Diamond Builders Pty Ltd v Gilridge Investments Pty Ltd [2023] VCC 1527

1. In this proceeding, the plaintiff ("Diamond") applies for judgment against the defendant ("Gilridge") pursuant to s16(2) of the Building and Construction Industry Security of Payment Act 2002 (Vic) ("SOP Act"). Diamond makes the application by summons on originating motion dated 5 May 2023. The application arises out of works that Diamond completed for the construction of a residential apartment building known as EON Apartments.
2. In opposing the claim, Gilridge relies on four grounds, namely:

(a) No reference date has been identified by Diamond, and due to contractual breach, no reference date has accrued under s9 of the SOP Act;

(b) That a due date has not arisen pursuant to s12 of the SOP Act because certain contractual preconditions have not been complied with;

(c) Diamond has failed to establish that the payment claim does not include excluded amounts as per s10B of the SOP Act; and

(d) That it submitted a payment schedule.

1. Diamond rejects these claims, and also notes that the payment schedule provided by Gilridge was made out of time pursuant to the contract and s15 of the SOP Act.
2. In my view, Diamond has been able to satisfy the preconditions to judgment under s16(2) and none of Gilridge's grounds have been made out. My reasons are set out below.
3. Accordingly, there will be judgment for Diamond in the sum of $285,577.00 (including GST), plus interest as claimed by Diamond. I will order that Gilridge pay Diamond's costs of and incidental to the proceeding on the standard basis, in default of agreement (unless either party has a basis for a different order as to costs). I invite the parties to prepare draft orders to give effect to these reasons. I will determine any issue concerning costs on the papers.

1. On or about 16 September 2020, Diamond and Gilridge entered into a construction contract for Diamond to design and construct a low-rise residential apartment building, including basement and carparking ("Contract").
2. Pursuant to the Contract:

(a) Gilridge is the principal;

(b) The stated contract sum in the contract is $5,355,547.00 (including GST);

(c) Fordev Pty Ltd is the current superintendent under the Contract ("Superintendent");

(d) Diamond commenced the works under the Contract on the site, in or around December 2020;

(e) The time for payment claims is the 25th day of each month.

1. On or about 1 August 2022, the parties executed a Deed of Settlement and Release amending the terms of the Contract and bringing the status of the works, including variations and extension of time claims, into alignment as agreed between the parties.
2. From around the date of the Deed, several disputes began to emerge between Diamond and Gilridge.
3. On 18 November 2022, an adjudication determination was made under s23 of the SOP Act in respect of Diamond's payment claim dated 28 September 2022, determining that a sum of $191,052.40 (inclusive of GST) was payable. The relevant reference date for that payment claim was determined to be 25 September 2022.
4. After the adjudication determination, Diamond continued to carry out work on site between 26 September 2022 and 25 October 2022.
5. On 10 October 2022, Diamond sent Gilridge a show cause notice advising that it would suspend works within seven days unless Gilridge agreed to establish a trust account for the retention money. Diamond said that this was a substantial breach under the Contract.
6. On 13 October 2022, Diamond sent a further show cause notice to Gilridge on grounds that the superintendent was undervaluing Diamond's payment claims.
7. On 18 October 2022, Diamond suspended the works pursuant to the first show cause notice.
8. On 3 November 2022, Gilridge issued a show cause notice under clause 44.3(a) of the Contract alleging that Diamond was in substantial breach of the Contract.
9. The breaches alleged by Gilridge included the following:

(a) Diamond had wrongfully suspended the works, was suspension as only permitted under clause 44.9 of the Contract or as directed or approved by the superintendent;

(b) Diamond had delayed progress by failing to obtain all the required building permits;

(c) Diamond had not executed its works to the standard of workmanship required by the Contract;

(d) Diamond failed to satisfy certain legislative requirements;

(e) Diamond had not installed compliant fire screens;

(f) Diamon had wrongfully suspended works leading to under delay.

1. In correspondence dated 9 November 2022, Diamond responded to Gilridge's show cause notice. This correspondence disputes the above alleged breaches.
2. On or around 17 November 2022, Gilridge issued a notice to take the work out of the hands of Diamond under clause 44.4(a) of the Contract, alleging that sufficient cause had not been shown in respect of the alleged substantial breaches outlined in the 3 November 2022 notice.
3. On 19 January 2023, Waleed Abu Khumra ("Waleed"), director of Diamond, arranged for Diamond's project manager, Sam Skake ("Sam"), to issue Gilridge progress claim no. 13.
4. The payment claim states that it related to works ending 25 November 2022, although it is submitted by Diamond that this date was made in error, and the correct date referred to in the payment claim should have read "works ending 25 October 2022".
5. The payment claim included a spreadsheet which stated that the claim was made for work purportedly performed in the period between 26 September 2022 and 25 October 2022, totalling the sum of $285,577.00 (inclusive of GST).
6. The payment claim was sent to Gilridge via the same email address that was used by Gilridge for all correspondence relating to the Contract and the works.
7. On 3 February 2023, Gilridge purported to serve a payment schedule to Diamond's office and via a Dropbox link within an email.
8. The payment schedule stated that there was no available reference date for Diamond to make their January 2023 payment claim, that no new work had been performed for the period which the January 2023 payment claim was made, and that the January 2023 payment claim was unintelligible and, accordingly, invalid.
9. The payment schedule listed an amount of -$1,151,700.00 (inclusive of GST) in respect of the payment claim, that is, an amount payable by Diamond to Gilridge. Gilridge says that it arrived at this figure based on the work claimed for in part or full, defective and/or incomplete.
10. No payment was made from Gilridge to Diamond in relation to the payment claim, and on 13 February 2023, pursuant to the instructions of Waleed, Diamond's solicitors sent Gilridge a demand for payment.

1. The SOP Act seeks to ensure that people who undertake to carry out construction work can recover progress payments for the performance of that work.[1] It applies to any construction contract whether written or oral, or partly written and partly oral.[2]
2. The following terms are defined under the SOP Act:

(a) "construction contract" is 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;[3]

(b) "construction work" is defined under s5;

(c) "related goods and services" is defined under s6.

1. Section 16(2)(a) of the SOP Act provides that a claimant may recover from a respondent any unpaid portion of an amount claimed in a payment claim where the respondent fails to submit a payment schedule within time (or at all) in response to the payment claim.
2. Section 14 of the SOP Act concerns the form and content of payment claims. Section 14(1) reflects that, if entitled to a progress payment, a claimant may issue a payment claim to a respondent who is liable to make payment. The payment claim must identify the construction work to which the progress payment relates; must indicate the amount of the progress payment that the claimant claims to be due; and must state that it is made under the SOP Act.
3. Sections 14(2) and (3) of the SOP Act relevantly provide that a payment claim:

(a) must be in the prescribed form (if any) and contain the prescribed information (if any) - neither is prescribed;

(b) must identify the construction work or related goods and services to which it relates;

(c) must indicate the amount of progress payment that the claimant claims to be due;

(d) must state that it is made under the SOP Act; and

(e) must not include any "excluded amounts" (being amounts referable to particular categories of variations).

1. Section 14(4) of the SOP Act addresses when a payment claim can be served, where it is not a payment claim in respect of a final, single or one-off progress payment. It provides that such a payment claim may only be served within:

(a) the period determined in accordance with the construction contract "in respect of the carrying out of the item of construction work or the supply of the item of related goods and services to which the claim relates"; or

(b) the period of 3 months after the "reference date referred to in s9(2) that relates to the progress payment".

1. Sections 14(5), (6) and (7) of the SOP Act concern payment claims claim in respect of a final, single or one-off progress payment and are not relevant for present purposes. Section 14(8) provides that a claimant "cannot serve more than one payment claim in respect of each reference date under the construction contract". Section 14(9) provides that this limitation does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous payment claim if the amount has not yet been paid.
2. Under s15 of the SOP Act, a person on whom a payment claim is served (the respondent) may reply to the claim with a payment schedule. Section 15(2) requires that a payment schedule must identify payment the claim to which it relates, schedule the amount of the payment that the respondent proposes to make and must identify any excluded amounts.
3. Another important provision informing the formal requirements for payment claims under the Act is s9. Section 9(1) provides that "on and from each reference date under a construction contract" a claimant is "entitled to a progress payment under this Act calculated by reference to that date".
4. Section 9(2)(a) of the SOP Act provides that a reference date is a date determined by or in accordance with the construction contract as:

(a) a date on which a claim for a progress payment may be made; or

(b) a date by reference to which the amount of a progress payment is to be calculated,

(c) in relation to a specific item of construction work "carried out or to be carried out" or a specific item of related goods and services "supplied or to be supplied" under the contract.

1. The rest of s9 concerns situations where the contract makes no express provision for reference dates.
2. It is now well established in Victoria that unless a payment claim answering the description in s14(1) of the SOP Act is served, there can be no application to a court under s16(2)(a)(i). Although dealing with the alternative option of an adjudication application referred to in the New South Wales equivalent of s16(2)(a)(ii), this follows inexorably from the decision of the High Court in Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd[4] ("Southern Han"). On the other hand, the available defences to a payment claim are limited.
3. The available defences concern either the nature of the underlying contract or the form and service of the purported payment claim, and thus whether the payment claim is effective to trigger the procedures established by Part 3 of the SOP Act.[5] More particularly, the defences to a payment claim enlivened by the formal requirements of the SOP Act are, in substance, that the payment claim:

(a) does not relate to a "construction contract" (including because it does not involve carrying out "construction work"), or it relates to a construction contract excluded from the operation of the Act under s7 (for example, a construction contract that forms part of a loan agreement, or one that is a domestic building contract under the Domestic Building Contracts Act 1995);

(b) fails to satisfy the formal requirements of s14(2) (for example, by failing to identify the construction work or failing to state that it is made under the SOP Act);

(c) was made when no valid reference date existed,[6] including where it is served before an applicable reference date or relies on a reference date that has already been used up by an earlier payment claim;[7]

(d) includes variations that are "excluded amounts" under s10B; and

(e) was not validly served on the respondent under either the terms of the contract or under s50.

1. Another issue that may arise, in rare circumstances, is where a defendant alleges that they are not party to or are not liable under the contract. This usually arises where multiple subcontractors are involved in the works. Applicable authorities addressing this issue include Shells Venture Management v Agresta[8] ("Shells"), Baron Forge Contractors Pty Ltd v Vaughan Constructions Pty Ltd[9] ("Baron Forge"), Grave v Blazevic Holdings Pty Ltd[10] ("Grave"), Collective Crane Hire Pty Ltd v ICR Steel Pty Ltd,[11] and 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd[12] ("3D Flow").
2. Under s47, nothing in Part 3 of the SOP Act precludes bringing or continuing proceedings under the construction contract, including where those proceedings deal with the same issues in dispute in the proceeding relying on Part 3. Thus, a judgment under ss16 and 17 is a provisional judgment in what it grants and what it refuses.[13] The statutory context both contemplates and permits inconsistent judgments.[14] This section is, in effect, the statutory manifestation of the "pay now, argue later" description often given to the policy behind the SOP Act and its counterparts in other states.[15]
3. Further, in considering any purported defences to a payment claim, it is important to be mindful of s48 of the SOP Act. This section provides that the provisions of the SOP Act have effect despite any contractual provision to the contrary. It further provides that any provision in any contract purporting to exclude, restrict or modify the operation of the SOP Act or that may reasonably be construed as an attempt to deter a person from taking action under the Act, is void.
4. This court has endorsed the hearing of applications under the SOP Act on a summary basis by summons on originating motion with affidavit evidence.[16] Such claims are properly assessed on the balance of probabilities,[17] with the quality of the evidence weighed having regard to the fact that the legislation seeks to facilitate a swift but temporary remedy.[18]

1. Gilridge says that Diamond's payment claim relies on 25 November 2022 as a reference date.
2. Gilridge points out that the covering email sent from Diamond on 19 January 2023 outlines that payment claim no. 13 "is for the period ending 25 November 2022".
3. Gilridge says that this was not an error, as submitted by Diamond, and that the 25 November 2022 reference date was included to capture the work completed by Diamond since they remained "onsite on a daily basis" through until 10 November 2022, despite "suspending work".
4. Gilridge says that, because the payment claim does not have a valid reference date, it is also not possible to identify when items listed in the payment claim was performed, and that it might relate to work that Diamond purports to have performed after 25 October 2022 and up to the take out.
5. Gilridge says that, upon receipt of the payment claim, Leon Kochen ("Leon"), the director of Gilrdige, was not able to determine if the covering correspondence meant that the spreadsheet was wrong or misleading, or if the spreadsheet meant that the covering correspondence was wrong or misleading.
6. Gilridge says that the last reference date under the Contract was 25 October 2022, and Diamond should not be able to make a claim in respect of work incurred up to the take out.
7. Gilridge notes that pursuant to clause 44.4, after the principal has served a notice under clause 44.2 (for substantial breach of contract), and the contractor fails to show reasonable cause, then the Principal can by notice "take out of the hands of the contractor the whole or part of the work remaining to completed". Upon exercising the right to take the work out of the contract, "the contractor shall not be entitled to any further payment in respect of the work taken out of the hands of the contractor unless a payment becomes due to the contractor under clause 44.6".
8. Gilridge says that this means that under clause 44.4, no due date for any payments arises for any works at all and including any alleged progress payments which now do not become "due and payable" under s12 of the SOP act, until adjustment occurs under clause 44.6 (once the work is completed and the principal knows the final position).
9. Gilridge says that this "suspension of payments" includes a suspension of the rights of Diamond to receive payment, and by extension, make claims for progress payment. This would also suspend the accrual of reference dates on the 25th day of each month. Gilridge notes that, in Southern Han, following taking the works out of the hands of the contract, the accrual of reference dates was suspended. Gilridge says that, according to Southern Han, this suspension is treated as "suspension of the totality of the rights conferred and obligations imposed in relation to payment", and that the rights so suspended should include Diamond's "right to make a progress claim... for work up to the time of the work being taken out of its hands".
10. Gilridge says that, given Southern Han, the deferral of due dates for an existing claim is no different from the suspension of further dates accruing, despite work having been performed by the last reference date.
11. Gilridge says that, given the takeout, the SOP Act can only operate to secure payment for future dates on which a contractual right to claim payment arises, this being the date of the superintendent's adjustment under clause 44.6 of the Contract. Because no adjustment has occurred under clause 44.6, even if Diamond was entitled to claim, no due date has arisen for the purpose of sub-s16(1)(b) of the SOP Act.
12. Gilridge says that the Contract does not contravene s48 of the SOP Act, as the limits of s48 on contractual freedom are only relevant to clauses which restrict the operation of the SOP Act or exclude or modify its operation.
13. Gilridge says that clause 44.4 only impacts the contractually specified reference date and due date of payment, which is permitted under the SOP Act.

1. Diamond says that pursuant to sub-s9(2)(a) of the SOP Act, in determining whether a reference date has arisen, the first step is to look at the terms of the Contract. Diamond says that on a proper reading of clauses 42.1, 42A.1(a)(iv) and item 48 of Annexure Part A, there was an available reference date on 25 October 2022. This reference date remained open for three months, being until 25 January 2023.
2. Diamond says that the reference in the covering email to 25 November 2022 was made in error. Diamond points out that the trade breakdown refers to the correct period of "26/09/2022 - 25/10/2022", and therefore on its fact it should be clear that 25 October 2022 was the reference date relied on, not 25 November 2022.
3. Diamond says a failure to refer to the correct reference date, or the reference to an incorrect reference date, is not jurisdictional. Diamond draws upon the Supreme Court of South Australia's interpretation of Southern Han in Allway,[19] where Doyle J stated:

"It is also true that the 'failure' to identify any particular reference date in the payment claim did not invalidate that payment claim. While the existence of an available reference date is a precondition to a valid payment claim, the identification of the reference date in the payment claim is not". [footnote omitted]

1. Diamond says that, even if 25 November 2022 was considered to be the reference date under the payment claim, it is not a jurisdictional requirement that the work the subject of the payment claim pre-dates the relevant reference date. Diamond Draws upon TFM Epping Land Pty Ltd v Decon Australia Pty Ltd ("TFM"),[20] which states that it is an "untenable" proposition to assert that payment claims cannot include work that has occurred after the prescribed reference date. Diamond also points to the case of MPA Construction Pty Ltd v Profine Construction Pty Ltd,[21] where it was held that "any distinction of whether work was performed before or after 1 November 2019 is irrelevant".
2. Diamond rejects Gilridge's argument that the contractual take out operates to suspend the due dates for payment under the adjustment in clause 44.6.
3. Diamond says that Gilridge has misread Southern Han. In Southern Han, the court held that a take out provision may have the effect of suspending the generation of future reference dates, but reference dates which have already accrued will be unaffected. In this case, the 25 October 2022 reference date had not been used up and remained available to Diamond.
4. Diamond also denies that Gilridge's take out was valid or successful.

1. I accept Diamond's submission that the reference to the 25 November 2022 reference date in the covering email was made in error. The payment claim clearly states that the works in question were for the period 26/09/2022 - 25/10/2022. I agree with Diamond's submission that their presence on site post 25 October 2022 was simply to make the site safe, and not for the purposes of accumulating work to be charged at a following payment claim.
2. I also accept Diamond's submission that, even if the payment claim included work that occurred following the reference date, this inclusion would be permitted. In TFM,[22] the Court of Appeal for New South Wales found that, in applying the principles of Southern Han, it is "untenable" to propose that "a payment claim which includes any amount which accrued after a reference date precludes the payment claim being made with respect to that reference date". Further, in Hanson Construction Materials Pty Ltd v Brolton Group Pty Ltd,[23] the Court of Appeal for New South Wales noted that, "there is no requirement in s 13 that the work in respect of which the payment claim is made must be performed before the claim is made".
3. I do not accept Gilridge's submission that, upon receipt of the email and payment claim, Leon or another "reasonable person" would not be in a position to determine what period the works related to or when the reference date occurred. A reasonable person would be able to easily identify that the covering email contained an error, and that this did not apply to the payment claim.
4. I accept the view advanced by Diamond that, even if there is some confusion over which reference date has been identified, identifying a precise reference date is not a jurisdictional fact. The authorities relied upon by Diamond demonstrate that the Court has consistently adopted this approach to the identification of reference date.
5. In relation to the argument surrounding the take out notice, Gilridge seems to adopt the position that, pursuant to Southern Han, once take out has occurred and payment is suspended, Diamond no longer possesses the right to pursue a claim for any work in the lead up to that suspension. I find that Gilridge's arguments are predicated on a misinterpretation of Southern Han.
6. Gilridge relies upon Southern Han[24] at [78]:

"The suspension of payment was a suspension of the totality of the rights conferred and obligations imposed in relation to payment by cl 37. The rights so suspended included Lewence's right to make a progress claim under cl 37 for work carried out up to the time of the work being taken out of its hands".

1. In this passage, the High Court was not stating that the contractor could not exercise any rights which accrued prior to the suspension of payment in relation to a valid reference date that preceded the suspension, it was stating that the contractor's right to make a payment claim are suspended after the service of a take out notice, because from the date of the suspension no future reference dates can arise.
2. My view that Gilridge has incorrectly applied Southern Han is supported by the various applications of the passage relied upon by Gilridge_._ For example, in Parrwood Pty Ltd v Trinity Constructions (Aust) Pty Ltd,[25] the Court of Appeal for New South Wales stated:

"It is settled law that after the valid service of a take out notice, the contractor's rights are thereafter suspended, including the right to claim progress payments under cl 37, which in turn has the result that the statutory entitlement under s 8 will thereafter no longer arise. Westbourne Grammar School is to the same effect...It cannot be the case that a statutory entitlement to make a progress claim, which Trinity undoubtedly enjoyed on, say, 1 September 2019, ceased or was modified or extinguished after 3 September 2019 by dint of Parrwood exercising some right under the contract. That would invert the relationship between statute and contract... Parrwood sought to say, in various ways, that the reference date of 25 August 2019 became invalid, or ineffective, following the service of the take out notice. Purely as a matter of contract, two parties may as between themselves agree to proceed on a particular and even counterfactual basis. But the obstacle confronting this submission is the effect of statute. After 25 August 2019, not only had Parrwood and Trinity as a matter of contract agreed that that date was a date on which Trinity could make a payment claim. Section 8 applied then and there and gave Trinity a statutory entitlement to invoke the procedures under the Act. Nothing in the contract, and no exercise of powers under the contract thereafter could alter or modify, let alone extinguish, the rights created by statute on 25 August 2019".

1. Given Gilridge's misinterpretation of Southern Han, I do not accept that Diamond's right to make a payment claim in relation to the 25 October 2022 reference date ought to be suspended until the superintendent's adjustment under clause 44.6 of the Contract and, as such, no deferral of the reference date has occurred.
2. Ground (a) is rejected.

1. Gilridge contends that, under clause 43.2 (payment of subcontractors), before Diamond is able to make a payment claim under clause 42.1, Diamond needs to give to the superintendent a statutory declaration "that all subcontractors have been paid". At clause 43.3, the Contract provides that "the principal may withhold payment of money due to the contract until the statutory declaration or documentary evidence, as the case may be, is received by the superintendent".
2. Given that Diamond did not provide Gilridge with proof of payment of its subcontractors, Gilridge says that Diamond has not satisfied a contractual requirement for the due date arising under s12 of the SOP Act.

1. Diamond rejects Gilridge's argument that the due date ought to be deferred until Diamond complies with the contractual hurdle in clauses 43.2 and 43.3.
2. Diamond points to a "myriad of authorities" which stand for the proposition that a contractual precondition to payment will not prevent a claimant from enforcing its SOP right. Such a hurdle requirement, Diamond says, is contrary to s48 of SOP the Act.

1. I do not accept that a failure to comply with clauses 43.2 and 43.3 deprives Diamond of the ability to make a claim under the SOP Act.
2. In my view, such a reading of the Contract is contrary to s48 of the SOP Act, in that it would "exclude", "modify" and/or "restrict" the operation of the SOP Act. There are a number of authorities which support this view that a contractual condition precedent similar in nature to clauses 43.2 and 43.3 will not override a contractor's right to make a claim under the SOP.
3. For example, in Plaza West Pty Ltd v Simon's Eathwords (NSW) Pty Ltd & Anor,[26] Hodjson JA noted: "contractors are not deprived of entitlement to payment under the Act because a condition precedent, such as the obtaining of a superintendent's certificate, has not been satisfied". In BHW Solutions Pty Ltd v Altitude Constructions Pty Ltd,[27] Mullins J outlined why a "declaration" as prescribed under the contract did not preclude bringing an action under the SOP Act, stating:

"there is no requirement in the Act for payment claims to be accompanied by such a declaration. The applicant's payment claims in this matter are therefore not invalid in the absence of a declaration under clause 7(d)(iii)".

1. For these reasons, I reject the finding that a due date has not arisen due to Diamond's failure to comply with clauses 43.2 and 43.3 of the Contract.
2. Ground (b) is not made out.

1. Gilridge says that Diamond communicated that they would be claiming excluded amounts in its next payment claim. Gilridge says that Diamond had advised that, in the next payment claim, it would include costs in the nature of damages, and that this is an excluded amount within the meaning of sub-s10B(2)(c) of the SOP Act. Gilridge says that this explains why Diamond relied on 25 November 2022 as a reference date and not 25 October 2022.
2. Here, Gilridge points to Sam's communication on 2 November 2022, in which he states that, although the project was in "suspension", "all incurred costs for dismantling and re-installing of scaffolding together with scaffolding on site will be included in our final claim" - thus relating to activities undertaken by Diamond on the roof to make the job safe.
3. Gilridge says that these costs are in the nature of damages for breach of contract in the sense that no allowance was made for them in the nature of the contract.
4. Gilridge says that the descriptions of the payment claim on its face is not determinative in circumstances where there is other evidence from the claimant to suggest what is meant for by the claim (in this situation, including damages/an excluded amount).
5. Gilridge points out that, in relation to the adjudication determination for the previous claim (period ending September 2022), Diamond had stated in their submissions that scaffolding hire cost and the salary of an on-site supervisor were described by Diamond was "preliminaries". Gilridge says that it can therefore be assumed that under this payment claim Diamond had been including scaffolding and site management in its definition of preliminaries and had therefore used a somewhat broader definition for preliminaries than used in other projects.
6. Gilridge says that reading the current payment claim in the context of the adjudication submissions means that Diamond had been including scaffolding in its definition of preliminaries. On this basis, Gilridge says that Diamond has included an excluded amount "by stealth".
7. Gilridge says that other more "recent evidence" confirms that the payment claim includes something other than or in addition to contract works. On 4 July 2023, Diamond served a purported notice to Gilridge under clause 44 of the Contract. Although the purported notice is not the subject of this proceeding, Gilridge says that it shows that the payment claim upon which this application made included something other than trade works. In the purported notice date 4 July 2023, Diamond lists the amount owing under the current payment claim as being $285,576.90 "in respect of works and variations". Gilridge says that this notice is contrary to the position adopted up until 4 July 2023 in this proceeding and amounts to a concession that the payment claim includes something that has not been expressly identified in the payment claim, and therefore Diamond may be claiming an excluded amount by stealth.
8. Gilridge also says that the purported total claimed amount of $4,194,221.00 includes $162,369.00 for "variations". Gilridge says that these "variations" include "suspension dewatering costs" and "suspension preliminaries costs", both of which could be characterised as either (a) delay costs, (b) further and/or alternatively damages, (c) further and/or alternatively, time related cost, and for these reasons are "excluded amounts" within the meaning of s10B(1) of the SOP Act. Gilridge seems to think that, because the purported total claim amount includes these variations, that these variations form part of the claimed amount on the face of the payment claim.

1. Diamond says that Gilridge's argument imputing excluded amounts on the payment claim from subsequent correspondence is built on speculation.
2. Diamond says that there are no excluded amounts in the payment claim, and that this is clear on the "face of the payment claim" as required by Yuanda Vic Pty Ltd v Facade Designs International Pty Ltd ("Yuanda").[28]
3. Diamond says that fact that there are no excluded amounts on the face of the payment claim should be the end of the Court's enquiry, and any of the defendant's submissions are matters that ought to have been raised in the payment schedule.

1. Gilridge's claim that the payment claim includes excluded amounts demands that the Court impute meaning on the payment claim from surrounding ancillary correspondence and applications.
2. In my view, Gilridge asks the Court to undertake a full investigation and "digging exercise" in a manner that the Court of Appeal in Yuanda has soundly rejected.
3. In Yuanda, McLeish and Niall JJA held that the court must only examine the "face of the payment claim".[29] Their honours reasoned that:

"...the interpretation which best accords with the policy of the Act should be preferred. In our opinion, that is the more limited construction on which the primary judge relied. The enforcement process is not intended to be an inquiry into the merits of the claim. That is obvious from the prohibition on the respondent advancing a cross-claim or raising a defence. It is also apparent more generally from the 'pay now, argue later' scheme of the Act as a whole and, within that scheme, the provision for adjudication (and adjudication review) in respect of disputed excluded amounts. An interpretation which gives the Court a limited role is to be encouraged as consistent with the Act's preference for adjudication to resolve disputes about the contents of a payment claim".

1. Sifris JA agreed, holding that that the contrary interpretation is antithetical to the purpose of the Act (the timely resolution of payment disputes).[30] His Honour reasoned that:

"The structure, intent and purpose of the Act and the procedure for payment and objections to payment in relation to excluded amounts are predicated on a relatively quick summary procedure for allocation of risk pending any final determination. A full investigation of alleged excluded amount or the suggested digging exercise are entirely contrary to the intended purpose. Rather, it is up to the respondent to identify, in the manner provided for, the excluded amount and set in train the adjudication process. If the respondent fails to do so, it is not open to the respondent to later contest and request a full investigation or digging exercise (a suggested lesser review) in relation to an alleged excluded amount that it should have raised earlier, particularly in circumstances where the enquiry is not directed to a final determination of the rights of the parties, but rather what interim accommodation is appropriate and indeed required based on a face of the claim consideration".

1. Accordingly, all that the Court is required to do is to consider whether, "on the face of the payment claim", Diamond has established the absence of excluded amounts.
2. Gilridge does not argue that the face of the payment claim explicitly includes excluded amounts. Gilridge's entire argument is based on the allegation that Diamond is claiming excluded amounts "by stealth". As I am unwilling and not required to undertake a meticulous analysis of the surrounding circumstances to ascertain whether an excluded amount is being imputed by stealth, I am not of the opinion that the payment claim contained any excluded amounts.
3. Finally, I do not accept Gilridge's argument in its supplementary submissions that the $162,369.00 worth of variations listed in the payment claim form part of the claimed amount. This argument appears to be predicated on a misunderstanding of the payment claim. The variations listed in the payment claim have already been paid in the "previous claim", and there is no amount owing under the table for "this claim". It follows that the variations have already been paid, and do not form part of the $285,577.00 which is unpaid and owing under the payment claim. Further, contrary to Gilridge's submissions, none of the works identified in the "description" section of the variation are included in the listed works outlined in the "trade" component of the payment claim, and therefore cannot be said to make up any part of the claimed amount.
4. Accordingly, the payment claim does not contain excluded amounts. Ground (c) is not accepted.

1. Gilridge contends that Diamond has submitted a progress claim under the SOP Act, not the Contract, and therefore Gilridge was only obligated to submit a payment schedule within 10 business days. Although the Contract stipulates a shorter time of 14 days in which a payment schedule was to be submitted, because Diamond was not making a progress claim under the Contract, as it had failed to meet the preconditions of the Contract, sub-s15(5)(b)(i) does not apply, and the 10 days period outlined in sub-s15(4)(b)(ii) is enlivened.
2. Gilridge argues that, because Diamond submitted the payment claim via email, addressed to the incorrect parties, it did not submit a payment claim in the correct manner outlined in the Contract, where it is stipulates that a payment claim must be served on the superintendent.
3. Clause 2 of the Contract defines "superintendent" as "the superintendent or other person from time to time appointed in writing by the principal to be the superintendent and notified as such in writing to the contract by the principal". Further, clause 7 ("Service of Notices") states that a notice shall be deemed to have been given when it is "received by the person to whom it is addressed or delivered to the address of that person states in the contract or last communicated in writing by that person".
4. Gilridge says that under the Contract, notice is therefore given when "it is received by the person to whom it is addressed" or "delivered to the address of that person", so it must be delivered to the physical address as stated in the contract or otherwise communicated (as opposed to an email address) or must be "addressed" to a particular person. Gilridge says that the email did not include any covering email stating who it was addressed to, and simply began "Dear All", and that it was addressed "To: Gilridge Investments" in its heading, not the superintendent.
5. Gilridge notes that, relevantly, the named superintendent (outlined in Part A of the Contract, item 7 as being "Resource Coordinated Partnership Pty Ltd" (t/a RCP) attn Stuart Whiteroad) was not included in the email.
6. Gilridge says that although clause 42A.1 of the contract lists the superintendent "as an agent for the Principal", it does not provide for vice versa. Although service in the manner was acceptable under the SOP Act, this is not the prescribed form contractually agreed between the parties, and therefore the requirements concerning service of the superintended under clause 42.1 were inactive.
7. Because Diamond has not served the payment schedule in the manner prescribed in the construction contract, it is alleged that Diamond has no contractual right to be paid and is instead limited to its statutory right to make a payment claim under s14 of the SOP Act, and therefore the longer period of 10 business days applies.
8. Gilridge further argues that, unlike s14(1) of the SOP Act, the Contract does not give a prospective claiming a right to "serve a payment claim on the person who... is or may be liable to make the payment". Instead, clause 42.1 provides "the contractor shall deliver to the superintendent claim for payment supported by evidence of the amount due to the contractor and such information as the superintendent may reasonably require".
9. Gilridge insists that these more prescriptive provisions are not void under s48 of the SOP Act, because they do not purport to exclude, modify or restrict the SOP Act. Gilridge says that clause 42.1 exists in parallel to the SOP Act, and in the event that payment claim is not served in compliance with clause 42.1, the payment claim is still recognised under the SOP Act.

1. Diamond submits that, although the default period in which a payment schedule can be sent is 10 business days, s15(4)(b)(i) of the SOP Act permits the Contract to impose a shorter period. Diamond says its Contract with Gilridge imposed a shorter time, where it states at 42.1 that a superintendent's certificates is due "within 14 days of receipt of a claim for payment", and that 'day' in clause 2 meant "calendar day".
2. Diamond contends that the contractual period of 14 days was one day shorter than the statutory default period of 10 business days because Australia Day fell within the relevant period. Thus, the payment schedule was due on 2 February 2023 rather than 3 February 2023.
3. In response to Gilridge's argument that a payment claim cannot be made under the Contract because the provisions relating to serving notices were not complied with, and that instead a payment claim can only be made under the longer 10 business days of the SOP Act, Diamond says that the payment claim was effectively served on the superintendent simultaneously under the SOP Act and under the Contract.
4. Diamond argues that the nominated superintendent under item 7 initially was "Resource Coordination Partnership Pty Ltd (t/a RCP) attn Stuart Whiteroad".
5. However, Diamond notes that under clause 2, the superintendent was also any "other person from time to time appointed in writing by the principal... and notified as such in writing to the contractor by the principal".
6. Diamond points out that, by email dated 21 March 2022, Leon wrote to Waleed copying in Nick Grills ("Nick") of Foredev Group, noting that Stuart Whiteroad has tendered his resignation and that Foredev Group would be taking over as "project manager".
7. Diamond says that Foredev subsequently carried out the role of superintendent under the Contract. Here, Diamond points to EOT6 ("extension of time determination 006") dated 19 October 2022 signed off by Hedley Braham ("Hedley") of Foredev Group as superintendent, an email from Gilridge's solicitor dated 19 October listing Foredev as superintendent, an email from Nicholas Gils ("Nicholas") on 21 October 2022 confirming that all documents to the superintendent should be emailed to hedleyb@fordevgroup.com.au, and Gilridge's take out notice described Fordev Group as the superintendent. Finally, the payment schedule on 3 February 2023 included a document described as "progress payment certificate and schedule (under protest)" signed by Hedley Braham as superintendent's representative.
8. Diamond notes that the payment claim was copied to Hedley and Sam Persley of Foredev Group, and therefore on Gilridge's own construction of the Contract, the payment schedule was served outside the 14-day limit.
9. Diamond says that Gilridge's submissions that service of the payment claim was ineffective pursuant with clause 7 is based on a misinterpretation of clause 7. Diamond says that clause 7 is facultative and does not exclusively define the method by which service may be effect. Diamond says that service did take place as the parties had regularly used email as a means of service documents.[31]

1. Gilridge's argument that the longer statutory time limit should apply is predicated on the belief that the payment claim was not adequately served on the superintendent, and therefore notice has not been served in the manner prescribed under the Contract and thus the claim relies on the sub-s15(4)(b)(ii) of the SOP Act's longer statutory time limit (10 business days).
2. This argument appears to ignore the correspondence which identifies Foredev Group as the superintendent, and not Resource Coordinated Partnership Pty Ltd (t/a RCP). The email dated 21 March 2022 from Leon on behalf of Gilridge outlines that Foredev has been appointed the new project management company "to take over from RCP". Although referring to Foredev as the "project manager" and not "superintendent", in my view this email, when read in conjunction with subsequent emails that refer to Foredev as the superintendent and not RCP, demonstrates that, as of 21 March 2022, Foredev had been appointed new superintended pursuant to clause 2 of the Contract.
3. Examples of correspondence in which Foredev either signed off as superintendent or was referred to as superintendent include the extension of time determination 006 dated 19 October 2022, the email from Gilridge's solicitors dated 19 October 2022, the 21 October 2022 email from Nichols, Gilridge's take out notice, as well as the progress payment schedule dated 3 February 2023.
4. Further, paragraph 53(b)(i) of Leon's affidavit admits that the payment claim was emailed from Diamond to the superintendent.
5. Given that Hedley and Sam of Foredev Group were included in the list of recipients of the payment claim, service had occurred pursuant to the notice. Therefore, pursuant to sub-s15(5)(b)(i) of the SOP Act, the contractually agreed shorter time span of 14 days applies. I find that Gilridge has not provided a payment schedule within the stipulated time, and, therefore, is liable to pay Diamond the claimed amount pursuant to s16(2).
6. I further accept Diamond's submission that clause 7 is facultative and does not exclusively define the method by which service may take effect. Therefore, given that the parties regularly used email as a means of serving document, service did take place.
7. Accordingly, the payment claim was validly served, and Diamond did not receive a payment schedule in response to its payment claim in time.
8. Ground (d) is refused.

1. Diamond says that the test for compliance with sub-s14(2)(c) of the SOP Act is whether a reasonable person in the position of the defendant can comprehend the basis of the claim John Beever (Aust) Pty Limited v Paper Australia Pty Ltd.[32] I accept Diamond's submissions that its payment claim contained a detailed breakdown of how the claim was valued, including percentage performed according to each trade, noting that this level of detail compares favourably to similar claims which have been approved in the past.[33]

Other arguments raised under the payment schedule

1. Gilridge argues in its payment schedule that no work has been completed since the date of the previous payment claim.
2. Diamond says this is factually untrue, and that the plaintiff carried out work on site between 26 September 2022 and 25 October 2022.
3. The payment claim clearly sets out works that were undertaken by Diamond between 26 September 2022 and 25 October 2022, and I accept that this, in conjunction with the affidavit material submitted by Diamond and the fact that this argument was not pursued by Gilridge in their formal submissions, that on the balance of probabilities work did in fact take place between 26 September 2022 and 25 October 2022.

Compliance with formal requirements of s14 of the SOP Act

1. In my view, the payment claim satisfies the following formal and procedural requirements of s14 of the SOP Act, given that it:

(a) was issued on Gilridge, and indicated the amount for construction work due (discussed above);

(b) adequately identified the works to which the payment claim related;

(c) stated that it was made under the SOP Act;

(d) had a valid reference date (discussed above); and

(e) was validly served on Gilridge (discussed above).

1. For the foregoing reasons, there is judgment for Diamond in the sum of $285,577.00, together with interest and costs.

I certify that these 28 pages are a true copy of the judgment of her Honour Judge Burchell delivered on 31 August 2023.

[1] Building and Construction Industry Security of Payment Act (Vic) 2002 s3.

[2] Ibid s7.

[3] Ibid s4.

[4] Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd [2016] HCA 52; (2016) 260 CLR 340 at [44].

[6] Ibidat [61]-[62]; Vanguard Developments v Promax [2018] VSC 386 per Kennedy J at [121].

[8] Shells Venture Management v Agresta [2019] VSC 863.

[9] Baron Forge Contractors Pty Ltd v Vaughan Constructions Pty Ltd [2015] VCC 1424.

[10] Grave v Blazevic Holdings Pty Ltd [2010] NSWCA 324; (2010) 79 NSWLR 132.

[11] Collective Crane Hire Pty Ltd v ICR Steel Pty Ltd [2021] VCC 132.

[12] 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674.

[13] Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor [2009] VSC 156; (2009) 26 VR 112 at [2] and [43]-[46] per Vickery J, cited with approval in Pearl Hill Pty Ltd v Concorp Construction Group (Vic) Pty Ltd [2011] VSCA 99 at [11].

[14] Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd [2005] NSWCA 49; (2005) 62 NSWLR 385 at [22] per Handley JA, with whom Santow JA and Pearlman AJA agreed.

[15] Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor [2009] VSC 156; (2009) 26 VR 112 at [2] and [43]-[46].

[16] 3D Flow at [39]- [54]. See also SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805 at [26].

[17] Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449, 449-450 per Mason CJ, Brennan, Deane and Gaudron JJ.

[19] The Trustee for Allway Unit Trust Trading as Westside Mechanical Contracting Pty Ltd v R&D Airconditioning Pty Ltd [2018] SASC 46.

[20] TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 93 at [27].

[21] MPA Construction Pty Ltd v Profine Construction Pty Ltd [2020] VCC 1035.

[23] Hanson Construction Materials Pty Ltd v Brolton Group Pty Ltd [2019] NSWSC 1641 at [32].

[25] Parrwood Pty Ltd v Trinity Constructions (Aust) Pty Ltd [2020] NSWCA 172 at [31]- [32].

[26] Plaza West Pty Ltd v Simon's Earthworks (NSW) Pty Ltd & Anor [2008] NSWCA 279 [2008] NSWCA 279 at [8].

[27] BHW Solutions Pty Ltd v Altitude Constructions Pty Ltd [2012] QSC 214 [2012] QSC 214 at [17].

[28] Yuanda Vic Pty Ltd v Facade Designs International Pty Ltd [2021] VSCA 44.

[31] Electronic Transactions (Victoria) Act 2000 (Vic) ss1, 4, 5, 7 and 13A(1) and (2).

[32] John Beever (Aust) Pty Limited v Paper Australia Pty Ltd [2019] VSC 126 at [83].

[33] See, for instance, Cidec Pty Ltd v Citi-Con Pty Ltd34 and Seabay v Galvin [2011] VSC183 at [139]-[149].