A-Civil Aust Pty Ltd v Meso Solutions Pty Ltd

1. [1]

   In these proceedings the plaintiff, A-Civil Aust Pty Ltd (A-Civil), challenges the validity of a payment claim issued by the first defendant, Meso Solutions Pty Ltd (Meso), under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) on 30 May 2022 (Claim 16) and an adjudication determination made by the second defendant on 12 August 2022 in respect of that payment claim (Determination).

2. [2]

   A-Civil contends that Meso made representations to A-Civil to the effect that A‑Civil could ignore Claim 16, A-Civil did not need to respond to it with a payment schedule and that Meso would not proceed to the adjudication of Claim 16 under the Act. A-Civil contends that by taking steps to proceed to an adjudication of Claim 16 contrary to those representations, Meso engaged in misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law (ACL), or alternatively, unconscionable conduct in contravention of s 20 and s 21 of the ACL. A-Civil seeks injunctive relief under s 232 of the ACL, or alternatively damages under s 236 of the ACL. A‑Civil originally put an alternative claim in estoppel based on the making of the alleged representations but accepted at the final hearing (correctly in my view) that this claim did not add anything to its claim under the ACL and did not press it.

3. [3]

   A-Civil’s alternative case is that the Determination is affected by jurisdictional error because at the time of the notice purportedly issued by Meso under s 17(2) of the Act the amounts the subject of Claim 16 had not become due and payable under the construction contract and consequently the Determination is invalid and should be quashed.

4. [4]

   The second defendant and third defendant did not take any active part in the proceedings.

5. [5]

   Evidence was given on behalf of A-Civil by Nasser Matta, the chief executive officer of A-Civil (Mr Matta) and Chaudhury Mostafiz, the project manager of A‑Civil (Mr Mostafiz), and on behalf of Meso by Timothy Orr, the managing director of Meso (Mr Orr) and Edward Bobek, the technical director of Meso (Mr Bobek). Each of them was cross examined.

Background

1. [6]

   In 2020 A-Civil was engaged by Paynter Dixon Constructions Pty Ltd (Paynter Dixon) to undertake work for the construction of a car park for the Parramatta RSL Club located at 2 Macquarie Street, Parramatta (the Site), and they entered into a formal contract for this work on 20 November 2020.

2. [7]

   On 24 March 2020, Meso sent a letter of offer to A-Civil containing the proposed terms on which Meso would undertake sheet piling, anchoring, dewatering and permanent basement wall works for A-Civil at the Site (the Project). Following this, there were discussions between A-Civil and Meso regarding pricing of the work to be undertaken by Meso. While the formal contract was not entered into until 28 June 2021, A-Civil and Meso had reached a broad consensus as to the pricing and nature of the work to be performed by Meso by December 2020 because Meso ordered sheet piles in November 2020 which were delivered to the Site on 1 December 2020 and Meso commenced works on the Site on 17 December 2020.

3. [8]

   On 30 March 2021, A-Civil sent to Meso by email the proposed contract to be entered into by A-Civil and Meso for the Project. In late May 2021 Mr Bobek sent emails to A-Civil giving detailed comments on the draft contract. On 23 June 2021 Mr Orr and Mr Matta had a meeting at which they discussed the alterations to be made to the draft contract following which Mr Mostafiz sent by email a revised version of the contract to Mr Bobek for signature.

4. [9]

   On 28 June 2021, A-Civil and Meso entered into the contract under which Meso undertook to perform foundation piling works at the Site for a lump sum of $1,406,745 (ex GST) (Contract). The Contract contained an attachment entitled “General Conditions of Agreement” (General Conditions). Clause 8.3 of the General Conditions required that all payment claims should be accompanied by certain documents. Clause 8.3 is set out later in these reasons.

5. [10]

   It is not in dispute that in none of the emails or discussions before the final version of the Contract was sent to A-Civil on around 23 June 2021 did Mr Bobek or Mr Orr raise any concern with A-Civil as to cl 8.3 of the General Conditions. However, Mr Bobek gave evidence that he had a telephone conversation with Mr Mostafiz on 28 June 2021 before Meso executed the Contract during which he raised a concern that the requirements for payment claims under cl 8.3 were onerous or too hard to comply with and Mr Mostafiz said words to the effect that Meso could “just keep on doing what you are doing”. Mr Mostafiz accepts that he had a conversation with Mr Bobek that day in which he advised Mr Bobek that he had emailed him the Contract and requested that he sign the Contract, but he denies saying the words attributed to him by Mr Bobek.

6. [11]

   Prior to entering into the Contract, between 23 November 2020 and 25 June 2021 (inclusive), Meso issued 9 payment claims to A-Civil. Payment Claim 9, issued on 25 June 2021, indicated that $429,881.70 was outstanding prior to entering into the Contract. A further 6 payment claims were issued in the period from when the Contract was entered into and the issue of Claim 16 on 30 May 2022 in respect of which A-Civil did not issue any payment schedules, nor did Meso issue any s 17(2) notices or lodge any adjudication applications.

7. [12]

   A-Civil made payments to Meso amounting to $714,621.56 from 15 December 2020 to 23 December 2021 but no further payments after that time.

8. [13]

   Between December 2021 and May 2022, Mr Orr and Mr Bobek made repeated attempts to follow up the outstanding amounts with A-Civil’s representatives Mr Matta, his son Mr George Matta and Mr Mostafiz. It is clear that Meso understood that A-Civil’s delay in making payments to Meso was due in large part to the failure of Paynter Dixon to pay amounts outstanding by it to A-Civil.

9. [14]

   On 28 January 2022, Mr Bobek sent an email to Mr Matta, copying in Mr Orr, which stated:

10. [15]

    On 4 February 2022, Mr Bobek sent the following email to Mr Matta:

11. [16]

    On 7 February 2022, Mr Mostafiz responded by email to Mr Orr as follows:

12. [17]

    The drop box contained a large number of documents relating to Paynter Dixon’s claim against A-Civil for back charges which apparently included work performed by Meso under the Contract. Mr Orr replied by email to Mr Mostafiz on the same day that it was not possible to respond by close of business on the following day, and instead a meeting was arranged with Paynter Dixon in early March to discuss the matter. This meeting took place but it appears that Meso’s attendance was short and inconclusive (see [40(3)] below).

13. [18]

    On 1 April 2022, Mr Bobek sent an email to Mr Matta seeking to progress further discussions on how to deal with the Paynter Dixon back charges claim which included the following:

14. [19]

    Mr Orr later that day sent a follow up email to Mr Matta as follows:

15. [20]

    On 1 May 2022, Mr Bobek sent an email to Mr Matta attaching a further payment claim:

16. [21]

    On 7 May 2022, Mr Bobek sent two emails to Mr Matta indicating need to progress the matter urgently, including the following:

17. [22]

    On 30 May 2022 Mr Bobek sent an email to Mr Matta attaching Claim 16 in the sum of $366,813.79. It is undisputed that Claim 16 was not accompanied by the documents required by cl 8.3 of the General Conditions. Mr Bobek’s email stated:

18. [23]

    A-Civil submitted that Claim 16 had several errors including that it understated the amount paid by A-Civil to Meso by approximately $70,000 and overstated the amount owing by A-Civil to Meso by approximately $70,000. This was conceded by Mr Orr in cross-examination. A-Civil also submitted that Claim 16 had an error as it misdescribed the construction contract as “Formal Instruction of Agreement dated 20 August 2018”. However, it was not suggested that anything turned on this because the Project was correctly identified and the parties accepted that Claim 16 met the requirements of s 13(2) of the Act.

19. [24]

    Mr Matta gave evidence that on or about 2 June 2022 he had the following telephone conversation with Mr Orr:

20. [25]

    A-Civil alleges that this conversation amounted to a representation by Meso by its managing director that A-Civil should disregard Claim 16, Meso would not be proceeding with an adjudication of Claim 16 and A-Civil did not need to respond to Claim 16 by issuing a payment schedule (together, the 2 June Representation).

21. [26]

    Mr Orr denies that the conversation described at [24] above took place and denies that he ever said words to that effect to Mr Matta.

22. [27]

    On 15 July 2022, Mr Bobek, sent an email to Mr Matta and also to his son, George, attaching a notice to A-Civil under s 17(2) of the Act, which stated:

23. [28]

    Mr Matta gave evidence that on or about 18 July 2022 he had the following conversation by telephone with Mr Orr:

24. [29]

    A-Civil alleges that this conversation amounted to a representation by Meso to A-Civil that A-Civil should ignore Claim 16, that Meso would not be proceeding with an adjudication of Claim 16, and that A-Civil did not need to respond to Claim 16 by issuing a payment schedule (together, the 18 July Representation).

25. [30]

    Mr Orr denies that the conversation described at [28] above took place and denies that he ever said words to that effect to Mr Matta.

26. [31]

    Mr Bobek advised Mr Matta by email on 4 August 2022 at 2:04pm that Meso had lodged an adjudication application (Application) with the third defendant, Adjudicate Today, in respect of Claim 16.

27. [32]

    On 5 August 2022, Mr Bobek sent an email to Paynter Dixon serving a payment withholding request on it under s 26A of the Act, requiring Paynter Dixon to withhold the amount of $366,813.79 (incl GST) from moneys owed to A-Civil.

28. [33]

    Mr Matta and Mr Orr gave evidence that they had one telephone conversation regarding the Application after it was lodged by Meso but disagreed as to what was said.

29. [34]

    Mr Matta’s evidence was that on or about 5 August 2022 he had the following conversation by telephone with Mr Orr regarding the Application:

30. [35]

    Mr Orr’s version of the conversation (which he said occurred shortly after the Application was served and resulted from a call made to him by Mr Matta) is as follows:

31. [36]

    On 8 August 2022, the third defendant, Adjudicate Today, accepted the Application and nominated the second defendant, Mr Navid King (Adjudicator), to adjudicate the Application. On the same day Mr Bobek telephoned Adjudicate Today and asked what was required to withdraw the Application and what costs would be involved in doing so, and a representative from Adjudicate Today emailed Mr Bobek (with a copy to A‑Civil) stating:

32. [37]

    Mr Matta also gave evidence that on 9 August 2022 he had the following conversation by telephone with Mr Bobek regarding the Application:

33. [38]

    Mr Bobek’s version of the conversation is as follows:

34. [39]

    A-Civil alleges that the conversations Mr Matta had with Mr Orr and Mr Bobek on 5 and 9 August respectively amounted to a representation by Meso that it would withdraw the Application (Withdrawal Representation).

35. [40]

    The conflict in the evidence as to the conversations which Mr Matta says he had with each of Mr Orr and Mr Bobek in August 2022 needs to be considered in light of the emails which passed between them on 8, 9 and 10 August 2022 regarding the withdrawal of the adjudication application, which are as follows:

    1. (1)

       At 12:42pm on Monday, 8 August 2022, Mr Bobek sent the following email to Mr Mostafiz (emphasis added):

    2. (2)

       At 12:59pm that day, Mr Matta responded to Mr Bobek by email as follows:

    3. (3)

       At 4:39pm, Mr Bobek responded by email to Mr Matta, including the following (emphasis added):

    4. (4)

       At 1:21pm on 9 August 2022 Mr Bobek sent the following email to Mr Matta and Mr Mostafiz (with a copy to Mr Orr):

    5. (5)

       At 1:46pm that day, Mr Orr sent the following email to Mr Bobek with a copy to Mr Matta and Mr Mostafiz:

    6. (6)

       At 4:25pm that day, Mr Bobek sent an email to Mr Matta and Mr Mostafiz (with a copy to Mr Orr) stating:

    7. (7)

       At 4:29pm that day, Mr Matta responded by an email to Mr Bobek stating:

    8. (8)

       At 5:03pm that day, Mr Bobek replied stating:

    9. (9)

       At 5:23pm that day, Mr Matta replied stating:

    10. (10)

        On 10 August 2022 at 1:17pm, Mr Bobek sent an email to Mr Matta stating:

36. [41]

    Mr Bobek sent further emails to Mr Matta on 16 and 17 August 2022 stating that Meso needed to see Paynter Dixon’s payment schedules and other specified documents before it would withdraw the adjudication application. It is clear that A-Civil did not respond.

37. [42]

    On 17 August 2022 at 4:38pm, Adjudicate Today sent an email to A-Civil and Meso attaching the Determination which determined the adjudicated amount to be $366,813.76.

38. [43]

    On 24 August 2022, these proceedings were commenced by A-Civil by way of summons.

Clause 8.3 of the General Conditions

1. [44]

   Clause 8.3 of the General Conditions provides relevantly:

Issues

1. [45]

   The issues in dispute are:

   1. (1)

      Whether A‑Civil has established that Meso made representations on 2 June 2022, 18 July 2022 or in early August 2022 that Meso would withdraw the Application and, thus, that A-Civil was not required to issue a payment schedule.

   2. (2)

      Whether non-compliance with cl 8.3 of the General Conditions by Meso ousted the jurisdiction of the Adjudicator.

   3. (3)

      Whether A-Civil waived compliance with cl 8.3 of the General Conditions.

Claims under sections 18, 20 and 21 of the ACL

1. [46]

   Section 18(1) of the ACL provides:

2. [47]

   Section 20 of the ACL provides:

3. [48]

   Section 21 of the ACL provides:

4. [49]

   A-Civil’s primary case was that each of the 2 June Representation and 18 July Representation contravened s 18 of the ACL. It also submitted that Meso would engage in unconscionable conduct within the meaning of s 20 of the ACL or in the alternative s 21 of the ACL if it was permitted to obtain and enforce an adjudication certificate and judgment with respect to the Determination as this would be conduct contrary to the representations.

5. [50]

   The parties were in agreement that the central issue on which the application of s 18, 20 or 21 of the ACL turned was whether A-Civil had established, as a matter of fact, that Meso made each of the alleged representations.

6. [51]

   In Kallin Pty Ltd v ACN 107 851 847 Pty Ltd [2018] NSWSC 124 at [42], Hammerschlag J (as his Honour then was) said:

7. [52]

   In Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34, Dixon J emphasised that when the law requires the proof of any fact the Court must feel an actual persuasion of its occurrence or existence before it can be found, and “it cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality”.

8. [53]

   In Watson v Foxman (1995) 49 NSWLR 315, McLelland CJ in Eq made the following well known observations regarding the fallibility of human memory (at 319):

9. [54]

   See also the observations of Leggatt J (as his Honour then was) as to the fallibility of human memory to similar effect in Blue v Ashley [2017] EWHC 1928 (Comm) at [66]-[69].

10. [55]

    Hence, in commercial disputes the contemporaneous documents, objectively established facts and the apparent logic of events are likely to be the most reliable sources of evidence: Et-China.com International Holdings Ltd v Cheung [2021] NSWCA 24; 388 ALR 128 at [25]-[29] (and cases there cited).

11. [56]

    Based on all the evidence I do not have an actual persuasion that Mr Orr made either the 2 June Representation or the 18 July Representation, for the following reasons.

12. [57]

    First, A-Civil has not proved that any conversation occurred between Mr Matta and Mr Orr on or about either 2 June 2022 or 18 July 2022. Mr Matta was aware at the time he prepared his second affidavit of 23 November 2022 that Mr Orr disputed that he spoke to Mr Matta on or around either of those dates. Mr Matta could have but did not put on evidence as to his mobile phone records to show that he either made or received a call from Mr Orr on each of those days. It is significant that in his second affidavit of 23 November 2022 he included his mobile telephone log for 9 August 2022 to establish the calls he made to Mr Bobek on that day. That telephone log shows that he made three calls to Mr Orr’s mobile phone on 9 August 2022. There is no explanation as to why Mr Matta did not address the question of whether he made a call to or received a call from Mr Orr on 2 June 2022 or 18 July 2022 in the same way. In these circumstances I draw the inference that Mr Matta’s telephone log would not have assisted in establishing that telephone conversations between them occurred on or around 2 June 2022 and 18 July 2022: Jones v Dunkel (1959) 101 CLR 298 at 320-321; [1959] HCA 8.

13. [58]

    Second, Meso tendered Mr Orr’s telephone log for his mobile phone for the period from 31 May to 4 August 2022. This showed that no call was made by Mr Orr on that mobile phone to Mr Matta or vice versa at any time during that period. Mr Orr’s evidence was that he makes and receives all his business calls on his mobile phone. Further, it is clear from Mr Matta’s mobile phone log for 9 August 2022 that he telephoned Mr Orr on his mobile phone 3 times on that day and it may be inferred that this is the likely telephone number he would have used had he called Mr Orr on 2 June or 18 July 2022.

14. [59]

    Third, the email correspondence in the period from 2 June to 17 August 2022 (when the parties were notified by Adjudicate Today that the Determination had been made) contains no reference to the making of any representation in the nature of the 2 June Representation or the 18 July Representation. In particular, the evidence clearly establishes that there were discussions on 8 to 10 August 2022 regarding the withdrawal of the Application, including several emails by Mr Matta to Mr Bobek and Mr Orr on that subject. In none of these emails does Mr Matta refer to the 2 June or 18 July Representations. Had the 2 June or 18 July Representations been made, one would expect Mr Matta to have reminded Mr Orr of this fact and to have pressed him to act consistently with them.

15. [60]

    Fourth, it is inherently improbable that Mr Orr would have made the 2 June or 18 July Representations given the large amount owing by A-Civil to Meso at that time, and the fact that Mr Orr and Mr Bobek had been chasing A-Civil for payment of Meso’s outstanding payment claims for the Project since the last payment was received from A-Civil on 23 December 2021.

16. [61]

    Fifth, Mr Matta’s evidence in cross-examination was that at the time A-Civil received all payment claims made after the Contract was entered into (including Claim 16) he was of the view that they were not valid payment claims under the Act due to non-compliance with cl 8.3 of the General Conditions:

17. [62]

    Later he was asked further questions about payment claim 9 at page 917 of the Court Book, and the following exchange occurred:

18. [63]

    Mr Matta’s view that Claim 16 was invalid is the likely explanation for why no payment schedule was issued for Claim 16 and makes it highly unlikely that Mr Matta saw any need to obtain an undertaking from Meso that A-Civil did not need to put on a payment schedule or that it would not proceed to adjudication. This is because if Claim 16 was invalid, the adjudication would be unsuccessful. Whether this view is correct is the subject of the jurisdiction claim dealt with later in these reasons.

19. [64]

    Sixth, having observed both Mr Matta and Mr Orr give evidence in cross-examination, I am not persuaded that Mr Matta’s recollection of the alleged conversations with Mr Orr is reliable.

20. [65]

    Seventh, none of the matters raised by counsel for A-Civil as reasons why I should accept Mr Matta’s evidence are persuasive.

21. [66]

    I do not accept Mr Matta’s evidence regarding the conversations he had with Mr Orr and Mr Bobek after the Application was lodged.

22. [67]

    The starting point is Mr Matta’s telephone log for 9 August 2022 (which he put into evidence) which establishes two important matters. The first is that Mr Matta had a telephone conversation with Mr Bobek at 11:18am on that day which lasted for 9 minutes and 41 seconds. The telephone log records no other call to Mr Bobek’s mobile phone lasting more than a few seconds that day except for one he made to Mr Bobek’s mobile phone at 4:02pm which lasted for 7 seconds. There is a text message which Mr Bobek left on Mr Matta’s mobile phone at 4:02pm which states: “Sorry, I can’t talk right now.” I infer from this that the 7 second call at 4:02pm most likely involved Mr Matta leaving a short voicemail message for Mr Bobek and that they did not actually speak at that time. Hence, the conversation between Mr Matta and Mr Bobek referred to at [37] and [38] above most likely occurred at 11:18am on 9 August 2022, ie, before the email Mr Bobek sent to Mr Matta at 1:21pm set out at [40(4)] above. This is confirmed by the opening paragraph of the email which says: “Attached is the email you were referring to in our phone conversation”. The “phone conversation” is most likely the one he has just had at 11:18am that morning. The significance of this timing is that Mr Bobek’s email sent at 1:21pm concludes with the statement “Tim has agreed to withdraw the adjudication application once we review their position and formulate a response to Paynter Dixon, …”. The tenor of the email, including particularly the last paragraph, is more consistent with Mr Bobek’s version of the conversation set out at [38] above rather than Mr Matta’s version.

23. [68]

    The second important matter established by Mr Matta’s mobile phone log is that he called Mr Orr’s mobile phone at 1:48pm on 9 August 2022 and had a conversation which lasted for just over 13 minutes. It may be that the last paragraph of Mr Bobek’s email sent at 1:21pm that day prompted Mr Matta to call Mr Orr. But there is no evidence as to what was said in the conversation at 1:48pm and given the length of the call, the Court can have no confidence that either version of the conversation at [34] and [35] above reflects what was said by them in a call on 9 August 2022.

24. [69]

    The email correspondence on 8 August 2022 suggests that the conversation between Mr Matta and Mr Orr above about which they each gave evidence at [34] and [35] above occurred on 8 August 2022. Importantly, this is before Mr Bobek’s email of 9 August 2022 at 1:21pm which records what Mr Orr had “agreed” regarding withdrawal of the adjudication application.

25. [70]

    Having placed the conversation between Mr Matta and Mr Orr in context, I think it is more likely that Mr Orr’s version of the conversation is correct. Mr Orr and Mr Bobek had consistently maintained the position that they needed to see the payment schedules and other documents provided by Paynter Dixon to A-Civil to understand the nature of Paynter Dixon’s claim against A-Civil. Having not received that information, Meso had now proceeded to the next stage of enforcing its rights under the Act to recover the significant sum which it regarded as owing by A-Civil to it and was in a position of strength. It makes no sense for Mr Orr to have changed his approach in the conversation with Mr Matta on either 8 or 9 August 2022 when Mr Matta was clearly not offering to change his approach regarding the provision of the Paynter Dixon payment schedules or to provide any benefit to Meso for giving up its position of strength. The two emails sent by Mr Matta to Mr Bobek in the afternoon of 9 August 2022 (the first at 4:29pm and the second at 5:23pm) have the flavour of Mr Matta seeking to put pressure on Mr Bobek to withdraw the adjudication application.

26. [71]

    In addition to the documentary record, I have also taken into account the evidence given by each of Mr Matta, Mr Orr and Mr Bobek in cross-examination in concluding that Mr Matta’s version of each conversation with Mr Orr and Mr Bobek is not reliable.

27. [72]

    For the above reasons, I do not accept that any of the alleged representations were made by Meso to A-Civil and accordingly the claims under s 18, s 20 and s 21 of the ACL cannot succeed.

Jurisdictional claim

1. [73]

   A-Civil’s pleaded case is that the s 17(2) notice was invalid because Claim 16 was not accompanied by the documents required by cl 8.3 of the General Conditions (in particular those referred to in cll 8.3(g)(iv), (v), (vi), (vii) and (viii)) with the result that A-Civil had no obligation to pay the amount stated in Claim 16. By virtue of cl 8.3(k) of the General Conditions, Claim 16 was void and only fell due for payment 20 days after Meso had complied with the totality of the obligations in cl 8.3(g) of the General Conditions (which never occurred).

2. [74]

   The following are the provisions of the Act relevant to this issue.

3. [75]

   In the present case, the Application was made by Meso in reliance on s 17(1)(b) of the Act. A-Civil contends that the s 17(2) notice which Meso served on A‑Civil on 15 July 2022 did not comply with s 17(1)(b) because Meso did not supply with Claim 16 the documents required by cl 8.3(g) of the General Conditions, and consequently by the operation of cl 8.3(k) of the General Conditions, no amount ever fell due for payment under Claim 16.

4. [76]

   The correctness of this contention turns on two questions: first, whether the due date for payment of the amount claimed under a payment claim is determined by the provision of the contract such as cl 8.3 which makes the payment obligation contingent on the provision of certain documents; and second, if so, whether the provision of the contract which has that effect is void under s 34 of the Act.

5. [77]

   The scheme of ss 8, 9, 11 and 13 of the Act is as follows:

6. [78]

   It is clear that while the statutory entitlement under s 8 is predicated on the existence of a construction contract, the entitlement and the means available for its enforcement stand apart from the parties’ rights under the Contract: Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 at [38]; All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289 at [8].

7. [79]

   Section 9 provides that the amount of a progress payment to which a person is entitled under s 8 is to be “calculated in accordance with the terms of the contract”. In John Holland Pty Ltd v Roads and Traffic Authority of New South Wales [2007] NSWCA 19; 23 BCL 205 at [38], Hodgson JA (with whom Beazley JA agreed) said that “calculated in accordance with the terms of the contract” means calculated on the criteria established by the contract, and does not mean reached according to mechanisms provided by the contract. This observation was referred to with evident approval by Bathurst CJ in Edelbrand Pty Ltd v H M Australia Holdings Pty Ltd [2012] NSWCA 31 at [79]. Later, in Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] NSWCA 279, Hodgson JA explained what he meant by his earlier observation in John Holland when he said at [54]:

8. [80]

   Section 11 deals with the time at which the progress payment is payable. The relevant provision of s 11 in the present case is s 11(1B) which makes the progress payment “due and payable” on the date which is the earlier of the two dates specified in paragraphs (a) and (b) of the sub-section (which is this case is 20 business days after the payment claim was made). The expression “due and payable” in its ordinary meaning denotes an amount which is presently payable as opposed to an amount due but not yet payable. The word “due” used on its own is ambiguous as it can mean owing although not payable until a future date or it can mean presently payable; the compound phrase “due and payable” makes it clear that the relevant amount is required to be immediately or presently paid: Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 at 8 and 15, [1981] HCA 40; Helou v PD Mulligan Pty Ltd (2003) 57 NSWLR 74; [2003] NSWCA 92 at [26(3)]; Griffin Energy Group Pty Ltd v ICICI Bank Ltd [2015] NSWCA 29; 317 ALR 395 at [53]-[54].

9. [81]

   The reference in s 11(1B) to a progress payment is to the statutory entitlement conferred by s 8 of the Act. While the statutory entitlement under s 8 is calculated in accordance with the terms of the contract (s 9(c)), the date on which it becomes due and payable is determined by s 11(1B) and not the terms of the contract (such as a provision like cl 8.3(g) of the General Conditions). While s 11(1B) describes the progress payment as being one made “under a construction contract”, all this does is identify the construction contract which is the precondition for the statutory right to progress payments: Quickway Constructions Pty Ltd v Electrical Energy Pty Ltd [2017] NSWSC 1140 at [27].

10. [82]

    The method of enforcement of a progress payment as a debt due to the claimant turns on whether a payment schedule is served, whether there is an adjudication application and, if so, whether it goes to adjudication: see s 14, 15, 16 and 25 of the Act. However, these provisions all proceed on the basis that the statutory entitlement under s 8 is an obligation which is immediately due for payment on the date specified in s 11(1B) (where that provision applies).

11. [83]

    It is clear from the Second Reading Speech for the Building and Construction Industry Security of Payment Amendment Bill 2013 which introduced s 11(1B) into the Act that this is how s 11(1B) is intended to operate. The Minister said:

12. [84]

    In my opinion, s 11(1B) has the effect that the progress payment claimed by Meso under Claim 16 became due and payable 20 business days after that payment claim was made (30 May 2022) notwithstanding that the documents required under cl 8.3(g) of the General Conditions did not accompany Claim 16. Clause 8.3(g) allows A‑Civil to make a progress payment at a later time than provided under s 11(1B) because it permits A-Civil to defer making the payment until such time as the documents listed in cl 8.3(g) are provided by Meso, and hence is to be disregarded for the purposes of s 11(1B) by s 11(8).

13. [85]

    If I am wrong in the conclusion that cl 8.3(g) is inapplicable, then I would find that it is void under s 34(2)(a) of the Act. Clause 8.3(g) would, if it applied to a progress payment under s 8, operate to exclude, modify or restrict the operation of s 11(1B) because it would prevent the progress payment from being due and payable unless certain documents are provided to A-Civil.

14. [86]

    A-Civil submitted that cl 8.3(g) does not offend s 11 because it does not extend the time for payment of a claim under the Contract beyond the period of 20 business days after the payment claim is made, but rather makes the payment obligation conditional on the provision of certain documents. It was submitted that s 11 is directed only at provisions which attempt to defer the time for payment and not provisions such as cl 8.3(g) which make the payment obligation conditional or contingent on some matter or event. It was submitted that this contention is supported by s 12 which treats a “pay when paid” provision as of no effect. A “pay when paid” provision is one which, essentially, makes the liability to pay money owing or the time for payment contingent on a payment being made under, or the operation of, another contract.

15. [87]

    In my view, this submission overlooks the words “progress payment … becomes due and payable” in s 11(1B) which indicate that, by force of that subsection, the statutory entitlement to a progress payment arising under s 8 is both owing and payable on the specified date. It is irrelevant that under the construction contract the obligation may be contingent on certain documents being provided with the progress claim: see the observation of Hodgson JA set out at [79] above. Nor is it relevant to the construction of s 11 that s 12 renders ineffective provisions in a construction contract making the obligation to make a payment for construction work contingent or conditional on certain matters. Section 12 was present in the Act when enacted to deal with a particular kind of term in a construction contract (referred to as a “pay when paid” provision) and s 11(1B) was introduced in 2013 to deal with a different mischief.

Whether A-Civil waived compliance with cl 8.3

1. [88]

   Meso raised in its defence a contention that in a conversation between Mr Mostafiz and Mr Bobek on 28 June 2022, Mr Mostafiz told Mr Bobek that Meso need not comply with cl 8.3. Meso accepted that if it was successful on the first two issues, it was not necessary to deal with this waiver issue.

2. [89]

   While this issue does not arise given my conclusions on the first two issues, I will make the following brief observations about it. It is clear from the evidence that Mr Mostafiz and Mr Bobek did have a conversation on 28 June 2021 regarding the Contract. Mr Mostafiz could not recall in cross-examination whether he discussed cl 8.3 of the General Conditions with Mr Bobek during that conversation. Mr Bobek said in cross-examination that he recalls saying to Mr Mostafiz that cl 8.3 was onerous and that Mr Mostafiz said to him words to the effect “Don’t worry about [it], just keep on doing what [Meso] are doing”. Accepting for the moment that words to this effect were said, it falls short of a waiver of cl 8.3 for a number of reasons.

3. [90]

   First, the claim of waiver or estoppel was based on Mr Mostafiz having made a representation that Meso was not required to strictly comply with the provisions of cl 8.3(g). However, the conversation relied on is not sufficiently precise to form the basis of any meaningful representation by Meso as clearly a number of the subparagraphs of cl 8.3 apart from cl 8.3(g) were necessary for the operation of the progress payment regime under the Contract. Second, it is not clear how the alleged representation sits with the very extensive “entire agreement” clause contained in the Contract which was signed later that day. Third, it is not clear that Mr Mostafiz had authority to bind A-Civil as he was not a director of A-Civil but merely an employee.

4. [91]

   None of these matters was dealt with in submissions, reflecting the fact that this issue was touched on only briefly by the parties.

Conclusion

1. [92]

   For the above reasons, the proceedings should be dismissed with costs.

2. [93]

   I direct the parties within 7 days to bring in Short Minutes of Order to give effect to these reasons.