Bettar Holdings Pty Ltd trading as Hunt Collaborative v RWC Brookvale Investments Pty Ltd as trustee for Brookvale Development Trust

District Court of NSW|2024-11-06

Solicitors: Pinsent Masons (Plaintiff) Mills Oakley (Defendant) File Number(s): 2024/00071395

JUDGMENT

Bettar Holdings Pty Ltd, trading as Hunt Collaborative ('Hunt') seeks judgment in the sum of $232,472 against RWC Brookvale Investments Pty Ltd as trustee for the Brookvale Development Trust ('RWC'). Hunt asserts that the sum claimed is recoverable by it from RWC as a debt pursuant to s 15(2)(a)(i) of the Building and Construction Industry Security of Payment Act 1999 ('the Act).
RWC resists Hunt's claim and says that Hunt is not entitled to recover any amount from RWC as a debt under the Act.
At the hearing of the matter, Hunt relied upon the following affidavits: 1. Nicholas Bettar (Hunt's General Manager) dated 16 May 2024; 2. Walter Galizia (Hunt's Project Manager) dated 6 May 2024; 3. Chris McGrath (Hunt's solicitor) dated 16 May 2024; 4. Keiran Hill (Hunt's Finance Manager) dated 4 May 2024; 5. Gary Hill (Keiran Hill's father) dated 4 May 2024.
RWC relied upon the following affidavits: 1. Danny Hanna (Chief Executive Officer of Hannas Contracting Services Pty Ltd) dated 22 July 2024; 2. Steven Ogden (RWC's Commercial Manager) dated 22 July 2024; 3. Dale Cliff (RWC's solicitor) dated 23 July 2024; 4. Liam Shallies (Development Assistant employed by Hannas Contracting Services Pty Ltd) dated 28 October 2024.

Overview of the Act

The object of the Act is to ensure that a person who undertakes to carry out construction work, or to supply goods and services related to construction work, becomes entitled to receive, and is able to recover, progress payments for the carrying out of that work, or the supply of those goods and services (see s 3). In Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 at [3] to [4], the High Court said: 3. Enacted by the Parliament of New South Wales "to reform payment behaviour in the construction industry"[3], the Act mandated that it be subjected to review after the first three years of its operation[4]. As a consequence of the review then conducted, the Act was extensively amended by the Building and Construction Industry Security of Payment Amendment Act 2002 (NSW) ("the Amendment Act"). 4. The Minister responsible for introducing the Bill for the original Act, for conducting the review and for introducing the Bill for the Amendment Act was the Hon Morris Iemma MLA. In the course of introducing the Bill for the Amendment Act, Mr Iemma explained that when introducing the Bill for the original Act the Government of New South Wales had wanted to "stamp out the practice of developers and contractors delaying payment to subcontractors and suppliers"[5]. He went on to explain the original design of the Act which the Amendment Act was intended to enhance. He said[6]: The Act was designed to ensure prompt payment and, for that purpose, the Act set up a unique form of adjudication of disputes over the amount due for payment. Parliament intended that a progress payment, on account, should be made promptly and that any disputes over the amount finally due should be decided separately. The final determination could be by a court or by an agreed alternative dispute resolution procedure. But meanwhile the claimant's entitlement, if in dispute, would be decided on an interim basis by an adjudicator, and that interim entitlement would be paid. 9 Mr Iemma continued by emphasising that "[c]ash flow is the lifeblood of the construction industry" and that the Government was "determined that, pending final determination of all disputes, contractors and subcontractors should be able to obtain a prompt interim payment on account, as always intended under the Act"[7].
The Act provides for a process to occur between the parties to a construction contract, as defined. The process involves the service of a payment claim upon "the person who, under the construction contract concerned, is or may be liable to make the payment" (s 13). The Act provides for a 10 day period from the service of the payment claim within which the person upon whom it was served may respond by providing a payment schedule to the claimant (s 14). If the payment schedule is not provided within the 10 day period, then one consequence is that the person upon whom the payment claim was served becomes liable to pay the claim and the claimant may recover the unpaid portion of the claimed amount from the person (s 15). The rights of the parties under the contract are, however, preserved under s 32 of the Act, and the Act provides that an amount paid under the Act may be the subject of an order for restitution in proceedings under a construction contract (see s 32(3)(b)).
In Probuild Constructions (Australia) Pty Ltd v DDI Group Pty Ltd (2017) 95 NSWLR 82 at [105] - [106], McColl JA, with whom Beazley ACJ and Macfarlan JA agreed, said: 105. Thus, the SOP Act operates to alter, in a fundamental way, the incidence of the risk of insolvency during the life of a construction contract by seeking to preserve the cash flow to a builder notwithstanding the risk that the builder might ultimately be required to refund the cash in circumstances where the builder's inability to repay could be expected to eventuate. The risk of inability to repay, in the event of successful action by the other party, is one that the legislature has assigned to that other party. [65] 106. As McDougall J observed in Chase Oyster Bar, [66] the SOP Act "operates in a way that has been described as 'rough and ready' or, less kindly, as 'Draconian' [by] impos[ing] a mandatory regime regardless of the parties' contract: s 34 [and] …provid[ing] extremely abbreviated time frames for the exchange of payment claims, payment schedules, adjudication applications and adjudication responses [and] … a very limited time for adjudicators to make their decisions on what, experience shows, are often extremely complex claims involving very substantial volumes of documents".
Subsequent to interactions with Hannas which are set out below, Hunt generated a document dated Thursday 21 December 2023 which was entitled "Re: Brookvale Progress Claim 1A" and which included the words "This Payment Claim is made under the Building and Construction Industry Security of Payment Act 1999 NSW" ('the claim document'). On the first page of the claim document, under the date, the document is directed to: RWC Brookvale Investments Pty Ltd (ACN 670 150 437) as Trustee for Brookvale Development Trust (ABN 42 359 186 969) Suite 26.02 Governor Phillip Tower 1 Farrer Place SYDNEY NSW 2000
Walter Galizia of Hunt sent the claim document by email on 21 December 2023 to James Webb of Hannas, and sent a copy to Danny Hanna and Nicholas Bettar.
Hunt caused the claim document to be posted on 22 December 2023. Mr Galizia, in his affidavit of 6 May 2024, said that he addressed the envelope in which the claim was posted to James Webb of RWC Brookvale Investments Pty Ltd as Trustee for Brookvale Development Trust at Suite 26.02, Governor Phillip Tower, 1 Farrer Place Sydney NSW 2000.

Was there a construction contract between the parties?

The Act provides, in s 8(1): (1) A person who, under a construction contract, has undertaken to carry out construction work or to supply related goods and services is entitled to receive a progress payment.
The Act provides, in s 13(1): (1) A person referred to in section 8 who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.
In s 4, the Act defines "construction contract" as follows: construction contract means a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party.
In s 5, "construction work" is defined as follows: (1) In this Act, construction work means any of the following work - (a) the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures forming, or to form, part of land (whether permanent or not), (b) the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of any works forming, or to form, part of land, including walls, roadworks, power-lines, telecommunication apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage or coast protection, (c) the installation in any building, structure or works of fittings forming, or to form, part of land, including heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply, fire protection, security and communications systems, (d) the external or internal cleaning of buildings, structures and works, so far as it is carried out in the course of their construction, alteration, repair, restoration, maintenance or extension, (e) any operation which forms an integral part of, or is preparatory to or is for rendering complete, work of the kind referred to in paragraph (a), (b) or (c), including - (i) site clearance, earth-moving, excavation, tunnelling and boring, and (ii) the laying of foundations, and (iii) the erection, maintenance or dismantling of scaffolding, and (iv) the prefabrication of components to form part of any building, structure or works, whether carried out on-site or off-site, and (v) site restoration, landscaping and the provision of roadways and other access works, (f) the painting or decorating of the internal or external surfaces of any building, structure or works, (g) any other work of a kind prescribed by the regulations for the purposes of this subsection. (2) Despite subsection (1), construction work does not include any of the following work - (a) the drilling for, or extraction of, oil or natural gas, (b) the extraction (whether by underground or surface working) of minerals, including tunnelling or boring, or constructing underground works, for that purpose, (c) any other work of a kind prescribed by the regulations for the purposes of this subsection.
In s 6, the Act defines "related goods and services": (1) In this Act, related goods and services, in relation to construction work, means any of the following goods and services - (a) goods of the following kind - (i) materials and components to form part of any building, structure or work arising from construction work, (ii) plant or materials (whether supplied by sale, hire or otherwise) for use in connection with the carrying out of construction work, (b) services of the following kind - (i) the provision of labour to carry out construction work, (ii) architectural, design, surveying or quantity surveying services in relation to construction work, (iii) building, engineering, interior or exterior decoration or landscape advisory services in relation to construction work, (c) goods and services of a kind prescribed by the regulations for the purposes of this subsection. (2) Despite subsection (1), related goods and services does not include any goods or services of a kind prescribed by the regulations for the purposes of this subsection. (3) In this Act, a reference to related goods and services includes a reference to related goods or services.
Mr Bettar, in his affidavit, says that Hunt is a builder who operates in "the retail, institutional/industrial, commercial, education and residential sectors".
Mr Bettar says that he has known Mr Hanna for thirty years and is aware that Mr Hanna is the Chief Executive Officer of the Hannas Group, which is a property development company. From time to time, in his affidavit, Mr Bettar characterises people who are employees of Hannas as employees of RWC, by putting (RWC) after their name. None of the people Mr Bettar dealt with in relation to the Brookvale project were employees or office holders of RWC, on the evidence before me.
Mr Hanna, in his affidavit of 22 July 2024, said that he is "the chief executive officer of Hannas Contracting Services Pty Ltd, the development manager authorised by the defendant in the proceedings, the RWC Brookvale Investments Pty Ltd as trustee for Brookvale Development Trust ('RWC'), to manage the development on the defendant's behalf".
In his affidavit, Mr Bettar annexed a company search for RWC. The company search shows that neither Mr Hanna nor any other of the employees of Hannas involved in the events leading to these proceedings, on the evidence, were directors or statutory office holders of RWC at the relevant time. RWC came into existence on 1 August 2023. The company search says that RWC is registered in Queensland. RWC's registered office is at Level 26 111 Eagle Street Brisbane Queensland and its principal place of business is L 7, 44 Martin Place Sydney.
Mr Bettar said that Mr Hanna approached him in June 2023 and asked him to provide a quote in relation to several development projects, including the Brookvale Project. The Brookvale Project involved the construction of thirty-four industrial units with associated storage and carparking.
Hunt emailed an expression of interest to Mr Hanna on 8 June 2023.
On 3 October 2023, Mr Brian Gillen, a Project Manager of the Hannas Group, emailed the Brookvale tender documents to Mr Bettar and requested that Mr Bettar "complete the Lump Sum Cost Breakdown in the returnable schedule to give us a Cost Plan for the project and indicate the construction duration".
On 4 October 2023, Mr Charlie Martin, Chief Operating Officer of Hannas Group, sent an email to Mr Bettar, copying in Mr Gillen and Mr Webb (both employees of Hannas) to which was attached a bill of quantities for the Brookvale Project, for use by Hunt in preparing its tender.
On 11 October 2023, Mr Bettar sent an email to Mr Gillen, Mr Hanna, Mr Martin and Mr Webb. The documents attached to the affidavit included a document titled "Indicative Budget Estimate" which provided a budget estimate for the project and a breakdown of that budget estimate. It was noted, on the Indicative Budget Estimate "Costs are after demo, shoring, contamination and piles are done. We start with the slab on ground".
The estimate provided by Mr Bettar on behalf of Hunt was $27.75 million. However, the figure was a typographical error. It should have been $25.75 million. Mr Bettar sent an email in the afternoon of 11 October 2023 correcting the error and providing the correct information.
On 13 October 2023, Mr Bettar sent an email to Mr Gillen, Mr Hanna and Mr Martin asking, in effect, for a response to his tender. Later that day, Mr Webb emailed Mr Bettar saying, among other things: We are still in the process of reviewing all the tenders and working with the contractors to bring the price in line with our budget.
On 17 October 2023, Mr Bettar sent an email to Mr Webb, copied to Mr Gillen, Mr Hanna and Mr Martin, asking for Mr Hanna to call him.
On 19 October 2023, Mr Bettar sent an email to Mr Hanna saying, among other things: As per yesterday's chats, I started the ball rolling with the fire and structural engineer. They will both come back to me by Monday morning, latest. As requested, I have also prepared a construction management proposal, which I will finish Monday morning after reviewing what the guys come back with.
On 24 October 2023, Mr Bettar sent Mr Hanna an email attaching a "std contract with std conditions" ("the draft contract") saying "You can have a pre read". A meeting took place later that day with Mr Bettar, Mr Hanna, Mr Webb and Mr Steven Ogden (an employee of Hannas) at the Governor Phillip Tower. After the meeting, Mr Bettar sent an email to Mr Hanna, Mr Webb and Mr Ogden saying, in part: … - I explained to you the conclusions of the structural engineer. I reiterate that he is effectively starting from scratch. I will forward to you his quote, when I receive it today; - You wanted your lawyers to review my sub-contract and supply agreement, no issue; - You noted that the early works will finish at the end of this year, with slab on ground ready for the 5th of January; - You noted that mid next week you will have some costs on some trades and suppliers; - Also by mid next week you will have a roadmap on the way forward. For clarity, you noted that it will either be yourselves or a joint combination, being Hannas/Hunt going forward, decision next week; …
Mr Bettar says, in his affidavit, that he had a telephone conversation with Mr Hanna on the morning of 27 October 2023. He said that, at the conclusion of the call: Danny said words to me of the following effect: "Mabrook, speak to the boys and let's formalise everything". Mr Bettar said that 'Mabrook' means congratulations in Arabic, which is a language both he and Mr Hanna speak.
On 27 October 2023, in the morning, Mr Bettar sent an email to Mr Webb attaching a letter addressed to Hannas at Suite 26.02 Governor Phillip Tower. The email says, in part, "If you are in agreement, I await your letter of intent and written confirmation today, so I can gear up correctly for Monday start". A summary of the telephone conversation which took place earlier in the day is set out in the letter. The letter ends with the following two paragraphs: If you are in agreement with what is noted throughout this letter, please confirm your intention to engage us for this project. We believe the fundamentals have been agreed between both parties after offers, counter offers, consideration has been made by both. Whereas, verbally you said "Marbrook", Danny, thank you, but like you said, lets keep it formal and send me something solid today, so I can start my long, hard, sweaty road for the rest of 23 and 2024. We anticipate that this submission will meet your approval, and should you require further clarification, please do not hesitate to contact myself on [phone number].
At 1:15pm on the same day, Mr Webb sent an email to Mr Bettar saying, in part: …As Danny mentioned, it is Hanna's intention to progress with Hunt Collaborative. We are currently reviewing the legal documents you have sent through and will come back with any comments. We will also put together a formal letter of intent. Can you please work on a detailed scope of works on your CM role that can accompany the contract. Danny and I would like to meet with your team next Thursday at 10am. …
Mr Bettar responded by email at 1:39pm on the same day saying, in part: Await your letter of intent and or confirmation today. Please, if you don't think today, let me know as I need to cancel my workshop on the weekend. We are moving things to meet Saturday.
Mr Webb responded with an email at 2:47pm the same day, which said: Thanks for the chat earlier, as discussed it is Hannas intention to send Hunt Co a letter of intent early next week which includes the commercial agreement between both parties and a draft contract to be used under the CM agreement. Hannas agree to the commercial conditions noted in your attached letter of offer. It is Hannas intention, once a draft CM contract is agreed between both parties, to execute a contract between Hannas and Hunt Co for the Brookvale project. I will also speak with E-Lab and EI on the fee for the structural and fire engineer with the intention of having them engaged by Monday 30th October. I believe the above should provide enough assurance for you to discuss the project with your team and push forward.
In his affidavit, Mr Bettar said: Following receipt of this email, I considered that RWC had agreed to the engagement of Hunt for the provision of Services in relation to the Brookvale Project and the letter of intent was the email as he noted we are going straight to a contract …
An exchange of emails took place between Hunt and Hannas on 30-31 October 2025 regarding the engagement of a structural and fire engineer. Hunt obtained quotes and sent them to Mr Webb. In the morning of 30 October 2023, in an email, Mr Webb asked Mr Bettar to provide a summary of the construction cost savings that might result from the engagement of the structural engineer and the fire engineer discussed. In the afternoon of 30 October 2023, Mr Bettar responded with a one and a half page email analysing the quotes and setting out the anticipated construction cost savings. On 31 October 2023, in an email to Mr Bettar, Mr Webb confirmed that Hannas had approved the engagement of EI as the structural engineer and E-Lab as the fire engineer. He also sent Mr Bettar the pile design from the piling contractor and asked him to pass it on to "Graeme" (Graeme Deaker of EI).
Mr Bettar was then involved in a brief exchange of emails and a discussion of terms with EI on instructions from Hanna in relation to the Brookvale project.
On 31 October 2023, a meeting took place between Mr Bettar, Mr Webb and Mr Hanna. Mr Bettar summarised the discussion in an email sent to the participants late in the afternoon of the same day. It is clear from the email that agreement has not been reached between Hannas and Hunt on some fundamental terms of the contract. The following dot points were set out by Mr Bettar in his email (among others): … - You brought up retention and how that's going to work. I mentioned that in CM contracts, retention is not with the builder, but rather with the developer. Also the developer can decide what retention he can hold on what subbies so he can get a better deal. Also, it was discussed that cost of BG's wasn't factored in to the costing, nor cash, as this is not normal. You also brought up the point about any job over $20m, there needs to be a separate trust account for the retention All in all, it was agreed that this all needs to be looked at together. … - You have now gone from paying the subbies direct, to paying us direct. Obviously, we will put the payment schedules forward and you will review and sign off. We will then pay the subbies and suppliers. … - You brought up LD's [liquidated damages]. I said I have never ever ever heard of LD's being applied on a CM job. It's crazy and illogical. It's not a lump sum contract to factor in a premium for risk or allow for such things. It's open book and the incentive for us is that you don't terminate us! You noted that if anything, you can make the figure very very low and have a side deed if it all gets to much. Obviously, we need to sort this as well. I know you need to satisfy the bank in terms of incentive, but this is not normal. An open book transparent relationship should never need a stick. Anyway, let's sort this out as this is very bizarre. … - We brought up the handover and our start, being with the slab on ground as our first job, after your shoring is complete with capping beam, foundation piles in (as per your documents to me). I don't believe I am going to get it on the 5th of January (to handover at the end of 2024). I did mention that the original costing of 60 weeks on site is reduced to 52 for the bonus, which is a target as it is. We agreed that the bonus time will start 52 weeks after you handover ready for me to start the slap on ground. - You gave me the go ahead to give EI Australia and E-Lab the go ahead, so we can start all things. - You want me to look at possibly horizontally propping the basement walls, to delete the need for anchors. We will obviously look at all things, just like the safety barriers, in lieu of scaffold on the mezz. - We are obviously working on your job full time, started as of yesterday. Obviously, I expect my PM and Project Engineer etc will be paid from Monday the 30th on, till we get on site, correct? My office, myself, John etc comes out of the 5.5% when I start billing that. - You were going to send your legal rundown of things. Is this still coming? I have attached the standard conditions again. - Lots of other matters were discussed, but I am sure we will capture them soon.
Mr Webb responded by email on 2 November 2023, in which he commented in blue text inserted into Mr Bettar's email. It is clear from Mr Webb's email that there are still fundamental terms of the contract which have not been agreed.
Mr Galizia, of Hunt, sent an email to Mr Webb on 3 November 2023, asking whether he could "start contacting subcontractors for Brookvale". On 6 November 2023, Mr Webb responded, confirming that Mr Galizia could start contacting subcontractors and saying that Mr Webb would send "the list of subbies we have spoken with, and the pricing we have received later today".
On 8 November 2023, Mr Bettar emailed Mr Webb and Mr Ogden, asking for the list of subcontractors. Mr Webb responded by email on the same day, saying the list would be forwarded shortly and asking Mr Bettar to progress the design changes promised with significant changes to the structure "and fire" and also to prepare a design changes schedule. The object was clearly to find cost efficiencies.
On 10 November 2023, Mr Webb sent an email to Mr Galizia about air discharge exhaust outlets for the proposed warehouse toilets in the Brookvale project.
On 13 November 2023, Mr Webb sent an email to Mr Bettar and Mr Galizia asking when Hunt would be engaging the remaining consultations and commencing the design management meetings.
In his affidavit, Mr Bettar said that he attended meetings relating to the Brookvale project on 16 November 2023, 23 November 2023 and 30 November 2023. These meetings all occurred in Hannas' offices.
On 3 November 2023, Mr Bettar received from Mr Ogden a copy of a revised draft management contract prepared by HWL Ebsworth Lawyers on behalf of Hannas ("the lawyers' draft"). On 8 November 2023, Mr Ogden emailed Mr Bettar a comparison between the draft contract and the lawyers' draft.
By email of 8 November 2023 to Mr Ogden, Mr Bettar commented that the bulk of the standard draft had been modified, and that it would take more time to review.
On 13 November 2023, Mr Bettar sent an email to Mr Ogden, Mr Webb and Mr Galizia, with a copy to Mr Hanna. In quite strong language, Mr Bettar expressed irritation and frustration at the complexity and prolixity of the lawyers' draft and claims that some of the terms are mistakes. He commented that he and his team "are working on all the other things".
Hunt's comments on the lawyers' draft were sent to Hannas by email on 13 November 2023 in the late afternoon.
On 14 November 2023, Mr Ogden emailed Mr Bettar saying "The contract has been amended to what a Bank will accept …". Mr Ogden suggested that a meeting be arranged.
On 15 November 2023, Mr Ogden circulated a revised draft ("the revised draft") together with responses to Hunt's comments.
By email of 20 November 2023, Mr Galizia provided Hunt's comments in relation to the revised draft.
A meeting took place on 21 November 2023 between Mr Bettar, Mr Danny Hanna, Mr James Hanna, Mr Ogden and Mr Galizia concerning the revised draft. Following that meeting, there were further email exchanges concerning the progress of the revised draft.
On 29 November 2023, Mr Bettar attended a meeting at the café in Governor Phillip Tower with Mr Hanna and Mr Steven Bougoukas, who Mr Bettar understood to be representing the financier for the Brookvale Project.
On 30 November 2023, Mr Bettar received an email from Mr Ogden with a list of "key items" upon which the parties would need to agree.
Mr Bettar commented on the key items in an email to Mr Ogden on 30 November 2023. Two critical items were not agreed; the insertion of a liquidated damages clause and the provision by Hunt of a substantial sum for security.
Mr Bettar sent Mr Hanna an email on 1 December 2023. In it, he set out a chronology of events regarding Hunt's involvement in the Brookvale Project from 8 June 2023 to the date of the email. Mr Bettar referred to the work Hunt had done already and said that he was, that day, having meetings in relation to the Brookvale project. He asked that Mr Hanna tell him to stop immediately if "we have an issue". Mr Bettar then texted Mr Hanna asking for a response. Mr Hanna said that he would be having a meeting on "Monday or Tuesday … to work out which way to go".
The next week, there was an exchange of emails in which it was clear that terms had not yet been agreed. On 8 December 2023, Mr Bettar emailed Mr Webb, saying that he had cancelled "all meetings going forward". He indicated that the ongoing uncertainty was unfair to his "regular trades etc" and to his "repeat clients and colleagues".
On 11 December 2023, Mr Bettar had a telephone conversation with Mr Hanna in which Mr Hanna told Mr Bettar that another builder was to be engaged who "quoted more than you but … with no risk".
On 13 December 2023, Mr Bettar sent a "progress claim" to Mr Hanna and Mr Webb. A further "progress claim", referred to as "progress claim 1A", was sent by Mr Bettar on 20 December 2023, to supersede the first "progress claim". Neither of these "progress claims" were payment claims under the Act.
On 21 December 2023, Mr Galizia sent a further claim, in the same terms as progress claim 1A, to Mr Hanna and Mr Webb by email, and this claim stated on its face that it was made under the Act. It is this claim that Hunt relies on as the payment claim under the Act ("the 21 December claim").
On 25 January 2024, Hunt's solicitors sent a letter of demand to RWC, addressing it to the office of Hannas at Governor Phillip Tower, Sydney.
The formation of a contract requires "the existence of agreement (consensus on terms)" (see JW Carter Contract Law in Australia 8th Edition 2023 at [3-01]). It is clear from the events set out above that agreement did not transpire between Hannas and Hunt. Some terms of a potential future contract were agreed, but negotiations were always subject to a comprehensive agreement being arrived at and recorded in a written and executed contract. This never occurred. A complete set of agreed terms was never arrived at between Hannas and Hunt. The only relevant negotiation of a contract occurred between officers/employees of Hunt and officers/employees of Hanna. There has been no suggestion that there was any attempt to negotiate a contract directly with RWC. I find that no contract came into existence in this matter between RWC and Hunt.
In the absence of a contract, in order to be entitled to progress payments, Hunt must show, under s 8 of the Act, that it has "undertaken to carry out construction work or to supply related goods and services" under an "other arrangement" within the meaning of "construction contract" under the Act. However, the Amended Statement of Claim does not plead an "other arrangement". It only pleads, in paragraph 7, that the email from Mr Webb to Mr Bettar of 27 October 2023 at 2:47pm (see [36] above) constituted an agreement between Hunt and RWC for the performance by Hunt of "construction management services" for the Brookvale project.
The difficulty with the case pleaded is that it is clear from the email that a letter of intent and a contract were anticipated future steps, so that Hannas did not intend for there to be a binding contract at that stage. It was argued in Hunt's case that Mr Webb's email of 27 October 2023 at 1:15pm said "…it is Hanna's intention to progress with Hunt Collaborative". Mr Webb, in his email at 2:47pm on 27 October 2023 said "it is Hannas intention, once a draft CM contract is agreed between both parties, to execute a contract between Hannas and Hunt Co for the Brookvale project". It is unclear from these emails what, precisely, was contemplated by Mr Webb, but the emails cannot be read as constituting a concluded contract between Hunt and RWC. The terms of an arrangement between RWC and Hunt had not been settled. Hannas agreement to "the commercial conditions noted in your attached letter of offer" is expressed. However, those "commercial conditions" did not include, for example, pay rates which could form the basis of a progress payment (see CB p 283). It is clear from the email exchange of 27 October 2023, read as a whole, that each party understood that further negotiations were to occur and further steps were to be taken by them before a contract would come into existence between Hunt and RWC. Mr Webb's 2:47pm email suggests that a contract between Hunt and Hannas may have been in contemplation, rather than a contract between Hunt and RWC.
The 21 December claim asserts that Hunt "commenced construction/project management services on Brookvale from late October 2023 (6 weeks charged only)". In his email of 31 October, Mr Bettar told Mr Webb that he and his team began working full-time on the Brookvale project on 30 October 2023. It is clear from the evidence of Mr Bettar, including the emails in the exhibit to his affidavit, that Hannas knew that Hunt was working on the Brookvale project and performing the kind of tasks a construction manager performs, such as engaging subcontractors. Officers of Hannas requested officers of Hunt to undertake various tasks.
In its submissions, Hunt referred to the conflicting authority as to whether an "other arrangement" would have to be an arrangement creating legally enforceable obligations, and noted that there was conflicting authority on the point (Lendlease Engineering Pty Ltd v Timecon Pty Ltd [2019] NSWSC 685 per Ball J and Crown Green Square Pty Ltd v Transport for NSW [2021] NSWSC 1557). Hunt referred to the unanimous judgment of the Court of Appeal in BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd (2022) 108 NSWLR 350 at [36]: 36. … The expansive definition of construction contract, to include both a contract and some other arrangement, directs attention to the carrying out of the work, for reward, rather than the legal characteristics of the source of the obligation to carry out the work and the source of the liability of the respondent to make a payment.
The case that an "other arrangement" sufficient for the definition of "construction contract" under the Act arose between Hannas and Hunt or RWC and Hunt from 30 October 2023 until 8 December 2023 was not developed to the extent that the existence of an "other arrangement" was established on the balance of probabilities. Hunt did not identify, in its pleadings or its submissions, the basis upon which it asserted that it had an arrangement with Hannas or RWC for the performing of the tasks it performed between 30 October 2023 and 8 December 2023 for reward.
Also absent from the Amended Statement of Claim is the pleading of any agency agreement between Hannas and RWC which authorised Hannas to enter into a contract or "other arrangement" on behalf of RWC. An assertion by Mr Hanna, in his affidavit, that Hannas was authorised "to manage the development" on RWC's behalf does not establish that Hannas was authorised to enter into contracts on RWC's behalf (though it may be enough to establish that Hannas was authorised to conduct the negotiation of terms for RWC, subject to final approval by RWC). The extent of the agency agreement between Hannas and RWC (if it exists) is not before me.
The pleadings of promissory estoppel and "conventional estoppel" were not fully developed in Hunt's submissions. The particular promise or conduct relied upon was not specifically identified. In any event, it was clear in the correspondence at all times that both parties were aware that future negotiations were to take place which, if successful, would lead to the execution of a binding contract. In context, the reference to "Hanna's intention" in the email sent by Mr Webb on 27 October 2024 at 1:15pm must be read as an aspiration rather than a promise because the same email references the future negotiation of a contract and notes that Hunt should work on "a detailed scope of works on your CM role", clearly implying that the scope of works for the role was not yet agreed. Hunt relied upon the final sentence in Mr Webb's email at 2:47pm on 27 October 2023, in which he says: I believe the above should provide enough assurance for you to discuss the project with your team and push forward. It is uncertain what Hunt was to "push forward" with.
Hunt has not established that RWC is estopped from defending these proceedings.
Hunt's failure to establish the existence of a construction contract between Hunt and RWC is fatal to its claim. However, I will, nevertheless, consider the other issues argued.

Was the 21 December claim a payment claim under the Act?

The Act provides, in s 13(2): (2) A payment claim - (a) must identify the construction work (or related goods and services) to which the progress payment relates, and (b) must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount), and (c) must state that it is made under this Act.
In Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, Palmer J said, at [76]: 76 A payment claim and a payment schedule are, in many cases, given and received by parties who are experienced in the building industry and are familiar with the particular building contract, the history of construction of the project and the broad issues which have produced the dispute as to the claimant's payment claim. a payment claim and a payment schedule must be produced quickly; much that is contained therein in an abbreviated form which would be meaningless to the uninformed reader will be understood readily by the parties themselves. A payment claim and a payment schedule should not, therefore, be required to be as precise and as particularised as a pleading in the Supreme Court. Nevertheless, precision and particularity must be required to a degree reasonably sufficient to apprise the parties of the real issues in the dispute.
The 21 December claim is in 5 parts.
In Part 1, no monetary claim is made.
Part 2 is entitled "Costs from date of appointment". The text under the heading says "Hunt commenced construction/project management services on Brookvale from late October 2023 (6 weeks charged only)". There follows a list of positions, a person's name for each position, a period of time for each name and a total payment for each person. Specific tasks are not identified, and there is an overlap, which is allowed for in the calculations, with Part 5.
Part 3 is entitled "Costs to close out the project & collate documents From 12/12/2023 to 13/12/2023" and assigns a two day payment to two named people. Mr Bettar stopped work on the Brookvale project on behalf of Hunt on 8 December 2023. Mr Hanna communicated to Mr Bettar, in a telephone conversation, the decision made to proceed with an alternative builder, on 11 December 2023. It has not been established that the amount charged in Part 3 constitutes the supply of services under a construction contract, even if a construction contract had come into existence between the parties. Any "other arrangement" must have been terminated prior to 12 November 2023.
Part 4 is entitled "Extraordinary Costs (Instant verbal termination)" and assigns a "4 weeks termination" payment to two named people.
Part 5 claims "P and O Charge". P and O stand for profit and overhead. What is claimed is calculated as a percentage (based on a percentage of time worked) of the percentage of the anticipated contract sum in the final contract (ie, anticipated by Hunt), had it come into existence. Whilst profit and overhead may be able to be the subject of a payment claim (see Hodgson JA in Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in Liq) [2005] NSWCA 409; (2005) 64 NSWLR 462 ('Nepean') at [44]), in this matter, where the services the subject of the claim have not been identified, the claim in Part 5 is so vague as to be meaningless. It has not been established that the amount charged is for services supplied under a construction contract, even if a construction contract had come into existence between the parties.
The Act, in s 13(2)(a), says, relevantly, that a payment claim must identify the "construction work (or related …services) to which the progress payment relates". If the payment claim relates to construction works, it is not enough to assert that the claim is in relation to construction work; the specific construction work to which the claim relates must be identified. The same must be true of services. It is not sufficient to identify that the performance of "construction/management services on Brookvale" is charged, the specific services must be identified (see Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd [2004] NSWSC 116 at [27]). Specific services are not identified in Part 2, a general description is relied upon. There is no attempt at all in Parts 3, 4 and 5 of the 21 December 2023 claim to identify services relating to construction works.
In Nepean, Hodgson JA, with whom Santow JA and Ipp JA agreed, said at [34] - [38]: 34 In my opinion, a document which purports to be a payment claim does not fail to be a payment claim, within the meaning of the Act, merely because it can be seen, after a full investigation of all the facts and circumstances, not to successfully identify all the construction work for which payment is claimed. This could be the case, for example, if there is some typographical omission or other error in relation to one of a large number of items included in the claim; and the question whether or not the other party, by reason of its knowledge of the project, would have been able to fill in or correct that error could be one depending on a great deal of evidence concerning the circumstances of the case. In my opinion, it is inconceivable that it was the intention of the legislature that the existence of a payment claim under the Act should depend on that kind of consideration. 35 It is true that, if a payment claim does not identify the work in a way comprehensible to the respondent to the claim, the respondent will be in difficulty in formulating a payment schedule, and this may give rise to further difficulty in any adjudication proceedings, inter alia because of the provisions to which I referred in par.[18] above. But in my opinion, if a respondent is unable to identify some of the work in respect of which a payment claim is made, it can in the payment schedule say it does not propose to make any payment in respect of that work because it cannot identify the work, and because for that reason it disputes that the work was done or done to a standard justifying payment, or was within the contract or within any variation of it, and that any pre-condition to payment was satisfied. If an adjudicator then determined that the work was not identified in the payment claim, presumably he or she would not award any payment in respect of that work; and if the adjudicator determined that it was identified, the adjudicator could address matters put in issue in that general way by the respondent. 36 That is, I do not think a payment claim can be treated as a nullity for failure to comply with s.13(2)(a) of the Act, unless the failure is patent on its face; and this will not be the case if the claim purports in a reasonable way to identify the particular work in respect of which the claim is made. 37 I do not think this view is inconsistent in the result with that expressed by Basten JA in Hargreaves and Climatech. He expressed the view that successful identification is a mandatory requirement, but that intervention by the Court was not justified because the legislature has indicated an intention to treat that requirement as dependent on the satisfaction of an adjudicator. That must mean that a payment claim which purports in a reasonable way to identify the work in respect of which the claim is made is sufficient to support a valid determination by an adjudicator, even if it could be proved to a court that the payment claim did not successfully identify all of the work in question. 38 If a payment claim which thus purports to identify the work in respect of which the claim is made is sufficient to support a valid determination, as Basten JA says, it would in my opinion be wholly inconsistent with the scheme of the Act if it was not also sufficient to support a cause of action under s.15 of the Act in a case where no payment schedule is served. Otherwise, a respondent could avoid the effect of the Act by not serving a payment schedule, and defending the s.15 proceedings by raising a question as to identification, which could be as to just one of many items in a claim and could be such as to depend upon a very detailed examination of all the circumstances of the contract.
The 21 December claim does not identify in a reasonable way the particular work in respect of which the claim is made. The failure is patent on the face of the claim. The claim could not support a valid adjudication. The information an adjudicator would require to make a determination under s 22 of the Act is not provided in the claim. The relevant construction contract is not identified in the claim, beyond reference to "our various agreements and documentation between both parties". The information provided in the claim is not sufficient to enable an adjudicator to determine the value of services supplied because the services have not been identified.

Service

The Act, in s 13(1) allows a payment claim to be served: …on the person who, under the construction contract concerned, is or may be liable to make the payment.
The Act provides, in s 14(4): (4) If - (a) a claimant serves a payment claim on a respondent, and (b) the respondent does not provide a payment schedule to the claimant - (i) within the time required by the relevant construction contract, or (ii) within 10 business days after the payment claim is served, whichever time expires earlier, the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.
Hunt has sued RWC, claiming, under s 15(2)(a) of the Act that RWC owes the amount of the payment claim to Hunt as a debt.
The Act provides, in s 31: 31 Service of documents (1) Any document that by or under this Act is authorised or required to be served on a person may be served on the person - (a) by delivering it to the person personally, or (b) by lodging it during normal office hours at the person's ordinary place of business, or (c) by sending it by post addressed to the person's ordinary place of business, or (d) by email to an email address specified by the person for the service of documents of that kind, or (d1) by any other method authorised by the regulations for the service of documents of that kind, or (e) in the case of service by a party to a construction contract on another party to the construction contract - in the manner that may be provided under the construction contract. (2) Service of a document that is sent to a person's ordinary place of business, as referred to in subsection (1)(c), is taken to have been effected when the document is received at that place. (3) The provisions of this section are in addition to, and do not limit or exclude, the provisions of any other law with respect to the service of documents. (4) In this section - document includes written notice or determination. serve includes give, send or otherwise provide.
There is no evidence that RWC has ever been served with the 21 December claim at its registered office, or at its principal place of business, or in any other place, or by email. There is no pleading and no evidence that Hannas or any of the individual recipients of the 21 December 2023 claim were authorised to accept the service of documents on behalf of RWC or represented that they were so authorised. The fact that Hannas has been engaged to manage the Brookvale project for RWC does not imply an authorisation to accept service of documents on behalf of RWC. The fact that Mr Hanna generated a "Schedule of payment" in mid-January is not evidence that Hannas, or Mr Hanna, has ever been authorised to accept the service of documents on behalf of RWC. The consequence is that RWC, the defendant in this matter, has not become liable to pay the claimed amount.

Summary and Conclusion

Hunt bears the onus of proof on the balance of probabilities. Hunt has sued RWC for a debt under s 15(2)(a) of the Act.
Hunt has not proven that it had a contract with RWC to perform construction work as defined in the Act. The Act allows for a payment claim to be made under an "arrangement" falling short of a contract, but no arrangement was pleaded or established on the balance of probabilities. The estoppel arguments pleaded were not made out, as no promise or representation on the part of RWC and therefore no reliance on a promise or representation was established.
Had there been a "construction contract", then Hunt needed to prove that a valid payment claim was served upon RWC and that no payment schedule was provided to Hunt by the respondent within the time provided by the Act, which is ten days from the service of the payment claim.
The 21 December claim did not comply with s 13(2) of the Act because it did not identify the services related to construction work to which the progress payment relates. The words "As per our various agreements and documentation between both parties" do not identify a construction contract. A heading of "construction/management services on Brookvale" does not identify the services provided.
In any event, RWC has not become liable to pay the claimed amount to the claimant because it has never been served with the 21 December claim (or any payment claim). The Act, in s 15(1), says that a right to recovery in debt under s 15(2) is predicated upon the respondent having become liable to pay the claimed amount. Hunt has failed to show that RWC has become liable.
The following order will issue: 1. The plaintiff's claim is dismissed.

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 February 2025

Building and Construction Industry Security of Payment Amendment Act 2002(NSW)

(2022) 108 NSWLR 350

At a glance

Court

Decision date

Source

Judgment (8 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (10)