanced which could possibly succeed and that the plaintiff's case is very clear. The authorities emphasise that caution should be exercised before summary judgment is entered on behalf of a plaintiff. 2. A draft Defence was annexed to the written submissions on behalf of the defendant. The draft Defence essentially puts the plaintiff's case in issue and claims that the three tax invoices did not constitute payment claims under the Act requiring the service of a payment schedule (see paragraphs 10, 20 and 30). In the draft Defence the defendant asserts that the invoices failed to identify the construction work to which the progress payment relates (paragraph 34); that accordingly no requirement arose for the defendant to issue a payment schedule pursuant to Section 14 of the Act (paragraph 35); and that Invoice Number 118 was issued in breach of Section 13(5) of the Act and is void (paragraph 36); and Invoice Numbers 106 and 118 claimed for unapproved variations on the Barangaroo and T2 Projects, respectively. It is submitted in the draft Defence that as there was no agreement for the plaintiff to perform (and be paid for) the unapproved variations, these invoices did not arise under the construction contract and as such no right to issue a progress claim arises under Section 8 of the Act. The Pitt Street Project payment claim 1. As stated above, the payment claim for the Pitt Street Project was dated 24 November 2016 for the sum of $10,780 plus GST and is set out at page 41 of the Joint Tender Bundle. 2. The plaintiff relied on the following documents as providing relevant background information in relation to the Pitt Street Project payment claim: 1. At page 2 of the Joint Tender Bundle was an invoice from the plaintiff to the defendant dated 21 July 2016 in relation to the Pitt Street Project in the sum of $39,520.80 for work completed which was paid by the defendant. The plaintiff sought to draw from this the fact that work completed at the Pitt Street Project was not in issue for the defendant; 2. At page 40 of the Joint Tender Bundle was an email from Mr Ettrick to Mr Østergaard dated 3 November 2016 which set out various services which the plaintiff had apparently completed at the Pitt Street Project site. The email continued: "We note the following works or items have been carried out in good faith prior to learning the works will be conducted by another contractor …". Mr Østergaard replied in an email on 4 November 2016 "this is OK". Mr Ettrick then responded in an email sent on 28 November 2016 which on its face included a copy of Invoice Number 0095 referring to pre-construction costs at the Pitt Street site and claiming the amount, excluding GST, of $10,780. 3. Counsel for the plaintiff relied on this as being the same amount as the invoice at page 41 of the Joint Tender Bundle; 4. Counsel for the plaintiff submitted that the material at pages 39-40 of the Joint Tender Bundle provided the background knowledge to the defendant of the work in relation to which the plaintiff claimed the amount said to be owed including the particulars of that work. It was stated that it could properly be inferred that Mr Østergaard would then have known what was in the invoice when it was received; 5. The invoice itself, as stated above, is at page 41 of the Joint Tender Bundle. The invoice does contain the same amount exclusive of GST as is in the email sent to Mr Østergaard dated 28 November 2016 at page 39 of the Joint Tender Bundle. 1. It was submitted that Invoice Number 95 at page 41 of the Joint Tender Bundle accordingly satisfied the test in the Brookhollow case at [41] where Palmer J said what was required was a payment claim which, on its face, purported in a reasonable way to identify the construction work to which the claim relates. 2. In my view, that submission is to be accepted. When all of the background material and correspondence is looked at, the payment claim provides sufficient detail of the construction work to which the claim relates in a reasonable way on its face. 3. The defendant submits that the court cannot infer that the invoice dated 24 November 2016 is the same invoice as was sent with the 28 November 2016 email from Mr Ettrick to Mr Østergaard at page 39 of the Joint Tender Bundle. However, in my view, despite the difference in the dates, the same invoice for the same amount is, it should be inferred, provided. See paragraph 5 of Mr Ettrick's 17 February 2017 affidavit where this is established. 4. The defendant made the submission that the court cannot conclude on the evidence that there was ever any contractual agreement between the parties that the defendant was willing to pay the amount set out in the invoice. Certainly there is nothing in the documentation to which my attention was drawn which would indicate any agreement by the defendant to pay the precise amount set out in the invoice and the 28 November 2016 email. 5. The plaintiff put forward the propositions set out in paragraph 30 (a) and (b) above and submitted that the court need not be troubled by this issue. It was submitted that even though the evidence did not establish a clear agreement between the parties to pay the amount claimed, this was still sufficient to constitute a valid payment claim under the Act as the plaintiff claimed to be entitled to the progress payment within section 13(1) of the Act. In particular, it was asserted that this was a necessary conclusion from the definition of "construction contract" in Section 4 of the Act as meaning "a contract or other arrangement under which one party undertakes to carry out construction work … for another party" (emphasis added). 6. It was submitted that even if a contract could not be established because there was no evidence of acceptance of the amount that this still constituted an "other arrangement" within the definition of "construction contract" in Section 4 of the Act: see IWD No 2 Pty Ltd v Level Orange Pty Ltd [2012] NSWSC 1439 at [33]-[41] where no precise amount was agreed by the parties but an "other arrangement" was found. 7. The defendant submitted that in order for there to be a valid payment claim under the Act it must be shown by the plaintiff that: 1. There was agreement by the defendant for the plaintiff to undertake the relevant construction work; and 2. That agreement extended to the relevant construction work being undertaken for a price which was specified or which could be ascertained pursuant to the terms of what was alleged by the plaintiff to be the agreement between the parties: Further Submissions at [8]-[9] and [12]. 1. As stated above, the plaintiff relied on the decision of McDougall J in Machkevitch v Andrew Building Constructions [2012] NSWSC 546. In that case McDougall J considered the definition of "construction contract" in Section 4(1) of the Act and in particular the meaning of "other arrangement" within the definition. His Honour had to consider whether what was present in that case amounted to an "arrangement" for the purposes of the Act and in particular whether the definition of "construction contract" in Section 4(1) requires that the "arrangement" relied upon must be legally enforceable. In Machkevitch McDougall J stated the following legal propositions at paragraphs [14]-[30]: "[14] The Act gives, to those who undertake to carry out construction work or to supply related goods and services (for convenience, I will confine myself to "construction work") under a construction contract, the right to recover progress payments, and a statutory mechanism intended to ensure the swift implementation of that right. [15] One of the central concepts in the Act is that of "construction contract". That expression is defined, in s 4, to mean: … a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party. [16] The expressions "contract" and "arrangement" are not separately defined. [17] As a matter of language, it seems to be clear that the legislature intended that a "construction contract" could include both a "contract" (as that concept is known to and understood in the law) and some "other arrangements" that would not in law be regarded as contracts. [18] It seems to me, as a simple matter of reading the legislative words, that the concept of "other arrangement" is something which goes beyond the concept of "contract". [19] No doubt, the legislature had in mind that, from time to time, work would be done pursuant to arrangements which might not be susceptible to classification as contracts, formal or informal. Clearly, it did not intend that the entitlement to payment should depend on the degree of formality in the arrangements pursuant to which work should be done. In this respect, the legislative intention could be contrasted with the intention underlying s 10 of the Home Building Act 1989 (NSW), under which a builder is not entitled to enforce a contract unless it is licensed, and carries out work pursuant to a written contract. [20] The word "arrangement" may be thought to be a somewhat strange one in the context of the Act. It its primary meaning, it denotes the ordering or disposition of things (see, for example, the online editions of the Macquarie Dictionary and the Oxford English Dictionary). But the same reference sources suggest that a secondary meaning of "arrangement" denotes measures or preparations, or plans for the accomplishment of some purpose. [21] Nicholas J considered the proper construction of the definition of construction contract in Okaroo Pty Ltd v Vos Construction and Joinery Pty Ltd [2005] NSWSC 45. His Honour noted [at 40] that the word "arrangement" lacked precise meaning. His Honour observed that it was a word that appeared in many different statutory contexts, and that it would derive its meaning from its context. His Honour referred to what was said in Newton v FCT (1958) 98 CLR 1 at 7, and in Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (No 8) (1999) 165 ALR 468 at 469. [22] In the former case, the court concluded that an "arrangement" was something less than a binding contract It could be something in the nature of an understanding, or a plan not enforceable at law. [23] In the second of those cases, the court observed that the composite expression of "arrangement or understanding" required something more than a mere expectation. It required some assumption of obligation, or assurance, or undertaking. [24] In Okaroo [at 41], Nicholas J said, in my respectful opinion correctly, that in its context in the definition of "construction contract" in the Act, the word "arrangement" encompasses transactions or relationships which are not legally enforceable. Thus, his Honour said, and again in my respectful opinion correctly, that a construction contract would include both a legally enforceable agreement and other transactions which were not. He therefore concluded: … that contract is to be given its common law meaning and that "arrangement" means a transaction or relationship which is not enforceable at law as a contract would be. [25] At [42], his Honour observed that the only express limitation on the "arrangement" was that it must be one under which one party to it undertakes to carry out construction work for another party to it. I respectfully agree. [26] Further, his Honour concluded [at 55], there was nothing either in the definition of construction contract or in the Act as a whole which supported the suggestion that an "arrangement" must have the quality of legal enforceability. Again, I respectfully agree. I add only that an "arrangement" enforceable at law, for example through the doctrine of estoppel, would nonetheless be capable of being an arrangement for the purposes of the Act. [27] In my view, what is required is that there be something more than a mere undertaking; or something which can be said to give rise to an engagement, although not a legally enforceable engagement, between two parties; or a state of affairs under which one party undertakes to the other to do something; or an arrangement between parties to like effect. [28] In those circumstances, the court must look for a concluded state of affairs, which is bilateral at least, which can amount to an arrangement under which one party to it undertakes to perform construction work for another party to it. It is not necessary that the arrangement be legally enforceable; but an "arrangement" which is legally enforceable may be, a priori, a construction contract. [29] I do not think that much more assistance is to be gained from considering how the word "arrangement" (or its plural form) has been construed in other statutory contexts. Ultimately, the meaning to be given to the word must depend on an analysis of its place in the particular legislative scheme which is under consideration, and by reference to the context in which it appears. In my view, considerations of legislative purpose and context indicate, in the present case, that the word "arrangement" denotes some engagement, or state of affairs, or agreement (whether legally enforceable or not) under which, perhaps among other things, one party undertakes to perform construction work for another. [30] Whether an "arrangement" in this sense imposes any obligation (whether legally enforceable or not) on one of the parties to pay for construction work depends on the terms of the engagement, or agreement, or state of affairs." 1. Counsel for the plaintiff pointed out that there was no reference in the analysis undertaken by Justice McDougall of the need for an amount to be expressly stated in the contract or other arrangement to carry out the construction work. See also IWD No 2 Pty Ltd v Level Orange Pty Ltd [2012] NSWSC 1439 at [39]-[41]. The plaintiff also submits that there was no mention of the need of a contract sum in Okaroo Pty Ltd v Vos Construction and Joinery Pty Ltd [2005] NSWSC 45 to which his Honour referred in the passages quoted above. Accordingly, it was submitted that the definition of "construction contract" in Section 4(1) of the Act included both a contract and other arrangement encompassing transactions or relationships which are not legally enforceable but which constitute something more than a mere undertaking. 2. Reference was also made to the decision of Justice McDougall in Cranbrook School v J A Bradshaw Civil Contracting [2013] NSWSC 430. In that case one of the issues was whether an adjudicator lacked jurisdiction to make a determination because there was no relevant construction contract under the Act. In that case McDougall J stated the following at paragraphs [37]-[40]: "[37] The expression "construction contract" is defined in s 4 of the Act to mean: a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party. [38] It was common ground, I think, that the words "or other arrangement" denote something falling short of a contract as that term is known to the law. To the extent that it might not have been common ground, that proposition is in my view clearly established by the decision of Nicholas J in Okaroo Pty Ltd v Vos Construction and Joinery Pty Ltd [2005] NSWSC 45. I refer, in addition, to the decision of Rein J in Olbourne v Excell Building Corp Pty Ltd [2009] NSWSC 349 at [25]–[28], and at [44]–[57], where his Honour considered the factual situation. I refer, further, to my own decision in Machkevitch v Andrew Building Constructions [2012] NSWSC 546 at [14]–[30]. [39] For the reasons that I gave in Machkevitch at [28], for there to be an arrangement for the purposes of the definition of construction contract, one party to whatever the arrangement is must undertake to perform construction work for another party to that arrangement. That view is I think consistent with what Rein J had said in Olbourne. [40] Mr Condon submitted that, to the extent that this proposition was established by Olbourne and Machkevitch, they were decided either per incuriam or incorrectly. I see no reason to reconsider what I said in Machkevitch. That seems to me to follow inevitably from the language of the definition, which refers relevantly to an arrangement under which one party undertakes to carry out construction work for another party. It would be quite unusual for the word "party" where first used to indicate a party to the arrangement but, where secondly used, to refer to a party who need not be a party to that arrangement." 1. In my view, the submissions of the plaintiff should be preferred on this issue. Section 13(1) of the Act, the definition of "construction contract" in section 4(1) of the Act and the authorities relied on by the plaintiff all provide support for the plaintiff's approach. Mr Østergaard's email on 4 November 2016 (Joint Tender Bundle page 39) shows that the works were agreed and amounted to "a concluded state of affairs" within paragraph 28 of Machkevitch v Andrew Building Constructions [2012] NSWSC 546. The background correspondence establishes that the defendant was fully aware of the works undertaken for which the invoice was sent. 2. In all the circumstances, I accordingly find that there was a valid payment claim within section 13 of the Act. As no payment schedule was served by the defendant under section 14(4) of the Act, the plaintiff is entitled to judgment under section 15(4) of the Act. 3. Therefore, I find that summary judgment should be entered for the plaintiff for the amount claimed in relation to the Pitt Street contract payment claim. T2 Contract Claim 1. As stated above, the plaintiff makes a claim under this part of its Statement of Claim and application for summary judgment for the amount of $181,264.50 plus interest in accordance with the tax invoice at page 68 of the Joint Tender Bundle. 2. The contractual background relied upon by the plaintiff is as follows: 1. At page 4 of the Joint Tender Bundle is an email from Mr Ossip on behalf of the plaintiff to Mr Østergaard on behalf of the defendant which includes the following: "Please refer attached our tender cost proposal for the above project for review and approval. We will be available over the coming days to review the attached over the phone if required". The annexures to that email are not in evidence. 2. Mr Østergaard replied on 8 August 2016 in an email in which he said that he would "need some time to work with this offer" and added that he saw "no pricing for the gantry". 3. Mr Ossip replied in an email dated 8 August 2016: "We have allowed $20K in our tender which should be sufficient". Counsel for the plaintiff said that it should be inferred that this refers to the pricing for the gantry and I accept that that is the proper construction of the emails. 4. Mr Ossip followed up the matter on 10 August 2016 with Mr Østergaard. 5. On 10 August 2016, Mr Østergaard said in an email to Mr Ossip: "We will of cause [sic] have to continue the process and you will have to take the steps needed to get on with the process. By giving you this approval to continue Im [sic] taking a huge risk, because this off has not been approved by Joe yet with this short notice … Therefore you can go ahead …"; 6. On 22 August 2016 Mr Ossip sent to Mr Østergaard an email which included the following: "Further to our conversation, please refer attached our amended tender proposal inclusive of RIIS's comments on our previous tender proposal. As agreed, we will not charge Joe and the Juice any costs that are not incurred and we will go through all the incurred costs once the project has been completed": Joint Tender Bundle page 3; 7. The amended tender proposal appears to be the document at pages 6-10 of the Joint Tender Bundle, although it is called a "Bill of Quantities Summary". See the email from Mr Ossip at page 5. This gives the total project cost including GST as $392,530.05 (page 6 of the Joint Tender Bundle); 8. At pages 12-13 of the Joint Tender Bundle are emails between Mr Ossip and Mr Østergaard dated 5 and 6 October 2016. The plaintiff submits that the 5 October 2016 email from Mr Ossip deals with "additional works" which are the subject of the variations claim when one compares the detail in that invoice to the document appearing at pages 70-72 of the Joint Tender Bundle which sets out the contract works and claimed variations. The plaintiff says that Mr Østergaard's 6 October 2016 email does not dispute the additional works; 9. At page 59 of the Joint Tender Bundle is an invoice for Claim Number 1 in relation to the T2 food court in the amount of $294,397.57 which was sent by the plaintiff to the defendant and was paid on 28 December 2016. It was noted by the plaintiff that there was no provision of sub-contractor invoices for the purposes of being paid as was suggested to be the arrangement in paragraph 6 of Mr Østergaard's affidavit; 10. At pages 61-66 of the Joint Tender Bundle is a series of emails. These show a dispute between the parties in relation to the works. The plaintiff relies upon the material at page 61 for variation works to the T2 Project. Mr Ettrick says in an email at page 61 under the heading "Variation Works" the following: "Invoice and substantiation/summary attached (INV0118 / Claim 3). Payment of $181,264.50 incl GST is due for these works … SMLXL variation costs as submitted are fair and reasonable and substantiation has been fully provided. Works not allowed in accordance with the contract documents and subsequently directed by RIIS were undertaken in good faith without delay as variations to the contract." 1. The plaintiff submits that what was sought was a further claim under the construction contract for T2 for variations; 2. At page 67 of the Joint Tender Bundle is Invoice Number 0117 from the plaintiff to the defendant for $98,132.49 for Claim 2 in relation to the T2 Project. This has been paid by the defendant; 3. Claim 3 for variations which appears at page 68 of the Joint Tender Bundle which is Invoice Number 0118 is the invoice in question which is in dispute. 4. At page 69 of the Joint Tender Bundle is a series of emails relating to the variation claim for the T2 Project. In an email dated 23 January 2017 at 5.32pm Mr Ettrick sends to Mr Østergaard what he describes as "T2 Variation summary and detailed substantiation attached". 1. The plaintiff submits that this amount is owing under the Statement of Claim and the summary judgment application because it amounted to a valid payment claim for variations to the T2 Project. 2. The defendant submits that Invoice Number 118 is a claim for unapproved variations on the T2 Project. It is asserted that as there was no agreement for the plaintiff to perform any, let alone unapproved variations, these invoices did not arise under the construction contract and thus there was no right to issue a progress payment claim for them under Section 8 of the Act. See the Further Submissions at [10]-[15]. 3. This is even though the plaintiff submitted some sub-contractor invoices which may be found at pages 75 to 83 of the Joint Tender Bundle. 4. It is also said on behalf of the defendant that the 5-6 October 2016 emails do not establish any agreement or bilateral arrangement between the parties. In the 5 October 2016 email in the last sentence Mr Ossip requests an "undertaking by COB today 06/10/16". It is submitted that Mr Østergaard's 6 October 2016 email does not provide this undertaking or provide any agreement to the claimed additional (variation) works. 5. In my view there is force in relation to the submissions made by the defendant particularly as the matter is a summary judgment application. 6. The plaintiff has made a payment claim under section 13(1) for a progress payment to which it claims it is entitled. There was clearly a construction contract between the parties for the T2 project as earlier invoices were paid. The issue is the claim for the variations. The plaintiff says the variation works were "directed" by the defendant: Joint Tender Bundle page 61. 7. The claim is for a variation under the contract. The evidence does not in my view establish to the standard required for a summary judgment application that there was a "concluded state of affairs" and an engagement between the parties which was "bilateral at least" within Machkevitch at [27]-[28] in relation to the alleged variation. There was merely an assertion to an entitlement to be paid for the additional works which was not clearly agreed to by the defendant. In my view no bilateral arrangement was clearly made on the evidence currently before the Court. 8. Accordingly, in my view the defendant's submissions in relation to the validity of the payment claim concerning the disputed T2 invoice should be upheld. 9. In my view the detail of the documentation provided clearly satisfied the requirement in section 13(2)(a) of the Act. 10. Counsel for the defendant also pointed out in relation to Invoice 118 that it was issued on the same date as Invoice number 117. It was argued that this was contrary to Section 13(5) of the Act which states that a claimant cannot serve more than one payment claim in respect of each reference date under the construction contract. Accordingly, it was submitted that this payment claim could not be relied on. 11. The plaintiff relied on Ardnas (No 1), the decision of Hammerschlag J which I have referred to above. 12. The defendant said the current case can be distinguished from Ardnas. It was submitted that the clear policy under the Act is that a recipient cannot be given different invoices in the same reference period for work and variations. It was submitted that Ardnas is not sufficiently clear on its facts to determine that the two invoices in the present case may be relied upon. It is further submitted that the factual scenario is quite different in Ardnas where separate amounts for separate work were claimed but not separate amounts for both primary construction work and variations under the construction contract. 13. I cannot read any such distinction in Ardnas. I agree with the plaintiff that the case appears to stand for the proposition that if a different payment claim is served for different work for a construction project that could have been in the same payment claim it should be allowed when sent at the same time as the first invoice. The two invoices in question in the present case were sent at the same time as annexures to Mr Ettrick's email to the defendant dated 23 January 2017. 14. Ardnas is also supported by Alan Conolly v Commercial Indemnity [2005] NSWSC 339 at [21]-[23] which is very similar factually to the present case. 15. In the absence of appellate authority, I read Ardnas as standing for the proposition put forward by the plaintiff and I believe I should follow a decision of a single Judge of the Supreme Court who specializes in the construction jurisdiction. 16. Accordingly, I do not accept this aspect of the defendant's submissions. 17. However, for the reasons given in relation to the variations argument, in my view the plaintiff has not established a right to summary judgment in relation to this part of its claim concerning the T2 project. Barangaroo Contract Claim 1. The third part of the claim made by the plaintiff in these proceedings for summary judgment in relation to the Statement of Claim is the claim for the sum of $96,800 for Tax Invoice Number 106 dated 12 December 2016. 2. In paragraph 31 of Mr Østergaard's affidavit, Mr Østergaard agreed that for the Barangaroo Project only, in November 2016 both parties referred to a fixed sum of $220,000 for the project. However, Mr Østergaard asserts that there was never any modification to what he describes as the plaintiff's obligation to provide "sufficient Open Book documentation in order to be entitled to payment nor was there ever an agreement on variations". This is a reference back to the alleged agreement referred to in paragraph 6 of his affidavit. 3. The documents relied upon by the plaintiff in relation to this aspect of its claim are as follows: 1. At page 17 of the Joint Tender Bundle is an email from Mr Østergaard to Mr Ossip and Mr Ettrick which includes the following: "Referring to our meeting yesterday, I hereby confirm our agreement on a total sum of 220.000$ ex gst". 2. There is an email from Mr Ossip to Mr Østergaard and Mr Ettrick at page 17 of the Joint Tender Bundle dated 8 November 2016 which includes the following: "Please refer attached our amended offer to reflect our verbal agreement". The amended offer appears to be for $220,000 plus GST. A document on the plaintiff's letterhead concerning "Joe & The Juice – Barangaroo South" and said to be a Bill of Quantities (both Summary and Detailed) in the amount excluding GST of $220,000, is attached. 3. At page 25 of the Joint Tender Bundle is Tax Invoice Number 0088 from the plaintiff to the defendant relating to Barangaroo described as "Claim 1 30% deposit" in the sum of $72,600 being $66,000 excluding GST. The evidence is that this claim number one was paid by the defendant to the plaintiff on 17 November 2016. 4. At page 38 is a second Tax Invoice Number 0094 from the plaintiff to the defendant described as "Progress Claim 2" in relation to Barangaroo also for the amount of $72,600 which is $66,000 excluding GST. This was also paid by the defendant with payment being made on 23 January 2017. The invoice numbered 0094 was dated 24 November 2016. The earlier invoice numbered 0088 was dated 10 November 2016. 5. The next document relied upon is Invoice number 0106 dated 12 December 2016 at page 49 of the Joint Tender Bundle for which the plaintiff seeks payment in these proceedings. It is in relation to Barangaroo and is described as "Progress Claim 3, Variations to the contract will be issued in a separate invoice". The invoice is for $96,800 including GST or $88,000 excluding GST. 1. The plaintiff submits that when these documents are read together with paragraph 31 of Mr Østergaard's affidavit, it is clear that the defendant agreed to the plaintiff completing construction work on the Barangaroo project for the sum of $220,000 excluding GST. If one adds the three invoice amounts together being $66,000 (10 November 2016), $66,000 (24 November 2016) and $88,000 (12 December 2016), the sum of $220,000 is arrived at which is the agreed contract sum. The invoices on their face relate to a 30% deposit for the Barangaroo Project, Progress Claim 2 in relation to the Barangaroo Project and Progress Claim 3 in relation to the Barangaroo Project. 2. The plaintiff also submits that when one looks at the documents relied upon it is clear that they relate to the Barangaroo Project and that the details of the work to be completed are set out. Although only brief details are put in the three invoices, it is asserted that when one reads the background documentation and correspondence it is apparent that the defendant must have been aware of what the claims were for, being in the case of invoice number 0106 the remaining sum due under the contract. Having paid the first invoice and having received the second invoice, the defendant must have been aware of the work completed and was content to pay them. It was submitted that the inference should properly be drawn that the defendant as a competent company was aware at all times of what work was being completed by the plaintiff at the Barangaroo site. 3. The defendant submits that there is even less information in Invoice 106 than in the invoice for the Pitt Street Project. All that is included is that it is for Progress Claim 3. There is no information on the evidence which accompanied it from the plaintiff. It is said that it is far from established that this is the third claim under the $220,000 agreement. In particular, it is submitted that the evidence does not establish that it is the third claim under the agreement sufficient to comply with the high standard for a summary judgment. It is submitted that the email dated 8 November 2016 from Mr Østergaard amounted to a conditional agreement. 4. Counsel for the defendant accepted that up to the payment of the second invoice dated 24 November 2016 it appeared that the agreement to pay $220,000 excluding GST was in place. Reference is also made to later emails from Mr Østergaard which may be found at pages 84-85 of the Court Book which are said to be consistent with the contractual arrangement referred to in paragraph 6 of Mr Østergaard's affidavit. It is said that there are no emails negativing this arrangement and saying that a lump sum only is to be paid for the Barangaroo Project without the provision of sub-contractor invoices. It is submitted that this is reinforced by later emails from Mr Ettrick in February 2017 attaching sub-contractor and supplier invoices (see pages 75-76 of the Joint Tender Bundle). 5. Overall, it is submitted by the defendant that there is enough ambiguity to resist a summary judgment application. 6. The first question to be determined is whether the invoice at page 49 of the Joint Tender Bundle in the sum of $96,800 satisfies the test in Brookhollow of being a payment claim which on its face purports in a reasonable way to identify the construction work to which the claim relates. At Exhibit E to Mr Ettrick's 17 February 2017 affidavit is an email from Mr Ossip to Mr Østergaard dated 12 December 2016 forwarding the invoice 106 for Barangaroo being the invoice at page 49 of the Tender Bundle in question for Progress Claim 3. The email forwarding the invoice makes no additional reference to the work for which payment is sought. 7. The question therefore arises whether, from all the material before the Court, the conclusion can be reached that there was sufficient information before the defendant such that the payment claim in Invoice 106 on its face, in the context of the background, sets out in a reasonable way to identify the construction work to which the claim relates. 8. There seem to be two possible ways to construe the material which have been argued. First, that Invoice 106 at page 49 of the Joint Tender Bundle constitutes the third and final claim which must be for the completion of the work which was agreed to be undertaken for $220,000 excluding GST. This can be inferred from the fact that the three invoices amount to $220,000 excluding GST and they relate to Barangaroo, and the defendant was in a position to infer that in the light of its knowledge. 9. The second alternative is that there is no detail provided in Invoice 106 itself to see what it relates to in relation to the project for the plaintiff to identify the work for which payment is claimed and potentially prepare a payment schedule. 10. I consider that there is force in the plaintiff's argument that the fact that it is for a third invoice in relation to Barangaroo for the agreed contract sum of $220,000 is sufficient in circumstances where the three invoices total the agreed contract sum and the background information shows the contract works which were to be completed. 11. An inference can in my view properly be drawn from the invoice that it is for the Barangaroo project and not variations under the contract by the reference to "Variations to the contract will be issued in a separate invoice" in the invoice itself. Looking at the invoice in its context, it enables the recipient to determine that it is the last invoice for the agreed work which was set out in detail in the earlier correspondence. 12. Taking into account all the circumstances, in my view the payment claim in question does comply with Section 13(2) of the Act as set out in Brookhollow and which has been followed in later cases. 13. In my view, the plaintiff is entitled to summary judgment in relation to this payment claim. Conclusion 1. For the above reasons, in my view the application should be granted in relation to the Pitt Street and Barangaroo claims but not in relation to the T2 claim. 2. Accordingly, I make the following orders: 1. Summary judgment for the plaintiff on its Notice of Motion filed on 28 February 2017 under Part 13, Rule 1 of the Uniform Civil Procedure Rules in relation to the Pitt Street payment claim and the Barangaroo payment claim; 2. The application in the Notice of Motion in relation to the alleged T2 payment claim is dismissed; 3. The parties are to bring in short minutes of order within seven days reflecting the amounts in the Statement of Claim for the Pitt Street and Barangaroo payment claims together with any relevant interest; 4. I will hear the parties on costs; 5. Exhibits to be returned after 28 days. ********* 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 June 2017