Artkal Trading Pty Limited v Next Constructions Pty Ltd

C. The representation alleged

1. It is not apparent that to resend an identical email containing the identical documents comprising the payment claim constitutes a representation that no reliance will be placed on the earlier email.
2. In support of this submission, Next Constructions relies on the decision of Stevenson J in State Asphalt Services Pty Ltd v Leighton Contractors Pty Ltd. [3] In that case, an identical payment claim was served about four months after it was first served. The defendant there asserted that the plaintiff, SAS, "impliedly [represented], by service of the Second Payment Claim, that the First Payment Claim was withdrawn and that SAS would not seek judgment in respect of it". [4]
3. Stevenson J stated: "I see substance in Leighton's contention that, by making the Second Payment Claim, SAS implicitly represented that it no longer relied on the First Payment Claim. From Leighton's point of view, assuming that anyone there thought about it at all, what else could it make of the service of the Second Payment Claim?" [5]
4. This holding, if such it is, was obiter because Stevenson J dismissed the contention of Leighton on another ground. [6]
5. Artkal sought to distinguish the circumstances in State Asphalt, referring to the payment claim there having been served four months later, rather than the following day, as here. The significant time delay to a time after the expiry of the period for service of a payment schedule is not the only relevant difference between State Asphalt and this case. In that case, there were dealings in the four-month period between the parties, [7] which constitute circumstances against which the existence of a representation is to be measured, whereas there were no dealings in the short period between the sending and resending of the payment claim here. There was no indication in State Asphalt of whether the covering correspondence of the payment claim was the same both times it was sent - presumably, it bore a different date - whereas here, the covering emails were identical.
6. Mr Kevin Kim, the project engineer for Next Constructions who had responsibility for payment claims and schedules, gave evidence of his conclusion that the second payment claim was the one he was required to assess, and to which he was required to respond. He came to that conclusion without reviewing the contents of the first payment claim, so he was unaware that the payment claims were identical, and unaware that a response to the substance of the second payment claim was also a response to the substance of the first.
7. In assessing what representations are made by documents, it is essential to consider the documents as a whole. The representations that arise from conduct, including documents, are informed by the whole of that conduct and not by a glance at the initial words of a covering email, or the conduct divorced from disclaimers and other terms, as other conduct might qualify the character of any representation. [8] "Everything relevant" that was done "must be taken into account" said the High Court in Butcher v Lachlan Elder Realty Pty Ltd. [9]
8. I also take into account that Next Constructions expressly disavowed any reliance on the circumstance of the payment claim sent on 24 July being wrongly dated 25 July 2020.
9. In my view, the more likely explanation for resending the same payment claim the next day was either as a result of mistake, or out of an abundance of caution, neither of which of themselves carries a representation that no reliance would be placed upon the earlier email and payment claim.
10. Artkal submitted that the second email should be disregarded because a second payment claim after termination was not available under the Act. Section 13(1C) provides that, "In the case of a construction contract that has been terminated, a payment claim may be served on and from the date of termination".
11. I was not persuaded that "a payment claim may be served" compels the conclusion that only one may be served. Section 8(b) of the Interpretation Act 1987 provides that, "a reference to a word or expression in the singular form includes a reference to the word or expression in the plural form". There may be good reasons why multiple post-termination payment claims would be justifiable: for example, a first, soon after termination to claim for unclaimed work up to termination, and a second, in respect of other rights or claims that accrued under the contract or arising from its termination. Even if only one payment claim could be made post-termination, the service of the subsequent and allegedly invalid payment claim could still give rise to implied representations. Also, if the content and covering email evidenced that the earlier email was being replaced, then there would remain but one payment claim post-termination.
12. The question of timing of the payment claim was not a factor in Mr Kim's conclusion that he was required to respond to the later document. The question of dates and time limits for response was a matter outside his knowledge and experience. The service of the responsive payment schedule on Saturday, 8 August 2020 was not a consequence of a decision by Mr Kim based on a calculation of the period from the date of service of the payment claim. As Next Constructions frankly conceded, it may have been because it was lazy or delinquent. No other witness for Next Constructions, such as Mr Lynne, the Construction Manager and Mr Kim's supervisor, gave evidence and so could not assist Next Constructions to connect the time of service of the payment schedule to the time of service of the re-sent payment claim.
13. In the circumstances of this case, I was not persuaded that the service of a payment claim on one day, which was resent in identical terms the following day, without more, represented that the first communication was not to be relied upon, either generally or on the question of timing. The conduct was equivocal. Other possibilities are apparent. It is insufficient to establish a representation on the balance of probabilities if other explanations, and thus representations, are more likely. In my view, the alleged representation is not established.

D. A misleading representation

1. In the event I am wrong, there is a need to consider if the representation alleged was misleading.
2. In State Asphalt, the representation was, without deciding, assumed to be misleading. [10] Next Constructions directed no written submissions as to why the representation here was misleading, and orally disavowed any reliance on the representation being with respect to a future matter. But the asserted representation was in respect of the "doing or refusing to do any act", and thus a representation with respect to a future matter. It concerned whether Artkal would (in the future) rely on the first served payment claim. [11]
3. A representation that a person proposes to adopt a certain course does not become misleading when the person takes a different course because of a change of mind or out of necessity, at least in the absence of a representation with respect to a future matter, or the representation being repeated at a time when the state of mind has changed.
4. Next Constructions did not submit that Artkal had, at the time of resending the payment claim email, intended to rely on the Friday payment claim. The circumstances of the failed adjudication, a matter to which I will come, suggests the contrary. This was not a case where the representation was alleged to be misleading about the state of mind of the representor.
5. In the circumstances of the defendant's disavowal of the alleged representation being with respect to a future matter, I was not persuaded it was misleading.

E. Reliance and the injunction remedy

1. As indicated above, Next Constructions frankly conceded that its payment schedule being served a day late may have been caused by laziness or ignorance, and not because of any reliance by Next Constructions upon the period allowed for service of a payment schedule. Mr Kim, the project engineer employed by Next Constructions, who had responsibility for payment claims and payment schedules, gave no evidence that he believed service on the Saturday was sufficient because of the re-service of the payment claim. Rather, Next Constructions argued that the misleading representation caused damage merely because had Artkal solely relied on the re-sent payment claim as it purportedly represented, service of the payment schedule would have complied with the time limits under the Act. In that context, the subjective belief and acknowledged ignorance of Mr Kim about the precise time limits under the Act were said to be immaterial.
2. It was not disputed that this Court has jurisdiction to grant the relief provided in s 237 of the Australian Consumer Law. [12] But as Abadee DCJ observed in Storm Industries Pty Ltd trading as trustee of the T&L Trust v Unicar Australia Pty Ltd, [13] to access the "remedial smorgasbord" in s 237 to grant an injunction, there: "is still a gateway requirement to prove that a claimant has suffered loss or damage (or likely loss or damage), and the purposes in granting such relief is to either compensate the claimant, or prevent the damage likely to be suffered." [14]
3. Damage suffered or likely to be suffered by misleading conduct requires that the misleading conduct caused or is likely to cause damage. [15] The causation element remains relevant to injunctive relief. If the damage here was caused by a failure expeditiously to serve a payment schedule in ignorance of the relevant time limits, then whether service of the payment claim was represented to be efficacious on one day or the next is not in any sensible way causative of the loss. The later service of the payment claim was not a necessary condition of the occurrence of the harm resulting from the late service of the payment schedule, and thus the "but for" test was not satisfied. [16] Had Mr Kim believed he had until the day he served the payment claim, reliance might have been established. Mr Kim gave no such evidence, and Next Constructions disavowed both proof of Mr Kim's reliance on the re-sent payment claim and respective time limits, and its relevance and necessity.
4. The absence of reliance was the critical factor against an injunction in State Asphalt. [17]
5. Next Constructions submitted it was sufficient that Mr Kim thought the second served payment claim was the operative one: "I believed and understood that the Second Payment Claim was the payment claim that I was required to assess and respond to on behalf of Next," he said. [18] But as the payment claims were identical, this belief was of no significance in affecting the matters with which Mr Kim needed to deal. And the matter of significance, the differing date for service of a payment schedule answering the one payment claim or the other, was a matter of which Mr Kim was unaware.
6. Thus, even if it were reasonable for Mr Kim, without investigation, to infer that he could ignore the content of the first payment claim in favour of the second, he neither could, nor did, infer that he could ignore the date of service of the first payment claim.
7. In these circumstances, the remedy of an injunction seems inappropriate. It would not protect Next Constructions against damage or likely damage caused by misleading conduct, since the conduct played no role in the late service of the payment schedule. [19] This was not a case which involved "the substantial damage of having a judgment against [Next Constructions] obtained by [Artkal] in reliance on its own misleading conduct". [20]
8. The Amended Defence seeks relief and thus is in the nature of a cross‑claim. The filing of a cross‑claim is not permitted under s 15(4)(b)(i) of the Act. However, a defence, if not in relation to matters arising under the construction contract, can be brought. In this case, the defence arises from the asserted misleading conduct, rather than any entitlement under the contract. The Court of Appeal has allowed such a defence to be maintained. [21]
9. Accordingly, were Next Constructions otherwise entitled to relief for misleading conduct, the prohibition in s 15(4)(b) of the Act would not preclude that relief. However, for the reasons given, there is no proper basis for an injunction to be granted.
10. Another reason why an injunction of the type sought by Next Constructions is not appropriate is that it would involve relief that treated the representation as a promise. The relief sought would hold Artkal to its representation as if it had promised to waive its earlier payment claim, which, as a general rule, is not available. [22] Damages from misrepresentation flow from reliance upon it, not from it having a promissory character. Sometimes the same relief is available because that is the only way to compensate for the damage resulting from the plaintiff's reliance. When there is no reliance, it would be inappropriate to treat as a fact or promise that which had only been represented.

F. Date of service of re-sent payment claim

1. The findings I have made are sufficient to dispose of the defence to the proceedings, and for Artkal to be awarded judgment. But the parties raised an issue about the date of service of the re-sent payment claim, and it is appropriate that I deal with it.
2. Artkal argued that the payment schedule served by Next Constructions was out of time even if the time limits were determined by the re-sent payment claim. Next Constructions argued that the payment claim was deemed to have been served on Monday, 27 July, so that a payment schedule served on Saturday, 8 August was within time. As 10 business days are allowed for service of a payment schedule, [23] the resolution of the issue turned on whether the payment claim sent on Saturday, 25 July was served on that date or deemed to be served on Monday, 27 July 2020.
3. Section 13A of the Electronic Transactions Act 2000 provides: "13A Time of receipt (1) For the purposes of a law of this jurisdiction, unless otherwise agreed between the originator and the addressee of an electronic communication - (a) the time of receipt of the electronic communication is the time when the electronic communication becomes capable of being retrieved by the addressee at an electronic address designated by the addressee, or (b) the time of receipt of the electronic communication at another electronic address of the addressee is the time when both - (i) the electronic communication has become capable of being retrieved by the addressee at that address, and (ii) the addressee has become aware that the electronic communication has been sent to that address. (2) For the purposes of subsection (1), unless otherwise agreed between the originator and the addressee of the electronic communication, it is to be assumed that the electronic communication is capable of being retrieved by the addressee when it reaches the addressee's electronic address…"
4. There is little doubt that Mr Kim's email address, to which both emails with the payment claim were sent, was "an electronic address designated by the addressee" under s 13A. It was Mr Kim's work email expressly connected to both him and Next Constructions, and he was accepted to be the person who dealt with payment claims and payment schedules. He sent and received work emails from that address. He expressly deposed to believing and understanding that he was required to respond to emails sent to that address. [24] There was no agreement "otherwise", or any contrary evidence that Mr Kim's work email address was not to be his designated electronic address. The evidence leads inescapably to the conclusion that Mr Kim's work email address was an electronic address he designated. Accordingly, under s 13A(1)(a), the time of receipt of the email is when it was capable of being retrieved. There was no dispute that in respect of the second email, this was Saturday, 25 July 2020, not Monday, 27 July 2020.
5. Had I not been satisfied that Mr Kim's email address satisfied 13A(1)(a), it would raise the application of 13A(1)(b), and, in particular, whether Mr Kim under s 13A(1)(b)(ii) became "aware that the electronic communication has been sent to that address". The evidence indicated that on the Saturday, Mr Kim was aware that emails had been received, but was not aware of the nature of those emails. He chose not to open emails sent to his work email address on weekends. The question, then, is whether s 13A(1)(b)(ii) requires knowledge of the content of the electronic communication received or just that it was received. I incline to the latter view, including that the definite article in subpara (b)(ii) may not be significant in view of the indefinite article in the chapeau to subs (1). It would be different if Mr Kim was unaware of whether any emails had been received. In any event, because of my earlier finding in respect of s 13A(1)(a), I need not express a final view on this question.
6. Receipt by Mr Kim of the email on Saturday, 25 July 2020 under s 13A is not necessarily equivalent to service on Next Constructions. Section 31(1)(d) of the Building and Construction Industry Security of Payment Act permitted the service of documents under the Act to be served "by email to an email address specified by the person for the service of documents of that kind". Was the payment claim served by email to "an email address specified by the person for the service of documents of that kind"? In this case, the "person" is not Mr Kim, but Next Constructions, on whom the payment claim must be served.
7. Clause 1.12 of the contract specifies at cl 1.12(b)(ii) that, "a payment claim under the security of payments Act (sic)" may not be given electronically. [25] Artkal submitted that as the email was sent after termination, the agreement contained in the contract is immaterial. Next Constructions argued that this notice provision gave rise to accrued rights and necessarily survived termination. Whilst it seemed to me that cl 1.12 may not have force post-termination and thus, I was inclined to favour Artkal on that argument, the debate is somewhat arid: that cl 1.12, which prohibits the specification of an email address for payment claims, may no longer be operative does not mean that an email address is specified. Rather, cl 1.12(b)(ii) indicates that until termination, no email address was specified. In the absence of some other evidence, an email address for service would remain unspecified at the time of the service of the payment claims. As s 31 of the Act does not compel the specification of an email address, cl 1.12 is not a provision modifying the operation of the Act and thus cannot offend s 34 of the Act.
8. Neither party addressed whether the contract provided for service of payment claims on Mr Kim. Whilst Mr Kim made no complaint about service on him by email in his evidence, still this does not mean that his email address has been "specified" by Next Constructions. Had Mr Kim, as Next Constructions' representative for payment claims and payment schedules, specified it, the position may well be different.
9. In para 13 of his affidavit of 11 June 2021, evidence which has been referred to but not quoted in full previously, Mr Kim says: "After opening the email and reading the Second Payment Claim on Monday, 27 July 2020, I believed and understood that the Second Payment Claim was the payment claim that I was required to assess and respond to on behalf of Next. I thought at that time that the email of 25 July 2020 and the Second Payment Claim was the only payment claim that was made by Artkal and because Mr Mavrikis had sent the Second Payment Claim Artkal no longer relied on the First Payment Claim which had been overtaken by the subsequent, Second Payment Claim." [26]
10. This evidence indicates that Mr Kim regarded a payment claim sent to his work address as one validly served on Next Constructions since he was required to assess it and respond to it.
11. I indicated earlier that some steps were taken in an adjudication process under the Act, although no party relied upon the failed adjudication process as impacting on Artkal's claim. In Mr Kim's statement in the adjudication, tendered without objection, he said he received the payment claims on 24 and 25 July respectively, the date the emails were sent.
12. On the other hand, the payment schedule refers to the payment claim received on 27 July 2020.
13. Next Constructions conceded in its adjudication response (again, tendered without objection) that the second payment claim was served on 25 July 2020. The response refers to that date and conceded that the payment schedule was required to be served on 7 August 2020, and was invalid for late service. Next Constructions' response reads: "2.17 The Second Purported Payment Claim was served on 25 July 2020. 2.18 (Similarly) Next was required to serve a payment schedule within 10 business days under section 14 of the Act. A 'business day' is defined in section 4 of the Act as: 2.19 business day means any day other than- (a) a Saturday, Sunday or public holiday, or (b) 27, 28, 29, 30 or 31 December. 2.20 However as 25 July 2020 is a Saturday (i.e. not a business day under the Act) 10 business days after the Second Purported Payment Claim was served would still be 7 August 2020. 2.21 The Payment Schedule was issued on 8 August 2020 (see covering email dated 8 August 2020 at TAB 1.3). 2.22 This (again) means that the Payment Schedule was invalid under the Act and that the Claimant can only make an adjudication application under section 17(1)(b) of the Act (after complying with section 17(2) of the Act). 2.23 Runs into the issue (as set out above) of the Payment Schedule being invalid (i.e. issued after more than 10 Business Days of the payment claim)". [27]

1. This evidence of Next Constructions displays a concession against interest that is not otherwise explained. It is evidence of whether Next Constructions was served on 25 July and by email to Mr Kim. It confirms that this did occur. In the circumstances, it is a concession that a payment claim emailed to and received by Mr Kim is service on Next Constructions.
2. For this reason, and in accordance with Next Constructions' adjudication response, I find service of the second payment claim was effected on Saturday, 25 July 2020. It follows that the payment schedule served after Friday, 7 August 2020 was out of time, irrespective of whether there was any reliance by Next Constructions on an asserted misleading representation that Artkal would not rely on the first payment claim sent on Friday, 24 July 2020.
3. For all of these reasons, the defence fails.
4. Next Constructions accepted that if it failed on the misleading conduct case arising from the resending of the payment claim, Artkal was entitled to judgment on its payment claim of $202,179.79.

G. Costs

1. The parties agreed that costs should follow the event.

H. Interest

1. Section 11(1B) of the Building and Construction Industry Security of Payment Act provides that payment is due and payable 20 days after a payment claim is made. That date would be 13 August 2020. Interest from 13 August 2020 to date is $7,557.16.

I. Orders

1. The orders of the Court are: 1. Judgment for the plaintiff against the defendant in the sum of $209,736.95. 2. Order the defendant to pay the plaintiff's costs. 3. In the event that the defendant seeks to apply for a stay of the judgment, liberty to apply by email to my associate within 14 days.

Endnotes

1. Amended defence at [29].
2. Amended defence at [31].
3. [2013] NSWSC 528.
4. State Asphalt at [24].
5. State Asphalt at [113].
6. See at [114], [121]-[122].
7. See State Asphalt at [91]-[99].
8. Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at [39].
9. (2004) 218 CLR 592; [2004] HCA 60 at [39].
10. At [114].
11. Australian Consumer Law, s 4.
12. See Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9 at 16, Montgomery DCJ in Structum Pty Ltd v Basilios Mihalopoulos & CWCN Pty Ltd [2019] NSWDC 119 at [98], [101], Abadee DCJ in Storm Industries Pty Ltd trading as trustee of the T&L Trust v Unicar Australia Pty Ltd [2020] NSWDC 51 at [277], [283].
13. [2020] NSWDC 51.
14. At [288].
15. Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 526-527.
16. See generally Wallace v Kam [2013] HCA 19.
17. See [2013] NSWSC 528 at [114]-[118].
18. Affidavit, Kevin Kim, 11 June 2021, at [13]; Plaintiff's Court Book (PCB), p 196.
19. See Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9 at 15-16.
20. Bitannia at 15.
21. Bitannia at [96], [101], also [1], [11]-[12] and [17].
22. See generally Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494.
23. Building and Construction Industry Security of Payment Act 1999, s 14(4).
24. Affidavit, Kevin Kim, 11 June 2021, at [13]; PCB, p 196.
25. PCB, p 50.
26. PCB, p 196.2.18
27. PCB, p 185. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 October 2022