Impero Pacific Group Pty Ltd v Bonheur Holdings Pty Ltd

1. [1]

   These proceedings arise out of a contract between the plaintiff, Impero Pacific Group Pty Ltd, as Contractor, and the defendant, Bonheur Holdings Pty Ltd, as Principal, for the design and construction of a building development at Bellevue Hill in eastern Sydney. The Contractor seeks judgment under the Building and Construction Industry Security of Payment Act 1999 (NSW) for approximately $1.4 million, representing a payment claim issued in November 2018. Unless otherwise stated, statutory references in the balance of this judgment are to that Act. All figures are inclusive of GST.

Issues for decision

1. [2]

   Section 8 of the Act provides:

2. [3]

   The Act (s 4) contains the following definition of the term “progress payment”:

3. [4]

   Section 13 of the Act relevantly provides:

4. [5]

   Under the Act there is no entitlement to a progress payment, and there can be no valid progress claim, unless there is an available reference date. This is established by the High Court decision in Southern Han Breakfast Point Pty Ltd v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 (see at 360-361 [61], 363-364 [72]; the case is referred to in more detail below). It was common ground before me.

5. [6]

   The Principal resisted the entry of judgment under the Act on two grounds. First, the Principal contended that the payment claim was invalid because it was not supported by an available reference date for the purposes of the Act. Secondly, the Principal contended that the payment claim was invalid (or was not validly served) because the supporting statement which accompanied it did not comply with s 13(7) of the Act.

6. [7]

   In the course of the hearing, a further ground of defence emerged. Counsel for the Principal contended that if, contrary to the Principal’s main contention, the Contractor had a right to a progress payment, that right was limited to part only of the amount claimed in the progress claim. The consequence, so it was contended, was that no judgment could be obtained for the claimed amount. This additional ground of defence was the subject of supplementary submissions from the parties following the hearing.

7. [8]

   On the pleadings, the Principal raised other grounds of defence to the Contractor’s action. One was that the contract was not a “construction contract” for the purposes of the Act. Another was that it had served a payment schedule disputing the claim in time, so that the plaintiff could not proceed to judgment without first obtaining an adjudication determination in its favour. A payment schedule was in fact served, but the Contractor’s contention was that it was not served within the period of time allowed by the Act. Neither of these defences has been pursued and they are no longer relevant, except perhaps as to costs.

The building contract and the payment claim

1. [9]

   The contract between the parties consisted of two written agreements. The first was a Formal Instrument of Agreement based on the General Conditions of Contract for Design and Construct published by Standards Australia (AS4902-2000). The second was a Deed of Agreement which provided for rights and obligations of the parties additional to those under the Formal Instrument of Agreement. Both instruments were executed on 6 April 2018. It was not suggested that the terms of the Deed of Agreement are relevant for present purposes and in what follows I will refer to the Formal Instrument of Agreement based on AS4902-2000 as the “Contract”.

2. [10]

   The Contract sum was $7.37 million plus GST. The work (defined as Work under the Contract, or “WUC”), involved the construction of a residential building consisting of ten strata lot apartments. The date for completion was 1 March 2019.

3. [11]

   Clause 37 of the Contract dealt with payment. It relevantly provided:

4. [12]

   Item 33 specified the times for progress claims for the purposes of cl 37.1 as:

5. [13]

   Clause 39A dealt with the termination for convenience. It relevantly provided:

6. [14]

   The Principal exercised its option under cl 39A to terminate the contract for convenience. It did so by notice issued on 29 October 2018. There was a question as to whether that notice was served on the date it was issued, 29 October, or on the following day, 30 October. Nothing turns on this for present purposes.

7. [15]

   The payment claim the subject of these proceedings was dated 27 November 2018. It was described as progress claim 6. The narrative stated:

8. [16]

   The amount claimed was $1,394,484.55 inclusive of GST. The claim was in conventional form. It divided the works into categories and identified the amount claimed for each category. It was accompanied by a bundle of invoices from subcontractors.

9. [17]

   The payment claim was also accompanied by a document in the form of a supporting statement under s 13(7). The document contained a statutory declaration which was signed by Manuel Kalach, the project manager for the Contractor.

Available reference date

1. [18]

   The reference date for progress claims under cl 37.1 of the Contract was the 25th day of the month. As at 25 October, the contract remained on foot. Accordingly, 25 October was an available reference date for making a progress claim under the Act for work done to that point. But a claim could not be made under that reference date for work done between 25 October and the date of termination (29 or 30 October). This follows from the fact that an entitlement to a progress payment only arises “on and from” each reference date.

2. [19]

   Had the Contract continued in operation, work done after 25 October would have been claimable under the next reference date under cl 37.1, namely 25 November. But the Contract was terminated before that date was reached. Recognising that the prospective right to claim from that reference date did not survive termination (see Patrick Stevedores, cited at [20] below), the Contractor did not rely upon 25 November as a reference date. Instead, the contention was that termination of the Contract gave rise to another reference date for the purposes of the Act which enabled work done from 26 to 29 or 30 October to be claimed. If this contention be correct, work done between 26 September and 25 October, which could have been claimed on the 25 October reference date, could also be claimed from this later date: see s 13(6).

3. [20]

   In Patrick Stevedores Operations No. 2 Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2014] NSWSC 1413, a decision of Ball J, the construction contract gave the owner (Patrick) the right to terminate the contract for convenience. Patrick exercised this right on 24 April 2014. The payment claim by the builder (McConnell Dowell) was served on 30 June, claiming for work done up to the point of termination.

4. [21]

   The contract in Patrick Stevedores appears to have been based on AS4902-2000 or some other very similar standard form of contract. The clauses dealing with payment (cl 37) and with termination (cl 39A) were numbered the same way, and were substantially the same as, if not identical to, the corresponding clauses of the Contract in this case.

5. [22]

   Ball J first considered whether McConnell Dowell’s entitlement on termination was an entitlement for “work carried out or undertaken to be carried out (or related goods and services supplied or undertaken to be supplied) under” the construction contract between McConnell Dowell and Patrick. Clause 39A(2)(a) conferred an entitlement on termination to four amounts specified in sub-clauses (i) to (iv) were in substantially the same form as in this case.

6. [23]

   His Honour considered (at [34]-[35]) that amount (i) (the cost of work carried out prior to termination which would have been payable if the contract had not been terminated and the contractor had submitted a progress claim under cl 37.1 for work carried out to the date of termination) answered the statutory description. He considered that amounts (ii), (iii) and (iv) did not.

7. [24]

   Having pointed out that work done under prior reference dates could have been claimed on reference dates which accrued prior to termination could have been claimed under cl 37.1, but that the following monthly reference date became unavailable as a result of termination, his Honour said (at [38]):

8. [25]

   His Honour concluded (at [39]):

9. [26]

   In Omega House Pty Ltd v Khouzame [2014] NSWSC 1837, a decision of Darke J, a similar issue arose. The contract provided for progress payments to be made at the completion of each stage of the works (cl 12.6). It also gave the owner (Omega House) the right to terminate the contract for convenience. Omega House exercised that right on 15 November 2013. The payment claim in question (number 11) was lodged on 23 July 2014. The claim included a claim for retention monies under the contract.

10. [27]

    Counsel for the builder sought to distinguish the decision of Ball J in Patrick Stevedores but did not challenge it. Darke J said (at [46]-[47]):

11. [28]

    In Southern Han v Lewence Constructions the building contract entitled the principal (Southern Han), in the event of substantial breach by the contractor (Lewence), and following a show cause procedure, to take the work out of the contractor’s hands and suspend payment. On 27 October 2014, having purportedly invoked the show cause procedure, Southern Han issued a notice purporting to take the remaining work out of Lewence’s hands and suspending payment under the contract. On 28 October, Lewence purported to terminate the contract on the basis that Southern Han, in taking this step, had repudiated. Lewence then, on 4 December, issued the payment claim which was the subject of the proceedings. The claim did not expressly specify its reference date, but included work done up to 27 October.

12. [29]

    The High Court made some general observations about the way in which a reference date is determined under the Act. The Court said (at 361-362 [64]-[66], footnotes omitted):

13. [30]

    Clause 37 of the contract provided for the making of progress claims on the eighth day of each calendar month for work done to the seventh day of that month. The Court held that after 28 October cl 37 did not operate so as to provide a reference date. If the notice taking the works out of Lewence’s hands was valid, any entitlement under cl 37 was suspended. And (at 365 [79]):

14. [31]

    The difference between the parties in this case is highly technical and, on the face of it, very narrow. As I have already noted, 25 October remained available as a reference date for work done up to that point. Counsel for the Principal accepted that, should the progress claim the subject of these proceedings fail, it would be open to the Contractor to make a fresh progress claim under the Act for work done up to 25 October. Counsel acknowledged that on the Principal’s argument, only work done between 26 October and termination on 29 or 30 October could not be claimed under the Act (although it could, of course, be claimed in an ordinary contractual action).

15. [32]

    Nevertheless both parties maintained their positions. This may be because the commercial issue between the parties is bound up with the objections to the claim which the Principal, by being late in serving its payment schedule, could not propound in response to the payment claim. But whatever the motivation for the dispute, the Court must resolve it.

16. [33]

    Counsel for the Contractor recognised that his client’s contention was contrary to the decision of Ball J in Patrick Stevedores. Counsel submitted, however, that the High Court decision in Southern Han, which post-dated Patrick Stevedores (and Omega House) casts a new light on the interpretation of the relevant provisions. Alternatively, counsel submitted that the decision in Patrick Stevedores is “plainly wrong” and I should not follow it.

17. [34]

    In Patrick Stevedores Ball J made five preliminary observations about the structure and operation of the Act before dealing with the specific issues raised in the case. The fifth of those preliminary observations was (at [30]):

18. [35]

    His Honour also observed (at [32]):

19. [36]

    Counsel for the Contractor pointed out that Southern Han at [64] makes it clear that the term “progress payment” used in s 8 does pick up the statutory definition. Furthermore, Southern Han at [65] emphasises that the Act applies to create progress claim entitlements by reference to final payments under construction contracts, and by reference to single or one-off payments, and by reference to milestone payments, as well as by reference to progress payments strictly so-called.

20. [37]

    The argument in Patrick Stevedores, based on the earlier Court of Appeal decision in Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394, was that after termination of the contract, in the absence of any further contractual reference dates, reference dates continued to accrue at the end of each calendar month in accordance with s 8(2)(b) of the Act. The focus of the decision in Patrick Stevedores, and in Omega House, was therefore on s 8(2)(b). That is clearly shown by the way Darke J expressed his conclusions in Omega House, already quoted.

21. [38]

    In rejecting the argument, Ball J decided that s 8(2)(b) did not apply so as to create an alternative reference date outside the contract just because the contract had been terminated. With respect, that seems correct and it is consistent with the subsequent approach of the High Court in Southern Han.

22. [39]

    But the Contractor’s argument in this case is different. The Contractor is arguing that the termination of the Contract gave rise to a contractual entitlement to payment which is separate from the contractual entitlement to receive progress payments. From the judgments, it appears that no such argument was advanced in Patrick Stevedores or Omega House. There is no question that the contractual right to payment under cl 39A survived the termination of the Contract: that was a necessary consequence of the provision for payment after termination; and, in any event, the Contract expressly provided that the clause would survive termination.

23. [40]

    The Principal’s contention is that, if the Contract is terminated for convenience, the Act cannot be used to obtain a progress payment for work done between the last contractual progress payment date and the date of termination. I agree with Ball J that such a state of affairs would not necessarily be inconsistent with the broad object and purpose of the Act. But it is still unattractive. The clear intent of cl 39A.1 was that upon termination the Contractor would be entitled to payment for the period up to termination in the same manner it was entitled to progress payments under cl 37.1.

24. [41]

    Southern Han makes it clear that where a contract is terminated for breach, or the contract is repudiated and the repudiation accepted by the other party, there is no room for reference dates to accrue thereafter (unless the contract expressly so provides). But a termination for convenience is different. The obligation to pay the amount specified in cl 39A.2 is an obligation under the Contract, and the parties remain in contractual relations with each other, even though building work ceases. The situation is quite different from enforcing a right to damages which arises as a result of termination for breach, or from repudiation, of the type discussed in Southern Han at [66].

25. [42]

    In my view, when the expanded definition of “progress payment” is taken into account, the entitlement under cl 39A gives rise to a statutory entitlement to a progress payment according to that definition.

26. [43]

    Clause 38.1A does not prescribe when such a claim may be made; indeed it does not contain any express provision as to making a claim at all. But clearly if there is an entitlement to payment there must be an entitlement to make the claim. No date is specified for the purposes of s 8(1)(a), so, by s 8(1)(b), the relevant reference date for the purpose of the Act is the end of the calendar month, in this case, 31 October.

27. [44]

    For these reasons, I conclude that the termination of the Contract gave rise to a fresh reference date for the purposes of the Act. The Contractor was entitled to make a progress claim, under the Act, at least for amount (i), under cl 38A.2 as and from either the date of termination or 31 October. The payment claim was not invalid on this ground.

28. [45]

    I am very conscious that in reaching this conclusion, I am departing from what Ball J said in Patrick Stevedores, which was followed by Darke J in Omega House. In doing so, I do not accept the submission from counsel for the Contractor that those decisions were “plainly wrong” in the context in which they were delivered. Like Leeming JA in Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 at 632 [102], I would prefer to ask whether there are compelling reasons to depart from another decision rather than ask whether the decision can be characterised as “plainly wrong”. The present case underlines how unfortunate the “plainly wrong” terminology is. The factors which have influenced me are that the particular argument presented to me does not appear to have been presented in the earlier cases, and there has been a subsequent judgment in the area from the High Court. In combination, I find that these are sufficiently compelling reasons to reach the conclusion which I have.

Supporting statement

1. [46]

   The form of a supporting statement has been prescribed for the purposes of s 13(9). The form is found in the Building and Construction Industry Security of Payment Regulation 2008 (NSW), Schedule 1: see reg 19. It is as follows:

2. [47]

   The attachment contains two schedules. The first is for “subcontractors paid all amounts due and payable”. The second is for “subcontractors for which an amount is in dispute and has not been paid”. In each case, the schedule requires identification of the subcontractor’s name, ABN, the contract number/identifier, the date of works and the date of the payment claim.

3. [48]

   The Interpretation Act 1987 (NSW), s 80(1), provides:

4. [49]

   The supporting statement which accompanied progress claim 6 complied with the form, apart from one mistake. The form is clearly designed for use in two alternative cases: one where a single contractor is referred to and the other where a list of subcontractors is to be provided. The Contractor’s statement contained an attachment listing eight subcontractors as “paid all amounts due and payable”, and provided details for those subcontractors in accordance with the form, in accordance with alternative 2 on the form. But rather than deleting the reference to a single contractor (alternative 1 on the form), the Contractor’s form contained details of the contract with the Principal. This mistake is of no consequence and clearly the form represented “substantial compliance” for the purposes of the Interpretation Act, s 80(1). Counsel for the Principal did not suggest to the contrary.

5. [50]

   Counsel for the Principal focused on his argument on two of the invoices which accompanied the payment claim. One invoice was from a company called Shower Screen Traders Pty Ltd (“SST”), for the supply and installation of shower screens. It was dated 29 October 2018 and totalled $15,035.37. Payment terms were stated as “COD”. The second invoice was from a company called Prime Plumbing Group Pty Limited (“PPG”), for the installation of seventeen “mixers”. It was dated 25 September 2018 and totalled $11,220.00. No terms of payment were specified.

6. [51]

   Counsel for the Principal argued that as the SST invoice was dated 29 October the shower screens referred to in the invoice would presumably have been supplied on or around that date; and the terms being COD, the amount specified would have been payable then. For the PPG invoice counsel relied on s 11(1B) of the Act which provides for payment of a payment claim, unless disputed, within thirty business days after receipt. Accordingly, so it was submitted, payment would have been due by 6 November. There was no evidence that either invoice had been paid by 27 November when the payment claim was issued, and counsel submitted I should infer neither had been. In addition, SST was not listed in the schedule of subcontractors attached to the supporting statement at all.

7. [52]

   These arguments first emerged from the written submissions which were served shortly before the hearing. In response, counsel for the Contractor contended that payment had not been required under either subcontract before 27 November. Counsel sought at the hearing to lead further evidence from Mr Kalach about the subcontracts in question. This resulted in some opposition from counsel for the Principal on account of late service of Mr Kalach’s affidavit. The objections were overcome by limiting the new evidence. The relevant subcontracts were tendered. I also received evidence from Mr Kalach, without objection, that SST had not “delivered, the materials or provide[d] the services” referred to in its invoice.

8. [53]

   Counsel for the Principal submitted that the course of authority in this Court required me to find that if there had been a failure to comply with s 13, this invalidated the payment claim. Counsel relied on the line of authority which began with Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602. In that case the supporting statement served with the payment claim in question did not comply with the Act. McDougall J held that the claim was invalid. In Central Projects Pty Ltd v Davidson [2018] NSWSC 523, Ball J, in obiter, argued for a contrary view. His Honour suggested that on a proper construction of the Act failure to comply with s 13 simply exposed the contractor to criminal sanctions, but did not have any effect on the validity of the payment claim itself. McDougall J returned to the issue in Greenwood Futures v DSD Builders [2018] NSWSC 1407. His Honour acknowledged the force of Ball J’s reasoning, but decided he should follow his earlier decision in Kitchen Xchange because it had been followed, in the meantime, by Meagher JA sitting at first instance in two cases (Kyle Bay Removals Pty Ltd v Dynabuild Project Services Pty Ltd [2016] NSWSC 334 at [37]; Duffy Kennedy Pty Ltd v Lainson Holdings Pty Ltd [2016] NSWSC 371 at [37]).

9. [54]

   Counsel for the Principal also relied on Mt Lewis Estate Pty Ltd v Metricon Homes Pty Ltd [2017] NSWSC 1121. In that case, Hammerschlag J held that the supporting statement was invalid because it post-dated the reference date in the payment claim. His Honour held that this invalidated the payment claim because “punctilious compliance is required” at [51].

10. [55]

    Counsel for the Contractor argued that these authorities did not govern the present case. Counsel observed that in Greenwood Futures there was no supporting statement at all. The defect in the supporting statement in Mt Lewis was such that the statement provided no assurance that the subcontractors had actually been paid as at the reference date, which was the very purpose of the statutory prohibition. But counsel also invited me, if I did not think the decisions distinguishable, to adopt the view of Ball J in Central Projects.

11. [56]

    Section 13 contains two separate prohibitions concerning the requirement of a supporting statement. The first prohibition is on serving a payment claim unless it is accompanied by a supporting statement (subsection (7)). The other is a prohibition on serving a supporting statement which is misleading or deceptive to the knowledge of the head contractor (subsection (8)).

12. [57]

    The supporting statement in the present case may or may not have been accurate or complete, but in form it complied with the requirements of subsection (9). Section 13(7) was therefore not engaged. And there was no evidence that if the statement was incomplete or incorrect, it was knowingly incomplete or incorrect. No application was made to cross-examine Mr Kalach.

13. [58]

    When I put these points to counsel for the Principal, counsel accepted that s 13(7) was not relevant and that there was no evidence to establish the state of mind required for s 13(8). Counsel nevertheless maintained that the accompanying statement was misleading and maintained the submission that this invalidated the payment claim.

14. [59]

    I cannot accept this submission. The contention by the Principal depends upon demonstrating that the payment claim had no statutory validity because a statutory precondition was not met. That contention cannot be made out unless it is first shown that the service of the payment claim involved a contravention of s 13. The onus lies on the Principal to establish this defence. It has failed to do so.

15. [60]

    Clause 38 of the Contract contained contractual obligations which parallelled the statutory obligation under s 13. It may be that the provision of an inaccurate or misleading statement would constitute a breach of cl 38. It might also amount to misleading and deceptive conduct for the purpose of the Australian Consumer Law. But even if so, that would simply give the Principal private law contractual rights, or rights to relief under the ACL, or both. It would not necessarily mean that the Contractor contravened s 13.

16. [61]

    The facts of the present case illustrate the sort of problems which would arise in accepting the Principal’s argument. On the face of it, the supporting statement complied with the Act. The Principal developed its argument based on invoices which accompanied the payment claim. There had been no requirement to include those invoices in the supporting statement (or the payment claim, for that matter). I was told, and I see no reason to doubt, that the Contractor included their payment claim, not because they were statutorily required, but in order to comply with the contractual obligations which the Contractor had. Counsel for the Principal observed, somewhat darkly, that the Principal only found out about the supposed problem from the invoices. To my mind, this only emphasises the random and fortuitous nature of the suggested defence.

17. [62]

    Furthermore, the Contractor’s riposte involved going into the terms of the subcontracts for the purpose of demonstrating that, in accordance with those terms, the invoices were not in fact payable. In my view it would be very surprising if the statutory validity of the payment claim could depend upon contestable conclusions (which might involve the resolution of disputed issues of fact) about the contractual rights and obligations of head contractors and subcontractors inter se.

18. [63]

    For these reasons, I reject the Principal’s defence on this point. As no contravention of s 13 has been established it is not necessary to enter into the debate about whether, had contravention of s 13 been established, that would have invalidated the payment claim.

Entitlement to progress payment on termination for convenience

1. [64]

   As I have already noted, clause 39A gave the Contractor an entitlement, should the Contract be terminated for convenience, to payment of four amounts of money, corresponding to sub-clauses 39A.2(a)(i), (ii), (iii) and (iv). The sum claimed in the Contractor’s payment claim included, so I was told by counsel for the Contractor, components (i) and (ii). It did not include anything for components (iii) or (iv).

2. [65]

   The fact that the claim included claims for amounts (i) and (ii) was not clear from the claim itself. As I have noted the claim was in conventional progress payment form. There was no indication that it included a claim for the cost of materials ordered but not installed.

3. [66]

   In Patrick Stevedores Ball J said (at [34]-[35]):

4. [67]

   Counsel for the Principal submitted that I should follow the decision of Ball J, dealing as it did with a contract in the same terms as in the present case. A claim for payment of amount (i) was a claim for a progress payment for the purposes of the Act but a claim for amount (ii) was not. It followed, so counsel submitted, that no judgment could be obtained.

5. [68]

   Counsel for the Contractor submitted that the decision of Ball J in Patrick Stevedores on this issue was “plainly wrong”. But counsel also submitted that even if there was no statutory entitlement to amount (ii), that did not affect the Contractor’s right to judgment.

6. [69]

   I have already set out s 13, except for sub-s (2) and (3). Those sub-sections are as follows:

7. [70]

   The Act (s 4) contains the following definition of the term “claimed amount”:

8. [71]

   The Contractor’s application for judgment is made under s 15 which relevantly provides:

9. [72]

   In the present case, it was not possible from the face of the payment claim to determine how much was claimed for amount (i) and how much for amount (ii). But it was common ground that, even if that had been possible, it would not have made any difference. Counsel for both parties agreed that, even if it were possible to identify the figure for amount (i), it would not be open to the Court to enter judgment for that amount.

10. [73]

    I think that this is correct. The Act confers power on the Court only to enter judgment in the amount of the “claimed amount” (or, if some part of the claimed amount has been paid, the claimed amount less the amount paid). The Act does not permit the Court to make its own assessment of the extent to which the claimed amount represents payment for construction work or the supply of related goods or services. In that sense, it is an all-or-nothing provision.

11. [74]

    The Act provides for two pathways for a contractor to follow. One is to apply for judgment under s 15(2) if no payment schedule is served. The other is to apply for an adjudication. If the latter course is followed, the amount of the payment claim is to be determined by the adjudicator: s 22(1)(a). This must be done by reference to the payment claim, the provisions of the contract, and the Act: s 22(2). The Court of Appeal has frequently emphasised that the process of adjudication is for the adjudicator. An error in interpreting the payment claim, or the contract, or in applying the Act, for the purpose of determining the amount of the progress payment to which the claimant is entitled is not jurisdictional and cannot be used to invalidate the determination: Icon Co (NSW) Pty Ltd v Australia Avenue Developments Pty Ltd [2018] NSWCA 339 at [32]. In this context, it is significant that s 8(1) refers to a person who either is or claims to be entitled to a progress claim (see s 13(1)). It is necessary that the payment claim actually be supported by a reference date. But beyond that it is not necessary that the claimant in fact has a valid claim: Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9; [2006] NSWCA 238 at 30 [73], 31 [75]. It is enough that the contractor claims to be entitled to a progress payment: Quickway Constructions Pty Ltd v Electrical Energy Pty Ltd [2017] NSWCA 337 at [22].

12. [75]

    What this means is that if the Principal had served a payment schedule taking the point that amount (ii) fell outside the Act, and the claim had proceeded to adjudication, it would have been a matter exclusively for the Adjudicator to determine, having regard to the terms of the Act and of the Contract, whether that was so. Even if the Court disagreed with the Adjudicator’s interpretation of the Act or the Contract, that would be no ground to intervene. The Principal would simply have to pay the amount determined by the Adjudicator and pursue any contractual rights, and associated claim for restitution, in Court proceedings.

13. [76]

    The Principal should not be in a better position to raise the point in this case as a result of its own failure to serve a payment schedule. I therefore accept the submission for the Contractor that it is entitled to judgment for the amount claimed in progress claim 6 irrespective of whether amount (ii) answers the statutory definition.

14. [77]

    Counsel for the Principal asserted in submissions that the Contractor had been well aware, when submitting the claim, that amount (ii) was not claimable. If a claimant submits a deliberately false or exaggerated claim the opposing party may not be without remedy. If the claim is fraudulent, there might be a claim to recover any payment made in consequence of it: Luxford v Reeves [1941] VLR 118. Relief might also be available under the tort of abuse of process: Williams v Spautz (1992) 174 CLR 509; [1992] HCA 34. There may even be (although this is less clear) some available ground for resisting enforcement under the Act. But I do not need to go into this for the purposes of this case. There is no evidentiary foundation for counsel’s assertions. If the point had been taken at an earlier stage of the proceedings there might have been. But, as I have said, no application was made to cross-examine Mr Kalach. In these circumstances I would not be prepared to infer that the claim was other than one made genuinely in good faith.

Conclusion and orders

1. [78]

   I have concluded that the Principal’s defences fail and the Contractor is entitled to judgment. At the hearing I was asked, should I reach this conclusion, to defer making any order until the parties had an opportunity to put submissions on the questions of interest and costs. I will therefore publish my judgment and stand the matter over for a short time to allow the parties to agree these matters. If there is no agreement, the proceedings may be listed for further argument on these questions by arrangement with my Associate.

2. [79]

   The orders of the Court are: