CBEM Holdings Pty Ltd v Sunshine East Pty Ltd

1. [1]

   MITCHELMORE JA: I have had the significant advantage of reading in draft the reasons of Adamson JA, in which her Honour addresses the background to the appeal together with all of the grounds of appeal, and the reasons of Free JA which address construction of the Trade Contract (as defined in Adamson JA’s reasons) and restitution. I agree with the orders proposed by Adamson JA for the reasons her Honour gives, save that on construction I agree with the additional reasons of Free JA including his Honour’s qualification at [137]-[138]. I also agree with the further elaboration in his Honour’s reasons on restitution.

2. [2]

   ADAMSON JA: The appellant, CBEM Holdings Pty Ltd (CBEM) appeals against a judgment ordered by I Coleman SC ADCJ (the primary judge) on 28 March 2025 in the sum of $452,961.44 inclusive of GST in favour of Sunshine East Pty Ltd and Chunlin Fan (the respondents).

3. [3]

   In summary, CBEM performed earthworks for the respondents for a building project at Dural (the project) pursuant to a contract, entitled “Trade Contract -for use with Construction Management Contract” dated 3 December 2021 (the Trade Contract). It submitted payment claims, each of which carried an endorsement, stating that it was a payment claim made under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA).

4. [4]

   The first three payment claims, PC 1, 2 and 3, were approved by ASY Construction Pty Ltd (ASY), the Construction Manager, which was the respondents’ agent and project manager for the site. The fourth payment claim, PC 4, was not approved but as no payment schedule was served within time under SOPA, the respondents were obliged to pay the payment claim in full. Summary judgment was entered, in proceedings commenced by CBEM in respect of that payment claim and the respondents’ application for leave to appeal against that judgment dismissed: Sunshine East Pty Ltd v CBEM Holdings Pty Ltd [2023] NSWSC 744.

5. [5]

   In November 2022, the respondents terminated the Trade Contract before CBEM had completed its works under the contract. In PC 1-4, it claimed that it had completed a total of 53% of the works under the contract.

6. [6]

   Subsequently, the respondents brought proceedings in the District Court, alleging that they had paid more to CBEM than the Trade Contract required for the work performed. They claimed the differential between the 53% for which CBEM had claimed and the respondents had paid and the percentage of work which had actually been completed. They pleaded several causes of action of which only the following two remain relevant:

   1. (1)

      restitution for the differential based on mistake (the mistake being that CBEM had actually performed the percentage of work for which it had claimed in PC 2 and 3); and

   2. (2)

      damages for misleading or deceptive conduct under the Australian Consumer Law (ACL).

7. [7]

   The respondents also pleaded a claim that they had validly rescinded the Trade Contract by notice dated 11 January 2023 and were therefore only obliged to pay a “reasonable price” for works carried out under the Trade Contract as at the date of rescission, by operation of s 7BB(7) of the Home Building Act 1989 (NSW). It was common ground that the Home Building Act applied to the work which CBEM was contracted to perform and that it had not complied with the Act. The primary judge found that the Trade Contract was terminated on 1 November 2022 by notice from the respondents to CBEM and that therefore the claim for rescission did not arise: J[36].

The hearing in the Court below

1. [8]

   The proceeding in the Court below was heard over 5 days: 3, 4 and 5 June 2024, 4 July 2024 and 18 November 2024.

2. [9]

   In the Court below, oral evidence was given by Jianwei Bi (a director of the corporate respondent); Ji Zhang (a director of CBEM); Gordon Xue (an expert quantity surveyor qualified by CBEM); and Imad Fares (an expert quantity surveyor qualified by the respondents). The respondents did not call anyone from ASY to give evidence.

3. [10]

   The respondents’ pleadings were amended shortly before, and again during, the hearing. These amendments are germane only to the restitution claim and will be addressed, to the extent necessary, when ground 4 is considered.

The primary judge’s reasons

1. [11]

   The primary judge outlined the dispute between the parties (the plaintiffs being the respondents and the defendant being CBEM) as to quantum in J[14] as follows:

2. [12]

   At J[20], the primary judge recorded that his Honour drew the inference that evidence from ASY would not have assisted the respondents’ case (in accordance with the principles in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8).

3. [13]

   In addressing the respondents’ claim in restitution, the primary judge said, at J[44]:

4. [14]

   The primary judge addressed CBEM’s submission that the claim in restitution had not been properly pleaded as follows:

5. [15]

   The primary judge summarised CBEM’s submissions on mistake and noted, at J[64], its reliance on White Pointer Investments Pty Ltd v Creative Academy Group Pty Ltd [2023] NSWSC 817 (White Pointer) at [321] to [323], including at [321] that “[a] distinction may be drawn between mistake and payments made in fulfilment of a contractual obligation and a mere payment made by mistake” and that “[g]enerally, a payment made pursuant to a valid and enforceable contract cannot be recovered unless the contract is first set aside, on the ground of mistake or otherwise” (Emphasis added.) The primary judge noted the word “[g]enerally”.

6. [16]

   At J[71], the primary judge found as follows:

7. [17]

   The primary judge found at J[81] that the evidence did not establish that ASY had the expertise to evaluate the payment claims as a quantity surveyor or civil engineer would have done. Although his Honour, at J[82], found that ASY’s duties under the Construction Management Contract were “extensive”, his Honour nonetheless found that CBEM relevantly caused the respondents to make the payments. His Honour concluded, at J[82]:

8. [18]

   Accordingly, the primary judge found that the respondents had made out their claim for restitution as it would “offend conscience” to permit CBEM to retain money to which it was not entitled: J[86].

9. [19]

   The primary judge found that CBEM made claims for work which it had not actually performed. However, his Honour expressly refrained from finding that any of the payment claims involved “dishonest representations”: J[90]. CBEM submitted that, because the representations in the payment claims involved the exercise of skill and judgment, they were representations of opinion. His Honour rejected this submission and found that they were “representations of fact” that CBEM “had in fact performed the work detailed in the payment claims”: J[92].

10. [20]

    The primary judge was satisfied that CBEM’s payment claims were misleading or deceptive or likely to mislead or deceive at the time they were made: J[116].

11. [21]

    The primary judge rejected CBEM’s submission that the respondents had not proved that, in making the payments, they relied on CBEM rather than ASY, or that anyone from ASY had been misled by the payment claims. While the primary judge accepted, at J[96], that the respondents relied on ASY in paying the payment claims, his Honour also found that the respondents had relied on CBEM, and that CBEM’s misleading or deceptive conduct was an operative cause of its loss: J[127]. His Honour’s rejection of CBEM’s defence alleging proportionate liability of ASY has not been challenged on appeal.

12. [22]

    The primary judge summarised the evidence of Mr Xue and Mr Fares. His Honour found at J[137]:

13. [23]

    The primary judge found that, in the absence of evidence from CBEM to substantiate the claimed amount of $43,367.50 for site establishment and supervision, his Honour would allow only Mr Fares’ assessment of quantum at 22.14% of that figure, amounting to $9,600.46: J[138]-[142]. His Honour thus rejected Mr Xue’s allowance of the full amount.

14. [24]

    It is not necessary to descend into detail about the remaining items which comprised the judgment sum in favour of the respondents. This is because CBEM’s challenge in this Court to the total figure is that the method applied by the experts to value the work was not apt to quantify any overpayment under the Trade Contract.

The grounds of appeal

1. [25]

   CBEM appeals on six grounds. The first turns on an issue of construction of the Trade Contract as well as the primary judge’s interpretation of “concessions” alleged to have been made by CBEM. Grounds 2 and 3 challenge the primary judge’s findings relating to the misleading or deceptive conduct claim. Ground 2 challenges the finding that the representations made by CBEM were misleading or deceptive and ground 3 challenges the finding that there was a causal connection between the representations and the payments. Grounds 4 and 5 concern liability for restitution. Ground 4 challenges the finding of mistake and ground 5 challenges the finding that CBEM was unjustly enriched, having regard to the role played by ASY in performing an independent assessment of the work done under the Trade Contract. Ground 6 challenges the finding of quantum and alleges that the respondents failed to prove their loss.

2. [26]

   Grounds 1 and 5 largely turn on the construction of the Trade Contract and whether its effect is to foreclose a subsequent claim, such as the one which the respondents made in the Court below and seek to defend in this Court, based on a discrepancy between what they paid and what they were obliged by the Trade Contract to pay. Accordingly, this question of construction will be addressed first.

3. [27]

   In substance, CBEM submitted that the effect of the Trade Contract was that, once ASY had approved the payment claims submitted by CBEM and the respondents had paid them, the issue of CBEM’s entitlement to payment was finally determined. CBEM argued that, as a consequence, it was not open to the respondents to seek to challenge these amounts, including in future proceedings, since they were bound by ASY’s assessment, on the basis of which they had voluntarily paid the claims.

4. [28]

   Mr Campbell, who appeared with Mr Courtenay for the respondents, accepted that, if this construction point were decided in favour of CBEM, then the appeal must be allowed. In these circumstances, I propose to address it first.

5. [29]

   The Trade Contract is in a standard form issued by the Master Builders Association and is described as a “[c]ontract between Trade Contractor and Principal”. Its title indicates that it is a sub-contract for use with the Construction Management Contract. The parties to the Trade Contract are the respondents, as principal, and CBEM, as contractor. Although not a party to the Trade Contract, ASY is identified as the “Construction Manager”. The first page of the Trade Contract contains notes, including the following:

6. [30]

   Schedule B identifies the quotation (Rev 7) submitted by CBEM as being a relevant document to the “Works”. Rev 7 is entitled “Trade Breakup” and was submitted by CBEM on 19 November 2021 as a quotation. It sets out amounts or rates which apply to the various components of the works. The works in Rev 7 broadly relate to earthworks, drainage and concreting of pavements and footpaths.

7. [31]

   Schedule D to the Trade Contract provides that a deposit of 5% is required before commencement “to secure materials and labour” and that “[p]ayments thereafter [are] to be made as per works completed in schedule breakdown of contractors”.

8. [32]

   Clauses 1(iii) and (iv) of the General Conditions of Contract oblige CBEM to execute and complete the works in accordance with the contract, “in conformity with all reasonable directions and requirements of [ASY]” and “to [ASY’s] reasonable satisfaction”. Clause 10 makes provision for payment claims. It relevantly provides that payment claims are to be made as required by the timetable in Schedule D and are to be given to ASY but addressed to the respondents: cl 10(a). Such a payment claim must “accurately identify and relate to the work actually done by [CBEM] and must properly value the work with reference to the contract price or, as appropriate, the contract Schedule of Rates”: cl 10(c) (Bold in original). Any dispute or issue as to a payment claim is to be advised in writing to CBEM within ten business days of receipt of the payment claim: cl 10(e).

9. [33]

   Clause 11, entitled “Payment terms”, provides that the respondents are to pay CBEM the amount properly claimed in the payment claim or, if that is disputed or adjusted, the amount which is consequently admitted as being payable.

10. [34]

    Clause 20 provides for arbitration and dispute resolution and requires the parties to meet within seven days of the dispute being notified to the other party.

11. [35]

    The respondents, as principals, and ASY, as Construction Manager are parties to the Construction Management Contract, which was made on 16 April 2021. The description of the “Works” in Schedule 1 to that contract is:

12. [36]

    The fee payable by the respondents to ASY for their services is $35,640 (inclusive of GST) per month for 20 months. By cl 2 of the Construction Management Contract, the respondents appointed ASY as their agent “for the purpose of providing construction management services for the performance of and the completion of the Works”. The duties of the Construction Manager are listed in cl 6 and include monitoring the work of trade contractors in order to assess their performance and likely future performance and to “be reasonably satisfied that the work is being performed in accordance with the requirements of the trade contract”: cl 6(k). ASY’s duties also include, in cl 6(l), an obligation to:

13. [37]

    Clause 9 provides for payment of trade contractors by requiring the respondents to make prompt payments, in accordance with the trade contracts, directly to all trade contractors in accordance with ASY’s recommendation. It also expressly provides that nothing in the contract will be taken to impose on ASY an obligation to pay trade contractors.

14. [38]

    Mr Sheldon, who appeared with Dr Ball for CBEM, submitted that the Trade Contract amounted to a code in that it exhaustively provided the mechanism whereby payment claims were to be made, to be paid and, if disputed, how any disputes were to be resolved. He argued that, once ASY was satisfied that the work had been performed as claimed, recommended to the respondents that they pay the claim, and the respondents had paid the claim, it was no longer open to the respondents to challenge the payment or to seek reimbursement of any alleged overpayment. He submitted that the Trade Contract expressly required “final contemporaneous assessments of work performed” and did not permit CBEM’s entitlement to be paid to be determined by the “experts’ retrospective opinion of the value of work performed”. He relied on the absence of a clause providing that money paid under the contract would be treated as having been paid on account.

15. [39]

    Mr Sheldon further submitted that this construction was a commercially reasonable one in the circumstances where, of its nature, the work performed by CBEM (being earthworks and drainage) was more difficult to value and assess as time passed because these works tend to be obscured by buildings or other works. He contended that, in these circumstances, where the respondents had appointed a skilled Construction Manager, whose remuneration reflected its responsibilities, to assess claims as and when they were made, this should be the end of it. To the extent to which there was a dispute, the contract expressly provided mechanisms for its resolution.

16. [40]

    It is a necessary corollary of this construction of the Trade Contract, that the usual access which a party has to a court to resolve a dispute arising under the contract or to claim damages for breach is ousted because the contract constitutes an exhaustive code of the parties’ rights and obligations.

17. [41]

    In this context (as well as the issue of restitution, which is considered further below), Mr Sheldon relied on White Pointer in which Rees J said, at [321]:

18. [42]

    Mr Sheldon submitted that the highlighted portion represented the general principle and that the Trade Contract ought be construed as consistent with that principle.

19. [43]

    I do not accept the construction for which Mr Sheldon contended. First, while the text makes detailed provision for payment claims (including their assessment and payment) and how disputes relating to them are to be resolved, there is nothing in the express words of the contract which indicates any objective intention to deprive either party to the contract of its legal rights to have disputes litigated in court or to claim reimbursement of moneys already paid.

20. [44]

    Secondly, the argument that the nature of the work which CBEM was contracted to perform tells against there being any reservation of rights, must be rejected. As observed above, the Trade Contract is a generic contract which is intended to be used generally for sub-contracts where there is a construction manager. Thus, the Trade Contract can be taken to have been drafted in such a way as to cover all manner of what may loosely be described as “building work”. Such work is not limited to excavation, draining and concreting work but also includes brickwork, gyprocking, plumbing and other tasks which are required for the construction of a building. In these circumstances, little if any weight can be placed on the particular nature of the work for which CBEM was contracted to perform.

21. [45]

    Thirdly, a contractor, which is party to a Trade Contract, is not limited, when seeking to justify its claim, to evidence of what can be seen or ascertained from external observation of the works. It can substantiate the works it has performed by reference to its own records, including photographs, time sheets, descriptions of the work, contemporaneous schedules and oral evidence from those who performed or supervised the work. That, as referred to below, CBEM did not seek to substantiate the work it had done in this way and, indeed, sought to blame the respondents for its not having retained records, cannot affect the issue of construction.

22. [46]

    Fourthly, the wording of cl 11 of the Trade Contract requires the respondents to pay CBEM the amount “properly claimed in the payment claim” (emphasis added). This is a strong textual consideration that a payment made is not final but is subject to a right of restitution if it turns out that the payment has not been properly claimed in the payment claim. I agree with Free JA’s observations about the importance to the task of construing the contract of the word “properly” being used as a qualifier in this context.

23. [47]

    Finally, and perhaps most importantly, the Trade Contract can be taken to have been drafted against the background of SOPA, which regulates progress payments by the submission of payment claims by a builder to a principal (or sub-contractor to a builder). The effect of SOPA has been considered extensively by authority: see the summary of Part 3 of SOPA, entitled “Procedure for recovering progress payments” in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 at [3]-[18] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ).

24. [48]

    For present purposes, it is sufficient to note that Part 3 of SOPA makes provision for payment claims, which it obliges principals to pay (subject to the service of a payment schedule which entitles the principal to have the dispute adjudicated) on an interim basis. SOPA preserves the rights of parties to a building contract to sue on the contract later to ascertain the correct financial position between them. If it be the case that a principal is found by a court to have overpaid the contractor (by reason of having paid the payment claim in full), the principal is entitled to be reimbursed the difference between what it paid and what a court has found that it was contractually liable to pay.

25. [49]

    Section 32 of SOPA provides:

26. [50]

    Section 34 of SOPA prohibits contracting out of the Act in the following terms:

27. [51]

    The payment claims issued by CBEM were expressed to be issued under SOPA. Each of the payments made by the respondents to CBEM fall within the words in s 32(3)(a), “any amount paid to a party to the contract under or for the purposes of this Part [Part 3 of SOPA]”. The Trade Contract ought be construed in such a way as to maintain its validity, if this is reasonably possible: Langston v Langston (1834) 2 Cl & Fin 194; 6 ER 1128 at 1147; In Re Solomon; Solomon v Solomon [1946] VLR 115 at 120-121. The construction for which Mr Sheldon contended (that payments made by the respondents to CBEM in payment of the latter’s payment claims under SOPA were final and binding) would, if accepted, have the effect of “excluding, modifying or restricting the operation of [SOPA]” and render any clause to that effect void: s 34(2)(a).

28. [52]

    White Pointer concerned a contract to source sites for childcare centres. Accordingly, SOPA had no application to the construction of the contract in that case and could not bear upon the effect of payments made under the contract. Further, Rees J’s use of the word “[g]enerally” (at [321]) before stating the relevant principle indicates that her Honour appreciated that the principle admitted of exceptions. In my view, because of SOPA, the payment of payment claims under building contracts which fall within the ambit of SOPA, constitute a significant, well-established, legislatively entrenched exception to the general principle which Rees J articulated in White Pointer.

29. [53]

    Having regard to the express provisions of the Trade Contract (including the absence of words providing that payments made are to be final and binding) and the statutory background of SOPA, I am not persuaded that the Trade Contract precluded the respondents from claiming restitution of any overpayment.

30. [54]

    For present purposes, there is no particular reason to distinguish PC 1-3 from PC 4 in this context since no payment schedule was served by the respondents in respect of any of the payment claims. Thus, although it can be said that the respondents paid PC 1-3 “voluntarily” (since it was not necessary for CBEM to obtain judgment against them for the amounts claimed) and paid PC 4 “compulsorily” (by reason of the judgment entered against them), the respondents were obliged by SOPA to pay each of the payment claims in full (no payment schedule having been served within the time provided under SOPA). However, the respondents retained their rights to “pay now [and] argue later” (see, for example, Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 at [96] (Palmer J)) that CBEM had been overpaid and obtain credit for payments already made, as provided for by s 32 of SOPA.

31. [55]

    To this extent, ground 1 has not been made out. The balance of ground 1 relates to whether the primary judge was in error in regarding CBEM as having “conceded” in the proceedings that it claimed for work which it had not performed or that it was paid more than the value of the work performed by it pursuant to the Trade Contract. This aspect of ground 1 will be addressed in connection with ground 6, which relates to quantum.

32. [56]

    It follows from my rejection of the construction of the Trade Contract for which Mr Sheldon contended, that ground 5 has not been made out. That ground alleges that, because CBEM was entitled under the Trade Contract to retain the money that it had been paid, the primary judge was wrong to find that it was unjust for CBEM to retain the money. For the reasons given above, this was not the effect of the Trade Contract.

33. [57]

    The respondents ultimately pressed their claim under the ACL in relation to PC 2 and PC 3 and only to the extent to which the amount of the overpayment went beyond PC 4.

34. [58]

    As set out above, the primary judge was satisfied that the payment claims made by CBEM amounted to representations of fact rather than as claims per se or representations of opinion.

35. [59]

    A payment claim is not, of itself a representation; however, it may contain representations which may be facts or opinions. For example, a payment claim which represents that the claimant has completed an identified item (by indicating that 100% of the sum payable for that item is claimed), contains a representation of fact that the item has been completed. However, if the percentage claimed is, say, 75%, it is a matter of evaluative judgment or opinion that the proportion of the total task is 75%, rather than, say, 60% or 80%, or some other figure. Other examples may be conceived of matters which may be representations of either fact or opinion in a payment claim. A representation that a task has been completed to a proportion that is less than 100% is not generally one of fact because of the evaluative judgment required.

36. [60]

    Where the payee of the claim cannot establish that the maker of the representation did not reasonably and honestly hold the opinion that the percentage stipulated in the payment claim was correct, the representation, being one of opinion, will not be misleading or deceptive. As Bowen CJ, Lockhart and Fitzgerald JJ said in Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 88:

37. [61]

    A claim that an amount is owing to one party may be no more than an expression of opinion by the maker of the claim: Norton Property Group Pty Ltd v Ozzy States Pty Ltd (in liq) [2020] NSWCA 23 at [89]-[92] (Leeming JA, Payne and White JJA agreeing).

38. [62]

    In the present case, the primary judge’s initial characterisation of the representation in the payment claim (which did not descend into an analysis of the integers of the payment claim since the respondents had not specified them in its pleading) as a representation of fact was, in my view, erroneous. For this reason, I am not satisfied that the respondents have established that either PC 2 or PC 3 was misleading or deceptive (although they may turn out to have been incorrect, as addressed in the discussion below about quantum).

39. [63]

    For these reasons, ground 2 has been made out. However, as the judgment is also founded on the claim for restitution, the success of ground 2 will not result in the appeal being allowed, unless the judgment on that claim is set aside by this Court.

40. [64]

    As ground 2 has been made out, it is not strictly necessary to address ground 3. However, for completeness I propose to address it briefly.

41. [65]

    CBEM argued that, because ASY was retained to assess the work performed and to satisfy itself that the claimed work had actually had been done, the respondents could not be said to have relied on the payment claim, since they must have relied solely on ASY for its assessment. On this basis, CBEM argued that the respondents had not proved that CBEM’s misleading or deceptive conduct caused any loss which they had suffered by paying the payment claim.

42. [66]

    Mr Sheldon sought to draw an analogy between the present case and Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310, in which this Court allowed an appeal by auditors who had given an incorrect audit certificate and had been found liable for losses suffered by the company which would have been avoided if the certificate had been correct, since, in that event, a receiver would have been appointed. I understood him to submit that the act of CBEM in rendering the payment claim was simply the occasion for ASY’s assessment of the worth of the claim by reference to the work done and that ASY was the sole operative cause of any overpayment by the respondents to CBEM.

43. [67]

    I reject this argument and discern no error in the primary judge’s finding that CBEM’s conduct in submitting the payment claim was a cause of the (putative) overpayment and therefore a cause of the loss suffered by the respondents. Even if ASY were less than diligent in assessing the claim (a point which need not be determined), its conduct (which may amount to a concurrent cause) does not break the causal link between the payment claim rendered by CBEM and the respondents’ payment of it: see Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at [13]-[14] (Gleeson CJ). This would be the case even if any ineptitude on the part of ASY were attributed to the respondents since doctrines of contributory negligence do not play a role in this context: Henville v Walker at [13]-[14] (Gleeson CJ) and [140] (McHugh J).

44. [68]

    For these reasons, ground 3 has not been made out.

45. [69]

    Ground 4 alleges that, in light of the primary judge’s findings (as to ASY’s role), his Honour erred in finding (at J[71] and J[82]) that the relevant payments were caused by mistake that the work claimed by CBEM had actually been performed.

46. [70]

    CBEM submitted that it was not open to the respondents to argue that they were obliged to pay a lesser amount “under the contract” (being the Trade Contract) than they had in fact paid since they had not pleaded a claim in contract. In order to address this submission, it is necessary to review, for the purposes of this ground and, if necessary, the amended notice of contention, how the respondents pleaded their claim in restitution and various procedural steps with respect to the claim.

47. [71]

    In the further amended statement of claim, which was filed on 31 May 2024 (the Friday before the first day of hearing on the following Monday, 3 June 2024), the respondents alleged that they had paid CBEM a total of $985,859.48 under the Trade Contract and that “the total value of [CBEM’s] Works when valued under the Contract was $350,329.56”. The difference of $635,529.92 was defined as the “Overpayment”.

48. [72]

    In paragraph 29 of their further amended statement of claim, the respondents claimed “restitution of the Overpayment and interest on the Judgment Award [being the judgment in respect of PC 4], that was the money of the plaintiff paid to the defendant, pursuant to section 32(3) of the SOPA, and/or which is, in the circumstances detailed above, now unjustly retained by the defendant.”

49. [73]

    On 3 June 2024, the first day of the hearing, Mr Campbell, who also appeared for the respondents in the Court below, opened the respondents’ case and sought to amend the pleading as follows:

50. [74]

    Mr Campbell confirmed that the proposed amendments would not affect the evidence as they were based on the “same underlying facts, which are, the defendant has overclaimed, the plaintiff has overpaid. We are just seeking to recognise the fact that, under the contract, that overclaim was a breach”.

51. [75]

    Mr Sheldon, who appeared for the respondents in the Court below, responded by submitting: “[t]here is no claim for restitution for monies had and received if there is a contract on foot. You cannot avoid the contractual risk allocation”. He opposed leave to amend being granted, alleging that CBEM would suffer prejudice by not having an opportunity to plead election or estoppel in response. However, ultimately Mr Sheldon accepted that the hearing ought proceed on the basis of the misleading or deceptive conduct case and the monies had and received case, because there had already been litigation between the parties (relating to PC 4, referred to above) and the dispute ought finally be determined.

52. [76]

    At the conclusion of the respondents’ application for the amendment, the primary judge ruled that, other than in respect of certain identified paragraphs, the amendment ought be allowed. The second further amended statement of claim was filed on 3 June 2024. Of present relevance, it added the words to paragraph 29 highlighted in bold below which, following the amendment, read as follows:

53. [77]

    The evidence concluded on 5 June 2024. The parties agreed to exchange written submissions on 1 July 2024 and the matter was listed for final submissions on 4 July 2024.

54. [78]

    In its written submissions dated 1 July 2024, CBEM submitted, relying on Redland City Council v Kozik [2024] HCA 7; (2024) 98 ALJR 544 at [27], that the respondents’ claim in restitution must fail because it disclosed no cause of action as there was no pleading of an established category of restitution. The respondents relied on John Holland Pty Ltd v Roads and Traffic Authority of New South Wales [2007] NSWCA 140 (John Holland CA) in support of a submission that when a party has paid more to the other contracting party than the latter is entitled (whether pursuant to a payment claim or an adjudication under SOPA) to restitution of the difference between that amount and any lesser amount for which the payer was subsequently found liable to the payee in proceedings.

55. [79]

    When the hearing resumed on 4 July 2024, Mr Campbell submitted that the respondents were not required to plead a claim under the contract. Rather, he submitted that the claim in restitution ought properly be understood as a claim for money which has been paid above and beyond the contractual rights of CBEM to claim payment under the contract. He submitted that the respondents had paid CBEM too much and that they were entitled to restitution of the difference. He submitted that PC 2 and PC 3 were paid by mistake, the mistake being that the work which was claimed in those payment claims had been done. Mr Campbell argued that there was no requirement to particularise the mistake and, further, that PC 4, being a payment under compulsion, plainly attracted restitutionary principles.

56. [80]

    On 4 July 2024, the primary judge directed the respondents to provide particulars of the mistake relied upon. On 8 July 2024, the respondents provided the following particulars in respect of each of PC 2 and PC3:

57. [81]

    On 24 July 2024, CBEM objected to the respondents raising what it alleged was a “new case after the close of evidence”. It said further:

58. [82]

    In support of its contention, in particular (e)(ii)(2), CBEM filed an affidavit affirmed by Mr Zhang in which he deposed as follows:

59. [83]

    Mr Zhang deposed that he had spent all the money which had been paid to CBEM in payment of PC 2 and PC 3 and did not retain any funds in the event of a dispute. He also deposed that, had he not understood or acted upon the basis that receipt of the payments was a final receipt, he would have kept detailed records and photographs of the work done and engaged a quantity surveyor to measure the works performed and have ASY or Mr Bi sign off on the measurements. He also deposed that the contract price would have been greater, to make allowance for the need to do those things.

60. [84]

    When the hearing resumed on 18 November 2024, Mr Sheldon sought to read Mr Zhang’s affidavit.

61. [85]

    It will be noted that, in particulars (d) and (e) set out above, CBEM sought to justify, and blame the respondents for, its lack of records and other evidence to substantiate the work which it had actually done. In the proceedings in the Court below and in this Court, CBEM sought to attribute blame to the weather (alleging that the rain had washed away its earthworks) and to the respondents (that it had destroyed its records because it did not see any further use for them, since ASY had approved the works). This had forensic consequences because it meant that the only evidence of CBEM’s work was what the experts were able to detect from their inspection of the site. To the extent to which they were unable to ascertain whether particular work had been done, they attributed no value to it. Thus, CBEM ultimately bore the forensic consequences of its failure to retain records which might have established that it had done more work than was apparent to the experts.

62. [86]

    While restitution has attracted significant academic interest of late, it is a remedy for old and rudimentary causes of action, known as common money counts. These counts arise in certain circumstances where “the plaintiff claims money payable by the defendant to the plaintiff”: see Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 14.12(1). Indeed, their “commonness” is such that the UCPR confirm a plaintiff’s long-standing entitlement to plead the cause of action in “short form”.

63. [87]

    One such common money count is a claim for money had and received. In Bullen and Leake, Precedents of Pleadings, (2nd ed, 1863, V & R Stevens, Sons, and Haynes) at p 36, the authors said, of “common Indebitatus Count for Money received”:

64. [88]

    The effect of a payment which is, by its nature, a “progress payment” and made before the final liability under a contract is ascertained, was addressed by Dixon J in York Air Conditioning and Refrigeration (A/sia) Pty Ltd v The Commonwealth (1949) 80 CLR 11; [1949] HCA 23, who said at 63-64:

65. [89]

    Examples of such provisional payments include an advance made by an acquiring authority to a dispossessed owner, pending determination of just compensation (where the just compensation is found to be less than the advance, the acquiring authority is entitled to recover the difference as money had and received) or if the acquisition were revoked: Maroochydore Central Holdings Pty Ltd v Maroochy Shire Council [2007] QCA 326 at [18] (Jerrard JA).

66. [90]

    Thus, where a plaintiff (such as the respondents in this case) has made what is, in effect, a provisional payment by paying a payment claim under SOPA and claims money payable by the defendant (in this case, CBEM) to the plaintiff for “money had and received by the defendant’s for the plaintiff’s use”, that is all that need be pleaded, unless the defendant, by notice, requires the plaintiff to plead the facts on which the plaintiff relies in full: UCPR, r 14.12.

67. [91]

    The circumstances in which an action for money had and received will accrue are many and various. However, since at least John Holland Pty Ltd v Roads and Traffic Authority of New South Wales (2006) 66 NSWLR 624; [2006] NSWSC 874 (John Holland SC), it has been authoritatively established that where a party has paid more money in response to payment claims issued under SOPA than the amount to which the issuer is entitled under the contract, the payer is entitled to restitution from the payee of the difference on the basis of money had and received by the payee for the payer’s use.

68. [92]

    The nature of the payer’s right to recover any excess was considered by McDougall J in John Holland SC. His Honour said, at [34], that, if it were necessary to decide the question, he would conclude that such a claim to repayment is analogous to that described by Handley JA in Production Spray Painting and Panel Beating Pty Ltd v Newnham (No 2) (1992) 27 NSWLR 659 at 661-662 (recently applied by this Court in Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd [2025] NSWCA 5) as follows:

69. [93]

    McDougall J said further in John Holland SC:

70. [94]

    An appeal against McDougall J’s decision was dismissed: John Holland CA. While John Holland SC concerned an adjudicated claim, it has not been (nor could it be, in my view) suggested that payment under a payment claim, in respect of which there has been no payment schedule served and therefore no adjudication, is relevantly in a different category. In each case, the payer is obliged to pay, effectively on account, without prejudice to its rights to have its legal liability under the contract determined subsequently, and an adjustment made, if it has been found to have overpaid what it is ultimately found to be liable under the contract to pay. The only risk a payer runs in not serving a payment schedule is that, if the payee is insolvent, the payer may not ultimately recover any repayment in full. However, the payer’s rights to have its liability limited to the payee’s contractual entitlement is otherwise preserved.

71. [95]

    Dr Ball, who appeared with Mr Sheldon for CBEM, sought to gain assistance from the well-established principles relating to mistaken payments under a contract. He relied on the following passage from Ian Jackman, The Varieties of Restitution (2nd ed, 2017, The Federation Press) at page 43:

72. [96]

    For the reasons given below, this passage is inapposite in the present case.

73. [97]

    It follows from my conclusion about the construction of the Trade Contract that the present claim by the respondents is a common money count which alleged that CBEM is liable to pay the difference between what the respondents paid it, in response to the payment claims, and what they are found legally obliged to pay CBEM under the Trade Contract. The respondents were entitled to plead it in short form, no notice having been served requiring them to plead the facts on which they relied in full under UCPR, r 14.12(2).

74. [98]

    The particulars of mistake which the respondents provided in response to the primary judge’s direction, do not confine the common money count, as opened or as articulated consistently by Mr Campbell on their behalf throughout the hearing. Although it was not necessary for the respondents to allege mistake, it is plain from the terms of the particulars that they alleged that they paid the amounts which they seek to recover in the mistaken belief that the amounts accorded with their contractual obligations to CBEM (the mistake being that the percentage of work which had been claimed had actually been performed). However, once they became aware (or suspected) that CBEM had not performed the percentage of the work that was alleged in the payment claims, the respondents were entitled to claim the overpayment. The well-established jurisprudence to which Mr Jackman referred in the passage set out relating to mistaken payments above is, accordingly, inapplicable in the present case.

75. [99]

    The suggestion made on behalf of CBEM that it did not appreciate the nature of the claim or was taken by surprise by the allegation of mistake cannot, in these circumstances, be accepted.

76. [100]

    It was also submitted on behalf of CBEM that it was necessary for the respondents to plead their claim in contract and that, as they had not, it was misconceived and ought fail on that basis. This submission misapprehends the breadth of the common money count for money had and received. To plead this cause of action, all the respondents needed to do was to say that they had paid (implicitly, provisionally) more to CBEM in response to its payment claims than that which it was obliged under the contract to pay and that it claimed the difference.

77. [101]

    Such a claim is not a claim for damages for breach of contract and does not require such a claim to be pleaded. The respondents were obliged to pay the payment claims rendered under SOPA, without prejudice to their right to recover an overpayment if it turned out that their liability under the contract was a lesser sum. Far from “side-stepping” the Trade Contract (as CBEM accused them of doing), the respondents sought to have their liability determined by reference to its terms in order that the amount of overpayment could be calculated by the difference between their contractual liability and the total amounts paid. In these circumstances, CBEM’s reliance on well-established authority concerning the primacy of the contract in determining allocation of risk between the parties (such as Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; [2019] HCA 32 at [14] (Kiefel CJ, Bell and Keane JJ)) was misplaced.

78. [102]

    Ground 6 alleges:

79. [103]

    Mr Sheldon submitted that the method adopted by the experts was entirely inapposite to prove the amount claimed by way of restitution and that, accordingly, the respondents claim ought to have failed for lack of proof. He submitted that it was necessary for the respondents to establish, by reference to each payment claim what the respondents were entitled to, as at the date of the payment claim. He contended that the “global” approach adopted by the experts of ascertaining the disparity between the total amount paid by the respondents and the total amount to which CBEM was entitled under the contract was insufficient to discharge the respondents’ onus of proof.

80. [104]

    In order to address this submission, it is necessary to review how the matter was approached in the Court below.

81. [105]

    In CBEM’s opening written submissions dated 2 June 2024 to the Court below relating to quantum, Mr Sheldon said of the quantum issues:

82. [106]

    In CBEM’s written closing submissions dated 1 July 2024, Mr Sheldon maintained his primary case that CBEM had no liability to the respondents at all. However, in the alternative, he annexed to his submissions a table “setting out what [CBEM] contends [are] the appropriate findings as to quantum”. He submitted that it was telling that ASY had not been called to give evidence (a matter which the primary judge took into account, as referred to above) and criticised the opinions of Mr Fares, the expert called by the respondents.

83. [107]

    Under the heading, “The issues of quantum dividing the parties”, CBEM said:

84. [108]

    Thus, by 3 June 2024, the primary judge had been informed by CBEM that, based on the expert evidence, the respondents alleged that they had overpaid CBEM in the order of $650,000 and that CBEM alleged that any overpayment was $140,000.

85. [109]

    In closing submissions on 18 November 2024, the parties made submissions about various items considered by the experts, on the basis of which the primary judge summarised the differences between the parties as set out in J[14] (extracted above).

86. [110]

    The parties prepared a joint document dated 6 December 2024, which was provided to the primary judge, in which the final position of each expert on each of the items in the schedule was valued as a percentage of the total contract price. The schedule indicated that the:

    1. (1)

       value of the work which CBEM had contracted to perform was $1,682,741.83 (including variations but excluding GST), being the total consideration under the Trade Contract;

    2. (2)

       CBEM had claimed (and been paid in response to its payment claims, PC 1-4) a total of $893,735.90 (including variations but excluding GST), which equated to 53% of the total work under the Trade Contract;

    3. (3)

       the respondents’ expert, Mr Fares, opined that CBEM had only performed 25.41% of the work and therefore was only entitled to $427,610.76 (including variations but excluding GST); and

    4. (4)

       CBEM’s expert, Mr Xue, opined that CBEM had performed 33.33% of the work and was therefore entitled to $560,818.46 (including variations but excluding GST).

87. [111]

    In light of this document, the issue for the primary judge, once CBEM was found to be liable, was whether the respondents were entitled to $466,125.14 (excluding GST), as they had claimed, or $332,917.44 (excluding GST) in accordance with Mr Xue’s opinion, or some figure in between. The figures in J[14] are different because they also take account of interest and GST.

88. [112]

    At the hearing of the appeal, Mr Sheldon submitted that the process which the experts had undertaken did not produce any useful result. He submitted that it was only relevant to the aspect of the case which was eventually abandoned by the respondents, which related to their submission that the contract had been avoided and that their liability to CBEM was limited to the value of the work performed (assessed on the basis of quantum meruit) rather than on the basis of the contract. I do not accept this submission.

89. [113]

    The experts “valued” the work as a percentage of each of the items in Rev 7. Thus, the task which the experts performed was entirely appropriate to assess the quantum of the respondents claim for money had and received based on their overpayment of CBEM’s entitlement under the contract. Ultimately, as referred to above, the parties agreed on a combined schedule dated 6 December 2024 which was forwarded to the primary judge.

90. [114]

    This is the way in which CBEM conducted its defence to the respondents’ claim in the Court below by which it ought be bound: R v Birks (1990) 19 NSWLR 677. As Gleeson CJ said in that case at 683:

91. [115]

    CBEM’s primary position was that it had no liability to the respondents. However, Mr Sheldon can be taken to have allowed the case to proceed on the basis that, on CBEM’s alternative case, if CBEM were found liable, its liability would be the differential between the total amount paid and the amount assessed by Mr Xue as being referable to the percentage of the work which was performed by CBEM. CBEM tendered no business records to show what it had (or had not) done and adduced no evidence of quantum other than Mr Xue’s opinion evidence.

92. [116]

    While Mr Zhang, in his affidavit referred to above, sought to explain the absence of CBEM’s records (they had been destroyed because CBEM believed that the respondents would have no recourse against it for money already paid), this deficiency could not amount to positive evidence capable of displacing Mr Xue’s expert opinion as to what CBEM had and had not done.

93. [117]

    I understand that the effect of the primary judge’s observation at J[14] that CBEM had “concede[d]” that, if the respondents were successful either in their claim for damages for misleading or deceptive conduct or in their claim for restitution, the respondents’ damages would be at least $368,959.17 (this being Mr Xue’s final figure). In other words, Mr Xue’s evidence was the only evidence which had been adduced by CBEM on the question of quantum and, accordingly, it was bound by it.

94. [118]

    In ground 6, CBEM seeks to put the question of quantum in an entirely different way from the basis on which it conducted its defence in the Court below. Having participated in an apparently consensual, co-operative process of adducing concurrent evidence from the experts, CBEM seeks to resile from this process in this Court. CBEM would have this Court believe that the time spent by the Court below and the parties in narrowing the differences between the experts and reducing the figures to schedules apparently designed to assist the primary judge was little more than a solemn farce. It contended in this Court that an iterative process ought be engaged in, in circumstances where this was not put in any discernible way in the Court below. In these circumstances, this Court ought not entertain the argument.

95. [119]

    For these reasons ground 6 is dismissed.

96. [120]

    There being no other challenge to the primary judge’s findings, no error in the primary judge’s assessment of damages has been articulated or demonstrated.

Conclusion

1. [121]

   CBEM has had a modicum of success with respect to ground 2, which does not affect the result since its challenges to the award for money had and received have not been made out. In these circumstances, the appeal ought be dismissed with costs. There is, accordingly, no need to address the respondents’ notice of contention.

2. [122]

   For the reasons given above, I propose the following orders:

   1. (1)

      Dismiss the appeal.

   2. (2)

      Order the appellant to pay the respondents’ costs of the proceedings.

3. [123]

   FREE JA: I have had the benefit of reading in draft the reasons of Adamson JA. I agree with the orders proposed by her Honour. The respondents were entitled to succeed at trial on the basis of their claim for restitution of the amounts which they had overpaid.

4. [124]

   Subject to the following points of qualification and elaboration, I agree with her Honour’s reasons. I gratefully adopt her Honour’s summary of the background to the dispute, the findings of the primary judge and the arguments of the parties.

Proper construction of the Trade Contract

1. [125]

   The claim for restitution gave rise to an issue about whether the appellant had a lawful entitlement, derived from the contract between the parties, to be paid and to retain all of the amounts paid by the respondents in respect of PC1, PC2, PC3 and PC4. As the appellant correctly submitted, restitutionary relief cannot be granted in the face of inconsistent contractual entitlements and obligations. To allow a restitutionary claim in such circumstances would be to subvert the contractual allocation of risk: Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; [2019] HCA 32 (Mann) at [19], [62]-[64].

2. [126]

   I agree with Adamson JA that the appellant cannot demonstrate a contractual entitlement to retain the money paid by the respondents in response to the payment claims, to the extent that the work for which the payments were ostensibly made had not in fact been performed. Put another way, the appellant was contractually entitled to retain payments to the extent that the work in question had in fact been performed, but that was the limit of the entitlement.

3. [127]

   Adamson JA has identified a number of reasons why the Trade Contract, on its proper construction, does not give the appellant an unqualified entitlement to retain any money paid in response to a payment claim, once the time for triggering a dispute under the contract has expired. On the question of the interaction of the SOPA and the Trade Contract, I take a different approach from the one described by her Honour.

4. [128]

   The text of the contract concerning payment claims strongly favours the conclusion that the appellant does not have an unqualified right to retain money simply because it has been paid without a dispute being notified. Payment claims under the Trade Contract must relate to the contract price: cl 10(a). A payment claim must “accurately identify and relate to the work actually done by the Contractor and must properly value the work with reference to the contract price or, as appropriate, the contract Schedule of Rates”: cl 10(c). Under the Trade Contract the Contractor was entitled to be paid an initial deposit of 5% and payments thereafter “to be made as per works completed in schedule breakdown of contractors”. The work in question was detailed in a quote document headed “Trade Breakup”, which identified the various items of work and corresponding prices comprising the total contract price. Clause 10(d) provides that if a payment claim includes an amount for a variation the variation must have been directed as required by cl 4.

5. [129]

   The obligation of the Principal in response to a payment claim is “to pay the Contractor the amount properly claimed in the payment claim or if that is disputed or adjusted the amount which is consequently admitted as being payable”: cl 11(a). Before becoming “entitled to receive any payment” the Contractor is required to deliver to the Construction manager a statement that there are no outstanding wages, remunerations or other payments due and owing, a certificate or warranty document in relation to the work which is then due and a tax invoice in a satisfactory form: cl 11(b).

6. [130]

   Focusing first on the obligation of the Principal to pay an amount following a payment claim, there are two possibilities identified in cl 11(a). One involves an amount “consequently admitted as being payable” after an amount claimed in a payment claim has been “disputed or adjusted”. That corresponds to cl 10(e), which provides that any “dispute or issue as to a payment claim is to be advised in writing to the Contractor within ten (10) business days of receipt of the payment claim”. Notification of such a dispute would engage the arbitration and dispute resolution procedure in cl 20. The other scenario contemplated by cl 11(a) is where the amount claimed in a payment claim has not been disputed or adjusted. The obligation of the Principal in that scenario is to pay the amount “properly claimed”.

7. [131]

   The inclusion of the qualifying adverb “properly” is significant. On the appellant’s construction of the Trade Contract, if a payment claim was made but not disputed then, upon the expiry of the ten day time limit for notifying a dispute, the Principal became subject to an unqualified obligation to pay that amount and the Contractor became entitled not only to receive the payment but also to retain it, irrespective of whether or not the work to which the claim was actually done.

8. [132]

   That construction gives the word “properly” no work to do. The choice by the parties to include the word signifies an important qualification on the rights of the Contractor. An amount must not simply be claimed, it must be properly claimed. Read in the context of the surrounding clauses that describe the form of a payment claim, that must entail that the claim relates to the contract price, that it “accurately” identifies and relates to the work “actually done by the Contractor” and that it “properly” values the work with reference to the contract price or, as appropriate, the contract Schedule of Rates. If it includes an amount for a variation the variation must be supported by a direction under clause 4. As can be seen, there are various other constraints and qualifying adverbs that all serve to signify that the right to claim, like the obligation to pay, is limited to that which is objectively justified under the contract having regard to work actually done and properly valued. Reading the word “properly” in the same way gives a harmonious reading to subclauses (a) and (c) of cl 10 and cl 11(a).

9. [133]

   The appellant says its construction is consistent with the fact that payments under the contract are not expressly described as payments on account of a liability later to be determined. Had the parties formulated their arrangement in those terms, plainly the appellant’s argument would be untenable. But it does not follow that because payments are not described as payments on account it must have been intended that the appellant would acquire an unqualified right to retain payments made in respect of claims that are not disputed at the time. It remains necessary to construe the words of the contract to discern the intention of the parties in this regard.

10. [134]

    The appellant also argues that its construction is supported by the fact that the Trade Contract operated in a context where ASY, as the manager appointed under the Construction Management Contract, had the role of receiving and reviewing payment claims. However, as noted by Adamson JA, the Trade Contract is a standard form contract specifically designed to apply in circumstances where there is a construction manager performing such a role under a Construction Management Contract. It is within that context that the parties chose to use the language of clauses 10 and 11, with the various significant qualifications that I have emphasised above. In other words, notwithstanding the role of the Construction Manager the Trade Contract stipulates that any amount claimed must be properly claimed, in respect of work accurately identified and properly valued. Given that context, the involvement of ASY in the arrangement between the appellant and the respondent does not provide a basis for ignoring or reading down the language used in those clauses.

11. [135]

    The regime in the Trade Contract is therefore consistent with an arrangement whereby a payment claim might be made by the Contractor, there is no dispute notified within the contractual time limit and money is paid by the Principal in response to the claim, but the Contractor does not have a legal basis to retain the money to the extent that the amount in question was not “properly” claimed.

12. [136]

    Having such a contractual machinery for payment claims is harmonious with the statutory scheme for payment claims created by the SOPA. Section 32 of the SOPA, which is addressed in more detail below, expressly contemplates that a party to a construction contract who has paid money pursuant to a claim under the SOPA may seek orders for the restitution of any amount so paid.

13. [137]

    It is unnecessary to express a view about whether a contract of a different kind that did purport to confer an unqualified right to retain any money paid (and thereby foreclosed any later recovery of money paid in response to a payment claim under the SOPA) is to that extent void because it involves contracting out of the SOPA. On its face, s 32 of the SOPA preserves contractual rights but is agnostic as to what those contractual rights may be. To the extent that a particular contract, like the Trade Contract, supports an adjustment being made after payments have been made under the SOPA, the making of orders to effect such an adjustment (taking into account payments made pursuant to the Act) is contemplated by s 32(3). But that does not necessarily assume that every contract to which the SOPA applies must operate in that way.

14. [138]

    To resolve the issue of construction in the present case, it is sufficient to conclude that this Trade Contract did not give the appellant an unqualified right to demand payments and retain them, even if the payments were not in fact properly claimed by reference to work actually done.

The appellant did not have a legal basis to retain a large part of the amount paid and restitution is appropriate

1. [139]

   In light of this understanding of the Trade Contract, the significance of the facts found by the primary judge is clear. Under the Trade Contract, the appellant only had a lawful entitlement to be paid, and to retain, amounts properly claimed. Whatever difficulties may have been raised below regarding the articulation of the respondents’ case below, the parties plainly joined issue on the extent to which the appellant had in fact performed the work identified in PC1, PC2, PC3 and PC4. There was a large measure of agreement between the respective experts about the work which had, and had not, been performed. To the extent there were differences between the experts about particular items, they were resolved by the findings of the trial judge. The ultimate outcome was a finding that the appellant had claimed for work which had not in fact been performed. The value of that work, determined by applying the Trade Contract and not by some extraneous notion of value, was $452,961.44.

2. [140]

   The appellant has raised a number of complaints about the forensic difficulties that were involved in seeking to prove that work had been performed in the past. That is ultimately a distraction in circumstances where none of the appeal grounds challenged the findings made in this regard.

3. [141]

   By ground 6 of its appeal the appellant contends that this process of quantification was inapt because it did not allow for a differentiation between the work associated with PC2 and PC3 (which were the subject of the claim based on mistake) and the work associated with PC1 and PC4. However, that did not involve a challenge to the finding that the work actually performed was, applying the terms of the Trade Contract, substantially less than the work that was asserted to have been performed in the four payment claims. That amounted to a finding that there had been an overpayment of $452,961.44.

4. [142]

   In plain terms, bringing together that unchallenged finding of fact and the conclusion reached about the proper construction of the Trade Contract, the appellant had been overpaid and received money which it had no contractual entitlement to receive and retain. That provided a solid foundation for the claim for money had and received which, as Adamson JA has explained, was squarely advanced by the respondents.

5. [143]

   The appellant received the payments that it did at least in part because of the statutory compulsion imposed by the SOPA. Each of the payment claims was issued expressly under that Act and made the respondents subject to the applicable statutory obligations and consequences. In the case of PC4, the failure to serve a payment schedule within the statutory time limit meant that the respondents became subject to a statutory obligation to pay notwithstanding that they had queried whether there was a proper basis for PC4.

6. [144]

   The possibility that a situation of this kind may arise is squarely anticipated by s 32 of the SOPA. Subsection (1) of s 32 has the effect of preserving the rights of parties to a construction contract and subsection (3) provides that in any proceedings in relation to any matter arising under a construction contract a court or tribunal, in making any award in such proceedings, must allow for any amount paid under or for the purposes of the SOPA and may make such orders as “it considers appropriate for the restitution of any amount so paid”.

7. [145]

   In John Holland SC McDougall J at [33] expressed the view that s 32 of the SOPA does not itself create a restitutionary right. Instead it recognises and preserves the possibility of restitutionary claims arising under the general law. As his Honour explained at [33], the significance of s 32 in the scheme of the SOPA is to “reinforce the interim nature of adjudication determinations, and to provide that parties’ legal rights (as decided by a court or tribunal) are given full effect notwithstanding what may have been determined by an adjudicator and what may have been done in pursuance of, or obedience to, that determination”.

8. [146]

   Other features of the SOPA reflect the same overarching intent. In Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 (Southern Han) Kiefel, Bell, Gageler, Keane and Gordon JJ explained at [60] that the reference in s 13(1) of SOPA to a person who “claims to be” entitled to a progress payment:

9. [147]

   Payments made pursuant to SOPA are therefore payments of an interim nature, effectively on account: see Southern Han at [4], quoting the second reading speech for the Bill for the original SOP Act. Hence the description of the statutory scheme as “pay now, fight later”: Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd [2025] NSWCA 49 at [8].

10. [148]

    In Style Timber Floor Pty Ltd v Krivosudsky (2019) 100 NSWLR 133; [2019] NSWCA 171 (Style Timber Floor), Bell P (with whom Simpson AJA agreed) explained the scheme of Part 3 in the following terms:

11. [149]

    All of this assumes the viability of a party who has overpaid, or been underpaid, having regard to the rights and obligations of the parties under the contract and the work actually performed, achieving an effective remedy. A claim for restitution is the means by which a party who is ultimately found to have overpaid, pursuant to payment claims under SOPA, is restored to the correct position and the unjust enrichment of the recipient of the payment is remedied.

12. [150]

    In Juul v Northey [2010] NSWCA 211 McColl JA (with whom Basten and Campbell JJA agreed) said the following about the cause of action for money had and received:

13. [151]

    The present circumstances might well be thought to justify the conclusion that the appellant has received money which in justice and equity belongs to the respondents, under circumstances which render the receipt of it a receipt by the appellant to the use of the respondents. The appellant claimed payment for work which it has been found not to have done. Under the Trade Contract it should not have claimed for such payments and it had no entitlement to retain the money. The respondents paid PC2 and PC3 because they were operating under a mistake that the work had been done as claimed. They paid PC4 because the SOPA compelled them to. However, “whether enrichment is unjust is not determined by reference to a subjective evaluation of what is unfair or unconscionable: recovery rather depends on the existence of a qualifying or vitiating factor falling into some particular category”: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [150]; see also David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379; [1992] HCA 48; Mann at [168]; Redland City Council v Kozik [2024] HCA 7; (2024) 98 ALJR 544 (Redland City Council) at [73].

14. [152]

    McDougall J in John Holland SC at [34] described a claim for repayment in circumstances similar to the present matter as being analogous to that described by Handley JA in Production Spray Painting and Panel Beating Pty Ltd v Newnham (No 2) (1992) 27 NSWLR 659 at 662. The claim in that case was for restitution of amounts that had been paid pursuant to orders made by the Industrial Commission which were subsequently quashed by the Court of Appeal. Handley JA (with whom Mahoney and Priestley JJA agreed) at 661 held that it was well-established that the reversal of a judgment on appeal entitles the successful appellant to recover any moneys paid under the reserved judgment, which was the applicable principle when a superior court, in the exercise of its supervisory jurisdiction, quashes orders of an inferior court.

15. [153]

    I respectfully agree with McDougall J about the analogy to be drawn between recovery of a payment that was compelled under SOPA, where retention of the money by the recipient is ultimately shown to be unjust because it exceeds the recipient’s contractual entitlement. In each case the initial legal compulsion that caused the payment – deriving from the order of the Industrial Commission in Production Spray Painting and from the SOPA in the present case – no longer provides a just basis for the recipient to retain the money and the appropriate response to the consequential unjust enrichment is restitution.

16. [154]

    Here the relevant vitiating factor is that the money was paid under statutory compulsion and that compulsion has, in the manner intended by the SOPA, served its purpose and no longer provides a justification for retention of the funds in the hands of the appellant. In Moses v Macferlan (1760) 2 Burr 1005 at 1012; 97 ER 676 at 681 Lord Mansfield gave a list of instances where the action lay for recovery of money because the recipient was “obliged by the ties of natural justice and equity to refund the money”. The list included recovery of “money got through imposition (express, or implied)”.

17. [155]

    The recent decision of the High Court in Gray v Lavan (A Firm) [2025] HCA 42 affords an illuminating contrast in statutory schemes. Dr Gray sought restitution of a certain amount associated with payments that he had made to his former legal representatives, Lavan. The amount in question was interest on the amount that Lavan had repaid to Dr Gray pursuant to a deed of settlement that treated the repayment as equivalent to that which would have been ordered if there had been a taxation of costs under the Legal Practice Act 2003 (WA). Dr Gray’s claim for restitution was held to be unsustainable because Part 13 of the Legal Practice Act 2003 (WA) “excluded any such common law restitutionary consequences”. The relevant features of Part 13 were described by the Court in the following terms:

18. [156]

    The Court concluded that:

19. [157]

    By contrast, the SOPA does not impose any statutory duty to make restitution, or create anything in the nature of a statutory cause of action to facilitate restitutionary relief. As noted above, the reference to restitution in s 32(3) of the SOPA has been understood not as creating any statutory right but rather as acknowledging the existence of common law rights and signalling the intention of the legislature that the SOPA should operate harmoniously with such rights.

20. [158]

    Where money has been paid under a mistake of law, based on an understanding that there was a legal obligation to pay, that is a recognised vitiating factor: Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 67; [1994] HCA 61; David Securities. As far as PC4 is concerned, the analysis of mistake of law does not apply. However, there is a relevant analogy with a statute like the SOPA that imposes a valid obligation to pay (and a corresponding entitlement to receive), but on an intentionally temporary and conditional basis only. In both cases the statutory compulsion which provided the basis for the payment has fallen away.

21. [159]

    To the extent this analogy with existing vitiating factors might be thought too strained, the present circumstances would warrant recognition of a new or developing category of case: see Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256-7; [1987] HCA 5, quoted in David Securities at 379 and Redland City Council at [72]. The grounds for obtaining relief in money had and received are not static, and novel occasions of unjust enrichment supporting claims for restitutionary relief may emerge: Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 at [30].

22. [160]

    The conduct of the proceedings below, and on appeal, was to some extent obscured by an undue focus on the issue of mistake. The respondents did, in the course of the proceedings below, come to argue in relation to PC2 and PC3 that the payments in question had been made on the basis of a mistake that the work in question had been performed, which would provide a relevant vitiating factor supporting restitutionary relief. The appellant seizes on that aspect of the appellant’s case to argue that the respondents were not entitled to restitution in respect of the payment made in response to PC4, and the evidence going to loss did not permit the necessary distinctions between the work associated with the different payment claims.

23. [161]

    However, the respondents had also maintained a broader claim for money had and received which invoked s 32 of the SOPA and involved a complaint that they had paid the amount claimed in PC4 only because they were compelled to do so under the SOPA. I agree with Adamson JA that in those circumstances it was open to the primary judge to resolve the restitutionary claim in the way that he did. It follows that it is not to the point that the findings going to loss dealt generally with the work performed, as compared with the work claimed to have been performed, without seeking to differentiate between individual payment claims.

Total failure of consideration as an alternative vitiating factor

1. [162]

   The same conclusion would also be reached if the matter were analysed in terms of total failure of consideration, as opposed to statutory compulsion. In John Holland SC at [35] McDougall J observed that in circumstances where adjudications that had occurred under the SOPA regime had been found to be disputed, such that John Holland had been found to have no contractual entitlement to be paid the disputed amount, “there will have been demonstrated a total failure of consideration for the amount in question”. I respectfully agree with that analysis. It applies equally where there has not been an adjudication, but where payment claims have been paid but it has subsequently been demonstrated that the amounts paid exceed the contractual entitlement of the recipient.

2. [163]

   Total failure of consideration as a relevant vitiating factor supporting a claim for restitution may take the form of total failure of a severable part of the consideration: Mann at [168]. In Mann Nettle, Gordon and Edelman JJ explained that “consideration” in this context means

3. [164]

   In Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516; [2001] HCA 68 at [14] Gleeson CJ, Gaudron and Hayne JJ quoted with approval from the 1868 edition of Bullen and Leake’s Precedents of Pleadings where the notes concerning the common indebitatus count for money had and received by the defendant to the use of the plaintiff included the following:

4. [165]

   In the same case Gummow J at [104] described “failure of consideration” as the “failure to sustain itself of the state of affairs contemplated as a basis for the payments the appellants seek to recover”. His Honour at [105]-[106] addressed the question of why the failure of consideration must be “total”. Gummow J at [106] explained that one reason is the “law’s difficulty with apportionment in respect of an entire obligation, namely one in which the consideration for the payment of money is entire and indivisible. The rule is that the action will not be maintainable where ‘the money payable is neither apportioned by the contract, nor capable of being apportioned by a jury’ [citing Steele v Tardiani (1946) 72 CLR 386 at 401; [1946] HCA 21].” That concern does not arise where the form of the transaction between the parties allows for payments to be broken up in the relevant way: see [107] and [109].

5. [166]

   The Trade Contract, like the contracts at issue in Roxborough, provides for relevant severability of the consideration to which payments relate. As explained above, payment claims made under the Trade Contract related to particular items of identified work required to be performed under the contract, with a corresponding price for each item. There is no difficulty with apportionment of the work that is necessary to provide the basis for corresponding payment claims. The consideration is relevantly severable. Where the work in question has not in fact been performed, as the trial judge found in the present case, there has been a total failure of consideration in the relevant sense.