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  4. Wetlock Industries Pty Ltd trading as Wetlock Waterproofing ABN 45 151 807 359 v Body Corporate for City Link - [2016] QMC 9

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Wetlock Industries Pty Ltd trading as Wetlock Waterproofing ABN 45 151 807 359 v Body Corporate for City Link[2016] QMC 9

Wetlock Industries Pty Ltd trading as Wetlock Waterproofing ABN 45 151 807 359 v Body Corporate for City Link[2016] QMC 9

MAGISTRATES COURTS OF QUEENSLAND

CITATION:

Wetlock Industries Pty Ltd trading as Wetlock Waterproofing ABN 45 151 807 359 v Body Corporate for City Link [2016] QMC 9

PARTIES:

Wetlock Industries Pty Ltd trading as Wetlock Waterproofing ABN 45 151 807 359

(Applicant)

v

Body Corporate for City Link

(Defendant)

FILE NO/S:

SOUTH-MAG-426/16

DIVISION:

Magistrates Courts

PROCEEDING:

Originating Application

ORIGINATING COURT:

Southport Magistrates  Court

DELIVERED ON:

19 May 2016

DELIVERED AT:

Brisbane Magistrates Court

HEARING DATE:

22 April 2016

ACTING MAGISTRATE:

R Carmody

ORDER:

  1. Judgment for the applicant of $25,770.25 plus interest from 9 March 2016 at 2.5% compounding.
  1. Costs to be agreed within 7 days or failing agreement, assessed.

COUNSEL:

Mr Matthews

Mr Hickey

SOLICITORS:

Minter Ellison for the Applicant

Ramsden Lawyers for the Respondent

  1. [1]
    This is a disputed debt claim under s 19(3)(a)(i) of the Building and Construction Industry Payments Act 2004 (Payments Act) for the unpaid portion of a progress claim under a contract to carry out construction work i.e. remedial waterproofing.
  1. [2]
    The applicant’s general manager (Julie Shannon) deposes that the company’s standard terms of trade which make detailed provision for periodic payment claims and variation approval were incorporated into the contract.
  1. [3]
    However, I am not satisfied that JS1 evidences the relevant construction contract between the parties because the exhibited documents are disavowed and unsigned. Therefore the fate of the application has to be decided on the basis that the contract consists solely of quoted scope of works in the discounted sum of $115,492.14 ($128,324.60 – 19%) + GST accepted on 20 October 2015 as later verbally extended.
  1. [4]
    The claimed amount is $123,394.78 (112,177.07 + $11,217.71 GST) owing under the original quote for remedial waterproofing related services and $87,627.40 for extras.

The statutory regime

  1. [5]
    The Payments Act gives building contractors an implied entitlement to progress payments (s 12) at regulation intervals as well as establishing a summary procedure for claiming (s 17) disputing (s 18) and recovering the unpaid portion on notice (s 19 – s 20A) within six months of performance.
  1. [6]
    Only one progress payment is claimable under the Payments Act from each “reference date” for work (that may include a previously claimed amount (s 17(4)) a person “… has undertaken to carry out under a construction contract” (s 12). If the reference date for a progress claim is not expressly provided for in the contract it is set by Schedule 2 Payments Act at any reasonable time after the month in which the work was carried out under the contract.
  1. [7]
    A claim for a final progress payment becomes payable either on the due date agreed (which here is on receipt) or under the Payments Act within 10 business days after a claim is served (s 15).
  1. [8]
    The claimable amount is calculated on the basis of the value of the work plus variations less the cost of fixing any defects.
  1. [9]
    A claimant required to be licensed for the work in question by the Queensland Building Construction Commission Act 1991 (QBCC Act) cannot claim unless licensed.
  1. [10]
    While a respondent served with a standard payment claim has a right to challenge disputed amounts under the common law the Payments Act allows only 10 business days to respond to a statutory demand by serving a payment schedule proposing a lesser amount in lieu of the claimed amount (the scheduled amount) but must give reasons for refusing full payment (s 18) and for building work under the QBCC Act pay that amount within 15 days.
  1. [11]
    If the respondent fails to serve a payment schedule within 20 days of the due date all contractual rights are suspended and the claimed amount is deemed to be a debt which a claimant is entitled to sue on after giving the respondent a second chance to pay giving at least five days written notice of an intention to start statutory recovery proceedings (s 20A(2)-(3)). A respondent who ignores the notice cannot later plead any defence of raise a counterclaim based on the construction contract in the recovery proceedings (s 19(6)(b)).
  1. [12]
    Non-payment of a scheduled amount has much the same legal consequence under s 20 of the Payments Act except that a defence or counterclaim may be relied on by the respondent in any debt claim.
  1. [13]
    Interest accrues at prescribed or agreed rates.
  1. [14]
    However, before giving summary judgment for the irrefutably presumed debt the court must be satisfied either that the respondent failed to pay all or any unchallenged claimed amounts (s 19(3)) by the due date or for an unpaid scheduled amount does not have a valid counterclaim or defence.

The issues

  1. [15]
    The respondent opposes judgment on three main grounds. It contends that the payment claim is unenforceable because:
  1. (a)
    it is for unlicensed construction work; and
  1. (b)
    is formally defective for:
  1. (i)
    failure to identify the subject work; and
  1. (ii)
    relates to future work to be performed after the relevant reference date and alternatively;
  1. (c)
    the respondent served a compliant payment schedule.

The application of the Payments Act

  1. [16]
    Accepting that the Payments Act does not apply to a contract to perform unlicensed work contrary to s 42(1) of the QBCC Act the onus is squarely on the respondent as the alleging party to prove illegality by negativing exemptions.
  1. [17]
    Aside form a limited allowance for reasonable remuneration for material and labour costs (excluding the contractor’s own and any profit margin) the QBCC stops an unlicensed builder from recovering any monetary or other consideration for completed works (s 42(3)). However, there is no information about the wholesale value in dollar terms of the allegedly unlicensed work claimed for.
  1. [18]
    I am satisfied that the applicant and its nominee (s 42B QBCC Act) held a contractor’s licence for “waterproofing” work as defined by regulation which does not expressly include incidental work as to other definitions in Schedule 2 and that neither of them was licensed for some other construction work claimed for such as painting and items 2-4 of the quoted work. But the law recognises that agreed work will not always be carried out by the contractor personally or directly. Company contractors commonly engage specialists to do it for it. Thus, the QBCC is not contravened merely because a contactor enters into a construction contract for unlicensed building work on commercial buildings if it is to be carried out by subcontractor licensed for that class of work (s 8(1) QBCC).
  1. [19]
    Moreover, it appears from s 43(1)(b), (c) and s 43A-C QBCC Act that was a “licensed contractor” albeit for a different class of work the applicant could have engaged an appropriately licensed contractor or construction manager to personally supervise the performance of non-waterproofing work without infringing (s 42(1)).
  1. [20]
    There is no evidence that these options were not availed of.
  1. [21]
    Accordingly, this ground of objection fails.

The specificity of the payments claim

  1. [22]
    Under s 17(2) a payment claim must identify the work to which it relates with reasonable clarity. Reasonableness is a matter of judgment or a question of fact and degree.
  1. [23]
    The Payments Act emphasises speed and informality over precision and elegance.
  1. [24]
    A construction issue is to be resolved by reference to the statutory objects and the minimal role the court plays in their achievement (Broyden Pty Ltd t/as Time Cost & Quality v Davenport (2004) 61 NSWLR 421). Thus, the question whether a document qualifies as a payment claim (or payment schedule) under the Payments Act “should not be approached from an unduly critical viewpoint” (Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA Pty Ltd) [2007] QSC 333 at [20])
  1. [25]
    At [70] the respondent’s main affidavit the deponent (Nigel Patterson) asserts that it is impossible to identify the work claimed for with reasonable precision from the invoice because the accompanying breakdown was too “cryptic and unclear “ but goes on to say that as the person responsible for the day to day of the applicant’s works on the respondents behalf [14] he was “surprised and disappointed “to be receiving invoice 1825 because it was seeking payment for substantial variations which ……..” in the main had not been approved or even discussed “with him[66] and gives quite detailed evidence of the work he claims was either unfinished [72] or already charged for [73] and [84](a)-(g).
  1. [26]
    To my mind if major aspects of a payment claim can be critiqued and rejected for including items of work unlicensed, unfinished or reiterations it probably adequately and reasonably identifies the construction work claimed.
  1. [27]
    On this basis I am satisfied that the payment claim is compliant enough with the statute for current purposes.

The formal validity of tax invoice number 1825

  1. [28]
    The respondent argues that tax invoice 1825 does not meet the statutory conditions for a valid payment claim because it is formally defective and includes previous claims and partly relates to unfinished work.
  1. [29]
    The tax invoice was served a week before the completion date. It incorrectly purported to be made under the Payments Act NSW counterpart - the Building Construction Industry Securities Payment Act 2004 as s 17(2)(c) of the Payments Act requires but nothing really turns on the misnomer. The notation sufficiently meets the purpose of conveying to the recipient that the invoice is statutory demand and that the applicant it intends to invoke its rights for unpaid construction works under the Payments Act as opposed to pursue any common law remedies. Moreover, the correct citation in the subsequent s 20A notice would have removed any doubt before any potential prejudice was incurred.
  1. [30]
    Nor is invoice 1825 irregular because it includes previous claims (s 17 (4)).
  1. [31]
    FK Gardner & Sons Pty Ltd v Dimin Pty Ltd [2007] 1 Qd R 10 at [32] is cited by the respondent in support of its submission that a progress payment claim for work not completed prior to the reference date is impermissible.
  1. [32]
    However, that case is actually authority for the different proposition that the Payments Act does not entitle a party to claim payment for past work prior to a contractual reference date. The legitimacy of a claim for future work where there was no agreed reference date was not the issue.
  1. [33]
    The implied entitlement to a progress payment in s 12 of the Payments Act applies to construction work a person has undertaken to carry out under a construction contract.
  1. [34]
    A person having or claiming a statutory entitlement to a progress payment under s 12 of the Payments Act may summarily enforce and recover it under the procedures provided for in s 17 by serving a payment claim that satisfies the description in s 17(2)on the other party either on (but not before ) the day stated or worked out under the contract on which a progress claim may be made for work “done or undertaken to be carried out” or , if the contract is silent on the matter, the last day of the month in which the work “was first carried out” (Schedule 2). The core function of a “reference date” is to identify the earliest date on which a claimant can regularly serve the one and only payment claim per month allowed by s 17(4) of the Payments Act on the party liable to pay it.  
  1. [35]
    Here, the rectification works started on 19 December 2015 and ended on 15 March 2016. The tax invoice in issue (Number 1825) was emailed to the respondent on 9 March 2016.
  1. [36]
    Initially, the due dates for payment under the contract were agreed to be on receipt at the rate of 40% or $46, 196.86 (ex GST) on acceptance and 60% on completion of all works but were later impliedly varied by the party’s conduct in sending and paying interim payment claims including for future work on 12 January 2015 (Tax invoice #1813 for $38,112.40) to help relieve the applicant’s cash flow problems in addition to the deposit of $50,816.55 on 1 December 2015 (Tax invoice #1780). This is a total of $88,928.95 or 66% of the contract price. Thus, as at 8 March 2016 even on the respondents best case no less than $23,427.50 is owed to the applicant under the contract and yet it is conceded that no payments on account of the works to be carried out under the contract were made after 21 January 2016.
  1. [37]
    The applicant characterises invoice 1825 as a final payment claim for work done under the construction contract but the respondent says it was a one off interim payment outside the contract to help relieve cash flow pressures on the applicant. The respondent’s assets manager asserts at [71]-[72] & [84(a)-(g)] that contrary to the applicant’s statement in the payment claim the works were 100% complete as at the invoice date of 9 March 2016 they were “ongoing and continuing throughout January to 9 March 2016 and that he had been told that tiling work already paid for was defective.
  1. [38]
    I am satisfied that tax invoice was intended to be a progress claim under the construction contract despite the contrary being deposed to by NP at [88]. NP himself asked for a “final invoice” in the 4 March 2016 email on the mutual understanding that it would include the cost of any work still to be done in the closing weeks including after the invoice date. This may fly in the face of the concept of a “final” notice which conventionally relates to work already performed but the parties are at liberty to agree otherwise. Notably, although NP’s affidavit which was filed just before the hearing makes unsubstantiated complaints about unlicensed and unauthorised works, overcharging and minor defects and formal deficiencies it does not allege that any of the contracted work was left undone or incomplete at the end of the job which was over 3 months ago.

Is the debt for non-payment of a claimed amount or scheduled amount?

  1. [39]
    It is pressed for the respondent that the email NP sent to JS at 5.04 on 11 March, 2016 in response to tax invoice 1825 (and subsequent discussions) bears all the characteristics of a payment schedule within s 18 of the Payments Act and, therefore, the court is barred from giving judgment to the applicant for the claimed amount as a debt because the precondition in s 19(6) (a) is not be satisfied.
  1. [40]
    A payment schedule is a document that identifies the relevant payment claim, proposes a different (usually lower) payable amount and gives reasons for why the difference is being withheld.
  1. [41]
    To qualify the document does not have to be in an approved form or format. It does not matter that the applicant serves a s 20A notice in the belief that it is not compliant with the Payment Act.
  1. [42]
    Nor does it have to be intended to be a payment schedule when written as long as it is one in effect.
  1. [43]
    Whatever else it may be a document that reasonably - or even if only just- meets the criteria in s 18(2) (a)-(b) & (3) Payments Act is a ‘payment schedule ‘in reply to a payment claim.
  1. [44]
    With respect to the first item for the balance payment as per the terms of the quote of the respondents proposed payment of a slightly higher amount than $23,427.50 exc GST or [99] the $24,549.67 claimed but the scheduled amount for the 2 x variation claims of $87,627.40 it offered $0.00. Its stated reason for doing so was because he was not aware of and had not approved “significant cost increases” for work variations.
  1. [45]
    On this basis the email threads on Friday 11 March 2016 culminating in NP’s to JS at 5.04 pm satisfy the statutory description of a payment schedule.

The consequences of not paying the scheduled amount

  1. [46]
    The applicant claims to be entitled to under the statute for construction work undertaken to be carried out under the varied construction contract for an agreed reference date. Thus, the applicant is a claimant eligible to use the s 17 recovery procedures and that the circumstances mentioned in s 20(1) exist.
  1. [47]
    The respondent has not paid the scheduled amount and is liable a debt for the full amount of as a debt with interest under s 20 of the Payments Act unless it has an offsetting claim.
  1. [48]
    I am not satisfied on the material available that the respondent is entitled to bring a contractual counterclaim or defence to offset against the claim based on unapproved, undone or overvalued variations. All I have are conflicting accounts of opposing interests. Neither account concerning the quantum of any variations or their approval can be taken at face value. Nor can the factual conflicts be satisfactorily resolved on the papers or in a busy applications list.
  1. [49]
    For the respondent it is sworn that the variations were unapproved and uncosted. For the applicant, by contrast, the claim is verified and NP claims that he did not know about the overruns is contested in contemporaneous emails. There is no reason for me to treat the disputed payment claim as untrustworthy. This would involve preferring the untested written version of one deponent over another on little more than impression. Such an approach is contrary to the forensic method and likely to lead to substantial injustice.
  1. [50]
    As an inevitable statutory consequence the applicant is entitled to judgment for $25,770.25 plus interest from 9 March 2016 at 2.5 % compounding.
  1. [51]
    Costs are also allowed to either be agreed within 7 days or assessed because of the applicant’s substantial success in a proceeding that could have been averted if the respondent paid the scheduled amount when it fell due on 9 March 2016.
  1. [52]
    Orders accordingly.
Close

Editorial Notes

  • Published Case Name:

    Wetlock Industries Pty Ltd trading as Wetlock Waterproofing ABN 45 151 807 359 v Body Corporate for City Link

  • Shortened Case Name:

    Wetlock Industries Pty Ltd trading as Wetlock Waterproofing ABN 45 151 807 359 v Body Corporate for City Link

  • MNC:

    [2016] QMC 9

  • Court:

    QMC

  • Judge(s):

    R Carmody

  • Date:

    19 May 2016

Appeal Status

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

Cases Cited

Case NameFull CitationFrequency
Brodyn Pty Ltd t/as Time Cost and Quality v Davenport (2004) 61 NSW LR 421
1 citation
Jump To
Cite 1 - (2004) 61 NSW LR 421
F K Gardner & Sons Pty Ltd v Dimin Pty Ltd[2007] 1 Qd R 10; [2006] QSC 243
1 citation
Jump To
Cite 1 - [2007] 1 Qd R 10
Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA) Pty Ltd [2007] QSC 333
1 citation
Jump To
Cite 1 - [2007] QSC 333

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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