The sum specified in the statutory demand is $97,640.39, being the certified sum of $96,540.19 plus costs of $886.00 and interest under the District Court Act to the date of the demand.
3 The defendant performed building work for the plaintiff. The sum referred to in the adjudication certificate under the Building and Construction Industry Security of Payment Act was, in accordance with s.22 of that Act, determined by an adjudicator to be the amount of a progress payment to be paid by the plaintiff to the defendant. The manner of calculation to be employed in such a case is prescribed by s.13. That section deals with two alternative cases. The second of them is relevant here, that is, the case where the contract under which the building work was done makes no express provision for the calculation of progress payments. In such a case, the amount of a "progress payment" is, under s.9(b), "the amount calculated on the basis of the value of construction work carried out or undertaken by the person (or of related goods and services supplied or undertaken to be supplied by the person) under the contract".
4 In general terms, therefore, the adjudicated amount which later became the principal component of the judgment debt upon which the statutory demand was based was an amount assessed by the relevant functionary "on the basis of the value of" work done under the building contract and related goods and services supplied.
5 The offsetting claim propounded by the plaintiff arises from what it says was overcharging by the defendant in invoices that the plaintiff has already paid. The plaintiff has paid fifteen invoices (designated GREE-01 to GREE-15) totalling $552,203.91. Upon subsequent examination of those invoices, the plaintiff has formed an opinion that it has been overcharged by a substantial amount. In the hearing before me, three categories of supposed overcharging were relied upon. Those categories account, it is said, for overcharging to the extent of $102,597.90.
6 The first category of overcharging involves instances in which the same item was charged twice. To illustrate this, I was taken to the defendant's invoice GREE-02 dated 13 August 2003 which included a charge for six hours truck hire from Broken Head Quarry (abbreviated to "BROQUA") in the sum of $432.48 by reference to that supplier's own invoice number 68. Exactly the same charge for exactly the same item and amount by reference to exactly the same BROQUA invoice number was also included in the defendant's invoice GREE-03 dated 2 September 2003.
7 The second category of overcharging relates to instances where a charge is included in a particular amount for a particular item identified by reference to a supplier's invoice which is in fact for a lower amount than that charged. An example is again found in invoice GREE-02 dated 13 August 2003 where there is a charge for $3,933.83 for truck hire by reference to BROQUA invoice number 255 whereas the attached copy of BROQUA invoice 255 shows a sum of $374.16.
8 The third category of overcharging concerns cases in which there is a charge for an item billed by another party and reference to an invoice issued by that other party but no copy of any such invoice is attached. Again, an example from the defendant's invoice GREE-02 may be quoted. It contains yet another entry for truck hire from Broken Head Quarry (BROQUA). The entry is for $707.07 by reference to the supplier's invoice BROQUA 258. But among the several BROQUA invoices attached to the defendant's invoice GREE-02 there is none numbered 258.
9 The several instances within these three categories have been analysed by the plaintiff. The results, as they emerge from the several GREE invoices, appear in consolidated form at pages 144 to 146 of the exhibit AG1 to the affidavit of Mr Greenaway sworn on 17 November 2004. Also tendered by the plaintiff in the proceedings as exhibit A was a large folder containing each of the GREE invoices and all supporting materials. I granted an adjournment of several days to enable the defendant to examine this voluminous material. Upon the resumption, there was no submission on behalf of the defendant that the summary at pages 144 to 146, insofar as it dealt with the fifteen invoices GREE-01 to GREE-15, did not correctly reflect, in an arithmetical and compilation sense, the items within the three categories said by the plaintiff to entail overcharging. In respect of those items in the fifteen invoices, the total amount is $102,597.80.
10 This aggregate of $102,597.80 represents the offsetting claim on which the plaintiff seeks to rely for the purposes of s.459H(1)(b). The plaintiff says, quite simply, that each of the fifteen invoices submitted to it by the defendant (which it has paid) represented, in part, that the defendant was recouping, through the charge in the invoice, sums it had outlaid to or become responsible to pay to others, that the plaintiff paid those fifteen invoices on an assumption that that representation was true but, as now appears from the detailed analysis the plaintiff has carried out, the representation was false because, on the verification material provided, some of the disbursements were never incurred, some are overstated (i.e., were incurred in an amount less than that represented) and others have been on-charged twice. It is the plaintiff's contention that, as a result of the misrepresentations, it has paid on the fifteen invoices $102,597.80 more than it should have been charged and that sum is properly recoverable by it from the defendant.
11 Section 25(4) of the Building and Construction Industry Security of Payment Act limits the extent to which a person in the position of the present plaintiff may cross-claim and mount defences against someone in the position of the present defendant. But those constraints apply only in proceedings in which it is sought to have a judgment resulting from filing of an adjudication certificate under the Act set aside. It may be ignored in the present context as there is no suggestion that pursuit of the offsetting claim that the plaintiff considers itself to have involves any attempt to have the District Court judgment set aside.
12 Section 32(3) of the Act deals with proceedings "in relation to any matter arising under a construction contract". Proceedings in which the plaintiff sought to agitate its offsetting claim would be proceedings of that kind. But all the section says is that the court must allow for any amount paid to a party to the contract under Part 3 of the Act when formulating the relief to be granted and may make restitutionary orders. Again, therefore the Act would not have any impact on the pursuit of the offsetting claim: see Tooma Constructions Pty Ltd v Eaton & Sons Pty Ltd [2002] NSWSC 514.
13 It was submitted on behalf of the defendant that the offsetting claim is not a genuine offsetting claim because the general issues and some of the specific matters relating to it were referred to by the adjudicator and that there was otherwise no reference to those matters in the material put to the adjudicator by the plaintiff, with the result, it is said, that they have, as it were, been disposed of by the adjudicator's determination and cannot now be advanced by way of offsetting claim.
14 I do not accept that submission. As I have said, the adjudicator was, in this case, working under s.9(b). His task was to determine, as a progress payment, "the amount calculated on the basis of the value of construction work carried out or undertaken to be carried out" together with related goods and services. Section 10 says how that value is to be assessed. In a case such as the present, s.10(1)(b) applies to require a determination "having regard to" a number of matters. In no sense whatsoever does the adjudicator's assessment of value represent a determination of legal liability, as a matter of contract, between the parties.
15 The aim of the Building and Construction Industry Security of Payment Act is to ensure that progress payments are made, whether or not provided for in the contract, so that the party carrying out building work receives, on account, a summarily assessed sum as compensation for work done. That the adjudicator does or does not take into account a particular item or treats it in a particular way is irrelevant to ultimate questions of the contractual liabilities of the parties to one another. In Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, Palmer J summarised the system embodied in the legislation as "pay now, argue later". In Brodyn Pty Ltd v Davenport [2004] NSWCA 394, Hodgson JA said that the Act reflects a legislative intention "to ensure that disputes concerning the amount of such payments are resolved with the minimum of delay", the payments themselves being "only payments on account of a liability that will be finally determined otherwise".
16 It is pertinent here to quote what was said by Campbell J in Demir Pty Ltd v Graf Plumbing Pty Ltd [2004] NSWSC 553 about the interaction between the Building and Construction Industry Security of Payment Act (which his Honour labelled "the BACISOP Act") and the provisions of the Corporations Act concerning the setting aside of statutory demands:
"It was submitted that, if it were possible to set aside a statutory demand founded on a judgment debt arising from a notice of determination under the BACISOP Act , then that Act would be rendered toothless.