Style Timber Floor Pty Ltd v Krivosudsky

1. [1]

   BELL P: I have had the benefit of reading in draft the reasons for judgment of Leeming JA. I agree with his Honour’s reasons for judgment and the orders he proposes. What follows assumes a familiarity with his Honour’s reasons.

2. [2]

   Whilst it is correct that the valuable observations of Palmer J in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, as endorsed by this Court in Clarence Street Pty Ltd v Isis Projects Pty Ltd (2005) 64 NSWLR 448; [2005] NSWCA 391 at [31], indicate that the payment schedule provided for in s 14 of the Building and Construction Industry Security of Payment Act 1999 (NSW) need not be attended with the same degree of formality that might be required in other areas or other legal contexts, his Honour’s judgment is not a licence for informality or an excuse for vague, generalised objections to payment.

3. [3]

   Whilst I agree with the observation of Leeming JA in [76] of his Honour’s reasons that the requirements of s 14(3) of the Act may be satisfied by incorporating another document by reference, any document or documents to be so incorporated would need to be identified with sufficient particularity so that the recipient of the schedule knew what was being incorporated. Further the incorporated document or documents would need to be of the requisite specificity mandated by s 14(3). Obviously, the more details supplied, the less the prospect that the payment schedule will be subject to an objection that it lacks that character.

4. [4]

   In the present case, the purported incorporation of emails in what was claimed to be a “payment schedule” was inadequate: the emails referred to in Mr Wang’s response of 30 November 2017 which is set out in [10] of Leeming JA’s judgment were not identified with any specificity in that response but were simply described as “many emails”.

5. [5]

   The “many emails” to which Mr Wang referred were not put in evidence by him before the Judicial Registrar but, rather, were put in evidence by Mr Krivosudsky. Whether or not these emails represented the totality of the emails to which Mr Wang intended to refer in his response of 30 November 2017 was unclear. Similarly left wholly unclear was whether or not the “photos, videos, back charges from builders and other trades [and] complaints from [his] clients” referred to in the response were all contained in or were all attached to the emails to which Mr Wang had referred and which Mr Krivosudsky had put into evidence. This only serves to illustrate the fact that Mr Wang’s response of 30 November 2017 could not fairly be characterised as a payment schedule within the meaning of the Act.

6. [6]

   When documents are referred to in a payment schedule, its recipient should not be left to guess what documents are being referred to nor should a recipient be expected to guess, from a universe of multiple documents or, to use the language of the purported payment schedule in the current case, “many emails”, which aspects of those documents or emails set out the respondent’s reasons for withholding payment, as required by s 14(3) of the Act.

7. [7]

   In the course of a building project, emails or other communications are frequently sent raising difficulties or supposed difficulties with works. Frequently, those difficulties will be promptly addressed and resolved; others will be subject to discussion and may turn out not to be difficulties at all and still others may remain disputed. This, too, highlights the fact that reference in a payment schedule to the documentation that has passed between the parties in the course of the project may not satisfactorily disclose “the respondent’s reasons” for withholding payment, to use the language of s 14(3).

8. [8]

   LEEMING JA: This appeal concerns an exchange of emails on 28 and 30 November 2017 between Mr Jack Wang, the sole director of Style Timber Floor Pty Ltd, and Mr Rastislav Krivosudsky, who traded as RK Grinding. Mr Krivosudsky’s email of 28 November was as follows (it and others are reproduced as tendered, including obvious imperfections):

9. [9]

   The subject of the email was “Over due invoices has to be paid in 14 days”. The email attached seven tax invoices for work done at projects located in Pymble, Neutral Bay, North Sydney, Erskineville and Freshwater. Each invoice concluded with the statement, “This is a payment claim made under the Building and Construction Industry Security of Payment Act 1999 (NSW).”

10. [10]

    The entirety of Mr Wang’s response, which is the critical document in this appeal, was:

11. [11]

    It was accepted that Mr Krivosudsky’s email was a “payment claim” within the meaning of the Building and Construction Industry Security of Payment Act 1999 (NSW). The substantive issue arising in this appeal is whether Mr Wang’s response was a “payment schedule” for the purposes of that Act.

12. [12]

    Strictly speaking, the issues extend to whether there should be a grant of leave, and whether there was appellable error in summary judgment being entered on the basis that there was no triable issue that Mr Wang’s response was a payment schedule. However, there is limited utility in attending separately to those issues if the ultimate question of whether Mr Wang’s email engages the statute can satisfactorily be resolved, one way or the other.

Proceedings in the District Court

1. [13]

   Mr Krivosudsky commenced proceedings in the District Court by Statement of Claim on 17 October 2018 — nearly a year after the email exchange — alleging that Style Timber Floor had failed to pay the amount claimed in his payment claim, and had failed to provide any payment schedule pursuant to s 14(4) of the Act, and that by reason of ss 14(4), 15(1) and 15(2)(a)(i), he was entitled to the amount of $106,166.50. Mr Krivosudsky also filed a notice of motion seeking summary judgment in the amount of his claim.

2. [14]

   The notice of motion came before Judicial Registrar Howard on 2 November 2018, who delivered ex tempore reasons for entering summary judgment against Style Timber Floor. The Judicial Registrar said that the real issue arose under s 14(3) of the Act and relied upon what had been said in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 at [78] as whether “the essence of ‘the reason’ for withholding the payment is made known sufficiently to enable the claimant to make a decision whether or not to pursue the claim and to understand the nature of the case it will have to meet in an adjudication.” The Judicial Registrar identified the absence of reasons as the difficulty confronting Style Timber Floor. He said:

3. [15]

   Judgment in the amount of $106,166.50 plus interest was entered in favour of Mr Krivosudsky accordingly.

Proceedings in this Court

1. [16]

   Style Timber Floor sought leave to appeal directly to the Court of Appeal. That was irregular. While it is true that the right of appeal to the Supreme Court conferred by s 127(1) of the District Court Act 1973 (NSW) extends to judgments of the District Court constituted by a Judicial Registrar, such appeals are not assigned to this Court. This is because of the restriction on the definition of “specified tribunal” in s 48(1)(a)(iv) of the Supreme Court Act 1970 (NSW), which relevantly provides that a specified tribunal means “the District Court or a Judge of the District Court (but not a Judicial Registrar of that Court)”. This irregularity was detected by the Registrar of the Court of Appeal on 1 April 2019, who, noting that the amount involved was some $106,000, made a direction without opposition that the matter remain in this Court. That was an exercise of power pursuant to s 51(2) of the Supreme Court Act, which authorises proceedings commenced in the Court of Appeal which have been assigned to a Division to be continued and disposed of in the Court of Appeal.

2. [17]

   Because the judgment entered by the Judicial Registrar was on an application for summary judgment, an appeal lay only by leave: District Court Act, s 127(2)(d). There was a concurrent hearing of the application for leave and the appeal, with the opportunity for full submissions on the substance of the appeal.

3. [18]

   Style Timber Floor’s summons seeking leave was only filed on 20 February 2019, and thus required an extension of time, which was (appropriately) not opposed having regard to evidence about delay in obtaining the transcript of the Judicial Registrar’s reasons.

Part 3 of the Act

1. [19]

   Part 3 of the Act concerns the procedure for recovering progress payments. As Sackville AJA observed, with the agreement of Payne JA, White JA, Emmett AJA and me in Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (In liquidation) [2019] NSWCA 11; 365 ALR 345 at [71], the Act was enacted in 1999 and has been adopted with variations in other Australian jurisdictions and has given rise to numerous questions of construction. Although many authorities have explained the legislative scheme, it is desirable once again to do so in these reasons, just as it was in Seymour Whyte Constructions. It is as well to explain immediately why that is so.

2. [20]

   The question of construction is not, despite the emphasis in Style Timber Floor’s submissions, merely whether Mr Wang’s email “indicated” his company’s “reasons for withholding payment”, considered in isolation. It is necessary to construe s 14 as an important constituent part of a narrowly circumscribed statutory regime, serving a particular function in legislation with a particular purpose.

3. [21]

   Although it may be superficially attractive merely to consider whether Mr Wang’s email “indicated” his “reasons for withholding payment”, that would not, in my respectful view, be sufficient to determine whether there is compliance with s 14(3). Nor would such an approach accord with the authorities on that section and its materially identical counterparts in other jurisdictions.

4. [22]

   I quote from Sackville AJA’s judgment in Seymour Whyte Constructions at [72]-[74], omitting citations:

5. [23]

   Section 4(1) defines “progress payment” to mean, relevantly, “a payment to which a person is entitled under section 8”. Section 8, which is within Part 2 of the Act creating “Rights to progress payments”, provides:

6. [24]

   Section 11(1) provides that, subject to s 11 and any other law, a progress payment is to be made in accordance with the applicable terms of the contract. “Due date” in relation to a progress payment is defined in s 4(1) to mean "the due date for the progress payment as referred to in s 11.”

7. [25]

   Part 3 specifies how the legislative purpose of achieving a prompt pro tem resolution of disputes and payment of monies, all without prejudice to the parties’ rights at law, is to be effected. This reflects what Hodgson JA said (with the agreement of Mason P and Giles JA) in Brodyn Pty Ltd t/as Time Cost and Quality v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394 at [51]:

8. [26]

   The provisions are characterised by strict fast-paced time constraints, and a deal of informality. It is to be borne steadily in mind that enforceable (albeit not conclusive) determinations for hundreds of thousands or millions of dollars result from the fast-paced regime for non-curial adjudication.

9. [27]

   By way of overview, a person upon whom a payment claim is served must serve a “payment schedule” within 10 business days or else there is a statutory debt for the entirety of the payment claim. If a payment schedule is served, then the claimant may choose, within 10 business days, to engage the adjudication procedures under Part 3 of the Act, which will result in a determination within a matter of days, which determination may be enforced as if it was a judgment, albeit without prejudice to the parties’ rights at law. Importantly, as explained below, the submissions which may be made to an adjudicator, and thus the metes and bounds of the dispute which the adjudicator will determine, are delineated by the payment schedule.

10. [28]

    A payment claim must satisfy the criteria of s 13, including identifying the construction work and indicating the amount of the progress payment that is claimed. There are other requirements in some cases, but none is presently relevant. It was accepted that Mr Krivosudsky’s email of 28 November 2017 attaching the overdue invoices was a valid payment claim.

11. [29]

    The reference to paying within 14 days in Mr Krivosudsky’s email picks up the timing restriction imposed by s 14 if Style Timber Floor was to provide a payment schedule. Section 14 provides as follows:

12. [30]

    It was not suggested that the construction contract provided a lesser time for a payment schedule to be served. Accordingly, s 14(4)(b) required any payment schedule from Style Timber Floor to be served within ten business days.

13. [31]

    At that stage, the legislation confers important rights upon the claimant which are novel and beneficial.

14. [32]

    On the one hand, if no payment schedule is received within ten business days after the payment claim is served, then the claimant is entitled to enforce the statutory debt which is created by s 15(1)(a) and in recovery proceedings, the respondent is not permitted to bring any cross-claim or raise any defence in relation to matters arising under the construction contract: s 15(4).

15. [33]

    If a payment schedule has been served within (relevantly) ten business days after the payment claim is served, and satisfies the requirements in s 14(2) and (3), then, the elaborate provisions of Division 2 — titled “Adjudication of disputes” — are available. These include a statutory right of suspension, which for present purposes need not be elaborated. There are also two further rights.

16. [34]

    First, if the respondent fails to pay the whole or part of a scheduled amount in accordance with the schedule, then the claimant may recover the unpaid portion of the scheduled amount as a statutory debt in any court of competent jurisdiction. In recovery proceedings, the only issues are the making of the payment claim and the payment schedule, and the respondent is not permitted to bring any cross-claim or to raise any defence in relation to matters arising under the construction contract: s 16(2)(a)(i) and (4)(b).

17. [35]

    Secondly, the claimant may make an adjudication application in relation to the payment claim: s 16(2)(a)(ii).

18. [36]

    Any adjudication application must be made within ten business days after receiving the payment schedule, must be in writing and may contain such submissions relevant to the application as the claimant chooses to include. Thereafter, the respondent within five business days is entitled to lodge a response with the adjudicator, including such submissions as it chooses to include (s 20(1) and (2)(c)). Importantly, sub-s 20(2B) curtails the scope of the respondent’s adjudication response:

19. [37]

    Thus in that statutory sense, the reasons which are an element of a valid payment schedule circumscribe the matters which a respondent may put to the adjudicator.

20. [38]

    The adjudicator is then required to determine the adjudication application “as expeditiously as possible” and, subject to the parties’ agreement, “in any case within ten business days after the date on which the adjudicator notified the claimant and the respondent as to his or her acceptance of the application”: s 21(3).

21. [39]

    It is quite plain that not only are the statutory mandated timing requirements prescriptive and onerous, but also the entirety of the dispute is ordinarily required to be determined within some 15 business days of the adjudication application being made.

22. [40]

    Sub-section 22(2) delineates what the adjudicator may consider:

23. [41]

    Importantly, the entirety of Part 3 has no effect upon civil proceedings arising under a construction contract, except insofar as allowance must be made for the payments made pursuant to the expedited and non-curial procedures contained within it: s 32(2) and (3).

24. [42]

    First, the “trial” which was denied to Style Timber Floor following the entry of summary judgment would be a very narrow one. The only issue at that trial would be whether or not it had served a valid payment schedule. If not, it was indebted to Mr Krivosudsky. If it had, then Mr Krivosudsky had no claim for statutory debt, and his proceedings had to be dismissed. All of this was without prejudice to Mr Krivosudsky’s claims in contract, and any counter-claims by Style Timber Floor, based on the actual performance, or defective performance, of work by Mr Krivosudsky.

25. [43]

    Secondly, in many and perhaps most cases, there will be no distinction between a summary and a final determination of whether or not a document is a payment schedule.

26. [44]

    Thirdly, whether or not a compliant “payment schedule” has been provided in response to a payment claim falls to be determined in the context of the statutory provisions consequent upon doing so. Whether or not a document is a payment schedule must be something which is capable of ascertainment readily, and (at least ordinarily) without the assistance of a lawyer. The large majority of the cases which have arisen under this Act have not involved dispute as to whether a response was or was not a compliant payment schedule.

27. [45]

    Fourthly, and perhaps most importantly for present purposes, the payment schedule serves two important functions under the Act. The first is to inform the claimant as to the metes and bounds of its dispute with the respondent, so that it can make an informed choice as to whether to engage the expedited pro tem adjudication procedures under Division 2. The second is to articulate the respondent’s case which will then be determined by the adjudicator. It will also enable adjudicators to assess whether to accept appointment as an adjudicator to a dispute. At the time an adjudication application is made, all that the claimant and the prospective adjudicator will know of the nature of the respondent’s side of the case is what is contained in its payment schedule.

28. [46]

    Both parties relied on what Palmer J had said in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140. Palmer J was dealing with a dispute arising under s 20(2B), rather than s 14(3), in turn arising out of a formal payment schedule issued by Multiplex which was accepted to constitute a payment schedule. The question was whether an adjudication response fell within what had been indicated by the payment schedule. It was in that context that Palmer J said at [70], and [76]-[78]:

29. [47]

    When dealing with the requirements of a payment claim, Palmer J’s analysis was endorsed by this Court in Clarence Street Pty Ltd v Isis Projects Pty Ltd (2005) 64 NSWLR 448; [2005] NSWCA 391 at [31]. While it is clear that an abbreviated description, falling short of a pleading, will suffice, the passages emphasised indicate that the payment schedule must sufficiently describe the dispute so as to enable the claimant to determine whether to proceed in the knowledge of the nature of the case it will have to meet.

30. [48]

    It is established that even where a respondent proposes to pay no part of a payment claim, it is still required to indicate reasons in accordance with s 14(3): Barclay Mowlem v Tesrol Walsh Bay [2004] NSWSC 1232 at [15]-[16]; Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA) Pty Ltd [2007] QSC 333 at [24]. That, with respect, must be so having regard to, inter alia, the limiting effect of s 20(2B). It was not suggested in this Court that s 14(3) did not apply to Style Timber Floor on the basis that it refused to pay the entirety of the claim.

31. [49]

    In most of the litigation arising under the Act, there has been no dispute that a payment schedule has been provided. The requirements are undemanding, and it is of the nature of things that the recipients of payment claims are apt to have better systems in place to comply with the prescriptive regime put in place by the legislation. Indeed, there are very few cases where an issue has arisen as to whether a document as informal as Mr Wang’s email constituted a payment schedule.

32. [50]

    In Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA) Pty Ltd [2007] QSC 333 the same issue arose, in responding to a claim seeking a payment of $462,147.22 comprising three components for work at the same site: additional labour expended on original works $332,279.10, correct overtime rate charge of $4,045.50 and a refund of 10.50% Discount for prompt payment $83,809.24: see at [7]. It is helpful to reproduce the entirety of the applicant’s email dated 14 December 2006 which was contended to be a payment schedule:

33. [51]

    Section 18 of the Building and Construction Industry Payment Act 2004 (Qld) was identical to the current form of s 14 of the NSW statute. Chesterman J considered that the first and second criteria — identification of the invoice and the fact that the applicant proposed to pay nothing — were satisfied. His Honour stated at [22] that:

34. [52]

    His Honour rejected the submission that the email was a payment schedule at [25]-[30]:

35. [53]

    In Façade Treatment Engineering Pty Ltd (in liq) v Brookfield Multiplex Constructions Pty Ltd [2016] VSCA 247; 337 ALR 452, the same question arose, in connection with an email sent by an employee of Multiplex. The substance of the email is reproduced at [14] of the judgment of Warren CJ, Tate and McLeish JJA:

36. [54]

    The Court of Appeal considered the requirement of the Victorian counterpart to s 14(3) (s 15(3) of the Building and Construction Industry Security of Payment Act 2002 (Vic), which is in identical terms) extensively at [234]-[263], commencing with Luikens and addressing Clarence St and Barclay Mowlem v Tesrol Walsh Bay at [235]-[248], and then Minimax at [249]-[251]. The Court of Appeal then reproduced an obiter passage in a decision of Finkelstein J in Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248 as follows:

37. [55]

    The Court of Appeal then applied the equivalent of s 14(3) to the email sent by the Multiplex employee at [256]-[260] (citations omitted):

38. [56]

    The Court of Appeal went on to doubt the formulation by Finkelstein J in Protectavale of the test, namely, that “viewing the matter objectively, it was intended that the documents constitute a payment schedule”. Their Honours stated that while the objective intention of the document might be relevant, the focus of assessment must be on whether the document meets the requirements of [s 14(3)]: at [262].

39. [57]

    There is one further decision which bears some similarities with the facts of the present case. In 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674, his Honour Judge Woodward considered the effect of an email dated 4 December 2017, which is partly reproduced at [29]:

40. [58]

    His Honour applied Façade to conclude that that email did not indicate the reasons for the non-payment of the progress claim, stating at [75]:

41. [59]

    Style Timber Floor placed emphasis on the uncontroversial propositions that the statute contemplated a deal of informality, and Palmer J’s observation in Luikens that what might “be meaningless to the uninformed reader will be understood readily by the parties themselves”. The bulk of Style Timber Floor’s submissions, both written and oral, were directed to the emails and photographs to which reference was made in Mr Wang’s 30 November 2017 email. These had been put into evidence before the Judicial Registrar.

42. [60]

    I summarise them below, and in slightly greater detail than appeared in the written or oral submissions.

    1. (1)

       First, there were two complaints from customers conveyed by Mr Wang to RK Grinding by emails both dated 10 October 2017. The first, which concerned Neutral Bay, was a complaint that the concrete levelling was behind program, and would be further delayed if, as presumably had been suggested, Mr Krivosudsky would complete by next Monday. Mr Wang asked “Please put one more team to grinding the concrete, otherwise, I have to let other people do it and back charge you.”

    2. (2)

       The second also concerned Neutral Bay, and stated:

    3. (3)

       Secondly, some emails sent on 13 October 2017, concerning Neutral Bay, contain a complaint from the developer to Mr Wang regarding the failure to put in place dust control measures or to cover finished areas with plastic drop sheets, and that “the grinding crew leaves all the silica dust lying around”. The developer advised that “I regret to say that any damage or rework to finished surfaces in the units will have to be charged back to Style Timber”. Mr Wang passed on the photographs of the interiors of the development to Mr Krivosudsky, and said:

    4. (4)

       Thirdly, on Tuesday 17 October, Mr Wang forwarded a delay notice to Mr Krivosudsky and advised that “if you can’t get floor ready for level 2 by this Friday, I will let other levelling people fix the problem and all cost associate with it will be back charged on you”. That was followed by a further email on 19 October setting out a program for work in the next seven days at Neutral Bay to finish the floor levelling.

    5. (5)

       Fourthly, on 21 October 2017, another email was forwarded by Mr Wang to Mr Krivosudsky concerning Neutral Bay as follows:

    6. (6)

       Fifthly, on 26 October, Mr Krivosudsky sent overdue invoices 69 and 71 and requested that they be paid. These were for works in Pitt Street and the ground floor of Erskineville. The reply was that Style Timber had paid one invoice and the other would be paid tomorrow.

    7. (7)

       Sixthly, on 2 November 2017, there was a complaint to Mr Wang from the developer at Ridge Street North Sydney in the following terms:

    8. (8)

       Mr Wang forwarded that email to Mr Krivosudsky saying:

    9. (9)

       This was the only email which concerned the North Sydney development site.

    10. (10)

        Seventhly, On 3 November 2017, Mr Krivosudsky wrote to Mr Wang:

    11. (11)

        Mr Wang responded that another team was still fixing the defects and added “check the photos I texted to your mobile”. He said, “Again, you should check your job, make sure it’s done properly. Not my guy, he is the coordinator arrange material and delivery and communication”.

    12. (12)

        Eighthly, later on 3 November 2017, Mr Krivosudsky, referring to overdue invoices numbers 70, 75 and 76 said, “i have to stop work on job sites Pymble Project …, Erskineville”.

    13. (13)

        Mr Wang responded concerning both Pymble and Erskineville as follows:

    14. (14)

        On 10 November 2017, Mr Krivosudsky provided an invoice for a job at Freshwater, saying that the sheets were signed by the site manager. The response from Mr Wang the following day was “they are all defected by builder”. Mr Krivosudsky responded:

    15. (15)

        Mr Wang responded:

    16. (16)

        Later that day, Mr Krivosudsky responded:

    17. (17)

        There was a response from Mr Wang later that day:

    18. (18)

        Mr Krivosudsky responded:

    19. (19)

        Finally, there was a series of emails exchanged on 17 November. Mr Wang wrote:

    20. (20)

        Mr Krivosudsky replied 13 minutes later:

    21. (21)

        Mr Wang’s response, of the same day, was as follows:

43. [61]

    The following matters may be drawn from this material.

44. [62]

    First, there is a single complaint about the Pymble invoice. This was the smallest of the seven invoices: 213 hours of work “Levelling bedrooms block B and Block A” and “Levelling lobbies block C”, totalling $7,029. I understand Mr Wang to have complained that more or different work had been done than had been undertaken (“you working for Pymble project for corridor and carpet area is without my permission”). Assuming, favourably to Mr Wang, that the invoice, which was sent 3 days after Mr Wang’s 3 November 2017 email, included work which was unauthorised, there is no indication of any defective work in the areas to which it related.

45. [63]

    Secondly, there is a single complaint about the North Sydney development. Mr Wang indicated that reimbursement would be sought by the client. However, Mr Wang appears not to have said that such a claim had been received, let alone its amount. The North Sydney invoice was the second largest (it was $19,250).

46. [64]

    Thirdly, the emails express directly contradictory statements about the Freshwater development. Either the timber floor had been laid or it had not.

47. [65]

    Fourthly, a recurring theme of Mr Krivosudsky’s emails is that the site supervisors had approved the work done by him.

48. [66]

    Fifthly, the large majority of emails concern the Neutral Bay and Erskineville developments.

49. [67]

    Sixthly, the last email in the sequence is revealing. It alone of the emails identifies “back charge from Mitch who fixed 3 units for you”, “back charge from floor layers Andrew and Simone”. Even then, the amount of those back charges was not identified. Those three items are relatively specific, but Mr Wang also identifies delay, defects and “ruin” other trades listed as “painting, doors, kitchens, pluming, tiling, water proofing”. Mr Wang goes on to identify other costs for “Style timber site people and admin cost” and to assert that “the total amount are far more than all your bills”. However, that email, no differently from the critical email of 30 November 2017, concludes with an invitation to talk about all the issues, which is a little difficult to reconcile with an offsetting claim exceeding the unpaid $106,000, not a single aspect of which was, according to the evidence, ever quantified in what was conveyed to Mr Krivosudsky, even after he had suspended work.

The character of Mr Wang’s 30 November 2017 email

1. [68]

   The Judicial Registrar, with respect correctly, held that Mr Wang’s email identified the invoices and conveyed that he proposed to pay none of them. The email therefore satisfied s 14(2).

2. [69]

   However, if Mr Wang’s email was to amount to a payment schedule, it was required also to indicate Mr Wang’s reasons for withholding payment. It asserted that Mr Krivosudsky “will understand why I can’t pay you”, and said, by way of explanation, “the damages you done is more than what you claimed”.

3. [70]

   I mean to convey no criticism of Mr Wang. However, if his response is to constitute a payment schedule complying with s 14(3), then it must be said that it would be difficult to exclude any claim whatsoever from the ambit of the dispute between Mr Krivosudsky and Style Timber Floor. Delay on any site, defects on any site, and unspecified amounts for the time of “Style timber site people and admin cost” on any site are mentioned in the previous email.

4. [71]

   There was nothing in Mr Wang’s response which was directed to any particular invoice. Indeed, there was nothing in Mr Wang’s response which was directed to any particular project.

5. [72]

   Was the dispute about Neutral Bay and Erskineville? Did it extend to North Sydney, Pymble and Freshwater? Was part of the Pymble invoice disputed, or was it accepted that it was all required to be paid, but was absorbed by the offsetting claim? The same questions may be asked of the North Sydney invoice. The email is opaque as to the number of sites which were said to contribute to the damages Mr Wang’s company had suffered. The email is opaque as to whether any (and, if so, to what extent) of the actual entries in the invoices were disputed, as opposed to the claim for back charges, delay, wasted materials and defective work on which Mr Wang relied.

6. [73]

   It is to be borne in mind that Mr Krivosudsky had supplied unpaid invoices from five separate sites, and Mr Wang’s response identified no site whatsoever. One point of the provision of a payment schedule is to permit the statutory mechanism of adjudication to take place. It is impossible to express any views as to the limits of the adjudication if the 30 November email is to amount to reasons which engage s 20(2B).

7. [74]

   These concerns may be tested practically. What was the scope of the dispute which might be adjudicated in December 2017? Was there a dispute about all five of the properties throughout Sydney? Or just one property? Or a number of properties? What material would Mr Krivosudsky have to supply to an adjudicator if this email were a valid payment schedule? Would Mr Krivosudsky have to make submissions about the condition of the concrete floors at Freshwater? About what had occurred at the North Sydney property? How many of the matters raised in October and November had been resolved by 30 November?

8. [75]

   The email amounts to less by way of reasons than the emails held not to satisfy s 14(3) in Minimax Fire Fighting Systems and Façade and 3D Flow Solutions. True it is that the substance of the email is that Style Timber Floors had incurred more actual costs which it claimed to be able to deploy by way of set-off to enable it to deny any obligation to pay any of the payment claim. But save for the assertion that they exceeded the payment claim, no information was given about those actual costs, or the properties to which they related. I do not consider that that sufficiently satisfies the obligation to indicate the reasons for the purpose of s 14(3).

9. [76]

   Style Timber Floor at one stage submitted that the matter should have been left to go to trial on the basis that there might be conversations which bore on whether or not there was a sufficient indication of Mr Wang’s reasons. I do not accept that submission. First, Mr Wang supplied an affidavit in response to the summary judgment application. He did not in that affidavit suggest that there was some material conversation, nor was there other evidence which suggested that there had been. It follows that the submission lacks any evidentiary foundation. Secondly, it is to be doubted that save in exceptional cases such evidence would be relevant. Payment claims and payment schedules must be served. They must be in writing. It may be accepted that the requirement under s 14(3) may be satisfied by incorporating another document by reference. It is perhaps arguable that a payment schedule could incorporate a conversation by reference. But in the present case, the submission lacks any evidentiary foundation.

10. [77]

    It was not suggested that the fact that Mr Krivosudsky delayed almost a year before exercising his rights under s 14 made any difference. I cannot see how it does.

11. [78]

    Further, it would have been open to Mr Krivosudsky to ask for further information about Mr Wang’s email, or indeed to meet with him in accordance with his invitation. There is nothing in the evidence to suggest that occurred. However, the failure to do so is irrelevant to the parties’ rights under the Act, which turn on whether or not the 30 November 2017 email amounts to a payment schedule. On one view, the gravamen of Mr Wang’s email was an invitation to come to his office, so that he could then explain his reasons, which Mr Krivosudsky would understand. If that is how the email is to be understood, it cannot be a payment schedule. Section 14(3) requires an actual disclosure of reasons, not an offer to do so in the future.

12. [79]

    Finally, it is to be firmly borne in mind that the litigation merely determines whether or not Mr Krivosudsky is entitled to a statutory debt against Style Timber Floor. It says nothing of the underlying dispute between them.

13. [80]

    The foregoing focusses upon the ultimate question, whether the 30 November 2017 email is a payment schedule. That question is binary. The wholly documentary nature of the question in the present case means that there is no difference between its determination on a final basis or on a summary basis. Conversely, and contrary to Mr Krivosudsky’s submissions, nothing turns on the separate requirement for leave. In a case such as the present, the most significant factor relevant to the grant of leave is the correctness of the outcome.

Orders

1. [81]

   For those reasons, while there should be the requisite extension of time and grant of leave, the appeal must be dismissed. I propose the following orders:

2. [82]

   SIMPSON AJA: I agree with the orders proposed by Leeming JA and with his Honour’s reasons therefor. I also agree with the additional observations of Bell P.