(See also, Legal & General Assurance v Stock [1993] 49 IR 464 at pp 480-481; State Bank of NSW v Grover (1996) 64 IR 451 at pp 456-457).
41 With regard to the authorities, and to its context in the Act, in my opinion the term "arrangement" in the definition is a wide one, and encompasses transactions or relationships which are not legally enforceable agreements. The distinction in the definition between "a contract" and "other arrangement" is intended by the legislature to be one of substance so that under the Act construction contracts include agreements which are legally enforceable and transactions which are not. Thus in distinguishing between these relationships I understand the legislature intends that "contract" is to be given its common law meaning and that "arrangement" means a transaction or relationship which is not enforceable at law as a contract would be. Accordingly I reject the submission for Okaroo that the term "arrangement" should be understood to mean an agreement which is tantamount to a contract enforceable at law.
42 In deciding whether a contract or other arrangement is within the definition of construction contract the only matter for consideration is whether it is one under which one party undertakes to carry out construction work, or to supply related goods and services, for another party. There is no other requirement or qualification which is expressly or by implication included in the definition which must be satisfied. It may be safely assumed that had the legislature intended any additional requirement or qualification it would have included it in the definition. (Contrast, for example, s 22(2)(b) whereby the adjudicator is, in terms, directed to consider the provisions of the construction contract from which the application arose in determining an adjudication application).
43 The evidence establishes, and I find, that from about 14 March 2003 when Vos commenced the joinery works there was an arrangement under which Vos undertook to carry out construction work and to supply related goods and services for Okaroo. Vos, in fact, carried out the joinery work and, as part of the arrangement Okaroo would, and did, make payments direct to Vos for the work done. The arrangement as it operated was as contemplated in the conversation between Mr Wiltshire and Mr Hing on about 14 November 2002, and in the letters of 14 March and 23 April 2003 (paras 9, 10, and 11 above, respectively). It commenced before the sub-contract between Vos and Consolidated was made. This arrangement was one which plainly accords with the descriptions given in the judicial statements to which I have referred.
44 However, Okaroo submits that to find the existence of such an arrangement is not sufficient to meet the definition of construction contract. It is put that the arrangement must be one under which the liability to pay for the construction work is legally enforceable.
45 The question raised in the submission requires consideration of the statutory scheme and its objects.
46 A comprehensive analysis, with which I respectfully agree, was provided by Macready, AJ in Beckhaus v Brewarrina Council [2002] NSWSC 960:
"60 The Act obviously endeavours to cover a multitude of different contractual situations. It gives rights to progress payments when the contract is silent and gives remedies for non-payment. One thing the Act does not do is affect the parties' existing contractual rights. See ss 3(1), 3(4)(a) and 32. The parties cannot contract out of the Act (see s 34) and thus the Act contemplates a dual system. The framework of the Act is to create a statutory system alongside any contractual regime. It does not purport to create a statutory liability by altering the parties' contractual regime. There is only a limited modification in s 12 of some contractual provisions. Unfortunately, the Act uses language, when creating the statutory liabilities, which comes from the contractual scene. This causes confusion and hence the defendant's submission that the words "person who is entitled to a progress payment under a construction contract" in s 13(1) refers to a contractual entitlement.
61 The trigger that commences the process that leads to the statutory rights in s 15(2) is the service of the claim under s 13. That can only be done by a person who "is entitled to a progress payment under a construction contract". The words "progress payment" are a defined term in the Act. It means a payment to which a person is entitled under s 8. That section fixes the time of the "entitlement" given by the section by reference to the contractual dates for making claims or, if there is no contractual provision, for making claims by reference to a four week period. Section 9 deals with the amount of such a statutory progress payment. Importantly, s 9 uses similar words to s 13 in that it refers to "a progress payment to which a person is entitled in respect of a construction contract" and then directs determination of that amount by reference to both contractual amounts or if no contractual amount on the basis of the value of the work done.
62 Section 11 then deals with the due date for payment in respect of "a progress payment under a construction contract". It does it also by reference to contractual due dates and if no such provision then by reference to a two-week period. One thus has a series of sections which create a statutory right to a progress payment by fixing entitlement, the date for making claims, amount of claims and due date for payment of claims. The statutory right to claim is for both situations, namely, where a contract provides for such claims and where it does not.
63 Thus s 13 merely continues on the statutory procedure and the opening words must be a reference to the statutory entitlement created in the previous sections not the contractual entitlement submitted by the defendant".
(Also, see generally Jemzone Pty Limited v Tritan Pty Limited [2002] NSWSC 395).
47 As His Honour pointed out, the Act contemplates a dual system by creating a statutory system alongside any contractual regime.
48 It must be kept in mind that the object of the Act is to ensure that a person who undertakes construction work under a construction contract is entitled to receive, and is able to recover, progress payments in relation to that work (s 3(1)). The means by which it is ensured that a person is entitled to receive a progress payment is by granting a statutory entitlement to such a payment regardless of whether the relevant construction contract makes provision for progress payments (s 3(2)). As Austin, J observed in Jemzone (para 41) the Act offers special statutory rights which override general contractual rights and place a claimant in a privileged position.
49 The procedure by which it is ensured that a person is entitled to recover a progress payment is explained in s 3(3).
50 The statutory entitlement to a progress payment for the benefit of a person who has undertaken to carry out construction work or to supply related goods and services under a construction contract is provided by s 8(1) which gives effect to the statement in s 3(2). The term "progress payment", being the payment to which the statutory entitlement refers, is defined in s 4. Importantly, the statute contains default provisions which operate if the construction contract is silent, and which deal with matters such as intervals within which claims may be made (s 8(2)(b)), amount (s 9(b)), valuation (ss 10(1)(b), (2)(b)), and time for payment (s 11(1)(b)) (Jemzone para 26).
51 The statutory scheme therefore operates, as intended by s 3(2), regardless of the existence or absence in contracts or arrangements for construction work of provisions which govern entitlement to, and liability for, payments. Where, for example, the arrangement is one which does not give rise to liability for payment enforceable at common law against the party for whom the work is done the statute provides for liability for a progress payment.
52 The Act applies to any construction contract as defined (s 7(1)) except those referred to in s 7(2), (3), (4), and (5). It thus applies to provide a statutory entitlement to a progress payment (which itself is a creature of statute), and a procedure whereby liability for its payment may be established, which procedure extends to its recovery. It thus gives effect to the objects stated in s 3.
53 In that context, therefore, it will be seen that the provisions of s 13(1) should be construed consistently with those of s 8(1), as the opening words of s 13(1) direct. The liability referred to is in respect of the progress payment to which the statute entitles a person who meets the description in s 8(1)(a) or (b). So understood, it is clear that issues of entitlement and liability stem from the statute and not from the provisions of the contract or arrangement which is the construction contract.
54 In my opinion no support is to be found in the words of s 13(1) for Okaroo's argument as to the proper construction of the expression "contract or other arrangement" in s 4. Indeed, they are totally irrelevant to that exercise.
55 In my opinion there is nothing in the definition of construction contract itself, or read with s 13(1), which indicates the qualification for which Okaroo contends. As I have earlier held, the only requirement to satisfy the definition is that the contract or other arrangement be one under which "… one party undertakes to carry out construction work, or to supply related goods and services, for another party". The terms and conditions (if any) pursuant to which a liability is incurred to pay for the construction work carried out, or the related goods and services supplied, are entirely irrelevant to the requirement of the definition. Accordingly, I reject Okaroo's submission that a construction contract must be a contract or other arrangement under which liability to pay for the construction work is legally enforceable.
Conclusion
56 I keep in mind that the only issue in these proceedings is whether there was a construction contract. I have found that there was. To the extent that the adjudicator held there was an arrangement which met the definition of construction contract in my opinion, with respect, he was correct. It follows that the essential pre-condition for the existence of his determination has been satisfied (Brodyn paras 53-56).
57 Upon the payment claim proceeding to determination under Pt 3 of the Act, the issues of liability to make the statutory progress payment were properly for determination by the adjudicator. I express no view as to his finding on liability, or as to any other matter decided by him.
58 For the above reasons the amended summons should be dismissed.
59 In the circumstances it is appropriate that I direct Vos to bring in short minutes, and to afford the parties the opportunity to address me in relation to costs but only if there is no agreement on that question. Arrangements should be made with my Associate by 18 February 2005 for the re-listing of the matter.