Fu Xing Pty Ltd v Sidway Constructions Pty Ltd

Judgment

The plaintiff by notice of motion filed on 7 December 2016 seeks orders as follows: 1. Judgment be entered in favour of the plaintiff pursuant to rule 13.1 of the Uniform Civil Procedure Rules 2005 (NSW) in the sum of $598,083.80 pursuant to section 15(2)(a)(i) of the Building and Construction Industry Security of Payment Act 1999 (NSW) ("BCISOPA") or such further or other amount as the court considers fit; or 2. Verdict and judgment on a final basis be granted in favour of the plaintiff pursuant to section 15(2)(a)(i) of the BCISOPA (in the sum of $598,083.80 or such further or other amount as the court considers fit); and 3. The defendant pay the plaintiff interest on the sum of $598,083.80 at the rate prescribed under section 101 of the Civil Procedure Act 2005 (NSW) pursuant to section 11(2) of the BCISOPA; and 4. Costs; and 5. Such further or other orders as the court deems fit.
The plaintiff filed a statement of claim on 7 December 2016 together with this summary judgment application. The plaintiff claims it is entitled to judgment pursuant to s 15(2)(a)(i) of the Building and Construction Industry Security of Payment Act 1999 (NSW) ("the Act") for a payment claim under s 13(1) of the Act on 4 October 2016 in the sum of $598,083.80, on the basis that the defendant did not provide a payment schedule in accordance with s 14.
The plaintiff relies upon the affidavit of Guang Hong Wu sworn 7 December 2016 and upon the terms of the legislation.
Shortly after the plaintiff commenced these proceedings and brought the summary judgment application, the High Court of Australia, on 21 December 2016, handed down a decision in Southern Han Breakfast Point Pty Ltd (in Liquidation) v Lewence Construction Pty Ltd [2016] HCA 52.
The relevant chronology of events is as follows: Reference date Event date Event 9 February 2016 Contract entered into by Sidway and Fu Xing 25 September 2016 Reference date under contract 27 September 2016 Notice of termination issued to Fu Xing by Sidway 29 September 2016 Payment claim issued by Fu Xing to Sidway 4 October 2016 Letter issued by Fu Xing to Sidway (purported payment claim) 10 October 2016 Payment scheduled issued by Sidway to Fu Xing 25 October 2016 Reference date under contract (the defendant alleges that the contract have been terminated on 27 September 2016, this reference dated did not accrue) 26 October 2016 Letter issued by Sidway to Fu Xing evidencing dispute re Fu Xing 4 October (undated) letter

As can be seen from the above, two days after 25 September 2016, the reference date within the meaning of s 8(2)(a) arose, the defendant claims to have served a notice on the plaintiff on either 26 or 27 September 2016 (defendant's outline of submissions, paragraph 6(c)) terminating the contract with immediate effect. This was effected pursuant to the contractual right to terminate and thus would prevent the service of further payment claims other than for the 25 September 2016 date.
The plaintiff disputes that the contract was terminated on 26 or 27 September 2016 and says it was not terminated until 26 October 2016. The claim that the contract was not terminated until this date (one day after the reference date in the contract) is based on the letter sent by the defendant to the plaintiff on that date (Annexure G to the affidavit of Mr Wu (pages 90 - 94)).
This summary judgment application is predicated on the plaintiff's 4 October 2016 "payment request" being able to amount to a payment claim under the Act. The first problem is that it is written in terms which the defendant claims mean that it cannot be construed as a payment claim at all. For example, it states that the plaintiff disagrees for the reasons for termination identified in the defendant's notice of termination, identifies costs incurred in labour and material in somewhat informal terms (such as "Merhis should pay for it") and requests an employee of the defendant to contact Mr Wu on behalf of the plaintiff "to discuss the request". While a schedule of labour and material costs up until 26 September 2016 is attached, the defendant submits that this cannot be a payment claim at all within the meaning of s 13(1) (because the amount set out is not payable by the defendant in discharge of an obligation, but a series of complaints).
There are thus four barriers to any claim for summary judgment: 1. Whether the 4 October 2016 document is a payment claim at all; 2. If the 4 October 2016 document is a payment claim, it was the second payment claim served by the plaintiff in respect of the 25 September 2016 reference date under the contract, which is prohibited by s 13(5) of the Act: Southern Han Breakfast Point Pty Ltd (in Liquidation) v Lewence Construction Pty Ltd at [62]. 3. Can the 4 October 2016 "payment request" be a 25 October 2016 payment claim which has been brought forward? An ingenious argument by Mr Green that the terms of the contract would permit the bringing forward of the payment date is untested by law and probably contrary to the ratio of Southern Han Breakfast Point Pty Ltd (in Liquidation) v Lewence Construction Pty Ltd. I also note that in Hill (as Trustee for Ashmore Superannuation Benefit Fund) v Halo Architectural Design Services Pty Ltd [2013] NSWSC 865, it was held that a party cannot back-reference the reference date, which makes the likelihood of a party being permitted to forward reference dates likely to be similarly impermissible. 4. Finally, there are disputed issues of fact as to when the termination of the contract with immediate effect occurs, as no further payment claim under the Act can be permitted: Southern Han Breakfast Point Pty Ltd (in Liquidation) v Lewence Construction Pty Ltd at [79] - [81].
The purpose of the Act is to provide a statutory mechanism for the securing of payments of obligations to pay for work imposed by the contractual force of the construction contract, as opposed to amounts claimed by way of damages for breach of contract or other amounts (Southern Han Breakfast Point Pty Ltd (in Liquidation) v Lewence Construction Pty Ltd at [66]).
The principal difficulty for me is that where the date of termination of a construction contract is a disputed issue of fact and the payment claim relied upon is served after the date contended for by the defendant, the disputed issue of fact of the date of termination of the contract must be resolved. There being a dispute as to this date, which can only be resolved as a disputed issue of fact at the hearing, summary judgment is not available and the plaintiff's application for summary judgment falls at the first hurdle.
If the defendant had brought an application for summary dismissal of these proceedings, I would have considered it necessary to go on to determine whether, in the circumstances, the claim is a payment claim at all or can be forward-dated. However, no such application is before me, and the parties agree that the appropriate course is for the proceedings to go to hearing. I have accordingly set in place a timetable to enable the parties to obtain a hearing date at the earliest possible date.
The sole remaining issue is the question of costs. I have not heard submissions in full in relation to the basis upon which summary judgment is opposed, or for that matter the basis for the summary judgment application. These are matters best left to the determination of the trial judge, and accordingly I have reserved costs of the application on that basis.

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