JMT Construction and Project Management Pty Ltd v Basile [2025] VCC 466

1. I have considered the submissions and evidence filed by each party. While there were some objections raised to some of the evidence, this was on the basis that a party had been taken by surprise. I resolved these objections by allowing each party further time to file further affidavits and further submissions.
2. For the following reasons, the plaintiff's application is dismissed.

1. Evidence was given on affidavit by Jeremy Martinez, Project Manager of the plaintiff,[4] and by the defendant Frank Basile.[5] There are no significant factual disputes, other than the identity of the contracting party for the defendant.
2. The plaintiff is a company in the business of supplying and installing carpentry work for residential projects. It was engaged in 2023 to carry out work in connection with the renovation of a hair salon in Fitzroy North (the property). The defendant is an architect and, together with his wife Sofia, is one of two directors of the company Unico. Sofia Basile is a hairdresser. The property was being refurbished so that she could move in and continue her hair dressing business at the property. Unico was the owner of the property.
3. The plaintiff carried out various works between May and October 2023. It served the payment claim in question on the defendant under cover of an email from the plaintiff's project manager, Jeremy Martinez, to the defendant dated 25 January 2024. The email is headed "JMT Payment Claim." The following documents were attached to the email.
4. A document headed "Tax Invoice" dated 25 January 2024, which includes the breakdown of the payment claimed of $117,143.53, calculated as follows:

1. The Tax Invoice sets out that the "Base claim to date" of $133,879.37 is calculated as follows:

1. There is no explanation on the face of the document of how the amounts listed in the column headed "Entitlement to margin" were calculated. Many of them appear to be 30% of the amount in the "Original quote" column. "Waterproofing" appears to be 30% of the amount in the "Entitlement to sub-contract amount" column.
2. The Tax Invoice also lists the "Variations to date" of $84,851.40 as follows:

Additional works Inv 696 instructed by Frank Basile

Scaffolding - Select Access 3 x Inv instructed by Frank Basile

1. In each calculation of "Entitlement to margin", the amount is equivalent to 30% of the "Original quote" or "Entitlement to subcontract amount" figure.
2. The other documents attached to the email were:
   1. Plaintiff's tax invoice no. INV-0696 dated 7 August 2023, naming as the "customer", "314 Queens Parade Fitzroy North" claiming $34,675.82 (incl. GST) for "additional works", as follows:

Slab excavation and slab pour for disability ramp (materials included)

1. Invoices from "Provans Mitre 10" in Clifton Hill addressed to "Tor Budge Carpentry", as follows:

1. Invoices addressed to the plaintiff for "314 Queens Road", from admin@mooved.com.au, as follows:

1. A quotation from MECHFLOW air conditioning dated 5 July 2023 for 314 Queens Parade Fitzroy North to "Supply and install 6 of stand alone high wall split systems (Mitsubishi electric used for pricing). Decommission and removal of 3 x existing high wall split systems", with specifications, inclusions, exclusions and conditions for a total price incl. GST of $19,207.10.
2. Tax invoice no. 0036 of CE Built of Bundoora dated 28 August 2023 addressed to Frank Basile for "brick restoration" of 100 hours at $80.00 per hour and $600.00 of "materials", total incl. GST $9,460.00.
3. Tax invoices of Select Access Pty Ltd addressed to JMT Constructions Pty Ltd for delivery to 314 Queen Street Fitzroy North, as follows:

Hire of Quick Stage aluminium scaffolding from 1 August 2023 to 4 September 2023

Delivery and hire of scaffold tower from 6 July 2023 to 30 September 2023

Installation, delivery and hire of Quick Stage aluminium scaffolding from 20-31 July 2023

1. The defendant has paid the plaintiff's tax invoice INV-0696 dated 7 August 2023.
2. There is no dispute that the defendant has not paid the balance of the payment claim, nor did he provide a payment schedule in response.

1. The principles to be applied in determining proceedings commenced under s 16 of the Act are well established and I will not repeat them here. There was no disagreement between the parties that for the claim to succeed, the plaintiff must demonstrate the matters in s 16(1)(a) and (b) of the Act. In particular, the liability to pay and right to procure judgment is premised upon:

(a) the existence of a construction contract for the progress payment;

(b) the existence of a reference date for the progress payment;

(c) a valid payment claim for the progress payment;

(d) no payment schedule having been given; and

(e) that the respondent has failed to pay the whole or part of the claimed amount.

1. In the present matter, the defendant argues that the prerequisites have not been met. Accordingly, the questions to be determined are the matters raised by the defendant, as set out at paragraph 2 above.

Is there a construction contract between the plaintiff and the defendant?

1. The proceeding has been issued against Frank Basile as the defendant. He submits that he was not the contracting party, but instead the contract was between the plaintiff and Unico. The defendant suggests that he entered into the contract on behalf of Unico.

1. The defendant submits that although Mr Martinez believed he was contracting with the defendant, his belief is subjective, irrelevant and should not be taken into account. Similarly, although the plaintiff instituted these proceedings against the defendant, that is not determinative of the parties to the contract.
2. Instead, as there is no written contract, the defendant submits that the Court should have regard to the following surrounding circumstances in order to identify the contracting parties:

(a) That the defendant was a director of Unico;

(b) Unico was the registered proprietor of the land and building on which the contract works were to be performed;

(c) Unico was the advertised "builder" on the project;

(d) Unico paid the deposit, being the essential element of consideration in formation;

(e) Unico made other payments to the plaintiff for the works; and

(f) Unico was the ultimate beneficiary of the works.

1. The defendant relies on his evidence that Unico is a small proprietary company. He says that it is unsurprising that it operates through its directors without the usual formality of larger companies, such as separate email addresses or support staff. It should not be accepted, as the plaintiff submits, that the informality through which Unico operated means it did not operate.
2. For the same reason, he contends that the Court ought not accept the plaintiff's submission that the defendant has conceded in his first affidavit that he was the contracting party. As the defendant expressly states in his second affidavit, he was "authorised by Unico to make [his second] affidavit". He deposes to some matters in his capacity as Unico's director. Where he uses terms such as "I" or "my", he says it is reflective of his conduct acting as a conduit for the company, consistent with his role as director.
3. In response to the plaintiff's alternative submission, that he was some sort of "informal" party to the contract such as in the case of 3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd[6] (3D Flow) the defendant, argues that this submission should be rejected. He says that first, such an interpretation would undermine the general principles of contract law, particularly those of privity of contract. Second, the present circumstances are not analogous to 3D Flow, where the contract between two entities expressly provided for payment to be made by a third party. Here, it cannot be said, nor is it alleged, that a contract between the plaintiff and Unico expressly provided for payment to be made by the defendant.

1. The plaintiff agrees that a party's subjective opinions are not relevant when determining who the proper contracting parties are. Instead, the question is to be resolved by reference to the facts concerning identity as known and as would reasonably be understood by the other contracting party.
2. The plaintiff refers to a volume of correspondence that it had with the defendant in relation to the project and points out the absence of reference to Unico. The plaintiff says that the evidence referred to in its submissions and affidavits demonstrate that it and the defendant were objectively the contracting parties.
3. The plaintiff also says that in the First Basile Affidavit, the defendant admits that he was the contracting party and nowhere does he refer to Unico as the contracting party.
4. It submits that the statements made by the defendant in the Second Basile Affidavit should be seen as a late attempt to course-correct from his evidence in the First Basile Affidavit, by referring to his subjective intention that Unico was the contracting party.
5. The plaintiff notes that despite this attempt, nowhere does the defendant depose to or disclose any communication with the plaintiff where the defendant is expressed to be acting as an agent or office for Unico, rather than on his own behalf.
6. The plaintiff submits that it is irrelevant that there may be instances in which Unico was acting as the contracting party to engage other trades in relation to the construction of the salon, and it is possible that the defendant had subjectively intended here for Unico to be the contracting party, but ultimately this is not reflected in the objective facts of the case.
7. Alternatively, the plaintiff submits that if the Court accepts that Unico is the contracting party, then it is open to the Court to find that the defendant is nonetheless responsible for the payment to the plaintiff. Consistent with his role as 'architect', which is not disputed, Mr Basile also acted as the project manager or superintendent. That fact scenario is similar to the 'parallel arrangement' discussed in 3D Flow[7], where the landowner (LTP) engaged a construction manager (MOC) and a builder (3D). The contract with LTP and 3D provided MOC would make payment, but the Court found LTP liable to 3D, nevertheless. There, the Court considered that a 'parallel arrangement' might arise simply by MOC acting as LTP's agent or because of MOC's express instruction to 3D to invoice LTP direct. There, Woodward J found that: [8]

LTP was a party to the construction contract, but even if it was not a party in the formal sense, it was nevertheless a person who, under the construction contract, was at least arguably liable to make the payments under the Payment Claims, and thus a person who "may be liable" within the meaning of s 14(1) of the SOP Act.

Discussion and conclusion: the defendant is the contracting party

1. As noted in the parties' submissions, the question of who the proper contracting parties are is to be resolved by reference to the facts concerning identity as known and as would reasonably be understood by the other contracting party.[9] Evidence of subjective intention by a party is not admissible or useful to ascertain the correct contracting parties.
2. On the evidence before me, it is apparent that, objectively, the parties to the construction contract were the defendant and the plaintiff. I do not accept the defendant's submission that Unico was the contracting party.
3. It is inconsistent with the defendant's evidence in the First Basile Affidavit, where Mr Basile refers to decisions he made in relation to the project in the first person, the clear implication being that he was the contracting party who was dealing with the plaintiff.[10]. He notes he is the defendant in the proceeding but makes no complaint that he has been incorrectly named.
4. Similarly, the defendant's correspondence during the project supports the conclusion that he was acting in a personal capacity. While it is not unusual for a small business to have one of the directors conduct all of the correspondence, it would be expected that the email address or letterhead or signature footer would indicate a company was involved. Instead, the defendant corresponded with the plaintiff using a personal email address: 'frankabasile@icloud.com' and he signed his messages 'Frank Basile, Architect'.
5. The fact that Unico was the advertised "owner builder" on signage, and was the registered proprietor of the property, is not relevant in my view. Mr Martinez's uncontradicted evidence is that the signage erected by the defendant at the property was not erected until after the plaintiff's last day on site. Further, the uncontradicted evidence of Mr Martinez is that at no time until the Second Basile Affidavit did the defendant tell Mr Martinez of the existence or purpose of Unico. No mention was made of Unico at the time the plaintiff provided its quote (on 8 May 2023), during the carrying out of the work (May to October 2023), or during further meetings and revisions of the quote, including the meeting at the Rubber Duck Cafe. Mr Martinez says that the defendant never told him he was acting as director of Unico.
6. For those reasons I accept on the evidence before me that the contracting party was the defendant.
7. Although it is not relevant to my ultimate decision, I agree with the defendant that the facts in this case are not analogous to those of 3D Flow,[11] as that construction contract was structured as a "multi-lateral arrangement" from the outset. That is not the case here.

Does the payment claim satisfy the requirement to clearly identify the work and the amounts - s 14(2)(c) and s 14(2)(d) of the Act?

1. The defendant correctly notes that the process of assessing whether the payment claim adequately identifies which construction work it relates to is an objective question to be decided without reference to extrinsic evidence of surrounding circumstances. The onus of proof is on the applicant to satisfy the Court of these matters, as a non-compliant entry cannot be severed from the balance of the payment claim.[12]
2. The defendant submits that it is impossible to ascertain the work to which the payment claim relates, contrary to s 14(2)(c) of the Act. Further, the payment claim does not indicate the amount that the plaintiff claims to be due, contrary to s 14(2)(d).
3. The defendant contends that a reasonable person in his position is unable to glean the basis of the amount charged from the rolled-up way in which the purported payment claim lists all works done, claims a full amount for all of those works under the heading 'THIS CLAIM', and then subtracts unparticularised amounts apparently already paid. The defendant says one is left wondering which of the works they are being charged for and for how much.
4. Further, the defendant says the purported payment claim identifies the amount already paid as $112,236.65, for reasons not apparent on the face of the document. The plaintiff has in effect conceded that amount is incorrect, as it did not include the payment made by the defendant for INV-0696, which can be seen by the plaintiff now reducing the amount of its claim.
5. Further uncertainty is demonstrated by the entries for "roof replacement", "plumbing", "electrical Quote- 53", "Aircon ..." and "Brick Layer ...," where quoted amounts are provided but no entry is made in the column headed "Entitlement to Subcontract Amount", notionally indicating no payment is required. Those amounts do not equal $112,236.65, the stated sum already received. The recipient is understandably left wondering whether those entries are blank because payment has previously been received, or no charge was incurred, or the work was not done, or some other reason.
6. The defendant suggests that the deficiency in the purported Payment Claim is emphasised by an illustration. In Diamond Builders Pty Ltd v Gilridge Investments Pty Ltd,[13] the Court had before it an otherwise rolled-up payment claim which specifically identified the works paid under a "previous claim" with "no amount owing under the table for 'this claim'". That, it is submitted, would permit compliance with s 14(2)(c), unlike the present matter.
7. The defendant also says that it has no way of knowing what the item "carpentry variation" refers to as it does not make any reference to any extraneous documents which explain what works were done. There is no evidence which would inform the meaning of the words "carpentry variation". That Mr Martinez apparently had discussions with an engineer without the defendant further compounds the issue.
8. The entry of "carpentry variations" is akin to the entry of "oral variations" considered in Top Cat Installations Pty Ltd v Southstar Homes Pty Ltd.[14] In that case, the description was considered insufficient for the purposes of satisfying s 14(2).
9. Further, the defendant says that the purported payment claim does not reflect the amount that the plaintiff now claims is due. The original claim sought the amount owing of $117,143.53, but it is now claiming that only $82,467.71 is due.
10. In the defendant's submission, the Court should not engage in a parsing of the payment claim to remedy its defects, as the plaintiff invites with respect to INV‑0696. This would be contrary to Yuanda Vic Pty Ltd v Façade Designs International Pty Ltd (Yuanda)[15] and would likely be productive of error. One clear error would be double counting GST. The payment of invoice INV-0696 included GST, yet the plaintiff's proposed arithmetic would see him be charged GST again on a parsed version of the purported payment claim.
11. The defendant notes that on the eve of the hearing the plaintiff sought to adduce evidence that the payment claim "included an error in that it contained the full amount for Variation 1, when it is only claiming the Contractor's Fee for Variation 1". The plaintiff accordingly reduced the amount sought from $117,143.53 to $82,467.71. The plaintiff now wishes to withdraw that concession with Mr Martinez's further sworn evidence. The defendant says that if even the plaintiff cannot understand the construction work to which the progress payment relates, it follows that a reasonable person in the defendant's position is similarly unable to do so.

1. The plaintiff says that the payment claim adequately identifies the construction work to which it relates, it indicates the amount of the progress payment that it claims to be due (the claimed amount); and it states that it is made under the Act.
2. The plaintiff says that the relevant construction work, in this case the variations, are sufficiently identified to enable the defendant to understand the basis of the claim. The nature of the work described in the variations section of the Final Payment Claim corresponds to the evidence given by Mr Martinez of the variations. The plaintiff says that the defendant has not contended that he is confused or unaware of the work based on the descriptions given in the Final Payment Claim.
3. The plaintiff says that the amount of the progress payment that it claims to be due is clearly set out and calculated from its constituent parts, inclusive of the 'Entitlement to Subcontract Amount' (i.e. the out of pocket and/or labour costs) and the 'Entitlement to Margin' (i.e. the 30% margin on the out-of-pocket costs). The final payment claim is made under the Act.

Discussion and conclusion: the payment claim does not comply with s 14(2)

1. I agree with the defendant that the payment claim is unclear as to what is owing and why, and therefore it has not satisfied the requirements of sections 14(2)(c) and 14(2)(d). While I accept that the defendant is capable of appreciating that the blank cells in the 'entitlement to subcontract amount' relate to amounts that have been already paid, the main issue is that adding together all of the amounts within all the blank cells, along with the amount already paid for invoice INV-0696 does not amount to the amount that has been 'received to date'. For this reason, the defendant is understandably confused as to what the correct amount that is owing ought to be, and why the amount of $112,236.65, and not a smaller amount, has been noted as paid.
2. Even if I were to accept that the amount for invoice INV-0696 was included in the 'entitlement to subcontract amount' in error, and that the defendant was capable of understanding that error, this doesn't assist the defendant in understanding where the balance of the $112,236.65 is derived from. As discussed above, if I add the amount of invoice INV-0696 and all the of the blank paid subcontractors amounts, the total is not $112,236.65.
3. I also agree with the defendant that the reference in the variations to "carpentry variations" is too vague and does not provide the recipient with enough information as to precisely what works were covered by this broad term. This confusion is illustrated by the plaintiff's contention that the claim for tiling works was included in the claim for "carpentry variations" (discussed further below). It is not possible to tell from the face of the tax invoice what construction work or related goods and services are being claimed.
4. As the payment claim does not comply with s 14(2), it is not a valid claim within the meaning of s14 of the Act. As the plaintiff has failed to satisfy one of the prerequisites to rely on in the Act, the claim will be dismissed.

Does the payment claim include excluded amounts - s14(3)(b) and 16(4)(a)(ii) of the Act?

1. There is no dispute about the principles applicable to identification of an excluded amount. The Court "is required to be satisfied that the claimed amount does not include any excluded amount 'on the face of the payment claim'"[16].
2. There is also no dispute as to the following definitions. An "excluded amount" is relevantly one which is "not a claimable variation".[17] A "variation" is a "change in the scope of the construction work to be carried out".[18] A "claimable variation" must be either agreed by the parties,[19] or one where "the person for whom the work has been carried out ... or a person acting for that person under the construction contract requested or directed the carrying out of the work".[20]
3. The defendant submits the claim for "tiles" is a claimed variation which is not a first class or second class variation. The discrepancy between the cost of the tiles in the contract, being $11,800.00, and the cost of the tiles in the payment claim, being $17,075.00 together with a margin of $5,122.50 is acknowledged by the plaintiff and is not explained on the face of the payment.
4. The defendant submits INV 357 was not served with the payment claim, but if it is included, it does mention the "extra work we have done" and "for materials". The additional charges plus GST account for the difference between the contracted amount and the amount sought by the payment claim.
5. The defendant argues that the plaintiff's submission that the tiling variation falls within the separate line item "carpentry variations instructed by Frank Basile" is not plausible. Carpentry is an unconnected line item in the payment claim with a standalone charge of $26,000; tiling and carpentry have no bearing on each other. The defendant further submits that this is also inconsistent with what Mr Martinez says in his evidence that "carpentry variations" meant.
6. To allow Mr Martinez's evidence around the titling variation would involve a "full investigation" and a "digging exercise" as to what was meant by the variation, and this is impermissible in this type of application.[21]
7. Similarly, the defendant submits "plastering" is an excluded amount. The purported contract on which the plaintiff relies identifies the scope of plastering works and the cost as "TBC". The only objective evidence of the parties' agreement to the cost of works is an exchange of text messages, which show an agreement for no more than $15,000.00.
8. The payment claim includes a line item for "Plastering" which claims $17,250.00 plus a margin of $5,175.26. Mr Martinez's evidence was that the agreement was for an amount higher than $15,000.00. The defendant says that the objective evidence should be preferred over Mr Martinez's inconsistent uncorroborated evidence, which says the agreement was for a higher amount. The defendant submits the payment claim does not on its face identify the variation or any direction given by the defendant, is therefore an excluded amount.

1. Mr Martinez says the allowance for tiling in the contract was $11,800.00. The claimed amount was $17,075.00, which included a variation of $5,275.00. A claim for this extra amount is permissible unless the sum of $5,725.00 is an 'excluded amount' for the reasons expressed by the majority in Yuanda.[22]
2. The variations are not excluded amounts; they are second class variations and are claimable pursuant to s 10A(3) of the Act. It alleges it is clear on the facts that:

(a) the work was carried out under a construction contract; and

(b) the person for whom the work has been carried out (the defendant) requested or directed the carrying out of the work; and

(c) the parties do not agree as to, amongst other things, the value of the amount payable or the method of valuing the amount payable.

1. The plaintiff relies on Mr Martinez's affidavits which provide detailed evidence of the work carried out, and it refers to the evidence where Mr Martinez says that instructions, directions and approval for the extra works were given on site. The plaintiff submits the tiling work falls within the work claimed as 'Carpentry variations instructed by Frank Basile'.
2. As such, it contends that the payment claim does not include an excluded amount, and the Court is entitled to give judgment. The plaintiff notes that no payment schedule has been provided by the defendant, and he failed to pay the whole or part of the claimed amount, save for the sum of $34,675.82. Judgment is permitted to be given for a lesser sum than the claimed amount, provided it does not include excluded amounts,[23] which, on the evidence above, it does not.

Discussion and conclusion: the payment claim does include 'excluded amounts'

1. I accept the defendant's submission that the reference to tiling includes a variation that is neither a type 1 or a type 2 variation and is therefore an excluded amount. The plaintiff acknowledges that the difference between the amount quoted for the titling, being $11,800.00, and the amount ultimately charged under the payment claim, being $17,075.00, means that there has been a variation of works totalling $5,122.50.
2. I am not persuaded by the plaintiff's submission that this $5,122.50 can be taken to be included in the 'carpentry variations' under the 'variations' subsection. There is no obvious reason why tiling would be included in carpentry, and I agree with the defendant that these amounts are entirely unconnected. For this reason, on the face of the claim, there is no evidence as to how I am able to determine what the tiling variations were and who directed them without a "full investigation" and "digging exercise" of extraneous information that is not permitted under Yuanda.[24]
3. I accept the defendant's submission that the plastering referred to in the payment claim is also an excluded amount. The contract listed the cost of plastering as "TBC", and therefore any amount charged for this work would need to be either a type 1 or type 2 variation. As there is no information on the face of the payment claim as to who directed this variation, I do not accept that plastering is a permitted variation, and therefore it is an excluded amount.
4. As the claimed amount includes excluded amounts, it is not a valid payment claim within the meaning of s14 of the Act and the plaintiff cannot rely on the procedure in s 16(2)(a)(i).

1. As I have determined that the plaintiff's claim fails because the purported payment claim payment claim does not comply with s 14(2) and contains an excluded amount contrary to s 14(3)(b) and s 16(4)(a)(ii) of the Act, the remaining issues raised by the defendant need not be determined.
2. I will make orders dismissing the application and invite the parties to provide the orders they propose for the disposition or future conduct of the proceeding.

I certify that these 22 pages are a true copy of the judgment of her Honour Judge Kirton delivered on 16 April 2025.

[1] Building and Construction Industry Security of Payment Act 2002 (Vic) s 7(2)(b) (the 'Act' or 'SOP Act').

[2] Plaintiff's Outline of Submissions dated 13 June 2024.

[3] Defendant's Outline of Submissions dated 13 June 2024 and 15 August 2024.

[4] Affidavit of Jeremy Martinez dated 24 April 2024 (**'First Martinez Affidavit'); Supplementary Affidavit of Jeremy Martinez affirmed 13 June 2024 ('Second Martinez Affidavit'); Supplementary Affidavit of Jeremy Martinez affirmed 25 June 2024 ('Third Martinez Affidavit'); Supplementary Affidavit of Jeremy Martinez affirmed 26 July 2024 ('**Fourth Martinez Affidavit').

[5] Affidavit of Frank Basile affirmed 11 June 2024 (**'First Basile Affidavit'); Affidavit of Frank Basile affirmed 10 July 2024 ('**Second Basile Affidavit').

[6] [2018] VCC 674 ('3D Flow').

[9] Boral Limited v Foley & Bear Pty Ltd trading as J&R Industries [2016] NSWCA 373 [22]

[10] First Basile Affidavit [6]-[7].

[12] Façade Designs International Pty Ltd v Yuanda Vic Pty Ltd [2020] VSC 570, 18 [36].

[13] [2023] VCC 1527, 21 [100]

[14] [2019] VCC 1878, 9 [13].

[15] Yuanda Vic Pty Ltd v Façade Designs International Pty Ltd [2021] VSCA 44, 6 [22]-[23], 8-9 [31] ('Yuanda').

[16] Yuanda (n 15) 11 [38] (per McLeish and Niall JJA).

[21] Yuanda (n 15) 47 [120] (per Sifris JA).

[22] Ibid (n 15) 9 [31] (per McLeish and Niall JJA).