Crown Green Square Pty Ltd v Transport for NSW - [2021] NSWSC 1557 - NSWSC 2020 case summary — Zoe

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Crown Green Square Pty Ltd v Transport for NSW

[2021] NSWSC 1557

Supreme Court of NSW|2020-12-01|Before: Henry J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2020-12-01

Before

Henry J

Catchwords

[2009] NSWCA 69 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544
[2017] NSWCA 151 Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1
[2016] NSWCA 379 Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340

Source

Original judgment source is linked above.

Catchwords

[2009] NSWCA 69 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544[2017] NSWCA 151 Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1[2016] NSWCA 379 Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340

Judgment (22 paragraphs)

[1]

ild Constructions (Aust) Pty Ltd (No 2) (2016) 95 NSWLR 157; [2016] NSWCA 379 Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 93 Trinco (NSW) Pty Ltd v Alpha A Group Pty Ltd [2018] NSWSC 239 Vis Constructions Pty Ltd v Cockburn [2006] QSC 416 Texts Cited: Nil Category: Principal judgment Parties: Crown Green Square Pty Ltd (ACN 161 698 148) (First Plaintiff) Sathio Investments Pty Limited (ACN 138 087 939) (Second Plaintiff) Crown Cornerstone Investments Pty Limited (ACN 138 199 112) (Third Plaintiff) Crown Group Construction Pty Ltd (ABN 91135 132 884) (Fourth Plaintiff) Transport for New South Wales (ABN 18 804 239 602) (First Defendant) Sydney Trains (ABN 38 284 779 682) (Second Defendant) Rail Corporation New South Wales (ABN 59 325 778 353) (Third Defendant) Representation: Counsel: L Shipway (Plaintiffs) T Breakspear SC (Defendants)

[2]

[3]

Judgment

Between 2015 and 2019, the plaintiffs (who are entities that are part of the Crown Group of companies) were involved in the development of a property, known as the "Infinity" complex, located at Green Square, Sydney (Infinity development).
The site of the Infinity development was proximate to Green Square train station (Station).
The conditions of consent for the Infinity development required the Crown Group to carry out works to upgrade an underground pedestrian tunnel that provided access to the Station and connect it to the Infinity complex, submit a final works package to the second defendant (Sydney Trains) for approval and comply with all of Sydney Trains' requirements.
On 3 March 2016, the first, second and third plaintiffs (together, the Crown Entities) entered into the "Green Square Railway Station Relocation of Tunnel Entrance Development Agreement" (Development Agreement) with the defendants (together, the Rail Entities), who are New South Wales Government Agencies constituted by the Transport Administration Act 1988 (NSW) with interests in and responsibilities for train stations and rail infrastructure in New South Wales. Under the Development Agreement, the Crown Entities agreed to procure the "Tunnel Works" at no cost to the Rail Entities, save for a payment of $750,000 by Sydney Trains that was made last year.
On 26 March 2020, the fourth plaintiff (Crown Construction) (the construction entity of the Crown Group) sent to Sydney Trains an invoice claiming payment of $866,530.06 (inclusive of GST) (26 March Claim) in relation to works to design and install certain electronic, mechanical and fire safety services into the Tunnel Works, some of which were linked back to a monitoring site within the Station (Link Works).
The plaintiffs contend that the 26 March Claim is a payment claim within s 13 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SoP Act) that was issued pursuant to another "construction contract" that arose out of directions given by the Rail Entities to the plaintiffs to carry out the Link Works. The plaintiffs claim that Crown Construction is entitled to judgment, relying on the Rail Entities' failure to provide a payment schedule in response within the time provided for by the SoP Act.
The Rail Entities deny the existence of the construction contract relied on by the plaintiffs and contend that the Link Works were required to be carried out by the Development Agreement and development consent conditions. They say that, for these and other reasons, the 26 March Claim is not a valid payment claim, with the consequence that Crown Construction is not entitled to the right to judgment conferred under s 15 of the SoP Act.
The issues for determination as agreed between the parties can be summarised as follows: 1. Whether there was a separate construction contract for some or all of the Link Works. If the answer to (1) is yes: 1. Whether, on its proper construction, the 26 March Claim is a payment claim under the SoP Act. 2. Whether the 26 March Claim is a second payment claim in respect of the same reference date as a previous payment claim. 3. Whether the 26 March Claim seeks payment in relation to two construction contracts.
The plaintiffs relied on the affidavits of Mr Peter Mullen affirmed 13 July 2020 and 21 August 2020, Mr Craig Elgie sworn 13 July 2020 and Mr Christopher Pope affirmed 13 July 2020. Mr Mullen is an architect who was, at the relevant times, employed as a Development Manager of the Crown Group. Mr Pope is a director of Pope Property and was employed by the Crown Group from 2012 to 2018 in various positions, including Development Director and Head of Development. Mr Elgie is the National Construction Director of Crown Construction. They were not cross-examined.
The Rail Entities did not read any affidavits but relied on the documents contained in the court book, which included various plans and drawings of the works undertaken as part of the Infinity development.
The parties also relied on detailed written submissions, including supplementary written submissions received after the hearing, which have been of assistance to the Court.
For the reasons that follow, I have concluded that the plaintiffs' claim should be dismissed.

[4]

Relevant provisions of the SoP Act

Section 3 of the SoP Act sets out the object of the Act and the scheme by which that object is to be achieved. It provides as follows: (1) The object of this Act is to ensure that any person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services. (2) The means by which this Act ensures that a person is entitled to receive a progress payment is by granting a statutory entitlement to such a payment regardless of whether the relevant construction contract makes provision for progress payments. (3) The means by which this Act ensures that a person is able to recover a progress payment is by establishing a procedure that involves - (a) the making of a payment claim by the person claiming payment, and (b) the provision of a payment schedule by the person by whom the payment is payable, and (c) the referral of any disputed claim to an adjudicator for determination, and (d) the payment of the progress payment so determined. (4) It is intended that this Act does not limit - (a) any other entitlement that a claimant may have under a construction contract, or (b) any other remedy that a claimant may have for recovering any such other entitlement.
Construction contract is broadly defined in s 4(1) 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.
The SoP Act applies to any construction contract, whether written or oral, or partly so: s 7(1). It does not apply to a construction contract under which the agreed consideration is to be calculated otherwise than by reference to the value of the work: s 7(2)(c).
Part 2 is headed "Rights to progress payments" and confers a statutory entitlement to a progress payment. At the relevant time, it provided: 8 Rights to progress payments (1) On and from each reference date [1] under a construction contract, a person: (a) who has undertaken to carry out construction work under the contract, or (b) who has undertaken to supply related goods and services under the contract, is entitled to a progress payment. (2) In this section, reference date, in relation to a construction contract, means: (a) a date determined by or in accordance with the terms of the contract as the date on which a claim for a progress payment may be made in relation to work carried out or undertaken to be carried out (or related goods and services supplied or undertaken to be supplied) under the contract, or (b) if the contract makes no express provision with respect to the matter - the last day of the named month in which the construction work was first carried out (or the related goods and services were first supplied) under the contract and the last day of each subsequent named month.
Progress payment is defined in s 4(1) as: progress payment means a payment to which a person is entitled under section 8, and includes (without affecting any such entitlement)- (a) the final payment for construction work carried out (or for related goods and services supplied) under a construction contract, or (b) a single or one-off payment for carrying out construction work (or for supplying related goods and services) under a construction contract, or (c) a payment that is based on an event or date (known in the building and construction industry as a "milestone payment").
Sections 9 and 10 provide how the amount of the progress payment is to be ascertained and how construction work is to be valued: 9 Amount of progress payment The amount of a progress payment to which a person is entitled in respect of a construction contract is to be: (a) the amount calculated in accordance with the terms of the contract, or (b) if the contract makes no express provision with respect to the matter, the amount calculated on the basis of the value of construction work carried out or undertaken to be carried out by the person (or of related goods and services supplied or undertaken to be supplied by the person) under the contract. 10 Valuation of construction work and related goods and services (1) Construction work carried out or undertaken to be carried out under a construction contract is to be valued: (a) in accordance with the terms of the contract, or (b) if the contract makes no express provision with respect to the matter, having regard to: (i) the contract price for the work, and (ii) any other rates or prices set out in the contract, and (iii) any variation agreed to by the parties to the contract by which the contract price, or any other rate or price set out in the contract, is to be adjusted by a specific amount, and (iv) if any of the work is defective, the estimated cost of rectifying the defect.
Part 3 of the SoP Act sets out the procedure to recovering progress payments. The service of a payment claim is the trigger for the procedure set out in Part 3.
Section 13(1) provides that a person referred to in s 8(1) who is or who claims to be entitled to a progress payment may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.
Section 13(5) provides that a claimant cannot serve more than one payment claim in respect of each reference date. However, that section does not prevent a payment claim from including an amount that has been the subject of a previous claim: s 13(6).
Section 14 deals with payment schedules. Under s 14(4), if the respondent to a payment claim does not provide a payment schedule within time, 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.
Section 15 deals with the consequences of failure to provide a payment schedule within time. If the respondent does not pay the claimed amount in circumstances where they have not provided a payment schedule, the claimant may recover that amount as a debt due to the claimant in any court of competent jurisdiction or make an adjudication application under section 17(1)(b) in relation to the payment claim: ss 15(1) and (2). Section 15(4) provides as follows: (4) If the claimant commences proceedings under subsection (2)(a)(i) to recover the unpaid portion of the claimed amount from the respondent as a debt: (a) judgment in favour of the claimant is not to be given unless the court is satisfied of the existence of the circumstances referred to in subsection (1), and (b) the respondent is not, in those proceedings, entitled: (i) to bring any cross-claim against the claimant, or (ii) to raise any defence in relation to matters arising under the construction contract.
Section 32(1) provides that nothing in Pt 3 (which consists of ss 13 to 32) affects any right that a party to a construction contract may have under the contract, under Pt 2 in respect of the contract, or apart from the SoP Act, in respect of anything done or omitted to be done under the contract. Subsections 32(2) and (3) provide: (2) Nothing done under or for the purposes of this Part affects any civil proceedings arising under a construction contract, whether under this Part or otherwise, except as provided by subsection (3). (3) In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal - (a) must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order or award it makes in those proceedings, and (b) may make such orders as it considers appropriate for the restitution of any amount so paid, and such other orders as it considers appropriate, having regard to its decision in those proceedings.

[5]

Facts

The facts are largely not in dispute. However, as the factual matrix and terms of the Development Agreement are relevant to the question of whether the construction contract relied on by the plaintiffs exist, it is necessary to set them out in some detail.
The Infinity development involved the construction of a 20-storey residential and retail building and three basement parking levels on land owned by the Crown Entities that was bounded by Botany Road and Bourke Street in Zetland (Crown Land).
The Station is on a rail corridor that runs from Central Station to Sydney Airport, part of which was located underneath the Infinity development site. The Station is privately operated by Airport Link Pty Ltd. The land owner of the Station and rail corridor is the third defendant, RailCorp.
The main entrance to the Station is on the western side of Botany Road, directly opposite the Infinity complex. At the time the Infinity Agreement was entered into, the Station could also be accessed by an underground pedestrian tunnel which ran underneath Botany Road between the Station and the footpath on the eastern side of Botany Road, adjacent to the development site. The existing entrance to the tunnel was via stairs that descended from the footpath at street level on the eastern side of Botany Road. There was no lift.
Prior to obtaining development approval, representatives of the Crown Group consulted with representatives of the Rail Entities and other parties about the Infinity development and proposals to connect the underground pedestrian tunnel to the Infinity complex. During the course of the pre-development approval discussions, Mr Mullen was informed that Mr Chris Bailey would be the main point of contact on behalf of the Rail Entities in relation to the Infinity development.
An email dated 23 July 2014 sent by Mr Tim Campbell, the Development Director at the Crown Group, to Mr Desmond Mow, the Principal Transport Planner at TfNSW, refers to a meeting held on 14 July 2014 that discussed options for the proposed tunnel connection. The email attached a set of drawings that identified five tunnel connection options, including option 5 which showed the new lift location and walls in the basement tunnel connection. The email also stated: The blind corners, finishes, lighting and other aspects of the safety and security will need to [be] worked through in more detail with TfNSW and the guidelines at a later date once an option is agreed [to].
On 20 March 2015, a meeting was held at the office of TfNSW attended by representatives from the Crown Group, Sydney Trains and TfNSW. The notes of the meeting were circulated to representatives from the Crown Group, including Mr Pope and Mr Mullen, and record, as "Basic principles", the need to determine what was required for the development approval stage and the construction certificate stage and the two separate sections to the "approval", namely the construction over the main tunnel and structural impacts of the development on the train substructure and the pedestrian tunnel link proposal. The 20 March meeting notes and emails sent in March, April and May 2015 also record that representatives from the Crown Group, including Mr Pope and Mr Mullen, had identified to representatives of the Rail Entities that the Crown Group required information from TfNSW for the purposes of preparing a "Tunnel & Access Design Brief" for the architects. The information sought included the "Transport Design Standards", information on fire safety design issues, lighting, security, signage and ventilation requirements, life safety issues and a finishes schedule.
Emails exchanged during May 2015 between representatives of the Crown Group, including Mr Pope and Mr Mullen, and the Rail Entities attached versions of a comments register that referred to various iterations of drawings for the Infinity development. The versions circulated on 25 and 28 May 2015 identify the following: the drawings relating to the Railway Pedestrian tunnel section were to be approved by TfNSW prior to the issuance of the construction certificate; detail issues were to be resolved post-development approval to allow Koichi Takada Architects (KTA), the Crown Group architects, to provide detailed drawings of the pedestrian tunnel connection, including door details, ceiling and wall treatments, lighting and fire protection to TfNSW for approval; the documentation for the revised pedestrian entrance had been reviewed for architectural content but other lighting, fire protection, ventilation, signage and security services needed to be addressed; and Crown would endeavour to address TfNSW's concerns regarding matters such as disabled access, although a design brief was required from TfNSW to fully clarify design issues.

[6]

July 2015: Development Approval

Prior to grant of approval for the Infinity development, the City of Sydney Council sought RailCorp's concurrence to the development. In a letter dated 2 July 2015, Sydney Trains (to whom RailCorp's property functions had been transferred and concurrence functions delegated since July 2014) advised City of Sydney Council that it concurred to the development. Sydney Trains' letter stated that while documentation was required, the potential effects of the development on the safe and effective operation of existing or proposed rail infrastructure facilities could be covered by the conditions of consent to enable the proposed development to progress to the next detailed design stage.
On 29 July 2015, the City of Sydney Council approved development application D/2014/1758 lodged by Crown Green Square Developments Pty Ltd for the Infinity development (Development Approval).
The Development Approval included conditions for the Infinity project works relating to mechanical ventilation systems (71), utility services (104) and fire safety certificates (107), as well as 30 conditions under the heading "(123) Sydney Trains Conditions". Some of the Sydney Trains Conditions were directed to ensuring the protection of rail infrastructure facilities and the rail corridor and to ensure rail safety. For example, Condition (123)(5) contemplated entry into an agreement with Sydney Trains for that purpose prior to the issue of a Construction Certificate or commencement of Stage 2 works. Others related to works to the underground pedestrian tunnel and the new entrance to the tunnel.
The proposal for the pedestrian tunnel connection that was the subject of the Development Approval involved works to demolish the existing entrance staircase from the footpath, an upgrade to and extension of the pedestrian tunnel through to the level 1 basement of the Infinity complex on the Crown Land, and a new entrance to the tunnel on the Crown land to be accessed via a new staircase and public lift, both of which ran between the level 1 basement and the ground floor of the Infinity complex.
Condition (123)(6) provided that all excavation and construction works were to be undertaken in accordance with the details, methodology and advice set out in identified documents, which included seven architectural drawings prepared by KTA. Some of the KTA drawings, which were marked "work in progress", showed the existing pedestrian tunnel and the design for the proposed extension of the tunnel into the Crown Land and the new entrance, including the new staircase from the level 1 basement to the ground floor of the Green Square plaza level and the public lift from the level 1 basement to the ground floor of the Infinity building (SK-033-01, SK-033-03, SK-034-01, A-099 and A-100).
The Sydney Trains Conditions also included the following: (21) Prior to the closure of the existing pedestrian entrance to Green Square or prior to a Construction Certificate being issued for Stage 4 works in relation to the new pedestrian entrance to the Station …, the Applicant shall obtain advice from Sydney Trains as to the need to enter into an Agreement to enable such a closure, the closure time period and required opening date, the demolition and removal of the existing entrance and infrastructure/services, make good of the footpath, the construction of the new entrance and infrastructure/services, any change to the hours of operation of the new entrance, and the process in amending the current easement that benefits Sydney Trains. In the event that Sydney Trains advises that such an Agreement is required, the Applicant shall enter into this Agreement at the nominated timing by Sydney Trains. The Agreement shall be in accordance with the terms stipulated by Sydney Trains and the Applicant is to bear all Sydney Trains' and RailCorp's costs of entry into any Agreement. (22) Prior to the issuing of a Construction Certificate for Stage 4 works the Applicant shall enter into a Memorandum of Understanding in relation to the upgrading works required within the existing pedestrian tunnel. (23) Prior to any Construction Certificate being issued in relation to the new pedestrian entrance to Green Square Station, the external pedestrian ramps and upgrading works to the existing pedestrian tunnel (anticipated at Stage 4), the Applicant shall submit final construction details and works package to Sydney Trains for endorsement. The Applicant shall comply with all requirements stipulated by Sydney Trains. The Principal Certifying Authority is not to issue the Construction Certificate until written confirmation has been received from Sydney Trains confirming that this condition has been satisfied. (24) The extension of the pedestrian entrance into the subject development site shall not be owned by Sydney Trains, RailCorp or Transport for NSW and shall be maintained by the building owners. The Applicant shall grant Sydney Trains, and any entity stipulated by Sydney Trains an easement covering the tunnel extension located within the development site. (25) The granting of an easement benefitting Sydney Trains for the extension of the pedestrian access into the development site shall be the responsibility of the Applicant and at their cost, and granted free of cost to Sydney Trains and any entity stipulated by Sydney Trains. The easement for the new entrance shall be prepared on completion of the entrance works. The new easement and easement terms are to be endorsed by Sydney Trains prior to registration on title. The Principal Certifying Authority is not to issue any Occupation Certificate until written confirmation has been received from Sydney Trains confirming of its endorsement of the new easement and easement terms, and Principal Certifying Authority has received confirmation that the Applicant has registered this new easement on title. (26) Stage 5 works shall not commence until the pedestrian tunnel extension and existing tunnel upgrade works have been completed. This timing can be varied subject to written agreement by Sydney Trains.
On 1 September 2015, Mr Pope sent to Mr Bailey an email headed "Draft MOU for Green Square" that refers to a meeting at which the "Crown Green Square rail legal contract" was discussed and sets out Mr Pope's notes from that meeting. The notes record that a shorter form "Deed" rather than a memorandum of understanding and then a Project Development Agreement would be produced, that all detailed design issues would be dealt with outside the Deed on an as required basis, that design briefs, documents and meetings were to be progressed as necessary, and that Crown was to provide a copy of Crown Construction's builder insurance.
Also on 1 September 2015, Mr Pope sent to Mr Bailey a copy of the certificate of currency for public and products liability insurance issued by Willis on 8 July 2015 that referred to Crown Construction as the named insured and Sydney Trains as an interested party in respect of the proposed Infinity development.
On 25 October 2015, the Crown Entities signed the Development Agreement.
On 13 November 2015, Mr Bailey sent a letter to Mr Pope advising that Sydney Trains, as agent for RailCorp, had no objection to the issue of a Construction Certificate for Stage 2 excavation and basement works in accordance with the Development Approval and the documents submitted.

[7]

Development Agreement

On 3 March 2016, the Development Agreement was entered into as a result of execution by each of the Rail Entities.
The Recitals to the Development Agreement refer to TfNSW as responsible for the administration of railway services in New South Wales, the Crown Entities as owning the Crown Land adjoining the Station, and TfNSW having proposed that the current Station entrance be relocated and incorporated into the development on the Crown Land.
Clause 3 is titled "Design obligations" and relevantly provides: 3.1 Consultation and approval of Applications (a) To the extent that any Application relates to works which: (i) comprise the Tunnel Works; and (ii) will occur on, or interface with, the Tunnel Land, then Crown must, prior to lodgement of the Application with the relevant Authority: (iii) submit each Application to Transport for comment, permitting Transport a reasonable period (which will not exceed 15 Business Days) to review and provide comments in relation to such Application; (iv) if requested by Transport to do so, consult and discuss with Transport, and use reasonable endeavours to incorporate the reasonable comments or suggestions of Transport, in respect of: (A) the proposed terms and conditions of an Application; (B) terms and conditions any relevant Authority indicates may be imposed on any consent; and (C) terms and conditions any relevant Authority indicates are required as a matter of policy or as a matter of best industry practice; …. (vi) obtain Transport's approval to each Application in accordance with clauses 3.3 and 3.4; … (b) For the avoidance of doubt, the provisions of this clause 3.1 do not apply to Applications that do not relate to works referred to in clause 3.1(a)(i)-(ii). … 3.5 Consultation and approval of Drawings and Specifications Crown must: (a) submit the Drawings and Specifications to Transport for comment at: (i) Tender Stage; and (ii) Construction Stage permitting Transport 15 Business Days to review and provide comments; (b) if requested to do so by Transport, consult and discuss with Transport, and use reasonable endeavours to incorporate the reasonable comments or suggestions of Transport, in respect of the Drawings and Specifications; … (d) obtain Transport's approval to each Tender Stage and Construction Stage of the Drawings and Specifications in accordance with clauses 3.8, 3.9 and 3.10.
By cl 3.8, the Crown Entities acknowledged that TfNSW may, acting reasonably, withhold its consent to proposed Drawings and Specifications which, amongst other things, do not comply with the applicable planning Laws or is inconsistent with the Crown Entities' obligations under the Development Agreement.
Clause 3.11 provides that the Crown Entities are responsible for the cost of preparing all Drawings and Specifications.
Significant to the issues in these proceedings is cl 4 of the Development Agreement, which relevantly provides: 4. Construction of the Works 4.1 Conduct of the Works Crown must, at no cost to the Rail Entities, procure that the Tunnel Works are done: (a) diligently and as quickly as reasonably possible; (b) in a proper and competent manner; (c) in accordance with: (i) the Drawings and Specifications; (ii) the Development Approval; (iii) all Authorisations required to conduct the Works; (iv) any lawful requirements or [sic] Authorities; (v) this document or any requirements under this document; and (vi) good industry practice and in keeping with the amenity and operation of Transport's Operations and the Station; (d) so that the Tunnel Works are fit for the purposes set out in this document; … (h) in compliance with all applicable Laws and the relevant Australian Standards. 4.2 Crown's Obligations (a) Crown must pay all costs for the Tunnel Works (including but not limited to obtaining and paying for any Service it needs to carry out the Tunnel Works). (b) Without limiting the operation of this clause 4.2, Crown: (i) must relocate or modify any Service as is necessary, including obtaining consents of any Service owner (whether public or private) in respect of all such relocations and modifications; and (ii) takes the risk of the existence, location, condition, and extent and nature of any relocation or modification of any Service in respect of the Works. … (f) Any matter in dispute under this clause 4 may be referred to the Expert for determination under clause 18. … 4.7 Enforcement of benefit of Crown's rights Crown must in respect of a Defect, if Transport requests in writing, enforce for the benefit of Transport any defects liability rights and manufacturer and supplier warranties that Crown may have against third parties and that have not been assigned to Transport on [sic] another Rail Entity in relation to: (a) those parts of the Tunnel Works within the New Tunnel or the Station; (b) any right or benefit of Crown to any maintenance entitlements or warranties with respect to any plant or equipment located in or about or servicing the New Tunnel; or (c) a Defect. … 4.9 Crown's warranties concerning Works Crown will ensure that: … (b) the Tunnel Works, when completed will: (i) comply with Law and the Development Approval; (ii) conform with the Drawings and Specifications (as amended in accordance with this [deed]); (iii) be in accordance with the requirements of this document; and (iv) be fit for purpose in accordance with the Drawings and Specifications; …
Clause 17 concerns the role of TfNSW and includes the following: 17. Role of Transport 17.1 Provide details Transport must provide the Transport Information to Crown as soon as possible after (not being more than 15 Business Days after) the date of this document. … 17.3 Payment (a) Sydney Trains shall pay Crown the Upgrade Costs in accordance with this clause 17.3. (b) Crown must, when it considers that each line item of Tunnel Works referred to in Schedule 4 has been completed and installed on the Tunnel Land to the level and standard of completion referred to in Schedule 4, deliver to Transport and Sydney Trains: (i) a certificate executed by a registered quantity surveyor appointed by Crown certifying, in favour of Transport, that each line item of the Tunnel Works has been completed as installed on the Tunnel Land; and (ii) a tax invoice for the amount contained in Schedule 4 corresponding to the relevant item ("Payment Amount"), …
Clause 20 requires the Crown Entities to procure the registration of easements benefiting RailCorp on the title for the Crown Land on terms substantially the same as those set out in Schedule 5. Compliance with cl 20 and the issue of an Occupancy Certificate in respect of the Tunnel Works were, amongst other matters, preconditions to Practical Completion: cl 1.1.
Clause 22.4 of the Development Agreement provides that the agreement could only be amended or replaced by another document signed by the parties.
Clause 1.1 includes the following definitions: "Crown land" means the land in Lot 100 in DP 1204112. "Drawings and Specifications" means the drawings and specifications in Schedule 1 and the Station Design Guidelines for the Tunnel Works and for the Works, to the extent that the Works: (a) relate to the Tunnel Works; and/or (b) will occur on, or interface with, the Tunnel Land. "New Tunnel" means the tunnel from the Station to the boundary of the Crown Land which is to be constructed as part of the Tunnel Works, as shown in Schedule 3. "Service" means any operating utility, including water, electricity, gas, fuel, telephone, drainage (including piped, open or subsoil drains), sewerage, industrial waste disposal and electronic communications services. "Station Design Guidelines" means the document attached at Schedule 6. "Transport's Operations" mean any part of the operations, systems or assets of the Rail Entities including: (a) the Railway; (b) the Station; (c) the Railway Corridor; and (d) and the operations of third party operators using the Railway. "Transport Information" means details of the existing tunnel from the Green Square Railway Station to the public street, including a plan showing the relevant strata details and electrical installations and any details which may be critical to the operation of the railway system, all of which will be relevant to the relocation of the existing tunnel. "Tunnel" means the existing pedestrian tunnel between the Station and the eastern side of Botany Road. "Tunnel Land" means the land …. within which the Tunnel is located. "Tunnel Works" means the works required to: (a) upgrade the Tunnel and entrance on the eastern side of Botany Road as described in the Development Approval and the plans forming Schedule 1; (b) demolish the existing street-level structures which enable access to, and egress from, Green Square Railway Station from the eastern side of Botany Road and which will not form part of the New Tunnel when completed; (c) remediate of [sic] the relevant area in accordance with the design and specifications in Schedule 1 and the Development Approval; and (d) an access ramp and lift to street level which is compliant with the Disability [Discrimination] Act 1992 (Cth). "Upgrade Costs" means the amount (excluding GST) payable to Crown for performance of the Tunnel Works, in the amount of $750,000.00 (excluding GST). "Works" means: (a) the portion of the Works forming part of the Crown Project and contemplated by or to be carried out pursuant to the Development Approval, which are located below RL 16.020, as more particularly identified in the Plans and Specifications; (b) the Tunnel Works.
Schedule 1 attaches eleven architectural drawings and visual representations prepared by KTA of the designs for the new entrance to the pedestrian tunnel, the new stairs, three levels of basement areas, and the pedestrian tunnel. Four of the drawings (SK-033-01, SK-033-03 and A-099 dated 22 May 2015, and A-100 dated 29 April 2015) are drawings referred to in Development Approval Sydney Trains Condition (6). The KTA drawings attached to Schedule 1 of the Development Agreement are marked "work in progress". They do not record the location or details of electrical, mechanical or other services (such as lighting, security, fire safety, ventilation or CCTV) in the existing or extended part of the tunnel or in the lift lobby and staircase area. The KTA drawings identify that RL 16.020 is at a level above the ground floor lift lobby and plaza area of the Infinity complex.
Schedule 3 attaches a KTA drawing of the New Tunnel with the proposed extension to the tunnel.
Schedule 4 refers to the Upgrade Costs as follows: ITEM NUMBER DESCRIPTION OF WORKS COST 1 BUILDERS COSTS 76,399 2 PRELIMS 106,390 3 REMOVAL OF EXISTING STATION ENTRY PORTAL 57,886 4 SITE PREPARATION 328,500 5 SUBSTRUCTURE 180,825 TOTAL 750,000

[8]

Schedule 5 sets out the terms of the easements to be granted to RailCorp over that part of the Crown Land that comprised the extension of the pedestrian tunnel into the Infinity development and the new entrance (Easement). It also contains two drawings of the "Easement Site" on the ground and first basement levels marked in blue.
Schedule 6, headed Station Design Guidelines, includes a link to documents available on TfNSW's Asset Standards Authority website, which are stated to be revised from time to time, with the current documents titled ESB 000-ESB 005. Versions of ESB 000-ESB 004 were in evidence. In general terms, the ESB documents include information concerning the construction of new rail stations and the refurbishment and upgrade of existing rail stations for RailCorp. They provide an overview of the design and procurement process, the design principles to be applied for any works, and the services and systems applicable to the operation of train stations, including "Minimum Standard Features" for safety and security.
ESB 001, headed "Design Context and Process", refers to the station design process as involving "Stakeholder Consultation", the engagement of "Services Consultants" to evaluate and undertake designs of critical systems and identify services and structure space requirements, which steps will generally occur prior to the submission of a development application. ESB 001 identifies that project documentation will need to be produced which includes, but is not be limited to, the following: "Electrical LV", including CCTV specification and layout, a site plan to indicate location of switchboards, lighting layouts for concourse areas, power supply for communications, security, CCTV and electronic indicators; "Fire Protection", including sprinklers, detectors and fire suppression systems; "Vertical Transportation", for the design and documentation of lifts; and "Mechanical", including ventilation. ESB 001 also identifies "Minimum Standard Features" for safety and security at stations, which include mandatory CCTV and help point installations.
ESB 002, headed "Design Principles", identifies alarms and help points as relevant physical elements for the design of accessible paths to stations, according to the Disability Standards for Accessible Public Transport 2002.
ESB 004, headed "Station Services and Systems", identifies that services and systems need to be incorporated and co-ordinated in station design with respect to the accommodation of plant, equipment and controls, cable/conduit/pipe routes, and the location and support of "head end" equipment. It also states that building-related services, such as mechanical, electrical, hydraulic and fire service systems, will likely require interfacing and may need to be uniform across the network to ensure connectivity.
Paragraph 4.1.2 of ESB 004 states that: Contract documents should carefully enumerate the extent of work required to complement Station Operational Systems and Infrastructure Systems & Services arranged work [sic].In some cases, because of connection between, and proximity to, some of the above systems, consequential work may be required to the interfaced system as a result of a particular project scope. It is important that the scope of the work or a contingency sum is included as part of the station project.
Pausing here, it is common ground that the Development Agreement did not include any contingency sum or a detailed scope of works.

[9]

April 2016 - February 2017: Post-Development Agreement services designs

On 7 April 2016, Mr Mullen sent Mr Bailey an email stating that he would like to get the ball rolling on the design of the pedestrian tunnel. Attached to Mr Mullen's email were sketch drawings showing proposed finishes to the tunnel connection, such as tiling finishes and wall cladding.
On 27 May 2016, Mr Mullen asked Mr Bailey whether he had any feedback on the tunnel finishes sketches and advised that the architects were preparing a full set of drawings for the tunnel connection for submission and approval. Later that day, Mr Bailey sent an email to Mr Mullen stating that he had no feedback yet and asked for the drawings to be forwarded in electronic format as needed to distribute them to "Stations and also Airport Link Company (who operate the station)".
On 10 June 2016, Mr Mullen sent an email to Mr Bailey attaching detail drawings prepared by KTA of the proposed relocation of the tunnel and entrance to the Station for comment and approval, noting that they were in line with the Development Approval and the drawings previously submitted (Revision B drawings). Mr Mullen asked Mr Bailey to forward the Revision B drawings to all relevant TfNSW stakeholders for their review and comments.
The Revision B drawings include references to, for example, finishes including ceramic tiles, wall cladding and aluminium battens in the tunnel. They also include notes that state "Services to be confirmed" and "Existing roller shutter location to be modified as required" in the Railway Connection drawing of the tunnel (5400), "Final services design to be confirmed" on the Railway Entry drawing of the new entrance area (A-5402), and "To comply with Rail Standards" on the drawing of the Railway Access Stairs (A-5404).
By email dated 1 August 2016, Mr Bailey sent to Mr Mullen some comments on the Revision B drawings, including under the heading "Operational" that refer to CCTV, roller doors and lift issues that are set out below. Mr Mullen sent an email on 9 August 2016 which includes responses to each of the Operational items raised by Mr Bailey, as identified below in italics: Operational CCTV It is important that conduits and cable infrastructure needs to be in place up to the Botany Road entrance. We would like CCTV coverage up to street level. Under Schedule 5 Item 2 (a) (ii) Rail Corp is entitled to erect or place commute control barriers, associated signage, CCTV cameras, roller-door shutters and commuter signage on the Easement Site in relation to RailCorp's management of railway commuter activities provided that such barriers and signage do not materially adversely affect the operation of the retail centre contained in the Lot Burdened. Roller Doors Who is responsible for the opening and closing of the entrance doors? We would require automatic control of this door back to the Airport Line's (sic) Mascot Control Room. Under the Green Square Railway Station Relocation of Tunnel and Entrance Development Agreement Schedule 5 Item 2 (c) (ii) Crown Group must ensure that the Easements Site is closed and secured at all times during which it is not available for use. However Under Schedule 5 Item 2 (a) (ii) Rail Corp is entitled to erect or place commute control barriers, associated signage, CCTV cameras, roller-door shutters and commuter signage on the Easement Site in relation to RailCorp's management of railway commuter activities provided that such barriers and signage do not materially adversely affect the operation of the retail centre contained in the Lot Burdened. To this end RailCorp is responsible for the opening and closing of the doors. Crown can wire the doors back to the station control room and hence back to the Airport line's (sic) Mascot Control Room. Lift issues Who will be responsible for ongoing maintenance and lift breakdown? Under the Green Square Railway Station Relocation of Tunnel and Entrance Development Agreement Schedule 5 (d) Lift Crown is responsible for the maintenance.
On 27 October 2016, Mr Bailey sent an email to Mr Mullen advising that he had not heard anything further from stakeholders and advised Mr Mullen to "proceed accordingly".
On 2 February 2017, Mr Mullen sent an email to Mr Bailey requesting a meeting to discuss the services connections in the tunnel area to enable Crown Group to complete the detail services design of the tunnel connection. In an internal email sent by Mr Mullen on 21 February 2017, Mr Mullen stated that the meeting was to go through the services connections between the rail station and "our building."
Mr Mullen deposes that, in February 2017, Mr Bailey told Mr Mullen that he could set up a meeting but that Airport Link's requirements would need to be included in the pedestrian tunnel and that he would bring them to the meeting.

[10]

March - September 2017: Tunnel and new entrance services designs meetings

On 1 March 2017, Mr Mullen (and others on behalf of the Crown Group), Mr Bailey, Mr Boussi and Tim Anderson, the CEO of Airport Link, attended a meeting in which the services for the tunnel connection were discussed (March meeting).
Mr Mullen's evidence and the minutes of the March meeting that he prepared (and which were circulated to Mr Bailey, Mr Anderson and Mr Boussi on 7 March 2017) identify that a range of operational and design matters relating to services in the tunnel were discussed. Mr Mullen's evidence and the minutes record discussions about the existing CCTV, lighting, security, communications, fire and ventilation services in the tunnel, what was proposed to be installed by way of services in the new entrance area, the necessary modifications and upgrades to the services in the tunnel, and that Crown's services engineer, Building Services Engineers (BSE), would document what had been discussed for approval by Airport Link and Sydney Trains.
The minutes of the March meeting record the following: 1. the services to the tunnel and the Crown building were to be separated at the boundary, with Crown and Airport Link being responsible for services to their respective sections, unless it was beneficial to both parties and both parties agreed to link or control the services from one building or the other: item 1.4; 2. the security door at the entrance to the tunnel was to remain in its current location with its current control system and current CCTV coverage provided by Airport Link: items 2.1 and 2.2; 3. a new recessed roller-shutter door was proposed to be located at the main station exit to the library plaza, which was to be controlled and monitored by Airport Link, with access control to be by key with a remote link back to the Airport Link control centre at Mascot: items 3.1, 3.2 and 3.4; 4. CCTV monitoring was required for the upper and lower entrances of the stairs and lifts in the new entrance, which was to be provided to both the Airport Link control office in Mascot and the Crown Group building manager's office: items 3.5 and 8.2; 5. KTA were investigating the separation of the tunnel lift and the retail lobby lift to avoid conflict in use, with the tunnel lift to be controlled by Airport Link but powered and maintained by the Crown Group. CCTV monitoring in the lift was to be wired to the Airport Link control centre in Mascot: items 4.1 and 5.2-5.6; 6. the existing services in the tunnel were to be extended to the boundary, with separate services to be run from the boundary into the "Crown Section of the building". BSE was to document all services connections for Airport Link approval: items 6.1 and 6.2; 7. the lighting in the tunnel to the boundary was to remain on the current circuits, the lighting switching was to be controlled by Airport Link, and BSE was to produce a lighting layout for Airport Link and Sydney Trains for approval: items 7.1, 7.3 and 7.5; 8. the existing security camera to the station concourse was to remain, but additional security cameras were to be installed in the Crown development at the lower entry to the tunnel lift, inside the lift at the Botany Road entry, at the lower level of the main stairs and at the top of the main stairs. The new cameras were to be wired back to the Airport Link control centre in Mascot and BSE was to produce a security layout for Airport Link and Sydney Trains for approval: items 8.1-8.3; 9. the Crown Group was to replace the fire and smoke detectors in the tunnel up to the boundary, noting that the existing system was wired back to the Station's system and that Airport Link was to supply the Station's fire engineering report to assist in the fire engineering design of the tunnel: items 9.1-9.5; 10. the existing mechanical ventilation system in the tunnel was to be extended to the boundary and the ventilation to the stair area was to be documented by BSE for Airport Link's approval: items 11.1 and 11.2; and 11. communications systems in the tunnel were to be extended to the boundary: item 12.
Following the March meeting, Mr Mullen gave instructions to KTA and BSE to procure designs for the service works discussed at the meeting.
The day after the March meeting, Mr Mullen sent to Mr Bailey five revised "Railway Tunnel" design drawings prepared by KTA (Revision C drawings) for TfNSW's approval. The Revision C drawings did not incorporate the matters discussed at the March meeting and, like the Revision B drawings, included notes such as "Services to be confirmed" and "Final services design to be confirmed". The following day, on 3 March 2017, Mr Mullen sent four of the Revision C drawings to two other representatives of TfNSW, noting that a further submission would be provided when the services were coordinated prior to the issue of a construction certificate.
On 17 March 2017, Mr Mullen sent an email to Mr Bailey with "Rail Tunnel Design Standards" as the subject line. Mr Mullen's email states that the Crown Group consultants wanted to get started on the tunnel design and asks Mr Bailey where the standards were located. Mr Bailey responded later that day and referred Mr Mullen to the current station design standards on the TfNSW website, which I take to be a reference to the Station Design Guidelines identified in Schedule 6 to the Development Agreement.
On 7 April 2017, Mr Bailey sent an email to Mr Mullen advising that Sydney Trains and TfNSW had no comments on the Revision C drawings and to proceed accordingly.
On 10 May 2017, Mr Mullen sent an email to Mr Bailey and asked for confirmation that the Revision C drawings had been approved by each of the Rail Entities. On 24 May 2017, Mr Bailey confirmed that there were no comments or objections to the Revision C drawings and to proceed on that basis.
On 6 June 2017, Mr Pope sent an email to Mr Bailey, copied to Mr Mullen, asking for clarity on who from the Rail Entities was responsible for approving the services interface design, for example, the design connection to existing lighting and security. Mr Pope's email also refers to a need to urgently finalise the design to meet the programme target.
By email dated 8 June 2017, Mr Bailey advised Mr Mullen and Mr Pope that the only party to meet with regarding the services connections for the tunnel was Airport Link and that he could arrange a meeting with Mr Boussi.
On 19 June 2017, Mr Mullen sent an email to Mr Bailey requesting a copy of any fire engineering report applicable to the Station and tunnel and the as built drawings for the tunnel.
On 30 June 2017, Mr Bailey sent a fire report to Mr Mullen who passed it on to BSE and Holmes Fire, the Crown Group's fire consultants.
On 14 July 2017, another meeting was held to discuss the services design for the tunnel and the new entrance (July meeting). The meeting was attended by Mr Mullen, Mr Bailey, Mr Boussi, Mr Anderson and others from the Crown group.
Mr Mullen prepared minutes for the July meeting which adopt the same format as his previous minutes and record a discussion similar to that which had occurred at the March meeting. According to Mr Mullen's evidence, at the start of the July meeting, he undertook a general overview of what he understood was required by the Development Agreement. The July meeting minutes record that the Revision C drawings had been approved, approval of tender drawings was required by the Rail Entities, and Schedule 5 of the Development Agreement outlined each parties' responsibilities in respect of the Easement, which the minutes summarised.
The July meeting minutes and Mr Mullen's evidence record that there were discussions about existing services that were operating in the tunnel, what would be necessary to modify and upgrade them, such as in relation to fire engineering, and new items of work, such as: 1. a new fixed camera (C2) to be installed in the tunnel looking back at the roller shutter door: item 3.3; 2. fixed CCTV monitoring of the foyer camera (C5) which was to be linked back to Airport Link and the Crown Group to allow monitoring of both lift doors: item 5.4; 3. a help point which was to be installed on the wall adjacent to the lift and monitored by the Airport Link control centre at Mascot: item 6.8; and 4. existing services in the tunnel which were to be updated to the current codes and extended to the boundary by the Crown Group, including "lighting, power, dry fire, wet fire, mechanical services, Digital Antenna System (DAS), government radio network, and any other service currently installed in the tunnel connection": items 7.1 and 7.3.
After the July meeting, Mr Mullen marked up three KTA drawings relating to the Railway Tunnel (A-5400), the Railway Entry (A-5402) and the Railway Access Stair (A-5404) to incorporate what was discussed at the meeting, which he sent on 19 July 2017 to Mr Bailey, Mr Boussi and Mr Anderson, together with the July meeting minutes. The marked up drawings identify the location of emergency lighting in the ceiling of the tunnel and the new entrance area, the help point near the lift, and five fixed and CCTV cameras that were to be located in the tunnel and the new entrance and lift area (identified on the drawings as C2-C6).
On 10 August 2017, Mr Mullen sent an email to Mr Boussi asking for the Crown Group's services engineers to inspect the plantrooms and services cupboards as part of the tunnel connection design. Mr Boussi replied stating that he could arrange that inspection.
Also on 10 August 2017, Crown Construction, as contractor, entered into a written contract with Crown Green Square Developments Pty Ltd (the Crown Group company that had applied for the Development Approval), as principal, to design and construct the Infinity development in accordance with 2,791 documents (drawings and specifications) and the Development Approval (Building Contract). According to Mr Elgie's evidence, he understood that the Building Contract required Crown Construction to perform the obligations owed by the Crown Entities under the Development Agreement in relation to the pedestrian tunnel and the new entrance to the tunnel. The list of drawings identified in Schedule 1 to the Building Contract includes KTA drawings, such as in relation to the Railway Entry (A-5402), Railway 3D Views (A-5403) and the Railway Access Stair (A-5404).
On 6 September 2017, Mr Mullen and others from the Crown Group attended another meeting with Mr Bailey, Mr Anderson and Mr Boussi, during which matters relating to the services design for the tunnel and the new entrance were discussed (September meeting). Mr Mullen prepared minutes of the September meeting in the same format as the previous minutes which record that matters similar to those in the previous meetings were discussed.
The September meeting minutes record the following: the draft fire engineering report had not been completed (item 2.1); Airport Link had provided as built services drawings and an inspection of services had been conducted (item 2.6); the cost of commissioning security cameras linked to the Station and the cost of programming smoke detectors were to be borne by Airport Link (items 9.4 and 10.6); there was to be a schedule for drawings by KTA and BSE and a Holmes Fire scope of works (item 13.1); and the tunnel connection works were expected to commence in approximately March 2018 and complete in September 2018 (item 13.2).
On the afternoon of 6 September 2017, Mr Mullen sent an email to Mr Boussi requesting copies of the specification for the existing lights so that BSE could source an alternate, a specification for the existing cameras and help point, and the operation procedure for the roller shutter doors.

[11]

November 2017 - November 2018: Process to obtain approvals for services design drawings

On 8 November 2017, Mr Mullen sent an email to Mr Boussi copied to BSE (but not to Mr Bailey) about the CCTV. Mr Mullen's email states: As part of our tunnel works Crown Group will install the CCTVs required by Airport Link and wire them back to a central connection point in the station as identified in the site inspection. My understanding is the cost of testing and commission of the CCTV is to be done by Airport link as they are connected to a Honeywell system and need to [sic] new CCTVs to be integrated into the existing station CCTV system. The cost of the commissioning and integration into the station system is to be borne by Airport Link. These items will be included in Crown Documentation as a separate cost item. Could you confirm this is the case?
Mr Boussi responded the next day by an email which relevantly states: … you need to confirm those aspects relating to cost, with Sydney Trains in accordance with the original Sydney Trains and Crown arrangement. Airport Link were not privy to the original arrangement, and I've never seen it. Certainly nobody has ever discussed any cost implications we have under that agreement. So can you please refer that to Sydney Trains under your agreement with them to get that consent? Thank you.
Mr Mullen says that sometime after the email exchange with Mr Boussi, he had a conversation with Mr Bailey during which Mr Mullen said they needed to discuss the cost of the CCTV in the tunnel and who was going to pay for it. While he cannot not recall Mr Bailey's response, Mr Mullen recalls that Mr Bailey did not make any commitment to pay. As events transpired, the discussion about the cost of the CCTV did not occur as Mr Bailey ceased his employment with Sydney Trains on 23 November 2017.
On 8, 9 and 15 November 2017, BSE issued written specifications for Electrical Services, Fire Services and Mechanical Services (all marked "For Construction") and drawings for Electrical Services (EL-700, EL-701, EL-702 and EL-703, Issue 1), Fire Services (FS-700 and FS-701, Issue 1) and Mechanical Services (ME-700 and ME-701 Issue 1) in relation to the services works in the tunnel and the new entrance on the Crown Land. The BSE drawings identify services works that had been discussed and referred to in the minutes of the March, July and September meetings. They services include, amongst other things: the lighting, power, communications and security systems works for the tunnel, basement and ground floor of the new entrance, including the help point near the lift, the CCTV cameras and the link of the CCTV camera in the pedestrian tunnel to the door controller; the fire services sprinkler system layout for the tunnel, basement and ground floor of the new entrance; and the air conditioning and ventilation layout for the tunnel, basement and ground floor of the new entrance.
Mr Elgie's evidence describes the design in the BSE Electrical Services Drawings as the "Link Works", being the works linking the services in the Tunnel to the Station and to Airport Link's monitoring site in Mascot required by Airport Link. Mr Elgie's evidence is that he directed that Honeywell be invited to submit a tender for the Link Works as he was told by a subcontractor that all electrical and communication works associated with the railway and Station had to be undertaken by Honeywell. He also gives evidence that he was told by a Honeywell representative in February 2018 that the company had an "exclusive arrangement with rail to maintain all services within the stations in Sydney", and says that the exclusive arrangement had not been disclosed to him prior to execution of the Development Agreement. I pause to observe that Mr Elgie's evidence about what he was told was admitted on a limited basis.
On 22 May 2018, Mr Mullen attended a meeting at the site office of the Crown Group with Mr Pope and Mr Graham McLaren, Program Manager at Sydney Trains, who had been identified to Mr Mullen as the person who had taken over from Mr Bailey as the point of contact for the Rail Entities. Mr Mullen says they discussed the status of design approval, the tender process of the various works to the tunnel, and the cost of the tunnel works. Mr Pope and Mr Mullen give evidence to the effect that Mr Pope told Mr McLaren that the costs of "the tunnel works are blowing out", with reference to work arising "from Airport Link's requirements", and that the Crown Group was looking for a "variation to the Development Agreement". According to Mr Mullen, Mr McLaren informed them that "there is no mechanism in the contract to direct a variation. You will just have to carry on and do the work". According to Mr Pope, Mr McLaren told him that the Crown Group should formally write to them "in accordance with the contract".
On 20 June 2018, Mr Mullen sent the BSE Electrical and Fire Services Drawings, some KTA drawings, a KTA "Fittings and Finishes" schedule and a fire engineering report from Holmes Fire to Mr Brian Truong, Project Interface Manager, Sydney Trains. Mr Truong had been identified by Mr McLaren as someone who could work with Mr Mullen on the design and construction process. This appears to have been the first occasion on which the completed BSE Electrical and Fire Services Drawings were sent to any of the Rail Entities.
Also on 20 June 2018, Mr Pope sent an email to Mr McLaren, copied to Mr Mullen and Mr Elgie, about the costs of the pedestrian tunnel upgrade works. Mr Pope's email referred to the costs being considerably more than the value originally estimated on the concept design in September 2015, with the actual cost being $2,594,749 compared to the original estimated cost of $750,000. Mr Pope's email states: As discussed, I confirm that Crown Group has now completed the tendering to trade subcontractors for the full extent of Green Square rail station pedestrian tunnel upgrade works for the benefit of Transport for NSW (and others). This follows the lengthy liaison and finalisation by Transport for NSW and Crown Group of all the necessary design for the tunnel works. … As mentioned at the meeting, the cost for competing [sic] these works is considerably more than that the value originally estimated on the concept design in September 2015 at the time of collation of the Green Square Relocation of Tunnel and Entrance Development Agreement. … Grown [sic] Group has commenced these tunnel works in good faith but in order for us to complete these works in a timely manner (and to comply with both the Tunnel Development Agreement and Council Development Approval contractual completion timeframes) we now request that you meet our Grown [sic] Group Commercial Manager (Bernie Bishara) at our site office in Green Square next week so that he can take you through both the final agreed tunnel upgrade design and the detailed subcontractor tender pricing documents in order to satisfy Transport for NSW that the actual works costs are genuine. Following such, we respectfully request that the shortfall in these rail tunnel upgrade works be provided to Crown Group by TfNSW immediately to enable us to complete the works in both a timely manner and to enable the payment to trade subcontractors for such works. Crown Group is simply unable to fund a shortfall cashflow of this magnitude …
At the hearing, the plaintiffs accepted that the request in Mr Pope's 20 June email for funds for the cost of completing the works included the works they assert are the subject of the other construction contract in these proceedings, namely the Link Works.
On 3 July 2018, Mr Mullen sent an email to Mr McLaren which, amongst other things, asked for a meeting to discuss the services design approval process and the variation to the tunnel costs.
According to an email sent by Mr Bernard Bishara of the Crown Group to Mr Pope, Mr Elgie and Mr Mullen on 4 July 2018, Mr McLaren advised Mr Bishara that he did not want a meeting "at this stage", he was currently reviewing the "submission", the legal department was preparing a formal response to the request to be paid, and his initial feedback was "the extra over costs will be rejected in accordance with the agreement".
On 4 July 2018, Mr McLaren sent an email to Mr Pope, copied to Mr Bishara, responding to Mr Pope's 20 June email and stating: I refer to your email of 20 June 2018. I advise under clause 4.1 of the Green Square Relocation of Tunnel and Entrance Development Agreement (Agreement), Crown is required to complete the Tunnel Works (as that term is defined in the Agreement) at no cost to the Rail Entities. Under clause 17.3, Sydney Trains is required to pay the Upgrade Costs of $750,000 to Crown in accordance with the process set out in that clause. The Rail Entities will not be providing any additional funds to Crown to complete the Tunnel Works and request that Crown complete the Tunnel Works as per the requirement under the Agreement.
During late July and August 2018, Mr Mullen and Mr McLaren exchanged emails regarding the approval process for the tunnel works, including obtaining the necessary sign-off from the Authorised Engineering Organisation (AEO) authority, a certifying authority for rail-related works. In this case, an external engineering organisation, GHD, was appointed as the AEO.
On 24 July 2018, Mr Mullen sent three emails to Mr McLaren attaching the "Construction Stage documentation" for the tunnel and new entrance for comment under cl 3.5(a) of the Development Agreement and an AEO Verification Report for "selected designs of the Green Square Station Pedestrian tunnel project works" for comments and approval. The Construction Stage documentation comprised: 1. a BSE Fire Services specification for the extension of fire services dated 9 November 2017, a Fire Services guide and revised Fire Services drawings that identified the sprinkler layout for the tunnel, basement and ground floor of the new entrance (FS-700, FS-701 and FS-702, Issue 2); 2. a BSE Electrical Services specification dated 9 November 2017, Electrical Services notes and revised Electrical Services drawings that identified the lighting, power, communications and security layout in the tunnel, basement and ground floor of the new entrance near the staircase and lift (EL-700, EL-701, EL-702 and EL-703, Issue 3); and 3. a BSE Rail Tunnel Mechanical Services specification dated 9 November 2017, Mechanical Services notes and revised Mechanical Services drawings that identified the air conditioning and ventilation layout for the tunnel, basement and ground floor of the new entrance (ME-700, ME-701 and ME-702, Issue 2).
The BSE drawings and notes are marked "for construction" and dated July 2018. The drawings and specifications include works that were discussed at the March, July and September meetings, such as the CCTV cameras and the help point. The Electrical Services specification also includes a Help Point data sheet, which records that it was designed according to Disability Act requirements and provides communications functionality.
On 30 August 2018, Mr Mullen sent an email to Mr McLaren in which he provides an overview of the project works in response to a request from Mr McLaren for a short brief for the Rail Entities' engineers to understand the current status of the project. Mr Mullen's email refers to the Development Agreement requiring the extension of the existing pedestrian tunnel into the Infinity development and works in two areas. The first area was the existing tunnel, where the proposed works included installing new services to replace the old services and connecting them back to the existing station services. The second area was within the boundary of the Infinity development, with the proposed works including rail services, security, signage and access control extended from the rail concourse into the development, and lighting, lift, security and fire services to be provided by Crown Group.
On 17 September 2018, Mr Mullen sent an email to Mr McLaren in response to Mr McLaren's email request dated 14 September 2018 asking for GHD to provide a stakeholder list confirming consultation with Sydney Trains' stakeholders, as required by the AEO guidelines. Mr Mullen's email states: From Crown Groups point of view our stakeholder consultation was undertaken during regular design meetings with the design consultants and Chris Bailey from Sydney Trains and Hicham Boussi from Airport Link. The purpose of the design meetings was to involve Sydney Trains and Airport Link in the development of the tunnel design and in particular to ensure any input from Sydney Trains and Airport Link was incorporated in the tender and construction documentation of the project. To this end Crown Group received the attached sign off of the tender documents from Chris Bailey.
On 27 September 2018, Mr Mullen sent to Mr McLaren revised Electrical Services Drawings (EL-700 and EL-702, Issue 4, dated 21 September 2018) and a report prepared by GHD for the Crown Group as the third party AEO verification of designs for the Station's pedestrian tunnel works.
In or around October 2018, Mr McLaren ceased employment with Sydney Trains.
From November 2018, Mr Mullen liaised with Ms Robyn Jaber of Sydney Trains in relation to the approval of the Construction Stage documentation, which was identified in an email sent from Mr Mullen to TfNSW on 6 November 2018 as being "urgently" required.
On 14 November 2018, Ms Jaber sent an email to Mr Mullen asking for his response to five issues raised by the fire engineer. The same day, Mr Mullen responded to each of the issues raised, which responses were incorporated into Ms Jaber's email and are identified in italics below: 1. Who is leading discussions regarding the interface of the fire systems? Fire interface has been agreed with TfNSW and Airport Link and Crown Group. The installation on TfNSW property is to be done by Honeywell. 2. Who is developing the site management plans and shutter closure process? It is included in the Fire Engineering report and is to be managed [by] Airport Link 3. Who is conducting the appropriate training? Airport Link 4. What key management process is being implemented for the shutters? As per the fire Engineering report 5. Who is paying for the above? Crown is paying for all construction in the tunnel including services and signage. Airport Link is responsible for maintenance of their section of the building.
Mr Mullen says that when he sent the 14 November email, his response to question 5 was not intended as a statement of his understanding as to who would bear ultimate liability for the cost of the services in the tunnel and that, to his knowledge, that issue was unresolved. He gives evidence that, by this time, the Crown Group had started to carry out the works so as to not delay the project as a whole.
On 9 November 2018, Mr Mullen sent an email to Ms Jaber requesting approval under cl 3.1 of the Development Agreement in respect of the "construction certificate documentation" submitted to Sydney Trains.
On 15 November 2018, Ms Jaber wrote to Mr Mullen and provided Sydney Trains' provisional consent for the construction certificate, in accordance with the Development Approval. Ms Jaber also noted that Condition (123)(23) of the Development Approval Conditions was "accepted" and Condition (123)(25) (which related to the proposed Easement) was "To be completed" and "outstanding".

[12]

February 2019: The Honeywell contract

On 11 February 2019, Crown Construction entered into a contract with Honeywell Ltd in relation to the Green Square Station - Infinity project tunnel connection (Honeywell Contract). The Honeywell Contract was for a fixed price of $677,282 excluding GST.
Schedule 1 set out the Trade Scope of Works for Mechanical, Electrical and Fire Services, the introduction to which stated: This Scope of Works is for the total decommissioning and reinstatement of all building services in the Green Square Station-Infinity Project connecting rail tunnel and concourse and includes all installation, testing & commissioning to complete the Audio Visual, security, and alarms, duress and safety measures including Mechanical, Electrical & Fire Services in accordance with the drawings, specifications and programme provided and includes all necessary items required to operate under control of Airport Link and State Rail (SR) as well as the Infinity project Building Management Committee (BMC) to allow a proper and timely completion in a properly co-ordinated and safe manner, including but not limited to the following; An important note for this contract of works is that Honeywell are to include all services work and upgrades to their system equipment where required for all mechanical, electrical, fire scope of work that is within the Green Square Rail Station Concourse, within all services plantrooms and equipment and any services installation outside the rail tunnel construction hoarding that Crown Group will erect at the commencement of the Rail tunnel works that delineates the Infinity Project From the Green Square Station. This scope also includes all fibre optic cabling, DAS and Government radio station within the tunnel and back to all head ends and Station infrastructure within the Green Square Station.
The Mechanical Scope of Works included works referred to in five paragraphs. The introduction states: Honeywell is required to decommission and installation of all mechanical equipment within the tunnel and complete testing and commissioning of new mechanical systems to ensure the mechanical systems achieve the requirements as per the specification, drawings approved by Sydney Trains.
The Electrical-Power and Lighting, Security, Help Point Scope of Works included works identified in paragraphs (6) to (28), and relevantly provided: Honeywell is required [to] decommission and supply and installation of all electrical and communications, data, security and controls within the rail tunnel. Honeywell will also be responsible for testing and commissioning of the electrical and communication systems … to ensure the electrical and communication systems achieve the requirements as per the specification, drawings and documentation approved by Sydney Trains.[Honeywell shall provide the following as part of the electrical scope of works. … (8) All wiring for the CCTV Cameras, Help Point, security & train signage are to be completed by Honeywell as well as any upgrades to this equipment. ... (11) All connections required by Sydney Trains/Airport Link to connect to Mascot need to be completed by Honeywell. ... (16) Install optic fibre for the help point for the railway tunnel and complete install of the help point. (17) Sydney Train Intercom help point connect to train station intercom help point system. … All works that are outside of the construction hoarding line at the end of the tunnel within the concourse and within the Green Square station are the responsibility of Honeywell to include in their scope of work. This includes all access and operations works within the plantroom. When the main contractor requires commissioning to be completed Honeywell are required to make themselves available to complete the commissioning which includes access the [sic] electrical and communication boards to operate the electrical and communications systems that feed into the railway tunnel. Please note any electrical, CCTV, security and help points, communication cabling outside the hoarding is to be completed by Honeywell as part of this contract works. … (27) Wiring of help point from the cupboard within Crown's boundary to station board, Help Point to be supplied and installed by Crown's electrician. (28) Supply of CCTV cameras located in Crown's concourse.
The Wet and Dry Fire Systems Scope of Works included works identified in paragraphs (29) to (49) and stated: Honeywell is required [to] decommission all wet and dry fire systems within the tunnel and complete testing and commissioning with Crown's wet fire contractor to ensure the sprinkler, fire detection, alarms and EWIS systems achieve the requirements as per the specification, drawings approved by Sydney Trains. Honeywell is also to supply and install dry fire system within the tunnel.
The Drawings and Specifications identified at Schedule 2 of the Honeywell Contract include the revised for construction Electrical Services, Mechanical Services and Fire Services drawings that were sent to Mr McLaren in July and September 2018 and the November BSE Specification documents.
On 17 September 2019, Mr Mullen sent an email to Ms Jaber requesting confirmation that Honeywell will provide acceptable sign offs with respect to the services for the Tunnel Works.
On 19 September 2019, the Honeywell Contract works were completed.
That same day, Mr Mullen sent to Ms Jaber copies of commissioning certifications from Honeywell in relation to the help point system, the control and monitoring of the roller door and lift linking systems, and the security cameras in the tunnel, basement and ground levels which were linked back to the Station and installed according to the Station's operational requirements.

[13]

September 2019 - March 2020: Practical completion of Tunnel Works and demands for payment for Link Works

On 20 September 2019, Mr Mullen sent an email to Ms Jaber attaching a Notice of Partial Practical Completion of Tunnel Works at Green Square. The notice is expressed to be issued in accordance with cl 7.2 of the Development Agreement and confirms that the Tunnel Works had been completed in accordance with the Drawings and Specifications, except for minor defects. The notice also refers to cll 7.3(a) and 7.5(b) of the Development Agreement and states that the defect liability period would commence from the date of the Notice. Attached to the notice is a list of incomplete works identified by Crown Group as not preventing the "works" from being reasonably used for the stated purpose, referring to the following: ● Help point signage to be installed to TfNSW specification ● Distribution Board an [sic] Comms Cupboard signage to be updated Airport Link specification ● Existing "FURNITURE AND STORAGE NOT PERMITTED IN THIS AREA" signs to be updated to Airport Link specification. ● 6 access panels to be installed in the tunnel in locations agreed by Airport Link ● Library Site Fire Booster enclosure cabinet to be complete ● A set of "as constructed" drawings for the tunnel works are to be provided to TfNSW ● RailCorp Assets have not yet been approved or transferred to RailCorp
The notice of practical completion also refers to other documents which are not in evidence, including a set of final certificates from contractors evidencing that the Tunnel Works comply with all laws and requirements of Authorities and a set of as constructed drawings of the Tunnel Works.
On 24 September 2019, Mr Mullen sent an email to Ms Jaber stating that, in accordance with cl 17.3(b) of the Development Agreement, the Tunnel Works were now complete and that each item of the Tunnel Works referred to in Schedule 4 had been completed and installed on the Tunnel Land. Mr Mullen's email attached a tax invoice from Crown Construction for the Upgrade Costs payment under the Development Agreement of $750,000 (plus GST). The tax invoice also included, at the bottom on the invoice, the words: "Subject to a separate claim for additional out of scope works undertaken".
In an email dated 26 September 2019, Ms Jaber asked Mr Mullen to re-issue the invoice as the words at the end were not what was agreed to in the Deed and that she had been informed that no additional money will be paid to Crown.
On 22 October 2019, Mr Mullen re-issued the invoice for $750,000 (plus GST) under cl 17.3(b) of the Development Agreement which did not include the words at the end, as requested by Ms Jaber.
On 26 February 2020, Mr Elgie sent a letter to Ms Jaber asserting a claim by Crown Construction for payment of the new scope of work that would link various electronic and other services installations within the Tunnel and the tunnel entrance to the Station as requested of the Crown Entities at the July meeting, which Mr Elgie refers to as the "Link Works". Mr Elgie's letter asserts that the scope of work comprising the Tunnel Works under the Development Agreement did not include the Link Works and that the Link Works were performed pursuant to oral and written requests under a separate agreement or arrangement formed by the parties' conduct. Mr Elgie's letter attaches an invoice for the Link Works dated 26 February 2020 (26 February Invoice) and other supporting documentation.
The 26 February Invoice was issued in the name of Crown Construction and directed to Sydney Trains. It seeks payment of the amount of $866,530.06 (including GST), which is comprised of the Honeywell Contract sum ($677,282.00), the costs of the rail tunnel documentation update design works carried out by BSE up to 31 July 2018 ($7,722.00), and a 15% margin for preliminaries and overheads ($102,750.60).
On 10 March 2020, Ms Jaber sent an email to Mr Elgie, copied to Mr Mullen, in which she states that Sydney Trains' position was that the Link Works were part of the Tunnel Works and the Upgrade Cost was the entire contribution to be made by Sydney Trains, noting that this had been communicated by her in July 2019 and also by her predecessors.
On 26 March 2020, Mr Elgie sent an email in response to Ms Jaber's 10 March email attaching a letter dated 26 March 2020, the 26 March Claim in the form of a revised version of the 26 February Invoice, a copy of the 22 October 2019 invoice for $750,000, and a document headed "Supporting Statement by Head Contractor" that is signed by Mr Elgie and refers to the Honeywell Contract.
Mr Elgie's 26 March letter is headed "Agreement dated 3 March 2016 (Agreement) re: Green Square Railway Tunnel - Station Upgrade". The letter deals first with the claim for payment of $750,000 and then with the Link Works. In the letter, Mr Elgie rejects Ms Jaber's assertion that the Rail Entities had communicated to the Crown Entities that the Link Works were part of the Tunnel Works and Upgrade Costs. He maintains that the design of the Link Works had been included progressively from March 2017 and that the Crown Entities had been directed to incorporate Airport Link's requirements into the design. Mr Elgie otherwise relies on the matters referred to in his letter and the materials sent on 26 February 2020 to Ms Jaber.
As noted above, the plaintiffs contend that the 26 March Claim, together with the supporting statement, is a payment claim under s 13 of the SoP Act. It is common ground that the Rail Entities have not responded to Mr Elgie's 26 March letter or paid the 26 March Claim but have paid the Upgrade Costs of $750,000 as required under cl 17.3(a) of the Development Agreement.

[14]

Issue 1 - Was there a construction contract for some or all of the Link Works?

The plaintiffs accept that, to be a valid payment claim, the 26 March Claim must have been served in respect of a construction contract within the meaning of that term in the SoP Act.
Their pleaded case is that a construction contract arose between the Rail Entities and the Crown Entities, or alternatively between the Rail Entities and Crown Construction, by reason of directions given by the Rail Entities to Crown Construction (as agent for the Crown Entities or to Crown Construction itself) by Mr Bailey to Mr Mullen at the March, July and September meetings to design and install into the Tunnel Works certain electrical and other services and to link them to a monitoring site within the Station in a manner that met the requirements of Airport Link (Link Works), and Crown Construction (as agent for the Crown Entities or in its own right) having entered upon and completed the Link Works in compliance with those directions: List Statement at [8]-[11]. The Link Works are particularised as all of the works the subject of the Honeywell Contract.
At the hearing, the plaintiffs confined their case to Crown Construction as the party that was entitled to and issued the 26 March Claim. They did not press their alternative pleaded claims that Crown Construction issued the claim as agent for the Crown Entities, that the Crown Entities were entitled to a progress payment for the Link Works or had issued the payment claim: List Statement at [10], [12], [13], [18)(c)].
The plaintiffs submit that the construction contract that arose in relation to the Link Works was an "other arrangement" within the meaning of s 4(1) of the SoP Act. They say that the 26 March Claim was issued in reliance on and pursuant to that other arrangement and not in reliance on the Development Agreement. They contend that an arrangement under the SoP Act does not need to be legally enforceable or involve any commitment or term relating to payment and the facts establish that an arrangement separate from the Development Agreement arose by 6 September 2017.
The Rail Entities assert that the construction contract relied upon by the plaintiffs does not exist: Amended List Response [13(c)]. They submit that the Court should find there was no additional arrangement in relation to the Link Works as they were part of the Tunnel Works required by the Development Agreement and the Development Approval Conditions. They also submit that the facts do not establish that a separate arrangement arose between the parties, irrespective of whether an arrangement must give rise to a legally binding obligation to pay for construction works.
There is no dispute that the Link Works involved "construction work" or "related goods and services" within the meaning of ss 5 and 6 of the SoP Act.
Thus, the issue for determination is whether there was an arrangement that was separate to and distinct from the Development Agreement under which Crown Construction (as the party that issued the 26 March Claim) undertook to carry out the Link Works for Sydney Trains (as the party to whom the claim was directed).

[15]

Legal principles - "other arrangement" under the SoP Act

It is common ground that an arrangement under the SoP Act (which is not a term defined by the Act) is intended to catch dealings between parties that are less formal than those that meet the legal requirements of a contract. However, the parties disagree on, and their submissions identify some debate about, whether an arrangement under the SoP Act must give rise to a legally binding obligation.
In Lendlease Engineering Pty Ltd v Timecon Pty Ltd [2019] NSWSC 685 (Timecon), Ball J identified the question as whether an arrangement under the SoP Act must give rise to a legally binding obligation by which the claimant is entitled to be paid by the respondent for services which the claimant undertakes to provide. After considering earlier authorities which had held that an "other arrangement" did not need to be legally enforceable (Okaroo Pty Ltd v Vos Construction and Joinery Pty Ltd [2005] NSWSC 45 (Okaroo), Machkevitch v Andrew Building Constructions Pty Ltd [2012] NSWSC 546 (Machkevitch) and IWD No 2 Pty Ltd v Level Orange Pty Ltd [2012] NSWSC 1439 (Level Orange)), Ball J stated (at [87]): [87] … I have reluctantly come to the conclusion that I should not follow the earlier cases. In my opinion, the relevant arrangement must give rise to a legally binding obligation, although, of course, that obligation need not be contractual in nature
Central to Ball J's decision was his consideration of the purpose of the SoP Act and s 32 of the Act. His Honour reasoned as follows: [68] It is plain that the SOP Act is not intended to affect the ultimate rights and liabilities of the parties to whom it applies. Rather, its purpose is to provide a mechanism by which contractors who do work in the construction industry, or provide related goods and services, and are entitled to be paid for that work are able to make progress claims and to have those claims paid promptly. The purpose of the SOP Act is not to create an obligation to pay where one does not otherwise exist. That is made plain by s 32 of the SOP Act … [69] In the light of that provision, it makes no sense to interpret the SOP Act as creating a right to a progress claim when the claimant has no underlying right to be paid any amount at any time by the person against who the claim is made for the work the claimant has undertaken to perform. Under s 32, any payment resulting from the adjudication of such a claim would have to be returned. In my opinion, that is not what the legislature could have intended.
Ball J observed that the facts in each of Okaroo, Machkevitch and Level Orange suggested that the relevant arrangements that were found to exist were legally binding, although not of a contractual nature in Okaroo and Machkevitch, and did not refer to s 32 of the SoP Act: at [74]-[75], [81], [84].
Ball J went on to state: [83] It appears that Nicholas J [in Okaroo] reached the conclusion that he did principally on the basis that the relevant contract or arrangement need not deal with payment at all because the obligation to make progress payments is supplied by the SOP Act. Consequently, there need not be any obligation to pay. There only needs to be a contract or other arrangement under which one party undertakes to carry out construction work or to supply related goods and services. With respect, however, that seems to me to confuse the subject-matter of the contract or other arrangement with its nature. It is plain that, in order for the SOP Act to apply, the subject of the contract or other arrangement must be the provision of construction work or the supply of related goods or services. But the question remains whether the expression "contract or other arrangement" connotes an arrangement which gives rise to a legal obligation to provide something in return for the construction work or related goods or services. For the reason I have given, I think it does. … [86] One difficulty with the view that an arrangement does not need to be legally binding to be a "construction contract" is that there is no obvious principle that can be applied in drawing the dividing line between arrangements that do not give rise to legal obligations but nevertheless are treated as arrangements for the purposes of the SOP Act and those that are not, which is likely to make an adjudicator's task more difficult, not less difficult. In other areas of the law where some non-legally binding relationships are treated as "arrangements" to which the relevant legislation applies, it is possible to ask if the purpose of the legislation is advanced by treating arrangements of the type in question as arrangements for the purposes of the legislation. However, as I have sought to explain, it is not easy to see how the purpose of the SOP Act is advanced if the end result is that any arrangement which is not legally binding will produce a result where any adjudicated amount will have to be repaid. Accepting that, it is not easy to see what criteria can be used to determine which non-binding legal relationships fall within the scope of the SOP Act and which do not.
The Rail Entities submit that the Court should follow Ball J's reasoning and find that Crown must establish a legally binding obligation by which Crown was entitled to be paid for the Link Works. They submit that Ball J's decision is correct and consistent with the objects of the SoP Act. They also submit that, even if the Court concludes that an arrangement need not be legally binding, an arrangement must include some provision or term that provides a right to payment for the works which the party undertakes to carry out. In support of that submission, the Rail Entities rely on ss 9 and 10 of the SoP Act and the cases referred to by the plaintiffs which they say invariably involved a factual matrix where the concluded state of affairs included, as a key element, a commitment to pay for the works.
The plaintiffs submit, with due respect to Ball J, that the better view is that an arrangement within the meaning of the SoP Act does not need to be legally enforceable. They rely on the test for an arrangement set out by McDougall J in Machkevitch and other cases that adopt a similar approach.
In Machkevitch, McDougall J considered that the concept of an "other arrangement" was intended to go beyond a contract. After referring to the approach of Nicholas J in Okaroo, His Honour held as follows: [27] In my view, what is required is that there be something more than a mere undertaking; or something which can be said to give rise to an engagement, although not a legally enforceable engagement, between two parties; or a state of affairs under which one party undertakes to the other to do something; or an arrangement between parties to like effect. [28] In those circumstances, the court must look for a concluded state of affairs, which is bilateral at least, which can amount to an arrangement under which one party to it undertakes to perform construction work for another party to it.
The plaintiffs submitted that Ball J may not have been taken to the decisions of Vis Constructions Pty Ltd v Cockburn [2006] QSC 416 (Vis Constructions) or Maxcon Constructions Pty Ltd v Vadasz (No 2) [2016] SASC 156 (Maxcon) which refer to Nicholas J's test from Okaroo with approval. The plaintiffs also refer to the recent case of Justar Property Group Pty Ltd v Chase Building Group (Canberra) Pty Ltd [2020] ACTSC 231 (Justar v Chase) in which McDougall J's test was endorsed: at [52]. In my view, those cases do not really assist on the question of whether an arrangement requires a binding obligation to pay something in return for the construction works. They do not consider Ball J's reasoning and the facts in Justar v Chase also suggest that the relevant arrangement included a binding obligation to pay for the works.
In Vis Constructions, the claimant had entered into a contract with an owner of land to provide kitchen fittings and wardrobe shelving for a new dwelling. In issue was the payment claim served on the builder, who had also entered into a written agreement with the owner to carry out construction work for the owner. The claimant sought to rely on a tripartite arrangement with the owner and the builder that provided for the builder to receive the claimant's invoice and pay the claimant a provisional sum. Jones J found that the payment claim was not the subject of an arrangement to which the builder was a party and that the allowance for a provisional sum was no more than a device for the flow of borrowed funds: at [53]. His Honour went on to state that the existence of an undertaking by one party (the claimant) to carry out construction work for another party (the builder) was the main criterion for a "contract, agreement or arrangement" (under the Queensland equivalent of the SoP Act) and considered, in that case, that it was not necessary or helpful to descend into the factual dispute on whether the builder assumed a liability to pay for the work: at [54]. Jones J also observed that the arrangement in Okaroo was clearly identified, concerned payment, and was an integral relationship between the parties: at [51].
In Maxcon, a builder challenged the validity of the payment claim served by a piling subcontractor on the basis that there was no construction contract for the works as the written contract entered into was void for illegality due to the subcontractor's failure to disclose that he was an undischarged bankrupt. Stanley J found that the subcontract was not void for illegality. His Honour also considered the alternative submission that even if the contract was void, there existed an arrangement between the parties that satisfied the definition of "construction contract". Stanley J referred to Nicholas J's reasoning in Okaroo that an arrangement can be a transactional relationship between parties that is not a legally enforceable contract. However, his Honour did not consider whether there was an arrangement that could be so characterised as he held that, even if the subcontract was void for illegality, it was not open to find that any distinct arrangement subsisted in circumstances where the parties had entered into a written contract: at [53].
In Justar v Chase, the dispute turned on whether the claimant and respondent to the payment claim were parties to an arrangement. The claimant builder, Chase, had served a payment claim on Justar, the owner of the land on which a development was to be carried out and a member of the Maxon Group. Most of the communications in relation to the development had been addressed to Maxon Group. Mossop J found that there was likely an arrangement that included Justar from April 2018 as, by that time, Chase had been told that Justar was the correct billing entity and Justar had submitted an offer to Chase for the design and construct component of the development. His Honour found there was no contract or arrangement between Justar and Chase prior to April 2018 as there was uncertainty up to that time as to who the contracting party was and strong evidence that there was no "arrangement" involving Justar. Mossop J reasoned that an arrangement which falls short of a legally enforceable contract may be a construction contract (at [52]), considered there was more scope for a lack of precision in the identification of the relevant parties within the concept of an "arrangement" (at [54]), and did not refer to Ball J's approach in Timecon.
In further support of McDougall J's approach, the plaintiffs say there are purposive and contextual matters that give rise to difficulties with Ball J's reasoning. They refer to the SoP Act being remedial in nature and a statute that is beneficial to builders by ensuring cash flow, relying on Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) (2016) 95 NSWLR 157; [2016] NSWCA 379 at [66], Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 (Probuild) at [43] and All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289 (All Seasons v Regal) at [9]. They submit that these matters weigh in favour of a liberal interpretation to the positive elements of the definitions in the SoP Act, citing Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd [2012] NSWCA 31 at [29]-[30].
The plaintiffs also submit that Ball J's conclusion that an arrangement must be legally enforceable does not give effect to the "pay now, argue later" regime created by the SoP Act. They say that it would frustrate, rather than facilitate, the Act's beneficial object if a respondent to a payment claim could challenge an adjudicator's decision on the basis that the arrangement between the parties did not create a legally enforceable right to receive payment. They submit that Ball J's approach adds a gloss to the words in the statute, noting that the definition of construction contract does not refer to a reciprocal undertaking by the person for whom the work is done to pay for it. They also submit that, properly understood, s 32 of the SoP Act weighs against Ball J's reasons as it permits a party who pays money under the Act to recover it if the claimant has no entitlement at law.
The SoP Act was introduced to ensure cashflow for builders from the parties with whom they contracted, thus operating to alter the incidence of the risk of insolvency: All Seasons v Regal at [9], quoting Fitz Jersey Pty Ltd v Atlas Construction Group Pty Ltd (2017) 94 NSWLR 606; [2017] NSWCA 53 at [10]. It was enacted to reform payment behaviour in the construction industry by stamping out the practice of developers and contractors delaying payment and was originally designed to ensure an ability to obtain a prompt progress payment, on account, with any disputes over the amount finally due to be determined separately: Probuild Construction (Aust) Pty Ltd v DDI Group Pty Ltd (2017) 95 NSWLR 82; [2017] NSWCA 151 (Probuild v DDI) at [103]; Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 (Southern Han) at [3]-[4].
The object of the SoP Act is set out at [13] above. Its objects are given effect by the creation of a parallel regime, separate from the construction contract, that confers an entitlement on persons who have undertaken to carry out construction work for the prompt making of progress payments. The regime operates without affecting the parties' rights under that contract, despite any provision to the contrary in the contract, and even though it may ultimately be proved that no payment was due at all: All Seasons v Regal at [8], [11]; Southern Han at [57]. It provides for an expeditious and self-contained "pay now, argue later" scheme for resolving disputes with respect to payment claims: Probuild v DDI at [102].
As Emmett AJA observed in TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 93 at [96], the procedure contemplated by the SoP Act is a summary one which does not finally determine the rights as between the parties. His Honour noted that disputes as to the amount claimed are to be determined by an adjudicator and that, by reason of the prohibition in s 15(4)(b)(ii) of the SoP Act, contractual defences are not to be raised at the stage where a claimant seeks to obtain judgment: at [95].
In Southern Han, the full court of the High Court referred to an important limitation that has been implicit in the overall design of the SoP Act since the time of its enactment in the following terms (at [66]): … That limitation is that the Act is concerned to provide a statutory mechanism for securing payment of an amount claimed to be payable in partial or total discharge of an obligation to pay for work (or for goods and services supplied) imposed by the contractual force of a construction contract. …
As was noted in Southern Han at [68], Hodgson JA in Coordinated Construction Co Pty Ltd v JM Hargreaves (NSW) Pty Ltd (2005) 63 NSWLR 385; [2005] NSWCA 228 at [41] referred to a progress payment as an "amount that a construction contract requires to be paid as part of the total price of construction work".
The issue before the High Court in Southern Han concerned the statutory requirement for a reference date under the SoP Act. The observations about the implicit limitation and nature of a progress payment were made in that context and not as part of any consideration of the meaning of an "other arrangement" under s 4(1) of the SoP Act. However, the reference to securing payment in discharge of an obligation to pay that is imposed by force of the construction contract and what is required to be paid as being part of the total price seem to me to support Ball J's reasoning and the Rail Entities' submissions that the object of the SoP Act is not to create an obligation to pay for construction works where one does not otherwise exist. Rather, the object is to enable a contractor to make and recover progress payments in a timely fashion where that contractor has an underlying right under the construction contract (be it a contract or other arrangement) to be paid some amount for the work they undertake to do.
It follows that I accept the force of Ball J's reasoning in Timecon. It is difficult to see what purpose is served if the concept of an arrangement extended to persons who do not have any legally enforceable entitlement to receive, or legally binding obligation to make, any payment at all for construction work undertaken, with the consequence that any adjudicated amount or judgment under s 15 would always have to be repaid.
That said, there is also force to the submissions advanced by the plaintiffs, particularly in view of the nature of the statutory scheme, as referred to at [157]-[159].
Having weighed the submissions and matters referred to above, with due respect to Ball J, I have come to the conclusion that an arrangement under the SoP Act does not need to be legally enforceable in the sense that it must give rise to legally binding obligations on the parties to it to carry out the construction work and receive payment for that work. Subject to a qualification which I will come to, I have decided to follow McDougall J's approach in Machkevitch, as set out at [150] above. It is supported by the weight of authority and the use of the word "arrangement".
The qualification is that I consider that an arrangement constituted by a bilateral concluded state of affairs that amounts to an engagement for the purposes of the SoP Act will necessarily involve some element of reciprocity or acceptance of mutual rights and obligations (whether legally enforceable or not), similar to the approach adopted by Rein J in Olbourne v Excell Building Corp Pty Ltd [2009] NSWSC 349 (Olbourne) at [27] and [57]. A factual element underpinning such an arrangement for the purposes of the SoP Act would, to my mind, involve some communication or dealing between the parties on the subject matter of payment for the works, most likely the final price, and a recognition or acceptance of some ultimate right to be paid. As to whether the arrangement imposes a legally enforceable obligation to pay that price, some other price, or no obligation to pay at all, that will depend on the nature and terms of the arrangement and is a question that can be determined in civil proceedings outside the SoP Act.
To that extent, I accept the Rail Entities' submission that, to constitute an arrangement for the purposes of the SoP Act, a bilateral concluded state of affairs will involve more than a party undertaking to carry out construction work for another, in the sense of agreeing or promising to do so for another person without more, and would involve some aspect relating to payment or price for the construction work. That is not to say that there needs to be some certainty as to payment or specificity as to the price to be paid although, presumably, in most cases there would be. Nor does there need to be any provision as to how the price is to be calculated or when payment will be made. As contemplated by the statutory regime, an arrangement may be silent about such matters, in which case the SoP Act makes default provision for them: see, for example, ss 8(2)(b), 9(b), 10(b) and 11(1A)(a).
This approach seems to me to be more consistent with the objects and legislative purpose of the SoP Act and the scheme created by it, which gives rise to a statutory entitlement to a progress payment despite the terms of the contract or the arrangement. It also reflects the cases to which I was referred, in which the factual findings that supported the existence of the arrangement under the SoP Act included circumstances that focussed on payment, rather than a finding that a legally enforceable obligation to pay existed: see, for example, Machkevitch, Okaroo, Olbourne, Level Orange, Justar v Chase and Seabreeze Manly Pty Ltd v Toposu [2014] NSWSC 1097 at [37]-[39].
I also consider that a requirement for an arrangement to involve some element of reciprocity and consideration of any provision for payment would not undermine the scheme contemplated by the SoP Act. It does not require an adjudicator to determine the ultimate legal status of the relationship (if contested) or the question of whether the arrangement between the parties created a legally enforceable right on the part of the claimant to receive, and a liability at law on the other party to make, the payment. Rather, it reflects that the right to a progress payment seeks to secure a payment on account of what the parties agreed would be paid for the construction works undertaken under a contract or other arrangement.
Accordingly, in my view, an arrangement under the SoP Act requires something more than a party undertaking to carry out construction work for another. There must be a concluded state of affairs between two or more parties involving some element of reciprocity or acceptance of mutual rights and obligations relating to payment or price for the works (which may or may not be legally binding obligations) under which one party undertakes to carry out construction work for another party to the arrangement.

[16]

Submissions

Relying on McDougall J's approach in Machkevitch, the plaintiffs say that the following matters gave rise to an arrangement for the Link Works that was distinct from the Development Agreement: 1. The parties had entered into the Development Agreement under which the Rail Entities had rights to review and "approve" the design of the works as that design was refined and developed, with the price for the Tunnel Works having been fixed by reference to early iterations of the design. 2. Pursuant to the process contemplated by the Development Agreement to submit drawings and specifications to the Rail Entities, Mr Mullen had communicated with Mr Bailey about the design process and sent him versions of the architectural drawings for review. 3. In about February 2017, after construction of the project had started, Mr Mullen sought to arrange a meeting to finalise the drawings for tender and was told by Mr Bailey that "Airport Link's requirements need to be included in the Tunnel" and he would have to bring them to the next meeting, which Mr Mullen says was the first indication that Airport Link had any involvement with the works that the Crown Entities were required to carry out. 4. Mr Mullen attended the March, July and September meetings, during which Airport Link raised requirements that affected the work that had to be carried out. These requirements included new items of work, such as CCTV monitoring of the upper and lower entrances at the stairs and lifts and the help point near the lift inside the Infinity building which were to be connected back to the Station and Airport Links' control centre at Mascot, despite that work not having been identified in the earlier drawings that were approved, including the drawings provided immediately after the March meeting. 5. The works required by Airport Link were incorporated into the minutes of the meetings and the designs, such as in Mr Mullen's sketch of the additional works sent to Mr Bailey after the July meeting. 6. Mr Mullen contacted Airport Link and the Rail Entities to confirm that the Crown Entities would not bear the cost of carrying out the additional works and was rebuffed, as was Mr Pope when he asked Mr McLaren for a variation of the contract sum to account for the work required by Airport Link. Mr Pope was told there was no mechanism in the Development Agreement to direct a variation and no further funds would be provided. 7. The works required by Airport Link were outside the scope of the Development Agreement as they involved works on Crown Land that were not part of the Tunnel Works which the Crown Entities were obliged to procure under the Development Agreement and had to carried out in a manner that met Airport Link's requirements. Honeywell had to be engaged and services works had to be connected in a way that was not contemplated when the Development Agreement was entered into. 8. The Crown Entities did not have any practical alternative but to press ahead with the work, even though it included items that they considered were not their responsibility, as they were obligated to obtain approvals under the Development Agreement so that demolition and tunnel work could commence.
The plaintiffs submit that these facts support a finding that an arrangement for the Link Works arose as the directions to Mr Mullen to carry out the new items of work were given in circumstances where the Development Agreement did not have a variation power and the Link Works were of a kind that would ordinarily be subject to a variation as out of scope works. They say that the directions to design and procure the installation of the Link Works were given in the context of the parties' relationship that was more than a mere undertaking as the Development Agreement imposed legally enforceable rights and obligations and served as the backdrop or context in which the arrangement arose. Put another way, the Rail Entities say there was a concluded state of affairs that rested upon, but was separate to, the Development Agreement, with the concluded state of affairs being an arrangement under which works outside the scope of the Development Agreement would be carried out for another party (the Rail Entities).
As to the undertaking, the plaintiffs contend that Crown Construction was the party that undertook to carry out the construction work by means of an undertaking that was given on behalf of the Crown Group generally in circumstances where the Rail Entities were aware that Crown Construction was the Crown Group's construction entity. They submit that the undertaking that Crown Construction would procure the design, and thereafter the installation, of the Link Works was given progressively at different times as to different aspects of the works by Mr Mullen. They say that this occurred verbally at the March, July and September meetings and in writing by the minutes and accompanying documents. In supplementary written submissions, the plaintiffs identified the references in the minutes of the meetings to the works they say were required by Airport Link and the related items in the Honeywell scope of works (plaintiffs' works schedule).
The plaintiffs initially contended that the undertaking had been given and the arrangement was in place by 22 September 2017, when BSE prepared the first iteration of the electrical services designs, although they later asserted that the arrangement was in place by 6 September 2017.
The Rail Entities submit that there was no additional arrangement for the purposes of the SoP Act as the Link Works formed part of the Tunnel Works, were the subject of the Development Agreement, and were works that were contemplated and required to be carried out by reason of the Development Approval Conditions. In their response to the plaintiffs' works schedule, the Rail Entities say that the services works identified therein were works required, in particular, by cll 3.5, 4.1 and 4.2 of the Development Agreement and Development Approval Conditions (123)(21) and (123)(23).
The Rail Entities submit that, even if some of the Link Works were not required by the Development Agreement, the facts do not establish something more than a mere undertaking giving rise to an engagement, a concluded state of affairs which was at least bilateral, or any representation or undertaking that payment for the works would be made. They submit that a provision or term as to payment or price for the Link Works was entirely absent in this case, relying, in particular, on the refusal of the Crown Entities' request for further funds to complete the works in relation to the pedestrian tunnel.
They also submit that, if there was a separate arrangement for the Link Works, the Court should find that Crown Construction was not a party to it in the context where Crown Construction was not a party to the Development Agreement and had no pre-existing relationship with the Rail Entities. They also submit that the plaintiffs' case that Crown Construction was the agent of the Crown Entities cannot succeed as the asserted agency relationship is based on a building contract between Crown Construction and Crown Green Square Developments rather than any of the Crown Entities.

[17]

Consideration

An arrangement for the purposes of the SoP Act may exist alongside a written construction contract. Under such an arrangement, different liabilities may attach to those existing under the formal contract: Cranbrook School v JA Bradshaw Civil Contracting [2013] NSWSC 430 (Cranbrook School) at [50]. As has been observed, an existing contract between A and B does not preclude the possibility of an arrangement within the meaning of the SoP Act between A and C: Olbourne at [49].
Thus, the existence of the Development Agreement between the Rail Entities and the Crown Entities does not preclude the existence of a separate arrangement involving Crown Construction as alleged by the plaintiffs.
Whether an arrangement distinct from the Development Agreement exists requires an analysis of the facts and circumstances, including the terms of the Development Agreement, and the intention of the parties objectively ascertained from matters known to or common between them at the time the arrangement is said to have been made and what occurred thereafter: Levadetes Pty Ltd v Iberian Artesans Pty Ltd [2009] NSWSC 641 at [55]; Cranbrook School at [47].
Having regard to what transpired between the parties, the terms of the Development Agreement and the nature of the works, I have concluded that there was no other arrangement in relation to the Link Works.
The facts reveal that the existing construction contract, the Development Agreement, arose against the backdrop of the Development Approval, rather than as a typical market-priced building contract between a principal and contractor. The Development Approval contained conditions that required Crown Green Square Development to undertake works to the pedestrian tunnel and areas on the Crown Land to the benefit of the Rail Entities, contemplated entry into an agreement that dealt with the construction, infrastructure and services aspects of those works (Condition (123)(21)), and required the "final construction details and works package" to be submitted to Sydney Trains for approval and compliance with its requirements (Condition (123)(23)).
The facts also reveal that the commencement of the detailed design of the services works relating to the pedestrian tunnel connection was deferred by the parties until after the Development Approval was granted, and then again until after the Development Agreement was entered into. The Crown Entities were cognisant that services works would need to be undertaken as part of the pedestrian tunnel connection works and deal with such matters as fire safety, lighting, security, signage, ventilation, communications and disabled access. It was also commonly understood by the parties that the Crown Entities would need to obtain information from the Rail Entities to progress the services design brief, including the "Transport Design Standards" (see at [31]-[32] above). In that context, it is neither surprising nor significant that the drawings and plans attached to the Development Agreement did not include details of the services designs, including those that formed the Link Works, as the plaintiffs' submissions suggest.
The obligation on the Crown Entities to procure the Tunnel Works also required that they be done in accordance with broadly expressed requirements rather than in accordance with a detailed scope of works, such as that found in the Honeywell Contract. Some of the requirements were akin to performance objectives for the works, such as a requirement that they be in accordance with the amenity and operation of Transport's Operations and fit for purpose. The requirement for the works to be in accordance with the Drawings and Specifications incorporated the drawings that formed part of Schedule 1, which were marked "work in progress", the Station Design Guidelines which, as referred to at [57], identified matters relevant to the services design, including minimum requirements for certain services, and the Development Approval Conditions, which referred to construction, infrastructure and services works, and included as a condition the requirement to comply with all of Sydney Trains' stipulated requirements in relation to the final "works" package.
The Development Agreement also contemplated that the detailed design would be developed and approved as part of the Drawings and Specifications to be submitted to the Rail Entities and provided that the Tunnel Works were to be completed in accordance with those Drawing and Specifications as amended in accordance with the Deed: cll 3.5(a) and 4.9(b)(ii).
In other words, the surrounding circumstances and terms of the existing Development Agreement were consistent with and reflected an intention on the part of the parties that services works would be undertaken as part of the Tunnel Works, with the details of those works to be finalised after entry into the Agreement and according to the process contemplated within it. They also demonstrated an intention that the Rail Entities would have a say as to what works would be required.
Consistent with that, after the Development Agreement was entered into, Mr Mullen liaised with Mr Bailey in order to progress the services designs of the tunnel connection. Mr Mullen was informed in February 2017 that Airport Link's requirements needed to be included in the Tunnel and that they would be brought to the next meeting. Mr Mullen's evidence is that this was the first indication that Airport Link had any involvement with the work required to be carried out under the Development Agreement.
Although not challenged in cross-examination, in my view, Mr Mullen's evidence is at odds with the emails exchanged between him and Mr Bailey on 27 May and 1 August 2016 (as referred to at [64] and [67] above). In those emails, Mr Bailey had referred to Airport Link as the operator of the Station and in a way that suggested that it was a relevant stakeholder in the services design process, having raised the need to send designs to it and requested that the Crown Group "wire the [roller] doors back to the station control room and hence back to the Airport line's [sic] Mascot Control Room". In view of evidence indicating that Mr Boussi attended a meeting on behalf of Airport Link with Crown Group representatives to discuss the proposed works as early as May 2014, the stakeholder consultation process referred to in the Station Design Guidelines (ESB 001 at 1.3.2) and the definition of Transport's Operations (which extended to third party operators such as Airport Link), it also seems to me that it should have been expected that Airport Link would be a relevant stakeholder and have involvement in the tunnel services design process.
As to the March, July and September meetings, the background facts (such as those at [31], [32], [64], [69] and [76]), Mr Mullen's evidence and the minutes of those meetings indicate that they were held for the purposes of enabling the Crown Entities to obtain the necessary information to complete detailed designs of the services works required for the tunnel and new entrance on Crown Land. As the Rail Entities submit, the meetings reflect that the parties to the Development Agreement and Airport Link (as a relevant stakeholder) engaged in an iterative process for the Crown Entities to gain information about how existing services operated in the Tunnel and Station and what services would need to be incorporated into the works for the future operations of the pedestrian tunnel and access path through the Crown Land, having regard to the existing systems, Station operations and code requirements.
In my view, the meeting minutes and Mr Mullen's evidence identify that the focus of the meetings was on ascertaining the operational requirements for the design of the tunnel connection services. Those requirements were identified by reference to different areas of works, such as in the tunnel entry into the concourse, the library plaza entry area and the lift foyer, and to categories of infrastructure and services that were consistent with the services works discussed prior to the Development Approval, the details of which I have already referred to (at [31] and [32] above).
I accept that Airport Link raised requirements at these meetings that affected the work that had to be carried out by the Crown Entities. The requirements included that new infrastructure and services would be installed in the tunnel and areas on the Crown Land. See, for example, the help point, the security cameras in the lift, tunnel, stairs and lift foyer areas, new fire and smoke detectors, sprinklers, and cabling and electronics connections from the upgraded and new services back to the existing systems in the Station to enable control and monitoring by Airport Link as the Station operator.
But, I do not accept that the direction by Mr Bailey to Mr Mullen to incorporate Airport Link's service works requirements into the tunnel and new entrance designs and Mr Mullen's agreement to do so gave rise to an arrangement for the Link Works that was separate to or distinct from the Development Agreement.
In support of the existence of an arrangement, the plaintiffs rely on the works not having been identified in the earlier drawings that were approved by Mr Bailey, including the drawings provided immediately after the March meeting
The difficulty with this submission is that the facts make plain that the services designs were at a nascent stage of development at the time the March, July and September meetings were held. The Revision B and C drawings that had been approved by Mr Bailey recorded that the services aspects of the designs were yet to be confirmed and the Crown Entities still needed information from the relevant stakeholders to progress and finalise the services designs. Mr Mullen acknowledged the preliminary nature of the designs for the services works to the tunnel connection in an email which he sent to two representatives of TfNSW two days after the March meeting attaching several of the Revision C drawings and noting that a "further submission will be provided when the services were coordinated prior to the issue of a construction certificate". The need for information was also identified in Mr Mullen's 17 March 2017 request for a copy of the design standards so that the Crown Group's consultants could "get started" on the tunnel design, and in later requests, such as those referred to at [81], [87] and [91].
The works identified by Mr Boussi might have been "new" to Mr Mullen, but they were the type of works that fell within the categories of infrastructure and services that had been identified pre-Development Approval as needing to be detailed at a later stage (namely, security, lighting, signage, disabled access, and ventilation services). Mr Bailey's 1 August 2016 email had also identified the need for conduits and cable infrastructure up to the Botany Road entrance, CCTV coverage up to street level, automatic control of the roller door and the linking of services back to Airport Link's control centre.
As to the plaintiffs' contention that the manner in which the works were to be carried out changed after the Development Agreement was entered into, it is difficult to see how that could be so in the context where there were no detailed services design drawings or a design brief in existence at the time of the pre-Development Approval meetings.
I also do not accept the plaintiffs' submission that as the Link Works had to be carried out in a manner that met Airport Link's requirements, ipso facto, the work was outside the scope of the Development Agreement. Even accepting that Mr Bailey had told Mr Mullen that Airport Link's requirements had to be incorporated into the design for the pedestrian tunnel works and met in carrying out the works, it does not undoubtedly follow that the Link Works were of a kind that would ordinarily be subject to a variation as works beyond the scope of the Development Agreement and the subject of a separate arrangement.
The obligation on the Crown Entities to procure the Tunnel Works required them to be carried out in accordance with the amenity and operation of Transport's Operations and the Station, which relevantly extended to the operations of Airport Link as the Station's operator and a third party operator that used the Railway (see the definition of Transport's Operations). In other words, Airport Link was a relevant stakeholder in the process of identifying the services required for the Tunnel Works to be fit for purpose and in keeping with the amenity and operations of the Station. In any event, the Development Agreement also obliged the Crown Entities to procure the works in accordance with the Development Approval, which included the condition that they had to comply with all requirements stipulated by Sydney Trains in respect of the final construction details and works package. The requirement stipulated in this case was that the Tunnel Works must meet Airport Link's requirements, which was not unexpected in the circumstances.
The plaintiffs also submitted that the manner in which the works had to be carried out changed after the Development Agreement was entered into because Honeywell had to be engaged, which also amounted to a variation. Leaving to one side that the evidence does not establish that Airport Link required, or the Rail Entities directed, the Crown Entities to engage Honeywell for the Link Works (and, thus, was not part of the concluded state of affairs or alleged arrangement between the parties), it is difficult to see how the engagement of a particular subcontractor to carry out certain items of works could, without more, lead to the Link Works becoming work akin to a variation and beyond the scope of works which the Crown Entities were required to do under the Development Agreement.
As to whether the works identified at the meetings as requirements of Airport Link and the related items in the Honeywell contract were beyond the scope of what was required by the Development Agreement, I am also not persuaded by the plaintiffs' arguments on that issue and prefer the submissions advanced by the Rail Entities.
The plaintiffs' written and oral submissions advanced the case that the Tunnel Works were limited to upgrading the Tunnel and the pre-existing entrance from the footpath and did not extend to works on Crown Land to install, for example, the help point and CCTV cameras inside the Infinity complex. The plaintiffs initially accepted that some of the Link Works were within scope (such as lighting works within the Tunnel). However, during closing submissions, they clarified that their position was that the Tunnel Works did not extend to works on Crown Land other than in relation to the access ramp and the lift (as referred to in subcl (d) of the definition of "Tunnel Works") and all of the Link Works were outside the scope of the Development Agreement because they had to be carried out in a manner that met Airport Link's requirements.
The meaning of Tunnel Works and whether the Link Works were within scope raises a legal question as to the proper construction of the Development Agreement and a consideration of the nature of the Link Works.
The principles applicable to the proper interpretation of a commercial contract, such as the Development Agreement, are well known. The terms are to be construed by what a reasonable businessperson would understand them to mean in context. That requires consideration of the language used by the parties, the surrounding circumstances known to them, and the commercial purpose or objects to be secured. The context includes the entire text as well as any contract, document or statutory provision referred to in the text of the contract: Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35] (French CJ, Hayne, Crennan and Kiefel JJ); Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46]-[49] (French CJ, Nettle and Gordon JJ); Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16] (Kiefel, Bell and Gordon JJ).
The starting point is the definition of Tunnel Works, which is set out at [52] above. The issue that arose was the meaning of the works required to upgrade the "entrance" in subcl (a) of the definition of Tunnel Works. Are they works required to upgrade the existing entrance of the Tunnel on the Tunnel Land as the plaintiffs submit, or do they mean the works required to the new entrance on the Crown Land, as the Rail Entities contend? While accepting that the drafting involves a degree of ambiguity, a reasonable businessperson would, in my view, understand the reference to "entrance" in subcl (a) to mean the works required to establish the new entrance to the tunnel within the Crown Land, and not the works limited to the existing entrance on the Tunnel Land.
To my mind, the use of the word "upgrade" as a qualifier to "entrance" suggests that the parties intended to describe the works that were required to improve or change the entrance to a newer or better standard, consistent with the ordinary meaning of the word: Cambridge Dictionary, online ed, November 2021. That upgrade was to be achieved by relocating the entrance to the tunnel and incorporating the new entrance into the Infinity development on the Crown Land, from the ground floor plaza via the new staircase down to the tunnel. Such works are to be distinguished from works to demolish the existing entrance to the Tunnel and remediate that area, which the parties accepted were the subject of subcll (b) and (c) of the definition of Tunnel Works (and which I refer to as the existing entrance works).
The description of the existing entrance works in subcll (b) and (c) is a contextual indicator that the works required to the entrance in subcl (a) are directed to a different subject matter and scope of works than the existing entrance works. Similarly, the inclusion of works for ramp and lift access to street level in subcl (d) of the definition of Tunnel Works informs the meaning of the entrance works in subcl (a) and supports a broader scope of works than that advanced by the plaintiffs. This is because subcll (d) makes plain that the Tunnel Works extended to works on the Crown Land and were not limited to works within the Tunnel Land or the Tunnel (as defined).
I also consider that the works required to upgrade the "entrance on the eastern side of Botany Road as described in the Development Approval" would be understood to mean the "works in relation to the new pedestrian entrance to the Station", the "construction of the new entrance and infrastructure/services", the "new pedestrian entrance to the Station" and "the extension of the pedestrian entrance into the … development site", as referred to in Conditions (123)(21), (123)(24) and (123)(25). They are to be distinguished from the works involved in the "demolition and removal of the existing entrance and infrastructure/services" and to "make good … the footpath" (referred to in Condition (123)(21)), which would be understood to be the existing entrance works referred to in subcll (b) and (c) of the Tunnel Works definition. Further, the plans contained in Schedule 1 identify works involved in the relocation and incorporation of the new entrance to the pedestrian tunnel on the Crown Land: see, for example, A099, A100 and SK-023-04.
The meaning of "entrance" in subcl (a) is also informed by the other references to "entrance" in the title and Recital E of the Development Agreement. The latter refers to TfNSW's proposal for the current entrance to be relocated and incorporated into the development on Crown Land. Other terms of the Development Agreement are also consistent with the Tunnel Works not being co-extensive with the Tunnel Land. This is reflected, for example, in the definition of New Tunnel which was to be constructed "as part of" the Tunnel Works and cl 4.7 which contemplates that parts of the Tunnel Works are "within the New Tunnel or the Station".
As to the plaintiffs' reliance on cl 17.3 and the definition of Works, I do not consider that those parts of the Development Agreement reflect important expressions of what the parties intended would comprise the scope of the Tunnel Works or greatly assist with construing the scope of, and the obligations of the Crown Entities to procure, the Tunnel Works.
The purpose of cl 17.3 is not to define the scope of the Tunnel Works but to provide a mechanism for identifying when payment of the Upgrade Costs would be made by reference to the completion of some, but not all, aspects of the Tunnel Works as set out in Schedule 4. This is apparent from the line items in Schedule 4 which do not refer to the completion of works required to upgrade the tunnel or to the access ramp and lift. In the context where the Crown Entities were obliged to pay all costs for the Tunnel Works (cl 4.2(a)), the Drawings in Schedule 1 were marked "work in progress" and subject to later approval, and the parties had agreed to defer detail designs for the tunnel connection works and services when the Development Agreement was entered into, it is difficult to accept that the Upgrade Cost of $750,000 was intended to reflect the Crown Entities' actual cost of undertaking the Tunnel Works in accordance with cl 4.1 or a factual matter supporting the existence of the alleged arrangement, as the plaintiffs contend.
As to the definition of Works (set out at [52] above), the reference to "Crown Project" works (in subcl (a)) and the Tunnel Works (in subcl (b)) might suggest a dichotomy based on location but for the fact that there is some overlap between those works. The Tunnel Works includes the access ramp and lift works which also form part of the Crown Project works located below RL 16.020. I accept the Rail Entities' submission that the overlap highlights that the definitions of "Works" and "Tunnel Works" exist for different purposes in the Development Agreement and should not be taken as indicating that the parties intended for the definition of Tunnel Works to not extend to the works to the new entrance within the Crown Project.
Accordingly, I do not accept the plaintiffs' submission that, on a proper construction of the Development Agreement, the Tunnel Works which the Crown Entities were obliged to procure under cl 4.1 of the Development Agreement did not extend to works within the Crown Land, such as the electrical and other services works to install and commission the CCTVs (including in the lift), the help point, and the associated electronics and cabling related to those services.
In my view, a more expansive scope of the Crown Entities' obligations to carry out the Tunnel Works than that advanced by the plaintiffs is also consistent with the commercial purpose of the Development Agreement, which was to give effect to the Crown Group's obligations in the Development Approval. Such obligations include those arising from Development Approval Condition (123)(23), which provided that the Crown Group was to comply with all requirements stipulated by Sydney Trains in relation to the final construction details and works package for, amongst other things, the works to the new pedestrian entrance that was to be located on Crown Land.
I also accept the Rail Entities' submission that the electrical services items of work to be installed on the Crown Land that were identified at the meetings and formed part of the Link Works (such as the help point and CCTVs) were within the scope of the Crown Entities' obligation to procure the Tunnel Works under the Development Agreement. The Station Design Guidelines that formed part of the Drawings and Specifications relevantly required CCTV and help points as mandatory items in stations, CCTV to monitor passenger flows at station entry/exit and in "vertical circulation elements" (lifts), and emergency help points as part of accessible path designs. Those items thus fell within the scope of works contemplated by cl 4.1(c)(i). In my view, the electrical services items of work would also fall within the requirement for the Tunnel Works to conform with good industry practice in keeping with the amenity and operation of Transport's Operations and the Station (cl 4.1(c)(vi)) and be fit for their intended purpose as a subterranean pedestrian access way and for use and occupation (cl 4.1(d) and definition of Practical Completion in cl 1.1).
For similar reasons, I accept the Rail Entities' submission that the items of works identified at the meetings that were to be carried out within the Tunnel and related items of the Link Works, such as decommissioning the existing electrical, mechanical, and wet and dry fire services in anticipation of the construction works, installing and supplying new and upgraded electrical and wet and dry fire services in the Tunnel (including light fittings, CCTV cameras, smoke detectors and the Early Warning and Intercommunication System (EWIS)), and upgrading the existing electrical and communications systems (including to the DAS and government radio systems), fell within the scope of the Development Agreement. In my view, those works are of the nature that could be required for the Tunnel Works to conform with good industry practice in keeping with the amenity and operation of Transport's Operations and the Station (cl 4.1(c)(vi)) and be fit for their intended purpose as a subterranean pedestrian access way and for use and occupation (cl 4.1(d) and definition of Practical Completion in cl 1.1).
In addition, the Station Design Guidelines identified the need for fire systems, including sprinklers, smoke detectors, a fire indicator panel and an EWIS, which thus fell within the scope of cl 4.1(c)(i). To the extent that the upgraded electrical and wet and dry fire services in the Tunnel brought the tunnel "up to current code requirements" (as referred to in the July meeting minutes), such works ensured that the Tunnel Works were in accordance with lawful requirements and therefore fell within cl 4.1(c)(iv). The upgrades to the DAS and government radio systems fell within cl 4.2(b) as modifications to electronic communications services.
I am also not persuaded by the plaintiffs' contention that the works within the Station, such as the cabling and electronics works to connect services to the systems in the Station, the commissioning, testing and programming of upgraded services and their integration into the existing Station systems, were necessarily beyond the scope of the Development Agreement. As existing electrical, communications, mechanical and wet and dry fire services within the Tunnel were already connected to the plantrooms and Station's systems, it seems reasonable to expect that the upgraded and new services in the Tunnel, lift and new entrance area would need to be connected to those systems and for them to be commissioned, programmed and tested to ensure they were operational.
Further, cl 4.7(a) refers to parts of the Tunnel Works within the Station in the context of a defects provision. While not determinative, that clause informs the scope of what was required under cll 4.1 and 4.2 and is suggestive of an intention for the Tunnel Works and Services obligations to encompass works to connect the upgraded and new services into existing systems within the Station.
It follows, in my view, that the electronic connections works were of the type that also fell within cl 4.1, as works to ensure that the Tunnel Works were in accordance with the amenity and operation of Transport's Operations and the Station (cl 4.1(c)(vi)) and fit for purpose for use as a subterranean access path to and from the Station (cl 4.1(d)). They may also be within cl 4.2 as relocated or modified Services noting, for example, that the help point provided communications functionality according to the specification sheet that formed part of the BSE Electrical Services Specification.
For these reasons, I do not accept that the plaintiffs have established that the items of works identified in their works schedule as services requirements of Airport Link and the related items in the Honeywell scope of works, which includes the works referred to in the plaintiffs' submissions (at [42]), were beyond the scope of the works required by the Development Agreement and Development Approval. As the plaintiffs' alleged arrangement is predicated on a direction and corresponding undertaking to carry out works that were beyond the scope of the Development Agreement, it follows, in my view, that a construction contract in respect of the Link Works that was additional to or distinct from the Development Agreement did not arise.
Further, and even if some of the Link Works were beyond the scope of the Development Agreement (because, for example, the Crown Entities were not contractually obliged to carry out works to connect services (such as the help point) back to Airport Link's control centre in Mascot), considered objectively, the dealings and communications between the parties subsequent to the September meeting do not, in my view, support the existence of an arrangement for the purposes of the SoP Act in relation to those works.
Although Mr Mullen had sought confirmation from Mr Boussi that Airport Link would bear the cost of commissioning, integrating and testing the CCTV, his email accepted that the Crown Group would install the CCTVs and wire them back to the connection point in the Station. He was also told by Mr Boussi to liaise with Sydney Trains on costs by reference to the "original Sydney Trains and Crown arrangement".
Some six months later, Mr Pope and Mr Mullen met with Mr McLaren to discuss the "blow out" of the tunnel costs, ask for a variation to the Development Agreement by reference to works required by Airport Link (which, in the context of what was being discussed, I take to be a variation to the Upgrade Cost amount under that agreement), and was told there was no mechanism for a variation and to put the request in writing.
The terms of Mr Pope's subsequent written request, referred to at [99] above, are significant. Mr Pope's email refers to the tendering for the full extent of the "pedestrian tunnel upgrade works", the commencement and completion of the "tunnel works", and the Upgrade Cost of $750,000, namely the payment by the Sydney Trains in relation to the Tunnel Works. In my view, objectively construed, Mr Pope's request sought further funds to cover the expected cost of completing the tunnel works under the Development Agreement, and relevantly included the cost of the works required by Airport Link the subject of the alleged other construction contract in these proceedings (namely the Link Works). The plaintiffs also accepted at the hearing that Mr Pope's request extended to those costs. Yet, nowhere in his email does Mr Pope assert that the works required by Airport Link were beyond the scope of the Development Agreement, amounted to a variation, or were the subject of some separate arrangement struck between the parties. Nor was there any suggestion that the Rail Entities were contractually obliged to pay for the increased cost or that the Crown Entities were undertaking the works on any basis other than as part of the works required under the Development Agreement.
Mr McLaren's email in response, sent on behalf of the Rail Entities, was clear. The Rail Entities were not prepared to pay anything other than the contracted amount of $750,000 for the works being carried out by the Crown Entities and directed them to complete the Tunnel Works as required by the Development Agreement.
I do not accept the plaintiffs' submission that Mr McLaren's email does not preclude the existence of an arrangement for the Link Works because an arrangement does not require any commitment to pay for the work. While accepting that an arrangement does not require a legally binding obligation to pay, I do not see how a concluded state of affairs that amounts to a separate engagement in relation to the Link Works arises in view of this email. Nor do I accept the plaintiffs submission that the email is simply a statement of lay opinion as to what the Rail Entities considered they were liable to pay for rather than a communication about the work the subject of the alleged arrangement. Mr McLaren's email must be considered in the context of what was being sought by Mr Pope, namely a request for funds to cover the increased cost relating to the pedestrian tunnel works which, amongst other things, included the works required by Airport Link the subject of the alleged arrangement. I note that Mr Pope's evidence also refers to the "request to be paid for the Link Works".
In my view, the Rail Entities' position as expressed in Mr McLaren's email is unequivocal. They insisted on the Crown Entities performing the works as required by the Development Agreement. They also made plain their position that the Tunnel Works (as that term was defined) were the works that had to be undertaken, and that the only payment that would be made was that provided for by that Agreement in relation to the Tunnel Works. In other words, the only works the Rail Entities directed the Crown Entities to carry out were the Tunnel Works as defined by the Development Agreement.
The Crown Entities did not take issue with Mr McLaren's rejection of their claim for further payment or the direction to carry out the works as required by the Development Agreement. As the Rail Entities submit, the Crown Entities could have raised a dispute about the scope of the work required to be undertaken under the Development Agreement (as provided for in cl 4.2(f)). Rather than doing so, they proceeded to progress the designs and perform the Link Works in a manner that was consistent with them being carried out as part of the works required by the Development Agreement and the position expressed in Mr McLaren's email, not under some different arrangement.
The Construction Stage documentation (which included the services works referred to at the March, July and September meetings) was initially submitted for approval under cl 3.5(a) of the Development Agreement. The documentation to be submitted under that clause relevantly relate to drawings for the Tunnel Works and the Works to the extent the Works relate to Tunnel Works or would occur or interface with the Tunnel Land. Later, on 9 November 2018, the Construction Stage documentation was submitted under cl 3.1(a)(vi) of the Development Agreement, which clause related to an Application for works which "comprise the Tunnel Works": cl 3.1(a)(i).
In subsequent communications, Mr Mullen referred to the following: the Development Agreement required works in the existing tunnel and within the Infinity development site, with services works to be provided in both areas by the Crown Entities (at [107]); there had been stakeholder consultation with Airport Link in the development of the tunnel design (at [108]); and that the Entities Crown were paying for all services in the tunnel (at [112]). Mr Mullen asked whether Honeywell would provide acceptable sign offs with respect to the services for the "Tunnel Works" (at [122]).
Mr Mullen also issued certifications from Honeywell to the effect that the Link Works were installed in accordance with the Station's operational requirements (at [124]) and the notice of practical completion in respect of the "Tunnel Works" that included as part of the incomplete works the help point signage and certain works required by Airport Link (at [125]).
It was not until just after practical completion that the plaintiffs referred to "out of scope works", and only in early 2020 did the plaintiffs assert that the Link Works did not form part of the Tunnel Works and were carried out under a separate agreement or arrangement.
Each of the statements and acts referred to in [228]-[231] are, in my view, inconsistent with the proposition that the services works required by Airport Link (and which constituted the Link Works) were the subject of, and were to be carried out under, some arrangement different to the Development Agreement. Rather, they indicate that the Crown Entities were carrying out those works as part of the Tunnel Works pursuant to the Development Agreement, consistent with Mr McLaren's direction.
Other than the references to Airport Link paying the commissioning costs in the September minutes, Mr Mullen's 8 November 2017 email and Mr Pope's request for further funds (which was rejected), prior to practical completion of the Tunnel Works, there was no suggestion or representation that payment for the Link Works was expected or would be made. It was also not contemplated that those works were to be carried out by Crown Construction under some arrangement that would give rise to different rights and liabilities than those that arose under the Development Agreement and Development Approval Conditions.
Finally, so far as Crown Construction is concerned, other than being a member of the Crown Group and identified in late 2015 as the intended builder entity for the development, there are no facts that support its inclusion as a party to the asserted arrangement. It was not identified as the billing entity for the Crown Entities or referred to by Mr Mullen at any of the meetings, and none of the plans and drawings that were submitted for approval were submitted in its name.
In conclusion, in my view, when taken as a whole and considered objectively, the communications and dealings between the parties outlined above cannot be reconciled with the existence of a concluded state of affairs or a meeting of minds in relation to the Link Works that gave rise to an engagement under which Crown Construction undertook to carry out those works for Sydney Trains or the Rail Entities more generally, other than as part of and as required by the Development Agreement.
Accordingly, I find that there was no construction contract for the Link Works as alleged by the plaintiffs, with the consequence that the 26 March Claim is not a valid payment claim under the SoP Act and the plaintiffs' summons should be dismissed.
On the conclusion I have come to, the remaining issues do not strictly arise for determination. However, as they were the subject of submissions, I have set out below my reasoning in relation to each of them, although in a more summary form.

[18]

Issue 2 - Is the 26 March Claim a payment claim?

The Rail Entities contend that, properly construed in its context, the 26 March 2020 email that attached the 26 March Claim and the supporting statement did not communicate a payment claim to the Rail Entities.
In support of this submission, the Rail Entities rely on Fernandes Constructions Pty Ltd v Tahmoor Coal Pty Ltd t/as Centennial Coal [2007] NSWSC 381 (Fernandes), where McDougall J stated (at [27]) as follows: (1) For a document to be a valid payment claim under the Act, it must, among other things, be a "payment claim" and state that it is made under the Act. (2) The test is objective. (3) In applying the test, the document should be considered as a whole and in context. The context may include not only all the terms of the document but also … the terms of any covering letter, or facsimile transmission sheet, pursuant to which the document was sent to its recipient. (4) Further, the context may extend beyond the terms of the document and any covering note to the "factual matrix" - at least, insofar as that matrix is one that is (or should be) known to both parties, and therefore to the hypothetical reasonable observer by whom the analysis of the document is undertaken.
The Rail Entities submit that although the requirement referred to at (1) that the payment claim state that it has been made under the SoP Act has been removed by legislative amendment, the principles articulated are otherwise applicable.
They submit that, objectively construed, the 26 March Claim was not a new payment claim but a copy of the 26 February Invoice, which was a payment claim that had been rejected by Ms Jaber's email of 10 March 2020 in a manner sufficient to comprise a payment schedule. They point to the 26 March Claim and the 26 February Invoice being identical in all material respects, with the same invoice numbers, dates, amounts claimed and substantive content, and contend that the 26 March Claim was simply by way of providing a further articulation of its position on the 26 February payment claim.
It is submitted that, as a consequence, the Court should find that as the 26 March Claim was not a new payment claim but merely a copy of an historical claim, there was no statutory requirement for Sydney Trains to provide a further response to it by way of a further payment schedule.
The plaintiffs submit that the Court should find that the 26 March Claim was a payment claim as it satisfied the statutory requirements under s 13(2) of the SoP Act.
As the issue before McDougall J in Fernandes was whether the claim in question complied with a statutory requirement that is no longer in force, I doubt that McDougall J's principles remain apposite to this case. Documents under the SoP Act should not be approached in an "unduly technical manner". Insofar as they are used in relation to the construction industry, they should be applied in a common sense practical manner: Probuild at [109].
The 26 March Claim may have comprised an invoice that was in almost identical terms to the 26 February Invoice (the only difference being the removal of the words "Terms of Payment: Nett 7 days") to which Ms Jaber had responded. However, the cover letter described the 26 March Claim as a "revised invoice" and raised matters in support of Crown Construction's claim to be paid for the Link Works that were additional to those raised in the 26 February letter. Unlike the 26 February payment claim, the 26 March Claim was also accompanied by a supporting statement that adopted the format approved under the SoP Act and identified itself as a statement that must accompany any payment claim under that Act.
Under s 13(2) of the SoP Act, a payment claim must identify the construction work (or related goods and services) to which the progress payment relates and the amount which the claimant claims to be due. A payment claim must also be accompanied by a supporting statement: SoP Act, s 13(7). The 26 March Claim satisfied those requirements.
Further, a payment claim may also include a claim for an amount that has been the subject of a previous claim: SoP Act, s 13(6)(b).
Having regard to the above, I consider that the 26 March Claim was not served simply as a copy of a historical payment claim, but as a new payment claim that complied with the requirements of the SoP Act. Thus, had I concluded that there was a construction contract for the Link Works, I would not have accepted the Rail Entities' submission that the 26 March Claim did not give rise to the statutory requirement for the Rail Entities to provide a payment schedule in response.

[19]

Issue 3 - Is the 26 March Claim a second payment claim in respect of the same reference date as a previous payment claim?

At the hearing, the Rail Entities accepted that this issue only arises if the Court finds (as part of Issue 2) that the 26 March Claim was not a new payment claim but a copy of a historical one. This is because their contention that the 26 March Claim is invalid by reason of s 13(5) of the SoP Act, which provides that a claimant cannot serve more than one payment claim in respect of each reference date under the construction contract, rests on the proposition that it was simply a second copy of the 26 February Invoice.
As was submitted, if the 26 March Claim was the second copy of the 26 February invoice, it was a payment claim in respect of the same reference date and invalid, relying on Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190; [2009] NSWCA 69 at [9]-[15].
In Dualcorp, the subcontractor had served a payment claim attaching six invoices. Six weeks later, it purported to serve a second payment claim annexing the same invoices and claiming the same amount. Allsop P (as his Honour then was) observed that the second claim must have been in respect of only one reference date under the contract or the last day of the month, as provided for by the SoP Act, s 8(2)(b), and held that it was a claim in respect of the same reference date as the first payment claim. In view of the prohibition under s 13(5), the second claim was not a payment claim that attracted the statutory regime under the SoP Act: at [12]-[16].
The position is different in this case. As the plaintiffs submitted, if an arrangement existed for the Link Works that was separate to the Development Agreement, a reference date arose on the last day of the named month in which the construction work was first carried out under the arrangement, which was most likely July 2018, when BSE carried out the design work the subject of the 26 March Claim, and the last day of each subsequent named month: SoP Act, s 8(2)(b).
As a consequence, there were multiple available reference dates. The 26 March Claim was not served in respect of the same reference date as the 26 February Invoice, but one month later in respect of a new reference date.

[20]

Issue 4 - Does the 26 March Claim seek payment in relation to two construction contracts?

This issue only arises if the Court finds that an arrangement existed in relation to the Link Works but the 26 March Claim, which sought payment for all of the Link Works (namely, all of the services works carried out by Honeywell), also related to some services works arising under the Development Agreement. It was in that scenario that the Rail Entities submitted that the payment claim was invalid as it involved a claim for services works under two construction contracts.
The Rail Entities rely on Acciona Infrastructure Australia Pty Ltd v Holcim (Australia) Pty Ltd [2020] NSWSC 1330, a case in which an adjudicator's decision was challenged on the basis that the payment claim claimed for work done under more than one contract. Hammerschlag J concluded that the decision was void and should be set aside. His Honour held that the payment claim was invalid as it straddled numerous purchase orders (and therefore numerous contracts) with separate payment dates and did not constitute a valid payment claim under the SoP Act: at [40]-[41]. His Honour's reasons referred to previous decisions of this Court, including Trinco (NSW) Pty Ltd v Alpha A Group Pty Ltd [2018] NSWSC 239 (Trinco).
In Trinco, McDougall J found that a payment claim related to work performed under the written subcontract and work performed under a fresh, but different, subcontract. Although his Honour's finding that the payment claim was invalid was made on the basis of an absence of a reference date, he went on to conclude that the payment claim would also have been invalid as it comprised a claim for works under two construction contracts, applying the reasoning from Rail Corporation of New South Wales v Nebax Constructions Australia Pty Ltd t/as TrackSyde Constructions [2012] NSWSC 6 and Matrix Projects (Qld) Pty Ltd v Luscombe [2013] QSC 4.
The plaintiffs submit that the 26 March Claim was a valid payment claim even if the Court found that some of the works the subject of the claim were works performed under the Development Agreement. This was said to be because, unlike the position in Trinco, the 26 March Claim is a claim for payment made solely under the arrangement. The plaintiffs submit that no claim for payment is made for works to the extent they fall within the scope of the Development Agreement as such works would be covered by the lump sum payable under the Development Agreement that was the subject of a different claim. As was put, the 26 March Claim is one claim made under one arrangement, which is different to a payment claim that seeks one amount for works under one contract and another amount for other works under a different contract.
The plaintiffs also submit that the approach in Trinco would not prevent the Court from finding that the 26 March Claim was a valid payment claim. They say that whereas the parties to the two or more contracts relating to the payment claim were identical in Trinco and the related cases, the position in this case is that Crown Construction, as the party making the 26 March Claim, is a party to the arrangement but not the Development Agreement.
Without finding that there were facts to support the existence of the other arrangement for the Link Works, I cannot determine the scope of that arrangement or the parties to it, and the answer to these issues are hypothetical. Accordingly, the following are tentative views only, without purporting to decide the question raised by Issue 4.
The cases to which I was referred identify that the issue of whether a payment claim that straddles two or more construction contracts goes to jurisdiction and determines whether the payment claim is effective to engage the operation of the SoP Act: see, for example, Acciona at [40].
On that basis, I am inclined to the view that if a payment claim purports to be made and seeks payment under one construction contract but in fact relates to the works under two such contracts, the payment claim is invalid and would not enliven an adjudicator's jurisdiction or the SoP Act. It is difficult to see why the form of a payment claim that asserts or appears to relate to work under one construction contract could be a valid claim and engage the SoP Act if, in substance, the payment claim related to work done under two contracts, and the consequence of such a finding would mean that the payment claim could not be the foundation of a valid adjudication application.
To my mind, the issue of whether a payment claim straddles multiple construction contracts does not just give rise to a valuation exercise to be undertaken by the adjudicator, as the plaintiffs submit, but is a matter for the Court to determine as it goes to an issue of validity and jurisdiction, as reflected in Trinco and the other cases to which I was referred.
I am, however, more disposed to the contention that there needs to be common identity of the parties to the payment claim and construction contracts for the principles from Acciona and Trinco to apply.

Crown Green Square Pty Ltd v Transport for NSW

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