Edelbrand Pty Ltd v H M Australia Holdings Pty Ltd

Court of Appeal (NSW)|2011-11-11|Before: Bathurst CJ, McColl JA

IW v The City of Perth [1997] HCA 30; (1997) 191 CLR 1 John Holland Pty Limited v Roads & Traffic Authority [2007] NSWCA 19 Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622 Lennards Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 Minister for Immigration & Multicultural & Indigenous Affairs v SGLB [2004] HCA 32; (2004) 78 ALJR 992 Minister for Immigration & Citizenship v SZMDS [2010] HCA 16; (2010) 240 CLR 611 Multiplex Constructions Pty Limited v Luikens [2003] NSWSC 1140 Nepean Engineering Pty Limited v Total Process Services Pty Limited in Liq [2005] NSWCA 490; (2005) 64 NSWLR 462 Plaza West Pty Limited v Earthworks (NSW) Pty Ltd [2008] NSWCA 279 Re Minister for Immigration & Multicultural Affairs; Ex parte Application S20/2002 [2003] HCA 30; (2003) 77 ALJR 1165 Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252 Tesco Supermarkets Ltd v Nattras [1972] AC 153 Wilson v State Rail Authority (NSW) [2010] NSWCA 198 Category: Principal judgment Parties: Edelbrand Pty Ltd (Appellant) H M Australia Holdings Pty Ltd (Respondent) Representation: Counsel DS Weinberger (Edelbrand Pty Ltd) P Folino Gallo, I Leong (H M Australia Holdings Pty Ltd) Solicitors Whittens Lawyers & Consultants (Edelbrand Pty Ltd) TK Legal Pty Ltd (H M Australia Holdings Pty Ltd) File Number(s): 2011/54792 Decision under appeal Citation: H M Australia Holdings Pty Limited v Edelbrand Pty Limited t/as Domus Homes & Anor [2011] NSWSC 604 Date of Decision: 2011-06-21 00:00:00 Before: Einstein J File Number(s): 2011/54792

Factual background 2The appellant at the relevant time traded under the name Domus Homes. Part of its business activities apparently involved management of construction projects. On 15 October 2008, it entered into a contract with the respondent in respect of a factory development at Riverwood, New South Wales ("the agreement"). The agreement, described as "Domus Homes Steps Document", so far as relevant contained the following provisions: " COMMERCIAL IN CONFIDENCE The following is the outline of the 'Project Management Delivery' process for a $3,450,000 (target construction budget as outlined in 'Basis of the Bonus Arrangement' below, but excluding GST, survey plan, Council fees and contributions, Section 73 design and contributions, temporary water and power to site, geotechnical report and piering and/or piling with the reservation of the right to amend the proposal subject to Council DA conditions, final construction specifications and final geotechnical report), 4,870m2 industrial building project comprising 4,350m2, 9.0m high clear span warehouse plus 520m2 office space and driveways, parking and landscaping. The Domus Homes fee includes a fixed price project management service fee of $130,000 plus GST plus a bonus payment to be shared on a 50/50 basis between H. M. Australia Holdings Pty Ltd (HMAH) and Domus Homes for all savings affected below the $3,450,000 target mark (excluding the exclusions listed above and excluding GST). The bonus payment plus GST is to be made in full on occupation of the property or at the end of the main construction work, which ever occurs sooner. The Basis of the Bonus Arrangement The basis of the bonus arrangement is as follows: Based on research carried our by both HMAH and Domus Homes, the parties believe that a target budget of $3,450,000 for the project is achievable. Based on input from the builder recommended by Domus Hones, it may be possible to achieve a lower budget than the target budget, as outlined below. Should the project be delivered for an amount lower than the target budget, this saving will be shared on a 50/50 basis between HMAH and Domus Homes The structure will not be a design and construct model which we believe assumes too much risk and gives too much profit, but one where HMAH controls the design and delivery process through Domus Homes where HMAH pays for its consultants directly at significantly reduced risk. The proposed financial model is as follows: Costs to HMAH (excluding GST): Project Management $130,000 Architect (3.0%) $88,000 Other consultants $35,000 Construction estimate $2,922,000 ($600/m2) Total Possible Cost (excluding exclusions) $3,175,000 Base line target budget $3,450,000 Difference to be shared 50/50 $275,000 Bonus to Domus Homes 50% excluding GST (estimated) $137,500 Share to HMAH 50% excluding GST (estimated) $137,500 The 'Cost to HMAH if savings target met' of $3,4500,000 is NOT a guaranteed maximum price. It is however a realistic target price based on input from relevant parties with whom we have had discussions. The above figures are by way of an example only and the actual figures will vary expect for the Base Line Target Budget (BLTB). If the project is not brought in below the BLTB, then no bonus payment will be made to Domus Homes. Any savings below the BLTB of $3,450,000 will be paid out at 50% to Domus Homes in full as a bonus, irrespective of what that figure is plus GST excluding the exclusions listed above plus office and warehouse fitout like storage racks, furniture and partitions. The above cannot be construed as a guarantee. The above is indicative only, based on research carried out by Domus Homes as well as HMAH to deliver HMAH the safest and most economical result in good faith. ... Step 2: Design Meeting On Survey, geotechnical report and Architectural Brief completion by the client, David Edelstein, the architect and the project principal/s (client) meet to finalise the Architectural Brief. The architect is paid directly by the client, but coordinated by Domus Homes. ... Step 6: Council Submission The plans are submitted to council after a payment to Domus Homes of $21,666.67 plus GST by the client. This payment covers the management and coordination of the Development Application including all representations and meetings with Council as required. The additional consultants if required for the application (including planner, hydraulics engineer, traffic engineer, landscape designer, geotechnical engineer and/or geotechnical investigation, BASIX and Section J specialist etc) are co-ordinated by Domus Homes, but are paid for by the client as are applications fees and statutory charges. In the event of Council or the client requiring post submission changes where extra work is required (excluding minor changes), Domus Homes' rate of $250/hr plus GST will apply and Domus Homes will negotiate fees for the work with the architect and other consultants, if required, for client approval. ... Step 11: Construction Management and Delivery As construction progresses, Progress Payments are made by the client to the builder as stipulated in the construction contract: Domus Homes is also paid $21,666.67 plus GST in advance of the construction programme by the client, for its role as the client's representative in managing the consultants and contractor to deliver the project in accordance with the terms of the contract. Domus Homes will conduct regular site meetings and inspections to monitor and administer the works. Step 12: Occupation and Completion As the project nears completion, final inspections take place for occupation. Once the building is suitable for occupation, the client can move into the property. An Occupation Certificate is also prepared and issued by the Certifier. On occupation and/or building completion, a reconciliation is done and the bonus to Domus Homes gets settled in full within 7 days of invoice, failing which interest at 10.0% pa will apply for outstanding payments. Urgent defects, should they occur, will be repaired immediately by the builder, whilst smaller defects will be repaired at the end of the maintenance period. Domus Homes will co-ordinate this work. Hereafter, a Final Certificate is issued where all final payments are made to the builder. Conditions ... All payments are claimed under the Building and Construction Industry Security of Payment Act of 1999 NSW Section 13. ... All instructions to builders, subcontractors and consultants may only be carried out through Domus Homes. No variations will be carried out unless they are in writing with fully agreed scope, price and sign off by the client. Payments are required within 7 days of invoice (Bonus payment only - all other stages paid in advance) after which an interest rate of 10.0% pa will apply." It should be noted that the Mr Edelstein referred to in Step 2 was a Director of the appellant. 3The agreement was executed on behalf of the respondent by Mr Hui Ouyang (also known as Mr Harvey Ouyang) and a Ms Yeung Lo (also known as Ms Maggie Lo). They were described as owners. 4On 26 November 2010, Mr Edelstein sent an email to Mr Ouyang in the following terms: "Hi Harvey, Riverwood Bonus claim attached for your attention ASAP please. Thank you for your instructions on this project. Regards." 5The email attached two letters from the appellant to the respondent. The first stated as follows: "Dear Harvey & Maggie, LOT 1, DP264375 JINDALEE PLACE, RIVERWOOD NSW 2210. BONUS ABN: 34 099 585 476 Under the terms of our agreement (the Domus Homes Steps Document, ie. 'DHSH') signed and dated 15 October 2008 by David Edelstein of Domus Homes and Yeung Lo and Hui Ouyang of H. M. Australia Holdings Pty Ltd, I am acting on my rights to amend the final proposal in the DHSD based on the terms therein which entitles the final Bonus figure to be adjusted. A work sheet is attached outlining the Bonus workings for your assistance. A tax invoice is also attached for your immediate attention. As the subject building has now been occupied and the end of the main construction work has been completed, the Bonus is now due under the terms of the DHSD agreement. Thank you for your instructions on this project and I look forward to a continuing working relationship with you." 6The second invoice was described as a tax invoice. It was directed to the respondent and made a claim for a bonus in the following terms: "Dear Harvey & Maggie, LOT 1, DP264376 JINDALEE PLACE, RIVERWOOD NSW 2210. BONUS ABN: 34 099 585 476 As the subject building has now been occupied and the end of the main construction work has been completed, the Bonus is now due under the terms of our 'Domus Homes Steps Document' agreement between David Edelstein of Domus Hones and Yeung Lo and Hui Ouyang of H. M. Australia Holdings Pty Ltd dated 15 October, 2008. The terms of our agreement were that we would be paid as a bonus of 50% of any savings under the Base Line Target Budget (BLTB). Please find attached our working sheet showing how the variations requested by you during the project affected the BLTB and setting out the bonus now due and payable to Domus Homes. As per the attached work sheets, the Bonus amount now due to Domus Homes is $195,376.00 plus $19, 537.60 GST being, $214,913.60. Thank you for your instructions on this project. Any recommendations of our services to your family, friends and associates will always be greatly appreciated. This invoice is a payment claim under the Building and Construction Industry Security of Payment Act 1999. If you would like to pay by direct transfer, our banking details are as follows: Bank: ANZ xxxxx xxx, xx xxxx Street, xxxxx xxx NSW 2028. BSB: xx2 xx1. Account name: EDELBRAND Pty Limited ACN: xxx xxx x76 Account No: xxxx xxx16 Account type: Cheque account." 7The worksheet referred to in the letter described as a tax invoice set out the base line target budget of $3,450,000 and added to that figure an amount of $806,725 in respect of variations agreed to during the course of construction. As the actual costs of construction was $390,752 below the amount so calculated, the respondent claimed a bonus of 50% of that amount plus GST totalling the figure of $214,913.60. 8On 2 December 2010, a Mr Patrick Wang who described himself as an assistant accountant send Mr Edelstein an email requesting the spreadsheet of the appellant's bonus calculation in Excel format. That was supplied on the same day. On 6 December 2010, Mr Wang sent an email to Mr Edelstein in the following terms: "Thanks for your spreadsheet. I have discussed the calculation with Harvey, he has made some adjust [sic] to the sheet, please see attached file. The yellow highlighted ones are basic infrastructures of the building which Harvey believes should not be exclusions. The red highlighted figures are adjusted by me because of the differences with the invoices we have received." 9A spreadsheet with the adjustments was attached. That showed a bonus paid to the appellant of $21,811. 10On 13 December 2010, Ms Lo emailed Mr Edelstein requesting a meeting to discuss the bonus payment on 14 December. She stated that she would have Harvey, Girish (GM) and Patrick (Accounts) present as well. It can be inferred that Patrick was Mr Wang. 11On 22 December Mr Edelstein sent an email to Ms Lo, copy to Mr Ouyang, headed "Adjudication Application of Payment Claim under the Security of Payments Act 1999". The email provided as follows. "On 26 November 2010 I sent you a payment claim under the Building and Construction Industry Security of Payment Act. You have not responded with a payment schedule. The letter now serves as formal notice that I intend to apply for adjudication of my payment claim. This correspondence offers you an opportunity to provide a payment schedule, which should be provided within 5 business days. I remind you that, pursuant to s 14 of the Act, the payment schedule must indicate the amount of the payment that you propose to make and, where the amount is less than the amount claimed (being $214,913.60), indicate why you propose to make a lower payment." 12Ms Lo responded to the email on the same day. Her response was to the following effect: "The agreement that you refer to was signed on the 15 th of October 2008. This agreement was based on a plan (refer attached) that never eventuated. The building that was constructed was based on a different plan with dissimilar dimensions. We have tried to discuss with you to resolve the issues. We have requested that each item of the agreement be revisited to establish the validity of the items. So far you have not been willing to engage in discussions at that level. Our doors are open to any discussions that you may with to have with us." 13On 19 January 2011, the appellant made an adjudication application and served it on the respondent. The application was withdrawn on 7 February and the appellant thereafter made a new adjudication application. That was served on the respondent on 9 February 2011. A Mr Davenport accepted the adjudication and determined that the adjudicated amount was $214,913.60 inclusive of GST. 14It should be noted that on 28 January 2011 the respondent purported to make a response to the appellant's adjudication application pursuant s 20(1) of the Act. These submissions were based on the premise that a payment schedule complying with s 14 of the Act had been served by the respondent. The respondent now concedes that no such payment schedule was served. However, in the respondent's submissions to the adjudicator the following remarks were made: "8. On or about 26 November 2010, the Claimant made a payment claim for the bonus it alleges is payable pursuant to the Agreement. It is this payment claim that is the subject of the instant Adjudication Application. ... 12. On or about 6 December 2010 the Respondent, by its servant Patrick Wang, served a payment schedule upon the claimant pursuant to ss.14(1). ... 19. Progress payment is defined in section 4 of the Act to include: a. The final payment for construction work carried out ... under a construction contract, or b. A single or one-off payment for carrying out construction work ... 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.) 20. It is submitted that the instant claim is not a progress claim, rather it is a claim for a bonus that was contingent upon the completion of the construction work and directly referable to savings brought about by the claimant. The quantum of which could only be determined upon completion of the job. 21. Even if, however, the claim is held to be a progress claim, the due date for the payment of that claim would have been 7 December 2010. As the Contract provides that the bonus payment is required within 7 days of invoice. As the claim was made on 26 November 2010, the 7 th day after 26 November 2010 was 7 December 2010. 22. On 6 December 2010 the respondent, by its servant Patrick Wang, served a payment schedule upon the claimant in compliance with the requirements in section 14(1) of the Act. The Respondent submits that; a. The email complies with s.14(2)(a) (in identifying the payment claim) because it refers to the claimant's excel spreadsheet which contains the calculation by which the payment claim was derived. That excel spreadsheet was also attached to the payment claim - and so, a reference to the spreadsheet is, by implication, a reference to the payment claim. b. Equally, the email complies with s14(2)(b) (in indicating the amount proposed to be paid) because it provided sufficient information for the claimant to know the respondent's position by stating which items the respondent believed should not be exclusions. The respondent submits that paragraph 14 of the claimant's submissions supports this contention. c. The respondent notes that no amount has been paid to date on account of the claimant's refusal to accept the respondent's proposed payment." The submission was signed by Mr Ouyang.

The primary judge's reasons 15The primary judge concluded that the agreement was not a construction contract as defined in s 4 of the Act as it was not a contract under which the appellant undertook to carry out construction work or to supply related services, so as to fall within the definition in s 4 of the Act. In particular his Honour found the services provided by the appellant were not architectural services in relation to construction work as found by the adjudicator or building advisory services in relation to such work. 16In reaching this conclusion the primary judge focused in particular on the contention that the appellant was providing architectural advisory services in relation to construction work. He held it was not enough that the services provided were services in relation to architectural services. In reaching that conclusion his Honour applied what was said by McDougall J in Brian Leigh Smith & Anor v Coastivity Pty Limited [2008] NSWSC 313 at [39]-[40] to the following effect: "[39] In truth, I think, Coastivity's case based on either subpara (ii) or subpara (iii) can succeed only if the introductory words to para (b) are to be read as 'services of the following kind, or in relation to such services'. But the introductory words do not so read; and there is no basis for implying them by some process of construction. [40] I accept that the performance of Coastivity's obligations under clause 5(a) would have required it to coordinate, or control, manage, supervise and coordinate, the provision of services falling within either or both of subparas (ii) and (iii). But it did not thereby undertake itself to provide those services; and, on the evidence, it did not do so." 17The primary judge's conclusion was expressed as follows: "Domus provided services connected with architectural work, or as McDougall J put it at [39] in relation to architectural services, but they were not providing the architectural service itself. It is apparent from the agreement that what Domus was obliged to provide was project management services. As a necessary by product of this obligation they had to deal with architects and those providing architectural services, but they did not provide the service themselves. To provide a related service would have required Domus to perform services that could only be performed if an architect was responsible for their provision. The mere coordination of architectural services (without more) does not so require." (at [62]) 18In reaching that conclusion the primary judge only analysed steps 1 and 2 of the agreement. In particular he did not consider whether the services which the appellant agreed to provide in stage 11 constituted building advisory services in relation to construction works. The judgment (at [31]) seems to indicate that the primary judge held the view that stage 11 was not referred to by the appellant in its submissions before him. To the extent that he took that view he was incorrect. (See pars [3] and [26] of the appellant's written submissions in the Court below.) 19It may be that the primary judge formed the view that his reasoning in respect of steps 1 and 2 was equally applicable to submissions based on step 11 (see par [51]). For the reasons subsequently set out, it was not. 20The primary judge rejected the alternative bases on which the respondent contended that the adjudication should be quashed. He found that the agreement was not excluded from the operation of the Act by virtue of s 7(2)(c) and that adequate notification of the intention to apply for an adjudication was given for the purposes of s 17(2)(a) of the Act. The primary judge declined to permit the respondent to rely on the ground that the purported claim made by the appellant was not a payment claim for the purpose of s 13 of the Act. He gave short reasons during the hearing for declining to permit the respondent to rely on this ground. These reasons were as follows: "Early in the hearing of the instant proceedings a question has arisen as to whether or not the grounds relied on by the plaintiff under the heading no payment claim served/alternatively no proper payment claim served, grounds 3 and 4 are outside the pleadings and should not be entertained. Both parties have addressed on this discrete issue. In my view the grounds put forward by the plaintiff are seen to be outside the pleadings and the Court orders that those particular grounds not be entertained further and we can move on to the next matter."

The issues in the appeal 21The appellant contended that the primary judge erred in holding that the agreement was not a construction contract to which the Act applied. 22In addition to asserting that the agreement was not a construction contract for the purposes of the Act, the respondent sought to raise the following matters by way of Notice of Contention: (a) The contract was excluded from the operation of the Act by virtue of s 7(2)(c). (b) No notification of the appellant's application for adjudication was provided as required by s 17(2) of the Act. (c) His Honour erred in the exercise of his discretion in declining to permit the appellant to argue that either no payment claim was served or that the purported payment claim did not comply with s 13(2) of the Act. (d) The purported payment claim was not a payment claim within the meaning of s 13(1) of the Act. (e) Alternative to (d) the payment claim did not comply with s 13(2) of the Act. 23The respondent contended that if any of the matters referred to in subpars (a), (b), (d) and (e) above were made out then the facts which were a pre-condition to the exercise of jurisdiction were not established, or that to the extent that the adjudicator was entitled to determine those facts and did so adversely to the respondent, he committed a jurisdictional error and his decision was liable to be set aside.

The relevant legislative provisions 24The following provisions of the Act are relevant to the issues raised in these proceedings: "4 Definitions ... 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. ... 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'). ... 6 Definition of 'related goods and services' (1) In this Act, related goods and services , in relation to construction work, means any of the following goods and services: (a) goods of the following kind: (i) materials and components to form part of any building, structure or work arising from construction work, (ii) plant or materials (whether supplied by sale, hire or otherwise) for use in connection with the carrying out of construction work, (b) services of the following kind: (i) the provision of labour to carry out construction work, (ii) architectural, design, surveying or quantity surveying services in relation to construction work, (iii) building, engineering, interior or exterior decoration or landscape advisory services in relation to construction work, (c) goods and services of a kind prescribed by the regulations for the purposes of this subsection. (2) Despite subsection (1), related goods and services does not include any goods or services of a kind prescribed by the regulations for the purposes of this subsection. (3) In this Act, a reference to related goods and services includes a reference to related goods or services. 7 Application of Act ... (2) This Act does not apply to: ... (c) a construction contract under which it is agreed that the consideration payable for construction work carried out under the contract, or for related goods and services supplied under the contract, is to be calculated otherwise than by reference to the value of the work carried out or the value of the goods and services supplied. ... 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 ... (2) Related goods and services supplied or undertaken to be supplied under a construction contract are 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 goods and services, 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 goods are defective, the estimated cost of rectifying the defect, and, in the case of materials and components that are to form part of any building, structure or work arising from construction work, on the basis that the only materials and components to be included in the valuation are those that have become (or, on payment, will become) the property of the party for whom construction work is being carried out. 13 Payment claims (1) A person referred to in section 8 (1) who is or who claims to be entitled to a progress payment (the claimant ) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment. (2) A payment claim: (a) must identify the construction work (or related goods and services) to which the progress payment relates, and (b) must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount ), and (c) must state that it is made under this Act. ... 14 Payment schedules (1) A person on whom a payment claim is served (the respondent ) may reply to the claim by providing a payment schedule to the claimant. (2) A payment schedule: (a) must identify the payment claim to which it relates, and (b) must indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount ). (3) If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent's reasons for withholding payment. (4) If: (a) a claimant serves a payment claim on a respondent, and (b) the respondent does not provide a payment schedule to the claimant: (i) within the time required by the relevant construction contract, or (ii) within 10 business days after the payment claim is served, whichever time expires earlier, the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates. ... 17 Adjudication applications (1) A claimant may apply for adjudication of a payment claim (an adjudication application ) if: (a) the respondent provides a payment schedule under Division 1 but: (i) the scheduled amount indicated in the payment schedule is less than the claimed amount indicated in the payment claim, or (ii) the respondent fails to pay the whole or any part of the scheduled amount to the claimant by the due date for payment of the amount, or (b) the respondent fails to provide a payment schedule to the claimant under Division 1 and fails to pay the whole or any part of the claimed amount by the due date for payment of the amount. (2) An adjudication application to which subsection (1) (b) applies cannot be made unless: (a) the claimant has notified the respondent, within the period of 20 business days immediately following the due date for payment, of the claimant's intention to apply for adjudication of the payment claim, and (b) the respondent has been given an opportunity to provide a payment schedule to the claimant within 5 business days after receiving the claimant's notice. ... 22 Adjudicator's determination (1) An adjudicator is to determine: (a) the amount of the progress payment (if any) to be paid by the respondent to the claimant (the adjudicated amount ), and (b) the date on which any such amount became or becomes payable, and (c) the rate of interest payable on any such amount. (2) In determining an adjudication application, the adjudicator is to consider the following matters only: (a) the provisions of this Act, (b) the provisions of the construction contract from which the application arose, (c) the payment claim to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the claimant in support of the claim, (d) the payment schedule (if any) to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule, (e) the results of any inspection carried out by the adjudicator of any matter to which the claim relates. ... 31 Service of notices (1) Any notice that by or under this Act is authorised or required to be served on a person may be served on the person: (a) by delivering it to the person personally, or (b) by lodging it during normal office hours at the person's ordinary place of business, or (c) by sending it by post or facsimile addressed to the person's ordinary place of business, or (d) in such other manner as may be prescribed by the regulations for the purposes of this section, or (e) in such other manner as may be provided under the construction contract concerned. (2) Service of a notice that is sent to a person's ordinary place of business, as referred to in subsection (1) (c), is taken to have been effected when the notice is received at that place. (3) The provisions of this section are in addition to, and do not limit or exclude, the provisions of any other law with respect to the service of notices. 32 Effect of Part on civil proceedings (1) Subject to section 34, nothing in this Part affects any right that a party to a construction contract: (a) may have under the contract, or (b) may have under Part 2 in respect of the contract, or (c) may have apart from this Act in respect of anything done or omitted to be done under the contract. (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."

Was the agreement a construction contract within the meaning of the Act? 25The first issue is whether the agreement was in fact a construction contract within the meaning of the Act.

The parties' submissions 26The appellant submitted that the work required by step 2 of the contract constituted architectural services in relation to construction works whilst the work required in step 6 and step 11 constituted building advisory services in relation to construction work. It sought to distinguish Brian Coastivity supra, on the basis that in that case there was no obligation on the defendant to provide the services in question but rather to manage and co-ordinate those services. 27Counsel for the respondent submitted that the services provided were not architectural services because such services required the services of a qualified architect. So far as the question of building advisory services was concerned he submitted that involved giving advice as distinct from administering the contract. Ultimately he relied on Coastivity supra and submitted that the obligations in the present case, like those in Coastivity, were to co-ordinate and administer the work which did not amount to building advisory services.

Decision 28In Coastivity supra, McDougall J (at [34]) emphasised that the question of whether a contract is a construction contract requires attention to be focused on the obligations under the contract. A corollary of this is that little assistance will be derived from a consideration of authorities dealing with a different contract imposing different obligations. 29Further, once the contractual obligations in question are identified, it is necessary to determine whether these obligations fall within the words of the statute. That requires a focus on the words used by the legislature: see Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252 at [31]-[33]. The meaning of the text may require consideration of the context which includes the general policy and purpose of the provision: see Alcan (NT) Alumina Pty Limited v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 at [47] and the cases cited in that paragraph; Wilson v State Rail Authority (NSW) [2010] NSWCA 198. 30In the present case, the legislation in question is remedial legislation. In these circumstances the words in the definition of related goods and services in s 6 of the Act should be given a liberal interpretation, within the confines of the actual language employed and what is fairly open on the words used: Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622 at 638. In IW v The City of Perth [1997] HCA 30; (1997) 191 CLR 1 at 12, Brennan CJ and McHugh J put the position in the following terms (citations omitted): " ... beneficial and remedial legislation, like the Act, is to be given a liberal construction. It is to be given 'a fair, large at liberal' interpretation rather than one which is 'literal or technical'. Nevertheless, the task remains one of statutory construction. Although a provision of the Act must be given a liberal and beneficial construction a court or tribunal is not at liberty to give it a construction that is unreasonable or unnatural." See also Gummow J at 39. 31Each of the parties, correctly in my opinion, agreed that the words "advisory service in relation to construction work" in s 6(b)(iii) qualified each of the preceding words "building, engineering, interior or exterior decoration or landscape". 32It follows in the present case that for the agreement to be a construction contract within the meaning of the Act at least some of the services provided must be architectural services in relation to construction work so as to fall within s 6(b)(ii) of the Act or building advisory services in relation to construction work falling within the meaning of s 6(b)(iii). In considering that issue each of the expressions "architectural services" and "building advisory services" should be given their ordinary and natural meaning liberally construed. 33Notwithstanding the liberal construction to which I have referred, I do not think that the services required by steps 2 and 6 were architectural services in relation to construction work. Step 2 requires the appellant to co-ordinate the finalisation of the architectural brief. Step 6 refers to a right of the appellant to be paid $21,666.67 for management and co-ordination of the development application. To the extent that these steps give rise to obligations to provide services they are not obligations to provide architectural services. The primary judge was correct in so holding. 34The position is different so far as step 11 is concerned. Step 11 requires management of consultants and contractors and the monitoring and administration of the work. This should be read in conjunction with the condition which gives the appellant the sole right to instruct builders, consultants and contractors. 35An obligation to monitor and administer the work would, in my opinion, imply an obligation to advise the respondent as to the progress of the work and any steps which should be taken if problems emerge during the course of construction. Further, although the right to instruct the builder is given to the appellant by the contract, such instructions would normally be given in consultation with the respondent particularly where, for example, the respondent was required to sign off on variations. The obligation of monitoring and administering would, in my opinion, involve advising whether the price and scope of a proposed variation was appropriate. 36In these circumstances, the services provided by the appellant would seem to me to encompass building advisory services giving these words their ordinary and natural meaning. As I have pointed out, the work included advisory services. Having regard to the context in which the obligation arose, namely the development of a factory, it seems to me they are properly characterised as building advisory services. It was not in issue that the services were in connection with construction work. 37As I indicated earlier, the primary judge did not directly deal with this issue although it was raised for his consideration. In these circumstances, in my opinion, he erred in holding that the agreement was not a construction contract. 38It is thus necessary to deal with the matters raised by the respondent in its Notice of Contention.

Is the contract excluded from the operation of the Act by virtue of the provisions of s 7(2)(c)? 39The respondent submitted that the contract essentially involved a profit sharing arrangement. In these circumstances, it submitted that the amount payable was calculated other than by reference to the value of the work carried out. It relied in that regard on what was said by McDougall J in Coastivity supra. 40In Coastivity McDougall J considered a development agreement for the construction of six residential units. The agreement involved the owners of the property on which the units were to be constructed contributing the land. The developer, Coastivity, was obliged to co-ordinate an equity raising to finance the project and to co-ordinate and supervise the project. It was agreed that after payment of outgoings, profits would be shared between the owner, Coastivity and any private investor in the project in certain proportions. The agreement further provided the proportion in which losses were to be borne if the project proved unsuccessful. 41McDougall J held that the contract was not a construction contract as defined in the Act. He also held that if it was, it was excluded from the operation of the Act by s 7(2)(c). His Honour reasoned as follows: "[59] Some indication of what the legislature had in mind when it referred to the concept of value is to be found in s10: specifically, as to related goods and services, in ss(2). Section 10 makes reference to the kinds of matters that one would ordinarily expect to be considered in valuing construction work (ss(1)) or related goods and services (ss(2)). Although s7 appears in Part 1 of the Act and s10 appears in Part 2, there is no reason to think that the legislature intended that value, for the purposes of s7, should be anything different to the concept of value described in s10. Section 10, after all, states how construction work and related goods and services are to be valued; and the value of construction work or related goods and services is one of the referents in s7(2)(c). [60] There are other problems confronting this part of Coastivity's submissions. The first is that it is necessary, for the purposes of those submissions, that the profit share mechanism is to be regarded as the contractual method for valuing (in this case) related goods and services supplied by Coastivity under the deed. In other words, for the purposes of s10(2)(a), the profit share arrangement constitutes 'the terms of the contract' that provide how related goods and services are to be valued. Plainly enough, that process of valuation can only be conducted once the project has been brought to completion and final accounts can be taken. But if the deed is a construction contract, Coastivity would be entitled to progress payments on a monthly basis (s8(2)(b)). (Mr Scruby did not submit that this was a contract providing for only one reference date - namely, at the completion of the project and the taking of accounts. If I may say so, he was wise not to do so, since it would mean that the payment claim was hopelessly premature.) [61] Mr Scruby sought to counter this problem by saying that monthly progress payments could be valued in accordance with s10(2)(b). But it is difficult to reconcile that with the proposition that it is necessarily inherent in his primary submission: namely, as I have said, that the profit share mechanism provides the contractual method for determination of the value of the services supplied by Coastivity. [62] I accept that the words 'by reference to' are capable of indicating a broad relationship between the concepts, or things, that they connect. That is the point of the authorities upon which Mr Scruby relied. To my mind, the fact that those authorities deal with radically different statutory context does not necessarily invalidate the point, although it would be necessary to look at the particular context to see, as a matter of construction, whether a broad or a narrow concept of connectivity is imported by those words in a particular case. But that does not resolve the problem, which is that in my view the notion of an entitlement to share in profit is fundamentally inconsistent with the concept of value, or valuation, as it is used in the relevant sections of the Act. [63] Another problem is, as Mr Jennings submitted, that if the contractual mechanism for profit share is to be taken as defining the value of the services supplied by Coastivity, then those services will not necessarily have a positive value. If the project were carried through to completion and returned a loss, Coastivity would be obliged to bear 30% of the loss. On Mr Scruby's argument, the value of its services would be whatever negative amount was returned by carrying out this calculation. [64] I accept that the value of services may be fixed by reference to matters that do not fall strictly within s10(2)(b). Thus, in Biseja v NSI Group [2006] NSWSC 835, I held that a formula which valued project management services (agreed by the parties in that case to be related services) at a percentage of total construction costs did not attract the operation of s 7(2)(c). But although the determination of the value of those services in that case would always depend on a prior determination of the value of the construction work carried out, that value could be determined from month to month (by looking at the value of construction work performed in the month in question) and would always be a positive figure. That is a long way removed from the facts of this case." 42The respondent submitted that the position was the same in the present case. It submitted that the primary judge erred in holding that the bonus payment was calculated solely be reference to the costs of the building work. It was submitted it was calculated by reference to the cost relative to the pre-agreed budget which rendered it analogous to the profit share mechanism in Coastivity. It relied on the fact that it was not possible to determine the amount payable until completion of the contract and that there may be no amount payable. 43The appellant submitted that the bonus was calculated by reference to the cost of the building work and therefore did not fall within s 7(2)(c). It submitted the case was indistinguishable from Biseja v NSI Group [2006] NSWSC 835 where a fee calculated by reference to the cost of the building work was not excluded from the operation of the Act by virtue of s 7(2)(c). 44The appellant also relied on the decision of Einstein J in Brambles Australia Ltd v Davenport [2004] NSWSC 120 which it submitted established that s 7(2)(c) does not apply where at least part of the consideration payable was calculated by reference to the value of the work. In this regard, the appellant contended that the fixed consideration of $130,000 payable pursuant to the contract took the contract outside the operation of s 7(2)(c). 45I do not find that decision of any particular assistance. That case involved a contract for demolition at an agreed lump sump with a profit share arrangement in respect of saleable items salvaged during the course of demolition. For reasons which with respect are not entirely clear, his Honour held that the plaintiff had not discharged the onus of establishing the contract in question fell within s 7(2)(c) as there were "too many imponderables left for consideration" (at [30]).

Decision 46In my opinion s 7(2)(c) does not apply to the agreement. This is because the consideration is calculated by reference to the value of the services supplied. 47Section 10(2) of the Act provides that related goods and services are to be valued in accordance with the terms of the contract or, if there is no express provision, in accordance with the mechanisms set out in s 10(2)(b). This provision appears in Pt 2 of the Act which deals with the rights to progress payments. Section 7(2)(c) applies to exclude contracts where that mechanism cannot have application; that is where the consideration cannot be determined by reference to the terms of the contract or the mechanisms in s 10(2)(b). 48In the present case the agreement provided for a fixed payment of $130,000. That payment was payable by six instalments of $21,666.67 at the time set out in steps 1, 5, 6, 9, 10 and 11. The relevant reference date for those payments are the events specified in each of those steps. The amount payable is the amount calculated in accordance with the terms of the contract (see s 9(a)). For the purpose of s 7(2)(c) these amounts are not calculated other than by reference to the value of the services supplied as they are calculated in accordance with the contract price consistent with s 10(2)(b)(i). 49Step 12 of the agreement provides that the bonus payment is payable within seven days of an invoice after direct reconciliation following occupation and/or building completion. Thus, the reference date for the payment of the bonus can be ascertained in accordance with s 8(2)(a) of the Act. 50Further, the bonus amount is calculated in accordance with the terms of the contract consistently with s 9(a). For the purposes of s 7(2)(c) and s 10(2)(a), the contract provides how the amount is to be valued, namely 50 percent of savings below at targeted budget. 51Accordingly, s 7(2)(c) does not apply. As I have pointed out, the date of any payment due and its value can be determined in accordance with the contract as required by the Act. It is immaterial in my view that the amount of the bonus payment cannot be calculated until completion of the contract. What is of importance is that the contract provided the mechanism for its calculation at the reference date provided for by s 8(2)(a). The fact that no bonus may be payable when the reconciliation is done is immaterial. The contractor retains $130,000 which has been paid. It simply does not get a bonus. 52For these reasons this ground of the Notice of Contention is not made out.

Notification of the adjudication application 53The next issue raised by the Notice of Contention is whether the adjudication application was notified to the respondent as required by s 17(2) of the Act. The respondent's submission was that the email to Ms Lo of 22 December 2010 did not constitute notification for the purpose of s 17(2)(a). 54The respondent, in support of its submission, referred to a great deal of authority concerning service by facsimile or email and service on corporations. However, its basal proposition was that there was no evidence before the Court that the director who was the guiding mind of the company actually received notification. Orally, counsel for the respondent accepted that Ms Lo received notification but said there was no evidence that Mr Ouyang was notified. 55The appellant submitted that the email of 22 December 2010 constituted sufficient notification. It relied on the findings of the trial judge on this issue. His Honour had found that the fact that the email of 22 December sent to Ms Lo was copied to Mr Ouyang and that Ms Lo responded on the same day was sufficient evidence to infer that the respondent had been notified of the application.

Decision 56The parties agreed that s 31 of the Act dealing with service is merely facultative. That that is so is clear from s 31(3). 57In Howship Holdings Pty Limited v Leslie (1996) 41 NSWLR 542 at 544, Young J, as he then was, held that personal service merely means that the document must come to the notice of the person for whom it was intended. In Falgat Constructions Pty Limited v Equity Australia Corporation Pty Limited [2006] NSWCA 259, Hodgson JA, with whom Handley JA and Hunt AJA relevantly agreed, stated the position as follows (at [58] citations omitted): "[58] In the first place, in my opinion it is clear that if a document has actually been received and come to the attention of a person to be served or provided with the document, or of a person with authority to deal with such a document on behalf of a person or corporation to be served or provided with the document, it does not matter whether or not any facultative regime has been complied with. In such a case, there has been service, provision and receipt." 58Neither party disputed the principles set out in those cases, although the respondent seemed to suggest that it was necessary for the document to be received by the person who was "the directing mind and will of the company". This concept, which broadly speaking originated in considering the attribution of individual acts to a company for the purpose of establishing fault or criminal liability (see Lennards Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705; Tesco Supermarkets Ltd v Nattras [1972] AC 153; In Re Supply of Ready Mix Concrete (No 2) [1995] 1 AC 456) tends to obscure that what was necessary for the company to be notified was receipt by the person or persons having authority in the company to deal with the matter: Falgat Constructions Pty Limited supra at [58]; Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 at 506, 509. 59In the present case, even if the email of 22 December 2010 was not received by Mr Ouyang, Ms Lo was one of the persons who had authority to deal with the matter on behalf of the respondent. She signed the agreement as owner; she had emailed Mr Edelstein on 13 December 2010 requesting a meeting to discuss the payment claim and she was the person who immediately responded to the email of 22 December 2010 effectively rejecting the claim. In my opinion, notice of the adjudication application to a person who has such authority is notice for the purpose of s 17(2)(a). 60Further, even if notice to Mr Ouyang was necessary, it was open to the judge to find it was received on 22 December 2010. The email was copied to Mr Ouyang. In its submissions to the arbitrator the respondent made the following submission (par [26]): "Again, one begins with the due date for payment which is 7 December 2010. Pursuant to ss 17(2)(a), the claimant had 20 business from the due date for payment to give notice of its intention to apply for adjudication. That day is 7 January 2011 (being 20 business days from 7 December 2010). The claimant was within this time since it gave notice of its intention to apply for adjudication on 22 December 2010. The respondent does not dispute that it received this notice on 22 December 2010 (' notice of intention to apply for adjudication ')." 61These submissions were in evidence before the trial judge and were signed by Mr Ouyang. 62Finally, Mr Ouyang gave affidavit evidence in the proceedings before the primary judge. He did not contend that he did not receive the email of 22 December 2010. In these circumstances this Court should not draw the inference that he did not receive an email which was copied to him and which he acknowledged was received by the respondent in his signed written submissions to the adjudicator: Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Limited (1991) 22 NSWLR 389 at 418-419.

Should the adjudicator's decision be set aside on the basis that there was no valid payment claim under the Act? 63The respondent contended that there was no valid payment claim within the meaning of s 13(1) or, to the extent there was, it did not comply with the provisions of s 13(2). It contended that the primary judge erred in the exercise of his discretion in declining to grant leave to raise this issue at the hearing. It contended that in treating the claim as a payment claim, the adjudicator fell into error going to jurisdiction and his decision should be quashed. 64It is convenient to deal first with the issue of whether the discretion of the primary judge in refusing to allow the issue to be raised miscarried and then, to the extent necessary, the question of whether the payment claim complied with the requirements of s 13 of the Act. 65The respondent submitted that in declining to grant leave to raise the payment claim issue the primary judge erred because the Construction and Technology List Statement and the contentions contained in it was not a pleading and further erred by failing to take into account the absence of any prejudice to the appellant in allowing the amendment. The appellant contended that the primary judge was correct for the reasons he gave in refusing to allow the issue to be raised and that if the discretion was to be re-exercised leave should be refused because the claim was certain to fail and the amendment was thus futile. 66The respondent submitted that the claim was not a payment claim because it was not a claim under the contract. It contended that the claim purported to unilaterally vary the contract and thus was not a claim under the contract for the purpose of s 13(1). It submitted that to the extent the contract provided a mechanism by which the baseline budget for the bonus could be adjusted, the claim was not a progress claim as the words "calculated in accordance with the terms of the Contract" did not engage "contract mechanisms determining what is due under a contract independently of calculations referable to the work performed". It relied on the decision of this Court in Plaza West Pty Limited v Earthworks (NSW) Pty Ltd [2008] NSWCA 279. 67The respondent also submitted that even if the claim was a claim under the contract, it did not meet what it described as the minimum and essential requirements of s 13(2) of the Act. It repeated its claim that what was involved was the unilateral amendment but it also submitted that the entitlement to the bonus payment was not identified sufficiently on the face of the document to enable the respondent to understand the basis of the claim or its manner of quantification and that the provision of the figures in the worksheet forming part of the claim were not readily verifiable. 68The appellant, in its submissions, emphasised the words "who claims to be" in s 13(1) and submitted that the requirements of that subsection were satisfied because the claim was made under the contract whether justified or not. It also submitted that there was compliance with s 13(2)(a), (b) and (c) because the construction work was identified as was the amount claimed and the letter of 26 November 2010 indicated the claim was a payment claim under the Act.

(a) Did the primary judge err in refusing to permit the issue to be raised? 69The reasons given by the primary judge for refusing to allow the issue to be raised are scanty. I have set them out above (at par [19]). It appears the only issue he considered was whether the matter was raised by the pleadings. 70As I indicated above it was contended by the respondent that the statement of contentions in the Construction and Technology List Statement was not a pleading. It is correct that the proceedings were commenced by way of summons. However, the summons is required to include a statement of the plaintiff's contentions setting out not only the facts on which the plaintiff relies but the legal grounds for the relief claimed: Ingot Capital Investments Pty Limited v Macquarie Equity Capital Markets Limited [2008] NSWCA 206; (2008) 73 NSWLR 653 at [416]. In that case Ipp JA explained the purpose of such contentions in the following terms (at [417]-[418]): "[417] McDougall J (at 91 [278]) referred to Brambles Industries Ltd t/as CHEP Australia v Tatale Pty Limited [2006] NSWSC 204 where Bergin J (a judge with considerable experience of the Commercial List) observed that statements of contentions served essentially the same purposes as pleadings. Her Honour said (at [9]) that the requirements of Practice Note 100 were intended 'to ensure that each party knows the case made against it and sets the ambit within which pre-trial procedures such as discovery will proceed. The pleadings also define the limits in which the trial will be conducted. [418] Under the Commercial List practice the parties, in stating the facts, have 'greater latitude than under the pleading rules in explaining the plaintiff's legal contentions and issues arising from the facts': B Cairns Australian Civil Procedure 7 th ed (2007) Pyrmont, NSW, Lawbook Co at 87. This practice allows parties in the Commercial List, in pleading their cases, to comply fully with the surprise rule and to lay their cards on the table in the clearest possible way. They are expected to do this. This practice is the basis on which the Commercial List operates." See also Hodgson JA at [56]. 71The principles enunciated by Ipp JA above apply equally to matters commenced in the Construction and Technology List. 72It follows that the primary judge was correct in treating the statement of contentions as akin to pleadings. 73However, in considering whether or not it was appropriate to permit the issue to be raised, the primary judge should have considered whether the appellant would have been prejudiced as a result. Although absence of prejudice will not always be conclusive in allowing fresh issues to be raised, it remains a relevant factor to be considered: Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at [102]. In my opinion, the primary judge erred in failing to consider this issue. 74It follows that the discretion needs to be re-exercised. With some hesitation I am of the view that the primary judge should have permitted the point to be raised. There are powerful considerations to the contrary; first, as the primary judge pointed out, it was not pleaded; second, and equally importantly, it was not raised before the adjudicator. Indeed, the respondent contended before the adjudicator that it had served a payment schedule in compliance with s 14(1) of the Act in response to the claim. (See par [22] of the respondent's submissions to the adjudicator.) It also must be remembered that one of the objectives of the Act is to provide a speedy interim method of resolving disputes about payment claims. Taking a point directly contrary to the way the matter was approached before the adjudicator hardly assists in that objective. 75Notwithstanding, it seems to me that the point should be permitted to be raised. First, the matter goes directly to the jurisdiction of the arbitrator. Second, no prejudice was identified. The appellant did not contend it would have run the case below any differently had the issue been raised. Indeed, it made submissions on the point below. Further and importantly, one of the grounds on which it says the primary judge was correct in refusing leave was that the point was futile. This inevitably involves consideration of the issue. Finally, this conclusion will not involve any further delay in the resolution of the proceedings. The point can be dealt with by this Court.

(b) Was the claim a payment claim for the purposes of s 13(1)? 76It is important to note that the claim on its terms was expressed to be made under the contract. That is apparent from the second paragraph of the letter of 26 November 2011 in which the claim was made. (See at par [6] above.) The claim does not contend that the agreement was varied or a new agreement made in substitution for it. Any such variation or a new contract would of course have to be consensual and supported by consideration: Federal Commissioner of Taxation v Sara Lee Household & Bodycare (Australia) Pty Limited [2000] HCA 35; (2000) 201 CLR 520 at [22]-[23]. 77The adjudicator in his reasons went no further than stating that the method of calculation did not appear to him to be unreasonable. However, presumably he concluded that either as a matter of construction or implication, the baseline target budget could be increased by the cost of agreed variations. This may or may not be correct but it does not alter the fact that the claim on which the adjudication was made was one made under the contract. As Mason P pointed out in Clarence Street Pty Limited v Isis Projects Pty Limited [2005] NSWCA 391; (2005) 64 NSWLR 448 at [31] a payment claim is no more than a claim and many will be disputed. It was not suggested that, in determining the claim, the adjudicator was acting unreasonably, irrationally or illogically in deciding a jurisdictional fact: Re Minister for Immigration & Multicultural Affairs; Ex parte Application S20/2002 [2003] HCA 30; (2003) 77 ALJR 1165 at [37], [52]; Minister for Immigration & Multicultural & Indigenous Affairs v SGLB [2004] HCA 32; (2004) 78 ALJR 992 at [38]; Minister for Immigration & Citizenship v SZMDS [2010] HCA 16; (2010) 240 CLR 611 at [40]-[41], [94], [104], [127]-[129]. 78Alternatively, it was put by the respondent that it was not a payment claim because it was not calculated in accordance with the terms of the contract but rather by contractual mechanisms determining what was due independently of calculations referable to the work performed. 79In John Holland Pty Limited v Roads & Traffic Authority [2007] NSWCA 19 a claim was made under s 13 of the Act for a progress payment, the amount of which included an amount determined as a result of a dispute resolution procedure provided for by the contract. Hodgson JA, with whom Beazley JA agreed, held that this was not a progress claim as defined in s 9(1). His Honour expressed the view that the words in s 9(1) "'calculated in accordance with the terms of the contract' meant calculated on the criteria established by the contract and did not mean reached according to mechanisms provided for by the contract": see John Holland Pty Limited v Roads & Traffic Authority supra at [38]. His Honour expressed the same view in Plaza West Pty Limited v Simon's Earthworks (NSW) Pty Limited supra at [53]. 80In the present case, however, the amount was calculated in accordance with the criteria established by the contract. The contract provided for the amount payable to be calculated by reference to cost savings below a baseline budget. To the extent that the baseline budget could be varied, the variation was in accordance with the contract, so the calculation remained in accordance with the contractual criteria. 81It follows, in my opinion, that the claim was a payment claim within the meaning of s 13(1).

(c) Did the claim comply with the provisions of s 13(2)? 82In Clarence Street Pty Ltd v Isis Projects Pty Limited supra, Mason P, with whom Giles and Santow JJA agreed, cited (at [27], [31]) with approval the following passage from the judgment of Palmer J in Multiplex Constructions Pty Limited v Luikens [2003] NSWSC 1140 at [76] to the following effect: "A payment claim and a payment schedule are, in many cases, given and received by parties who are experienced in the building industry and are familiar with the particular building contract, the history of construction of the project and the broad issues which have produced the dispute as to the claimant's payment claim. A payment claim and a payment schedule must be produced quickly; much that is contained therein in an abbreviated form which would be meaningless to the uninformed reader will be understood readily by the parties themselves. A payment claim and a payment schedule should not, therefore, be required to be as precise and as particularised as a pleading in the Supreme Court. Nevertheless, precision and particularity must be required to a degree reasonably sufficient to apprise the parties of the real issues in the dispute." 83Although the question is objective ( Clarence Street Pty Limited v Isis Property Limited supra at [39]) the fact that the recipient of the claim was able to deal with it provides powerful support for the proposition that there was sufficient identification for the purpose of s 13(2)(a). 84In the present case, the payment claim attached worksheets setting out the variations and demonstrating how the baseline target budget was increased, total costs of the work and the bonus that resulted. By 6 December the respondent was able to make adjustments where it believed it was appropriate. As I indicated, the respondent in its adjudication submission made no complaint as to the adequacy of the information supplied and in fact claimed it had served a payment schedule. In these circumstances it seems to me the project claim sufficiently identified the work to which the payment claim related to comply with s 13(2)(a). 85There does not seem to me to be any basis for saying that the provisions of s 13(2)(b) were not complied with. The amount claimed to be due of $214,913.60 was set out. Further, the claim stated that it was a payment claim under the Act as required by s 13(2)(c). 86In these circumstances the respondent's submissions that the claim was not a payment claim should be rejected. 87The respondent submitted that if its arguments based on s 13 of the Act were correct, the adjudicator fell into jurisdictional error and his decision was liable to be quashed. In making that submission the respondent submitted that the Court should reconsider its earlier decisions in Brodyn Pty Limited v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421; Co-ordinated Construction Co Pty Limited v Climatech (Canberra) Pty Limited [2005] NSWCA 229; Nepean Engineering Pty Limited v Total Process Services Pty Limited in Liq [2005] NSWCA 490; (2005) 64 NSWLR 462 and certain dicta of McDougall AJA in Chase Oyster Bar Pty Limited v Hamo Industries Pty Limited [2010] NSWCA 190; (2010) 78 NSWLR 393. Having regard to the conclusions I have reached on s 13 it is neither necessary nor appropriate to do so.

Conclusion 88It follows, in my opinion, that the appeal should be allowed with costs, Order 1 of the orders made by the primary judge be set aside and in lieu thereof the summons be dismissed with costs. 89Accordingly the orders I would make are as follows: 1 Appeal allowed. 2 Order 1 of the orders made by the primary judge on 21 June 2011 be set aside and in lieu thereof the summons be dismissed. 3 Order that the respondent pay the appellant's costs to the appeal and the proceedings in the Court below. 90McColl JA: I agree with Bathurst CJ's reasons and the orders his Honour proposes. 91Tobias AJA: I agree with Bathurst CJ.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 March 2012

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