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Denbrook Constructions Pty Ltd v CBO Developments Pty Ltd[2021] QDC 325

Denbrook Constructions Pty Ltd v CBO Developments Pty Ltd[2021] QDC 325

DISTRICT COURT OF QUEENSLAND

CITATION:

Denbrook Constructions Pty Ltd v CBO Developments Pty Ltd [2021] QDC 325

PARTIES:

DENBROOK CONSTRUCTIONS PTY LTD ACN 109 582 122

(Plaintiff)

v

CBO DEVELOPMENTS PTY LTD ACN 628 135 768

(Defendant)

FILE NO:

823/21

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

14 December 2021 (ex tempore)

DELIVERED AT:

Brisbane

HEARING DATE:

13 December 2021

JUDGE:

Porter QC DCJ

ORDER:

  1. The application filed 6 December 2021 be dismissed;
  2. The matter be placed on the Commercial List; and
  3. The costs of the application be the Defendant’s costs in the proceedings.

LEGISLATION:

Building Industry Fairness (Security of Payment) Act 2017 (Qld), ss. 61, 67, 68, 69, 75, 100

Uniform Civil Procedure Rules 1999 (Qld), r. 292

CASES:

Ausipile Pty Ltd v Bothar Boring and Tunnelling (Australia) Pty Ltd [2021] QCA 223

Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391

KDV Sport Pty Ltd v Muggeridge Constructions Pty Ltd [2019] QSC 178

T & M Buckley P/L v 57 Moss Road P/L [2010] QCA 381

COUNSEL:

M. Steele for the plaintiff

W. Thomas for the defendants

SOLICITORS:

Rose Litigation Lawyers for the plaintiff

ABKJ Lawyers for the defendants

  1. [1]
    The plaintiff (Denbrook) sues the defendant (CBO) for summary judgment on its claim based on a payment claim delivered purportedly under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIFA).  The document relied upon is styled as ‘Payment Claim 26’.  Denbrook pleads that it delivered a payment claim, that no payment schedule was delivered within the specified time, that it had given the relevant pre-litigation notice, and accordingly, it is entitled to judgment for the amount of the claim under s. 100 BIFA. 
  2. [2]
    By its defence, CBO denies that it was served with a valid payment claim on three grounds. 
    1. (a)
      First, Payment Claim 26 impermissibly claimed payment in respect of more than one construction contract; 
    2. (b)
      Second, Payment Claim 26 failed to identify the construction work to which it related, as required by s. 68(1)(a) BIFA, and therefore is invalid; 
    3. (c)
      Third, Payment Claim 26 did not request payment, as required by s. 61(c), and therefore is invalid. 
  3. [3]
    The last point was developed in submissions in a different way from the pleaded defence.  CBO contended that Payment Claim 26 did not request payment from CBO, because it was not addressed to CBO.  This last point seemed, as a matter of law, to be a submission that Payment Claim 26 was not given to CBO, as required by s. 75(1) BIFA. 
  4. [4]
    This is a summary judgment application under Rule 292 Uniform Civil Procedure Rules 1999 (Qld) (UCPR), as opposed to a final hearing of an originating application.  Rule 292(2) relevantly provides:

292 Summary judgment for plaintiff

  1. (1)
    A plaintiff may, at any time after a defendant files a notice of intention to defend, apply to the court under this part for judgment against the defendant.
  2. (2)
    If the court is satisfied that—
    1. the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and
    2. there is no need for a trial of the claim or the part of the claim;

the court may give judgment for the plaintiff against the defendant for all or the part of the

plaintiff’s claim and may make any other order the court considers               appropriate.

  1. [5]
    I note that even if a defendant has no real prospects of successfully defending all or part of the plaintiff’s claim, the Court is not compelled to give summary judgment.  There are two circumstances where that might not occur, notwithstanding that conclusion. 
    1. (a)
      One is because the Court considers there is a need for a trial of the claim, or part of the claim; and
    2. (b)
      The other is that the Court, in the exercise of its residual discretion, considers it should not grant summary judgment. 
  2. [6]
    Denbrook and CBO entered into a construction contract on 11 December 2019.  The contract was for the plaintiff to perform construction management work.  Denbrook was to organise the commencement of certain works and coordinate construction of those works.  The construction was styled ‘Construction Management Contract’ (the contract).  It related to the construction of three single-floor apartments at Sovereign Shores.  It was uncontentious that the project was nearing completion when Payment Claim 26 was issued.  Two of the units had been sold, and a third is to settle today.      
  3. [7]
    The contract prices for the units are in excess of $2 million.  The contract relevantly provides, by Clause 15, headed ‘Construction Managers Fee for Construction Management Duties’, relevantly:

15. In consideration of the performance of the Construction Manager’s management services during the construction stage, the Principal must pay the Construction Manager…the fees set out in clause 15(a)…

(a) A lump sum fee as set out in Schedule 6 which must be paid by monthly instalments in the same proportion to the progressive monthly payment of the Cost of the Works which that Cost of the Works bears to the Estimated Total Cost of the Works and any final balance of the fee is to be paid at the time of final payment…

  1. [8]
    Schedule 6 provides, relevantly:

SCHEDULE 6 Applicable, GST is to be added to amounts below

The fee to be paid to the Construction Manager for management services during the construction stage: (refer to clause 15)

(Choose ONE of these)

1.1 Option [refer clause 15(a)]: plus GST

Lump Sum Site Works Preliminaries (refer CM Budget 9/12/19)    $485,976

& Construction Managers Margin (refer CM Budget 9/12/19)          $245,000.

…

  1. [9]
    There are some other definitions to be noted to understand exactly what is going on in the contract in respect of the construction manager’s entitlements to payment.  The first is the definition of ‘cost of works’, which is defined in Clause 1 to mean:

…costs and expenses incurred by the Construction Manager and by the Principal in connection with the construction of the Works.

  1. [10]
    The next definition of relevance is the definition of ‘estimated total cost of the works’, which is defined to mean:

…the estimate of the final cost of the Works provided to the Principal by the Construction Manager pursuant to sub-clause (3)(e).

  1. [11]
    Subclause (3)(e) provides, relevantly:

CLAUSE 3 PRE-CONSTRUCTION DUTIES

The Construction Manager’s pre-construction duties must include to:

…

(e) Review budget estimates as the development of the design of the Works proceeds and when it is completed, prepare an Estimated Total Cost of the Works for approval by the Principal….

  1. [12]
    There was no evidence before me that I could find about any estimated total cost of works being provided under the contract to the principal, which is odd, bearing in mind that the estimated total cost of the works is relevant to the identification of the proportion of the total sums to be paid, from time to time, as fees to Denbrook as the construction manager.  I do note, however, that there is a CM budget in the contract, which appears at page 38 of the exhibits to Mr Denley’s affidavit.[1] The construction manager’s budget is a part of the contract and it is relevant to the construction and interpretation of Payment Claim 26. 
  2. [13]
    It identifies that the estimated total budget for the works is some $3.4 million.  On that basis, one would imagine that the cost of the works, as referred to in Clause 15, is the total cost of the works that the construction manager is managing.  That is what the contract definition says (and that makes sense) at Clause 15(a).  The relevance of this will become clear. 
  3. [14]
    Clause 16 deals with progress payments.  Interestingly, subclauses (a) and (b) do not appear to be concerned with progress payments, but rather the provision of a statement showing all costs of works, and an estimate of the fees then due to the construction manager.  Such a statement is to be provided on the 1st and 15th day of each month.  It contains an obligation on the principal to pay the costs of works and one infers (although it does not say this) that the principal is to pay the costs of works as identified in the statement, under Clause 16(a).
  4. [15]
    It is Clause 16(c) of the contract which seems to provide an entitlement to payment for work done by the construction manager and for costs incurred by it.  Clause 16(c) provides:

CLAUSE 16 PROGRESS PAYMENTS

…

(c) After the Construction Manager has submitted its statement pursuant to Clause 16(a), the Principal must within the time stated in Schedule 8 pay the Construction Manager:

(i) for any Costs of the Works that have been incurred by and for which the Construction Manger is liable to pay or has paid; and

(ii) its fee as calculated in accordance with Clause 15.

…

  1. [16]
    Looking at Clause 16(a) again, read with Clause 16(c), it would seem, on the proper construction of the contract, that it provides for the statement of all costs plus the construction manager’s fees, to be the statement upon which the principal then pays amounts due to the construction manager.  Looked at in that way, on the proper construction of Clause 16, it probably gives rise to a reference date on the 1st and the 15th day of each month.  I am not sure that that sits easily with the terms of s. 67(1) BIFA, but there seems to be no reason why there cannot be two reference dates each month. 
  2. [17]
    Clause 18 deals with delay to the construction management duties and provides, by Clause 18(a), an entitlement to a reasonable extension of time if provision of the services are delayed by, effectively, principal breach or some third-party breach, as long as the construction manager gives notice within seven days, and where there is such a delay, the construction manager has an entitlement to delay costs which can be claimed as part of its fee.
  3. [18]
    As I said, as far as I could tell, no evidence was led of the total costs of works, nor of any statements of the kind identified in Clause 16.  That does not mean that the payment claims are not valid as payment claims under the Act.  I also observe that the works were predicted to cost a great deal more than a few hundred thousand dollars.  The amounts in Schedule 6 can be understood as comprising preliminaries for the project and the construction manager’s fee.  They are clearly not the cost of the works. 
  4. [19]
    Denbrook delivered payment claims, apparently without incident, on 21 occasions.  The first payment claim was delivered on 11 December 2019.  The entire progress claim appears at page 3 of Mr Denley’s affidavit filed by leave, sworn 13 December.

PROGRESS CLAIM TAX INVOICE

Project: Marquis, 2 Havana Way, Paradise Point

Date: 11/12/2019

Client: CBO Developments

Due Date: 11/12/2019

email: [email protected]

Job No: Marquis 009

Phone: 0419 235 844

Invoice No: Claim 1

Net amount this claim:

$68,806.00

GST:

$6,880.60

Total payable including GST:

$75,686.60

The Builder claims that the works have reached the following stage as per our building contract

Claim 1 as per progress claim summary number 1

Please make payments via electronic funds transfer, details as follows:-

Account name: Denbrook Constructions

BSB: 064486

Account Number: 10516026

  1. [20]
    The schedule plainly deals only with the Schedule 6 amounts, not with the cost of works or the total cost of works, with the exception that, on some basis that is unclear to me, it seems to provide for, and come to include, variations.  Whether that comprises variations to the works which the construction manager becomes liable to pay and entitled to be reimbursed for, or whether that means variations to the specific amounts in Schedule 6, was unclear and never explained. 
  2. [21]
    I note that Payment Claim 1 is addressed to CBO, and claims a specific amount calculated by reference to the spreadsheet attached to it.  This progress claim is a separate document from the document contemplated by Clause 16, and is, as I have said, articulated by reference to the Schedule 6 amounts, and claims those amounts in various percentages as the total amount of the work proceeds.  Therefore, it can be seen, for example, in the schedule attached to the first payment claim, that it identifies the total contract sum (which, as I have said, is the Schedule 6 amount) as $730,976.  It claims that 9% of the value of that work is completed and claims $68,806.  That is the pattern that is followed for these payment claims through to ‘Payment Claim 21’. 
  3. [22]
    Payment Claim 21 is in a similar form to Payment Claim 1.  It provides:[2]

INVOICE

BILL TOINVOICE NO. Claim # 21

Bob & Cherekee HillDATE 15/11/2020

CBO Developments Pty DUE DATE 29/11/2020

LtdTERMS Net 14

2 Havana Way Salacia

Waters

ABN 83 628 135 768

PERIODPROJECT

Claim #212 Havana Way

DESCRIPTIONAMOUNT

Claim #2117,072.05

This is a Payment claim made under the Building and INCLUDES GST1,552.00

Construction Industry Payment Act 2004, QLD TOTAL

Name: Denbrook Constructions TOTAL17,072.05

BSB: 064486 BALANCE DUE A$17,072.05

Account Number: 10516026

  1. [23]
    It can be noted that it is addressed to CBO again, and it claims an amount of $17,000.  Attached to it is the evolved version of the spreadsheet, which identifies in the first box, ‘Contract Sum Summary’, the Schedule 6 amount plus variations of $179,800, for a total contract sum of $910,785.19.
  2. [24]
    In the box immediately to its right, it identifies the percentage of those items of the total contract sum which have been completed.  It can be noted that it claims 76% of the Schedule 6 sum, which includes both the contractor’s margin and the site preliminary amounts, 100% of the variations, which are identified in the box at the bottom left, and that gives an average amount of 81% of the total contract sum.  Allowing for amounts previously certified, that leads to a claim for $17,000.
  3. [25]
    As I understand the evidence, the amounts claimed in Payment Claims 1 to 21 were paid.  I am satisfied, for the purpose of these proceedings, that there were four more payment claims delivered between Payment Claim 21 and Payment Claim 26.  The only evidence that they were delivered, however, is reference to them in Payment Claim 26 itself.  Nothing else is said about Payment Claims 22 to 25.  However, it is relevant that it appears that Payment Claim 26 was the 26th of the payment claims that were delivered under the contract. 
  4. [26]
    I now turn to Payment Claim 26.  It adopts a completely different format from, at least, Payment Claims 1 to 21.  It provides in its schedule:[3]

19 February 2021

Payment Claim 26

Progress Payment

 

Total to Date

This Claim

Cost of Works

$                                 909,285.19

$                                 119,364.89

Construction Manager’s Margin

$                                 180,000.00

$                                   51,808.27

Subtotal

$                              1,089,285.19

$                                 171,173.16

Plus GST

$                                 108,928.52

$                                   17,117.31

Plus 18(b)(ii) amount

$                                   11,000.00

$                                   11,000.00

Subtotal

$                              1,209,213.71

$                                 199,290.48

Less paid to date

$                                 826,488.51

$                                              0.00

Total

$                                 382,725.20

$                                 199,290.48

BALANCE DUE (382,726.20 + 199,290.48):

$                                 582,015.68

Due date: 5 March 2021

  1. [27]
    It has attached to it, on its second page under the heading ‘Costs of Work this Claim’, a series of cost centres which match cost centres in the Schedule 6 preliminaries announced in the subcontract from SW.1 through SW.15, and identifies previously completed amounts in respect of those items, and the amount claimed in the particular claim.  It also deals with the Schedule 9 expenses amount (which I have not previously discussed, but seems to be a provision for payment of salaries), to come up with a total amount of $119,364.89. 
  2. [28]
    That is the amount, it is to be observed, that appears in Payment Claim 26 on the first line under the heading ‘This Claim’, next to the words ‘cost of works’.  There is then a breakdown by invoice for those amounts.  What next appears is a schedule which, despite my best efforts over the last 24 hours, eludes my understanding.  It is headed ‘Construction Manager’s Margin – This Claim’.[4] 

CONSTRUCTION MANAGER’S MARGIN – THIS CLAIM

Cost of Works (actually spent)

$909,285.19

$1,028,650.08 ex GST

Estimated Cost of Works (budgeted)

$730,976.00

$730,976.00 ex GST

Value Of Works In Payment Claim 21

76%

$735,353.19 ex GST

Value Of Works In This Payment Claim 26

97%

$885,293.48 ex GST

Difference (claims 22-26)

17%

$149,940.30 ex GST

Construction Manager’s Margin

$ 304754.54

 

Margin Claimed in This Payment Claim

($304754.54 x 17)

= $ 51,808.27

 

[B]

TOTAL CONSTRUCTION

MANAGER’S MARGIN

$51,808.27

  1. [29]
    The purpose of that schedule is to identify the total of the construction manager’s margin claimed for this payment claim, it seems, if one compares the final sum identified in that schedule to the second line item under this claim in Payment Claim 26.  As I say, the meaning of the schedule eludes me, despite my best efforts. 
  2. [30]
    The next three pages contain what appears to be a claim for delay damages, but in fact is not.  What it seeks is an indemnity against liquidated damages in the amount of $11,000.  That appears to be the amount in the fifth line item in this claim.  Interestingly, in the ‘total to date’ column (that is, column 2), the same amount appears.  I cannot work out whether that is the same amount repeated, or whether there were coincidentally two $11,000 amounts for delay, and whether the one in column 2 is a claim for $11,000 to be paid as an indemnity against liquidated damages or is some damages claim.  The next document in the schedule are various attachments and annexures that are not of any particular significance, seemingly vouching various amounts.
  3. [31]
    It is convenient, having set out that background information, to note that there is otherwise no evidence from anybody before me which gives evidence of objective facts that helps one to understand what is going on in Payment Claim 26. 
  4. [32]
    The real issue in this case is the question of whether Payment Claim 26 identifies the construction work to which it relates.  Before stating the principles applicable to resolving that matter and reaching a conclusion about that for the purposes of this summary judgment application, I should deal with the other two points raised by CBO.  They can be dealt with fairly briefly.
  5. [33]
    The first point relates to the proposition that the claim includes a claim for work under another contract.  The first thing to note about that proposition is that try as I may, I cannot find any statement anywhere in Payment Claim 26 that indicates that it is a claim for payment for work done under another contract.  The objective indicators in Payment Claim 26 by itself, and taken with Payment Claims 1 to 25 (all of which relate to this construction management contract), lead to the overwhelming conclusion that it is a payment claim which, on its face, is in respect of that contract only.  The defendant alleges, however, that Payment Claim 26 infringes the undoubted prohibition on claiming for multiple contracts in a single payment claim, because the line item in the Payment Claim 26 schedule (at column 2) described as ‘less paid to date’ of $826,488.51, looked at objectively, includes an amount of some $17,600 that was paid in respect of a different contract. 
  6. [34]
    Even if I accept that that is so,[5]  it does not seem to me to provide any basis for invalidity of the payment claim.  Mr Steele, who appeared for Denbrook, directed me to the statement in the Court of Appeal in Ausipile Pty Ltd v Bothar Boring and Tunnelling (Australia) Pty Ltd [2021] QCA 223 at [120], where Justice of Appeal Morrison, with whom the other Judges agreed, said:

[120]In my respectful view, the reasoning in TFM is correct and should be followed. A               payment claim should not be treated as a nullity for failure to comply with s 75(1)               of the Act, unless that failure is patent on its face. Where a payment claim purports               to be made under one contract, it is not rendered invalid simply because at a later               time (either during the adjudication or otherwise) it is determined that part of the               claim was, in fact, a claim under a different contract. Provided a payment claim is               made in good faith and purports to comply with s 75(1) of the Act, the merits of that               claim, including questions as to whether it complies with s 75(1), is a matter for               adjudication after having been raised in a payment schedule. A recipient of a               payment claim cannot simply sit by and raise that point later, if it is not put in a               payment schedule in response.

  1. [35]
    Here, if it truly is as the plaintiff says that the amount identified as paid includes an amount paid under another contract, it is certainly not patent on the face of the payment claim. 
  2. [36]
    Section 75(1) provides that “a person who is, or claims to be, entitled to a progress payment may give the payment claim”, and that is consistent with the approach that his Honour took in Ausipile.  There are more reasons than that why this provides no answer to the claim on the payment claim.  As Mr Steele submitted, even if it were accepted that the ‘less paid to date’ figure has accidentally included an amount paid in respect of a different contract, all that does is reduce the amount of Payment Claim 26.  So, there no claim for payment for construction work to which the progress payment relates which is work under that other contract, and the payment claim itself is not a claim to a progress payment which claims money payable under that other contract.  It just reduces the amount of the claim.  There are other reasons why the proposition is plainly wrong, but I do not need more than the two already canvassed.  There is no real prospect of defending the case on that basis, and if that was all there was to it, summary judgment would follow. 
  3. [37]
    The next point to deal with is the submission that the payment claim was not given to CBO.  This submission must be considered in light of the admission that Payment Claim 26 was served on CBO at the relevant time.  The gravamen of the argument is that Payment Claim 26, unlike the other 21 payment claims that are in evidence, is not addressed to CBO.  The difficulty with the submission, first of all, is that it is admitted that the payment claim was served on CBO.  It is also uncontested on the evidence before me that it was in fact delivered in an envelope addressed to CBO.  The real point seems to be whether Denbrook had given the payment claim to CBO. 
  4. [38]
    The lack of reference to CBO is the only thing missing, and of course, this is Payment Claim 26 in a series of 25, all addressed to CBO in respect of a contract for which CBO is unquestionably the other party, and which is unquestionably the subject matter of the payment claim.  CBO figures in narrative contained in documents attached to the payment claim.  I cannot see any basis whatsoever to conclude that the payment claim was not given to CBO in the circumstances of all of those uncontested facts.  There is no real prospect of defending the claim on that basis, and if that was the only point that was raised, the summary judgment would be granted.
  5. [39]
    That leaves us with the identification of the work issue.  The first point in addressing that is to identify the principles to be applied in determining whether a payment claim is void for failure to meet the minimum requirement in s. 69(1)(a) BIFA of identifying the construction work to which the progress payment relates.  In that regard, I adopt, with gratitude, the helpful summary in KDV Sport Pty Ltd v Muggeridge Constructions Pty Ltd [2019] QSC 178 by Justice Brown at [10] to [18]: 

[10]KDV contends the payment claim did not satisfy the requirements of s 17(2)(a) of               the Payments Act, such that there was no payment claim to enliven the jurisdiction               of the adjudicator under the adjudication scheme provided for by the Payments Act.

[11]Section 17(2)(a) of the Payments Act provides:

“(2)A payment claim—

(a) must identify the construction work or related goods and services to which the progress payment relates; …”

[12]There is no jurisdiction for an adjudicator to consider a purported payment claim               which does not comply with s 17(2)(a) of the Payments Act.

[13] In T & M Buckley P/L v 57 Moss Road P/L, Philippides J (as her Honour then was)               stated at [38] that the Judge had erred in adopting the approach that he did and had               set too high a bar in respect of what was required by s 17(2)(a) of the Payments               Act:

“The issue for determination was not whether the payment claim explained in every respect the means by which a particular claim item had been calculated, but whether the relevant construction work or related goods and services was sufficiently identified as explained above. That is, whether the payment claim reasonably identified the construction work to which it related such that the basis of the claim was reasonably comprehensible to the applicant.”

[14] Her Honour had regard to the comments of Mason P in Clarence Street Pty Ltd v               Isis Projects Pty Ltd and to both the judgments of Hodgson and Santow JJA               in Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) and stated               at [36]:

“Santow JA (at [47]-[48]) expressed the view that, in respect of the minimum necessary to satisfy the identification requirement that the payment claim “purport in a reasonable way to identify the work” there must be “sufficient specificity in the payment claim for its recipient actually to be able to identify a ‘payment claim’ for the purpose of determining whether to pay, or to respond by way of a payment schedule indicating the extent of payment, if any.” But having said that, his Honour stated his agreement with what Hodgson JA said in Climatech Pty Ltd that what was required was sufficient identification “to enable the respondent to understand the basis of the claim” and disavowed the notion that there was a legal necessity to include any material directed merely to persuading a respondent to accept a payment claim (at [25]).”

[15] The test to determine whether the payment claim sufficiently identifies the  construction work the subject of the claim is an objective one. The assessment is               not made only by reference to the terms of the claim itself. As White J commented               in Neumann Contractors Pty Ltd v Peet Beachton Syndicate Ltd, “[t]he evaluation               of the sufficiency of the identification takes into account the background knowledge               of each of the parties derived from their past dealings and exchanges of               documentation”. McDougall J in Leighton v Arogen relevantly stated that:

“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 uniformed 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.

In this context, it may well be appropriate to take into account, in particular factual circumstances, the background knowledge of the parties (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…”

[16]The focus must remain on the objective circumstances, not on the subjective  intentions of the parties, although it is not wrong to examine the issue from the               vantage point of the parties to the particular contract.

[17]The test for whether the payment claim complies with s 17(2) of the Payments Act               does not direct the inquiry to whether or not, in hindsight, there has been a               successful articulation of the work in the claim: “a document ...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.” As was stated by the Court of               Appeal in T & M Buckley, the test is whether “the claim purports in a reasonable               way to identify the particular work in respect of which the claim is made”. Errors or               inaccuracies in the payment claim will rarely, if ever, provide a basis for concluding               that it is not made in accordance with s 17(2)(a) of the Payments Act.

[18]The above approach accords with the overall purpose of the Act, which was said by               Basten JA in Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd               to be:

“…to provide a speedy and effective means of ensuring that progress payments are made during the court of the administration of a construction contract, without undue formality or resort to the law.”

  1. [40]
    There are two points that emerge from her Honour’s summary.  The first is that, as identified in T & M Buckley P/L v 57 Moss Road P/L [2010] QCA 381, in approaching the test for validity in respect of compliance with s. 68(1)(a):

The issue for determination [is] not whether the payment claim explained in every respect the means by which a particular claim item had been calculated, but whether the relevant construction work…was sufficiently identified as explained above.  That is, whether the payment claim reasonably identified the construction work to which it related such that the basis of the claim was reasonably comprehensible to the applicant.

  1. [41]
    That passage from T & M Buckley, adopted by Justice Brown, refers to, when it says “as explained above”, extracts from Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391, and a number of other New South Wales authorities.  Those cases, dealt with in T & M Buckley at [30] to [38], made clear that a payment claim, unlike a payment schedule, is not a document which is to apprise the parties of the real issues that are likely to be in dispute.  The purpose and necessary requirement of the payment claim is merely to identify the work to which the claim relates, sufficiently to allow the other side to make its own assessment as to what to pay.  It does not have to go any further than that.
  2. [42]
    It is the application of that proposition that is difficult in these cases, not the stating of it. 
  3. [43]
    The second point which her Honour emphasises is that the test to determine whether a payment claim meets that requirement is an objective one, and one can take into account relevant extrinsic facts: that is, facts that are rationally probative of what a reasonable person in the position of the recipient of the payment claim would interpret it to mean. 
  4. [44]
    Again, the trick lies in applying that principle. Mr Thomas, who appeared for CBO, limited his complaints about Payment Claim 26 to column 2, headed ‘Total to Date’.  He frankly conceded that if the claim related only to column 3 and claimed just the amount identified there ($199,290.48), CBO would not be able to resist the conclusion that summary judgment should follow. He focused on column 2.
  5. [45]
    In my respectful view, column 2, read with column 3 or read alone, is an ambiguous and confusing part of the payment claim.  Let us start with the first line, ‘cost of works’.  That is said to be $909,285.19.  That is described as the total to date.  That would seem to me to include the amount of Payment Claim 26 itself, because the date is the date of the payment claim.  There is some suggestion that that is right, when one analyses that number against the schedule for Payment Claim 21. 
  6. [46]
    At the time of Payment Claim 21, only $735,000 of the total contract sum of $910,000 had been claimed.  It can be seen that that total contract sum includes all of the Schedule 6 items.  How that number gets to $909,000, if it does not include further amounts under Schedule 6, completely eludes me. 
  7. [47]
    The next difficulty is the second line item, the construction manager’s margin.  Now, it is true that that margin appears in Payment Claim 21, consistent almost with the claim for 76% of the total Schedule 6 amounts in Payment Claim 21.  The amount of $180,000 is claimed in Payment Claim 21 for what seems to be the construction manager’s margin amount.  It would seem, though, that that amount does not include the amount of the claim for the construction manager’s margin.  When one goes to the table that deals with that, I just do not understand how the $51,808 is calculated.  There may be an explanation, but I cannot work it out. 
  8. [48]
    There are other oddities in the construction manager’s margin table. For example, it identifies the value of works in Payment Claim 21 as 76% of the Schedule 6 amount, and then the value of works in Payment Claim 26 is 97%, and then it identifies the difference as 17%.  The number is 21%. 
  9. [49]
    We then come to the Clause 18(b)(ii) amounts relating to claims for payment arising out of delay contained in the schedule.  I have already explained that I do not understand whether that is a second amount in column 2, or just the column 3 amount repeated.  If ‘Total to Date’ means the total to date in the payment claim, then that is what it should mean.  If it does not, then it means something else.  There is then the oddity in column 2 that the cost of works, which seemingly must include the amounts of this claim, at least to some degree is calculated to give an amount owing of $382,000, yet that amount is claimed in a way where the $909,000 (which seemingly must include at least some parts of the specific claim) is claimed again. 
  10. [50]
    As I said, I find column 2 completely obtuse.  It is even more obtuse because it refers to the cost of works, when under the construction management contract, that is supposed to refer to the costs of the works of the whole of the project. 
  11. [51]
    I am very conscious that, in approaching this, I need to deal with the document on its face, and not conduct some kind of de facto payment schedule analysis.  However, I have been acutely conscious that what I am trying to do is to work out whether it is reasonably possible to determine from this document the construction work to which the progress payment relates.  I understand it for column 3, and I think that meets more than the minimum requirements.  Column 2, however, is a complete mystery to me.
  12. [52]
    This is not to say that it would not be possible at trial, when both parties have had an opportunity (with more leisured time to talk to their clients) to understand the objective facts that relate to the way the parties have gone about their dealings with each other, in respect of this construction manager’s margin, or can explain how a reasonable person in the position of the respondent would be able to understand exactly what is going on in column 2.
  13. [53]
    However, on the evidence before me, I have no idea.  For those reasons, I am not persuaded that CBO has no real prospect of defending the claim at this stage.  My strong impression is that, perfectly understandably, for good commercial reasons, this application was brought before both parties had a sufficient opportunity to be able to explore and understand what Payment Claims 21 to 26 mean, or would be taken to mean to a reasonable person in the position of the respondent.
  14. [54]
    I am not saying that that might not be all perfectly able to be explained rationally at a trial, but I do not understand it, and in that respect, even if I was able to impose some objective meaning on column 2, I would not be satisfied that there is no need for a trial of the proceedings, because it would be an artificial construct by me, in a context where the summary judgment (though Mr Thomas ultimately did not press for its adjournment) has been brought on at very short notice. I am not satisfied that the real issues on this aspect of the matter are at a stage of sufficient maturity for me to be giving summary judgment for effectively half a million dollars or more.
  15. [55]
    For that reason, and that reason only (because I think the other two points were clearly insufficient), I dismiss the application.      

Footnotes

[1] CD 6.

[2] Page 43 of Mr Denley’s affidavit, filed by leave.

[3] Page 50 of Mr Denley’s affidavit filed 6 December 2021 (CD 6).

[4] Ibid at page 54.

[5] And it certainly seems to be so.  The affidavit of Mr Kyle indicates that if it is not so, it is a remarkable coincidence, because the total amount of payments under the contract plus that payment gives the total identified in Payment Claim 26.

Close

Editorial Notes

  • Published Case Name:

    Denbrook Constructions Pty Ltd v CBO Developments Pty Ltd

  • Shortened Case Name:

    Denbrook Constructions Pty Ltd v CBO Developments Pty Ltd

  • MNC:

    [2021] QDC 325

  • Court:

    QDC

  • Judge(s):

    Porter QC DCJ

  • Date:

    14 Dec 2021

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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