Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd

Rectification: Ground 1 of the appeal

1. Mr Christie SC, who appeared with Mr Hume for Seymour, placed Ground 3 of the notice of appeal at the forefront of his argument. It is, however, convenient to commence with Ground 1, which challenges the primary Judge's conclusion that the Contract should be rectified by deleting Special Condition 1. It is common ground that unless the Contract is rectified, Ostwald's Adjudication Application was served outside the time specified by s 17(3)(d) of the Security of Payment Act. In that event Ostwald accepts, on the authority of Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd, [16] that compliance within the time limit specified in s 17(3)(d) of the Security of Payment Act is an essential condition for a valid adjudication application and that Ostwald's Adjudication Application did not comply with that essential condition.

Primary Judgment

1. The primary Judge noted that Ostwald's case was that cl 20.7 of the Subcontract Conditions was inserted into the Contract by Special Condition 9.1 as a result of the mutual mistake of the parties. Ostwald submitted that the terms of the Contract, as executed, did not reflect the parties' common intention that Seymour should have 30 days from the end of the month following receipt of the payment claim to make the payment. [17]
2. The primary Judge stated the relevant principles by reference to the judgment of Kiefel J in Simic v New South Wales Land and Housing Corporation [18] (Simic). No complaint is made about his Honour's statement of the law.
3. As his Honour observed, Ostwald relied on the evidence of Mr McHugh, a civil engineer it engaged to negotiate the terms of the Contract. Mr McHugh gave evidence as to his negotiations with Mr Demani, Seymour's Commercial Manager. Mr McHugh was not cross-examined, while Mr Demani did not give evidence.
4. The primary Judge found that on 18 August 2016, Mr Demani prepared a final version of a "Departures Table". This document set out in chart form each party's negotiating position in the proposed terms of the Contract including what became Item 21 of the Particulars. The Departures Table recorded that Ostwald had requested that the due date for payment be within ten business days of the end of the month in which the claim was made. Seymour's first response to this request was "Departure Not Accepted". Seymour's "Final Response" on Item 21 was as follows: "Payments are made in line with [Seymour's] payment sums. This is 30 days from end of month of claim. Non-negotiable."
5. The primary Judge accepted Mr McHugh's unchallenged evidence that the following exchange with Mr Demasi took place at the meeting on 18 August 2016: "Mr McHugh: If we can't have 10 days, can we have 28? Why isn't that reasonable? Mr Demasi: The 30 days is non-negotiable, payments are made in line with Seymour Whyte's payment runs. This is 30 days from end of month claim". His Honour accepted Mr McHugh's evidence that he was not aware after 18 August 2016 of any further negotiations between the parties and that: "[g]iven [his] role in the contract negotiations, [he] would expect to be made aware of any further discussions on the issue."
6. The primary Judge considered that this was a "clear case where rectification should be ordered by deletion of cl 9.1 of the Special Conditions". [19] His Honour gave the following reasons for this conclusion: [20] "60 I am comfortably satisfied that the actual and common intention of the parties was that Seymour Whyte have 30 days from the end of the month in which Ostwald served a payment claim to make payment. 61 Further, I am satisfied that the written agreement does not reflect the agreement because of a common mistake. 62 Mr Demasi told Mr McHugh that Seymour Whyte required '30 days from end of month' and that this was 'non-negotiable'. This is reflected in the Departures Table, which provides a vivid insight into the parties' negotiations. Mr McHugh, the person responsible for negotiations, conducted no further negotiations on this topic. The inference is irresistible that Ostwald accepted that Seymour Whyte meant what it said: the matter was not negotiable. 63 The particulars to the Subcontract Conditions confirm the common intention of the parties, as does Seymour Whyte's 'Provider Establishment Request Form'."
7. The primary Judge found that under the Contract as rectified the due date for payment of the payment claim was 30 August 2017. [21] As Seymour did not pay Ostwald the amount referred to in the payment claim or the Scheduled Amount by the due date, s 16(1) of the Security of Payment Act was enlivened. Ostwald was therefore entitled to proceed under s 16(2)(a)(ii) by making the Adjudication Application. [22] It had done so on 27 September 2017, within the time specified in s 17(3)(d) (being 20 business days after 30 August 2017). The Adjudication Application was therefore valid. [23]

Principles

1. There is no dispute as to the principles to be applied in a suit for rectification of a contract. They were recently restated by the plurality in Simic: [24] "103 Rectification is an equitable remedy, the purpose of which is to make a written instrument 'conform to the true agreement of the parties where the writing by common mistake fails to express that agreement accurately'. For relief by rectification, it must be demonstrated that, at the time of the execution of the written instrument sought to be rectified, there was an 'agreement' between the parties in the sense that the parties had a 'common intention', and that the written instrument was to conform to that agreement. Critically, it must also be demonstrated that the written instrument does not reflect the 'agreement' because of a common mistake. Unless those elements are established, the 'hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties' cannot be displaced. 104 The issue may be approached by asking - what was the actual or true common intention of the parties? There is no requirement for communication of that common intention by express statement, but it must at least be the parties' actual intentions, viewed objectively from their words or actions, and must be correspondingly held by each party." (Emphasis added.)
2. As Kiefel J explained in Simic, the focus in a rectification suit is on "the common intention of the parties up to the time the relevant instrument was made". That intention must be proved by admissible evidence to a high standard. [25] Her Honour quoted a passage from the judgment of Lord Chelmsford LC in Fowler v Fowles [26] that has been cited in other High Court authorities. [27] A fuller version of that passage is as follows: [28] "It is clear that a person who seeks to rectify a deed upon the ground of mistake must be required to establish, in the clearest and most satisfactory manner, that the alleged intention to which he desires it to be made conformable continued concurrently in the minds of all parties down to the time of its execution, and also must be able to shew exactly and precisely the form to which the deed ought to be brought. For there is a material difference between setting aside an instrument and rectifying it on the ground of mistake. In the latter case you can only act upon the mutual and concurrent intention of all parties for whom the Court is virtually making a new written agreement."
3. In Fox Entertainment Precinct Pty Ltd v Centennial Park and Moore Park Trust [29] Barrett J, after referring to Lord Chelmsford's statement, observed that: "The insistence upon a high degree of proof in this area is a recognition of two realities: first, that persons who take the trouble to record their agreement in writing (particularly when they are, as here, assisted by lawyers) must generally be presumed to intend their written bargain to prevail over what they have not written; and, second, that it is easy for one such party, upon becoming dissatisfied after the event with some element of the written compact, to seek to brand it as inaccurate."
4. In Samm Property Holdings Pty Ltd v Shaye Properties Pty Ltd, [30] McColl JA emphasised that "the type of intention that is relevant to rectification of a contract is the subjective intention - sometimes called the actual intention of the parties". [31] That is why evidence of the parties' subjective states of mind may be very important. [32]

Reasoning

1. An odd feature of Ostwald's case before the primary Judge and this Court is that it seeks to rectify the Contract by removing a provision (Special Condition 9.1) for which it contended during its negotiations with Seymour. Despite its negotiating stance, Ostwald submitted in this Court that the evidence "overwhelming[ly]" supported the inference drawn by the primary Judge that the parties' common intention at the date of execution of Contract was that the due date for payment was to be that recorded in Item 21 of the Particulars - that is, within 30 days of the end of the month in which Seymour received Ostwald's payment claim. Mr Robertson essentially relied on the reasoning of the primary Judge to support this submission.
2. A second unusual feature of this case is that the evidence relevant to the question of rectification was not disputed at the trial. The primary Judge's finding did not depend on any credit-based assessment of evidence as to the parties' common intention at the time the Contract was executed. [33] It is common ground that the principles governing appellate review of his Honour's finding are those stated in Warren v Coombes. [34]
3. The Contract was signed on behalf of Ostwald by Mr Matthew Ostwald, in his capacity as a director of the company, and Mr O'Brien, as company secretary. The evidence upon which Ostwald principally relied to support its case for rectification was given by Mr McHugh. As has been noted, neither Mr Ostwald nor Mr O'Brien gave evidence while Mr McHugh was not required for cross-examination.
4. At the relevant times, Mr McHugh was Ostwald's General Manger for Engineering. In his affidavit Mr McHugh said he was "responsible for tendering for projects and pre-contract negotiations". He also said that he: "was directly involved, as the main point of contact at Ostwald, in the negotiation of the Subcontract with Seymour Whyte. My counterparts, and the primary people I dealt with at Seymour Whyte, were Michael Demasi, they Seymour Whyte Commercial Manager, and Will MacDonald, the Seymour Whyte Operations Manager."
5. The principal difficulty facing Ostwald is that in the absence of evidence from the officers authorised to execute the Contract on its behalf, there was no evidence that at the time of execution of the Contract the relevant officers intended that Seymour should have 30 days from the end of the month in which Ostwald served a payment claim to make a payment. Nor was there any direct evidence explaining how Special Condition 9.1, which provided for a payment period of fifteen business days from receipt of a claim, came to be inserted into the Contract as executed. The absence of evidence as to the parties' reasons for including cl 9.1 is particularly significant since the terms of cl 9.1 departed from the positions of both Seymour (30 days from end of month) and Ostwald (28 days from payment claim) as recorded in the Departures Table.
6. Mr McHugh was involved in the negotiations of the Contract but he did not say that he was authorised to conclude a final and binding agreement with Seymour. Nor did he say that his involvement with the negotiating process was such that he knew that Mr Ostwald and Mr O'Brien accepted and intended that the thirty day period should be included in the Contract. The most Mr McHugh could say was that he would have expected to have been made aware of any further discussions that may have taken place in relation to the payment period after he and Mr Demani prepared the "final version" of the Departures Table on 18 August 2016. Whatever Mr McHugh's expectations may have been, there was no evidence as to what discussions, if any, took place between Ostwald's decision-makers and Seymour's representatives concerning payment terms during the 18 days between preparation of the Departures Table and execution of the Contract.
7. The primary Judge did not refer to the unchallenged evidence of Mr Millar who was Seymour's Group Commercial Manager in 2016. Mr Millar explained that he had instructed lawyers to prepare a pro forma subcontract that would be compliant with the requirements of the New South Wales Government GC 21 head contract in force at the time. Mr Millar also explained that the GC 21 head contract in force since 2014 had required payment to subcontractors within 15 business days. While there was no direct evidence as to why Special Condition 9.1 was incorporated in the Contract, Mr Millar's evidence provides a rationale for its inclusion.
8. Both the primary Judge and Mr Robertson placed considerable emphasis on the recording in the Departures Table that Seymour's requirement of "30 days from end of month of claim" was "Non-negotiable". Yet at least two significant issues on which Seymour's position was recorded in the Departures Table as "Non-negotiable" or "No further discussion are entertained" were dealt with differently in the executed Contract. [35] Given these changes, no inference is available that the Departures Table necessarily recorded Seymour's last word on a particular issue.
9. Mr Robertson relied on four additional matters to support Ostwald's rectification case. The first was the pro forma "Provider Establishment Form" sent by Seymour to Ostwald on 6 September 2016, the day the Contract was signed. The Form recorded that "Stated Payment Terms are 30 Days from Month End unless otherwise arranged" (emphasis added). In view of the last three words it is difficult to see how this advances Ostwald's case. The Contract did provide otherwise.
10. The second matter was evidence that Seymour had often, but not always, paid Ostwald 30 days from the end of the month the payment claim was received. The evidence did not demonstrate an invariable practice by Seymour and in any event could not establish that Ostwald's representatives executed the Contract under a misapprehension as to its terms.
11. Thirdly, Mr Robertson pointed out that the Contract as executed included the ticked box in Item 21 of the Particulars showing that the due date for payment was "Within 30 days of the end of the month of claim". But the express provisions of the Formal Investment Instrument of Agreement gave priority to Special Condition 9.1 over Item 21. Contrary to Mr Robertson's submission, the evidence is quite consistent with the box in Item 21 having been ticked in error.
12. The inference that the box was ticked in error is considerably strengthened by the fact that the box in Item 23 was also ticked, thereby expressly incorporating Special Condition 9.1 into the Contract. As Mr Robertson accepted, the ticking of both boxes created an internal inconsistency in the Contract which was resolved by the provisions conferring priority on the Special Conditions. In these circumstances, the ticking of the box in Item 21 provides no support for Ostwald's contention that the parties executed the Contract under the mutual mistaken belief that the time for payment was 30 days from the end of the month in which the payment claim was received.
13. Fourthly, Mr Robertson relied on the failure of Mr Demasi to give evidence. Seymour explained Mr Demasi's evidence on the ground that he was not an employee at the date of the trial. Regardless of whether Mr Demasi's absence was adequately explained, his absence could not fill the gaps in Ostwald's evidence.
14. The primary Judge erred in finding that the evidence established that the common intention of the parties on the date of execution of the Contract was that Seymour should have 30 days from the end of the month in which the payment claim was served to pay Ostwald. It follows that Ostwald did not make the Adjudication Application within the period specified by s 17(3)(d) of the Security of Payment Act. [36]

Ground 2: "fork in the road"

1. Seymour's written submissions identified the issue presented by Ground 2 in the notice of appeal to be: "whether a claimant can make an adjudication application and pursue it to a determination and then, in the circumstance that the adjudication application is found to be invalid, sue for the statutory debt under s 16(2)(a)(ii) [of the Security of Payment Act]." This issue was described by the primary Judge, with encouragement from the parties, as the "fork in the road" point.

Primary Judgment

1. Since the primary Judge concluded that the Adjudication Application was made within time and as there was no other challenge to the validity of the Adjudication Determination, his Honour did not need to deal with Ostwald's alternative contention that if the Adjudication Application was lodged out of time Ostwald could institute court proceedings under s 16(2)(a)(i) to recover the unpaid portion of the Scheduled Amount. Nonetheless his Honour correctly addressed the contention against the possibility that on appeal his finding that the Adjudication Determination was made within time might be held to be erroneous.
2. The primary Judge rejected Seymour's argument that the Adjudication Application, although a legal nullity, had a factual existence that could produce legal consequences, including constituting an election between inconsistent statutory remedies. On that argument Ostwald had made an adjudication application for the purposes of s 16(2)(a)(ii) of the Security of Payment Act and was precluded thereafter from pursuing the alternative afforded by s 16(2)(a)(i) of court proceedings to recover the unpaid portion of the scheduled amount.
3. His Honour reasoned as follows: [37] "116 the question here is whether the words 'adjudication application' in s 16(2)(a)(ii) should be construed as including a document purporting to be an adjudication application, but which does not satisfy the requirements specified in s 17(3), and which thus does not satisfy the definition of 'adjudication application' in s 4. [38] 117 In my opinion, the answer to this question must be 'no'. Otherwise, there would be attributed to Parliament the intention that a term, defined in the Act, should take on a different and more expansive meaning than is stated in that definition. That cannot have been the intention of Parliament. 118 The gloss Seymour Whyte seeks to place on s 16(2)(a)(ii) would amount to a rewriting of that definition. 119 I do not see this as an alarming consequence or one unlikely to have been contemplated by Parliament. It would merely mean that, on the assumption I am making for the purposes of this part of the judgment, Ostwald did not make an adjudication application as it had intended, and may now enforce payment of the amount that Seymour Whyte indicated in its payment schedule it proposed to make. 120 For these reasons, had the adjudication determination been void by reason of the failure of Ostwald to make its adjudication application in time, I would have found it open to Ostwald to go down the other 'fork in the road' and seek recovery of the unpaid scheduled amount under s 16(2)(a)(ii)."

Seymour's submissions

1. Seymour accepted that if Ostwald's rectification case was rejected, both the Adjudication Application and the Adjudication Determination were "nullities". Nonetheless Seymour submitted that Ostwald's actions in making the Adjudication Application precluded it from seeking to recover the Scheduled Amount as a debt due to it pursuant to s 16(2)(a)(i) of the Security of Payment Act. Seymour advanced two alternative arguments in support of the submission.
2. Seymour's principal contention is that under s 16(2)(a) of the Security of Payment Act a claimant who lodges a payment claim can choose between making an adjudication application or applying for a court order. But once a claimant chooses to make an adjudication application, the alternative statutory pathway is no longer available. This is the case, so Mr Christie argued, even if the adjudication application is vitiated by a jurisdictional error. Seymour's alternative submission is that as Ostwald, made an adjudication application in fact, it elected at common law not to pursue curial proceedings under s 16(2)(a)(i) of the Security of Payment Act.
3. The starting point for Seymour's principal contention is that s 16(2)(a) of the Security of Payment Act provides two "exclusive alternatives" to a claimant where a respondent fails to pay the whole or any part of the scheduled amount. Under the statutory scheme the claimant may choose either to recover the unpaid portion as a debt (s 16(2)(a)(i)) or make an adjudication application (s 16(2)(a)(ii)), but not both.
4. The next step in Seymour's argument is that a claimant who lodges an adjudication application out of time "make[s] an adjudication application" for the purposes of s 16(2)(a)(ii) of the Security of Payment Act, notwithstanding that the adjudication application is a legal nullity and that any adjudication determination is liable to be set aside in judicial review proceedings. It is enough that the adjudication application is in fact made. Once that is done the claimant has chosen one of the two exclusive alternatives and cannot pursue the other.
5. Mr Christie pointed to authorities indicated that legislation, as a matter of construction, may apply to acts which have been done in fact but which are devoid of legal effect. He submitted that s 16(2)(a) of the Security of Payment Act is such a provision. Thus a claimant who lodges an adjudication application out of time has made an adjudication application for the purposes of s 16(2)(a)(ii). This construction, so Mr Christie argued, promotes certainty and avoids the risk of a multiplicity of adjudicative and curial proceedings and consequent delays and expense.
6. Seymour's election argument rests on Ostwald's conduct in filing the Adjudication Application, failing to withdraw the Adjudication Application notwithstanding that the jurisdictional defect was identified obtaining the Adjudication Determination. By acting in this way, so it was submitted, Ostwald pursued a remedy inconsistent with its entitlement under s 16(2)(a)(i) of the Security of Payment Act to pursue curial proceedings. Ostwald therefore elected to make the Adjudication Application in lieu of court action to recover a debt.

Ostwald's submissions

1. Ostwald submitted that once it is accepted that the Adjudication Application was a legal nullity (having been made out of time), it necessarily follows that Ostwald had not "ma[d]e an adjudication application under section 17(1)(a)(ii)" within the meaning of s 16(2)(a)(ii) of the Security of Payment Act. Ostwald had therefore not irrevocably chosen one path in the "fork in the road" created by the use of the word "or" in s 16(2)(a). It was entitled to pursue its claim for the unpaid portion of the Scheduled Amount in the manner provided by s 16(2)(a)(i).
2. Mr Robertson contended that Seymour's approach would mean that there would be no consequences for a respondent who refused to pay a claimant in accordance with a payment schedule, should the claimant unsuccessfully attempt to make an adjudication application. Such an approach would hinder the statutory objective of preserving the cash flow of contractors and subcontractors performing work under construction contracts.

Exclusive alternatives

1. There was no dispute between the parties that s 16(2)(a) of the Security of Payment Act provides, in Mr Christie's words, two "exclusive alternatives" to a claimant where the respondent fails to pay the whole or any part of the scheduled amount. Despite the parties' consensus on this point, it assists in evaluating the competing arguments to explain why s 16(2)(a) should be construed in this way.
2. Section 16(1) of the Security of Payment Act applies if:

• a claimant serves a payment claim on the respondent (s 16(1)(a));
• the respondent provides a payment schedule to the claimant within the specified time (s 16(1)(b));
• the payment schedule indicates a scheduled amount the respondent proposes to pay (s 16(1)(c)); and
• the respondent fails to pay the whole or any part of the scheduled amount to the claimant on or before the due date (s 16(1)(d)). These conditions were satisfied in the present case.

1. Both parties therefore accepted that once Seymour failed to pay the Scheduled Amount by the due date Ostwald was entitled either to:

• institute proceedings to recover the unpaid portion of the Scheduled Amount from Seymour as a debt due to Ostwald (s 16(2)(a)(i)); or
• make an adjudication application (s 16(2)(a)(ii)), but could not pursue both (whether at the same time or consecutively).

1. There is a strong textual foundation for this construction of s 16(2)(a). The use of the word in s 16(2)(a) "or" indicates that the two remedies made available to a claimant where the conditions in s 16(1) are satisfied are intended to be true alternatives.
2. There is an obvious reason why the legislation contemplates that the remedies are alternative and not cumulative. The summary curial proceedings provided for in s 16(2)(a)(i) allow recovery of the unpaid portion of the scheduled amount. In these proceedings the respondent is not entitled to bring any cross-claim or raise any defence in relation to matters arising under the construction contract (s 16(4)). By contrast, an adjudication application requires the adjudicator to determine the amount of the progress payment to be made to the claimant having regard to specified matters, including submissions made by the respondent. [39] As McDougall J has observed, [40] it would be extraordinary if a claimant, having lodged an adjudication application and proceeded to an adjudication which upholds the respondent's defences, can then seek to enforce the unpaid portion of the scheduled amount by instituting curial proceedings pursuant to s 16(2)(a)(i).
3. This construction of s 16(2)(a) receives further support from the legislative history. As originally enacted in 1999, s 16(2) of the Security of Payment Act provided only one remedy for a claimant in the circumstances specified in s 16(1), namely the remedy now provided in s 16(2)(a)(i). The current version of s 16(2) was inserted into the Security of Payment Act by the Building and Construction Industry Security of Payment Amendment Act 2002 (NSW). [41]
4. The Explanatory Note to the 2002 Bill stated that the objects included the following: "(c) to provide claimants with the option of having their payment claims adjudicated under the Act rather than having to take court action to recover the amount owing." The Explanatory Note explained that the new s 16(2): "provides that, if the respondent provided a payment schedule in response to a payment claim but fails to pay the scheduled amount on time, the claimant may either take legal action in a court to recover the scheduled amount or make an adjudication application in relation to the payment claim." (Emphasis added.)
5. The Explanatory Note, although not decisive on the question of statutory construction, indicates that the new remedy available to a claimant was intended to be a true alternative to the pre-existing curial remedy.
6. Finally, it should be noted that this construction of s 16(2)(a) is consistent with the observation of the High Court in Southern Han that: [42] "as an alternative to commencing recovering proceedings for an unpaid portion [of a scheduled amount] in a court of competent jurisdiction, the claimant can make an application for adjudication of the payment claim."

Consequences of non-compliance with statutory requirements

1. The acceptance by both parties that the Adjudication Application and the Adjudication Determination were "invalid" or were "legal nullities" was based on the authority of this Court in Chase Oyster Bar. It is important to bear in mind that very considerable care needs to be exercised in using words like "nullity" or "void". [43] It is therefore necessary to consider what Chase Oyster Bar decided.
2. The claimant in Chase Oyster Bar served a payment claim on the respondent, but the respondent failed to provide a payment schedule in response. The claimant then made an adjudication application. Under s 17(2)(a) of the Security of Payment Act an adjudication application "cannot be made" unless the claimant has notified the respondent within 20 business days of the due date for payment of the claimant's intention to apply for an adjudication determination. The claimant gave notice well outside the 20 day period. Nonetheless the adjudicator made a determination in the claimant's favour. [44]
3. The Court held that in the exercise of its supervisory jurisdiction it had power to determine that the adjudication application had not been made in conformity with s 17(2)(a) of the Security of Payment Act and that the determination of the adjudicator was therefore "invalid". The Court further held that it had power to grant relief in the nature of certiorari setting the determination aside. [45]
4. The following propositions (among others) can be drawn from the judgments: (i) The supervisory jurisdiction of the Court under s 69 of the Supreme Court Act 1970 (NSW) can be invoked with respect to the exercise of statutory powers, whether or not the decision-maker is a public officer. Thus the supervisory jurisdiction extends to a determination made by an adjudicator under the Security of Payment Act. [46] (ii) An adjudicator does not have jurisdiction to determine an "application" that has been made outside the time limit specified by s 17(2)(a). Therefore an adjudicator who purports to make an adjudication determination in such circumstances commits a jurisdictional error. [47] (iii) Such a determination is invalid and may be quashed by an order in the nature of certiorari. [48]
5. The question arising in the present case as to whether an adjudication application made outside the 20 business days specified in s 17(3)(d) of the Security of Payment Act is invalid is not identical to the issue determined in Chase Oyster Bar. The Court there placed considerable emphasis on the "mandatory import" of the language in s 17(2)(a), which states that an adjudication application "cannot be made unless" the notification is made within the prescribed period. Section 17(3)(d) uses somewhat different language in that it provides that an adjudication application "must be made" within the prescribed period. However, both parties accepted that despite the differences in the statutory language, the reasoning in Chase Oyster Bar applies to an adjudication application made outside the period prescribed in s 17(3)(d). For that reason they accepted that the Adjudication Application and the Adjudication Determination were invalid. I am content to proceed on that basis.
6. Characterising a determination affected by jurisdictional error as invalid does not necessarily mean that the determination has no legal consequences. In Chase Oyster Bar Basten JA quoted [49] a passage from a Federal Court judgment which was expressly approved by Gleeson CJ in Minister for Immigration and Ethnic Affairs v Bhardwaj as follows: [50] "There is no doubt that an invalid administrative decision can have operational effect. For example it may be necessary to treat an invalid administrative decision as valid because no person seeks to have it set aside or ignored. The consequence may be the same if a court has refused to declare an administrative decision to be invalid for a discretionary reason. In some circumstances the particular statute in pursuance of which the purported decision was taken may indicate that it is to have effect even though it is invalid or that it will have effect until it is set aside." Basten JA therefore contemplated that an adjudication determination affected by jurisdictional error, although liable to be set aside by the Supreme Court in its supervisory jurisdiction, can have consequences for the parties.
7. McDougall J made observations in Chase Oyster Bar directly relevant to the issue raised by Ground 2 in the Notice of Appeal. His Honour said this: [51] "216 …. A claimant who has received neither payment schedule nor payment of the claimed amount is given alternative rights. It may sue for a debt (s 15(2)(a)(i)). If it does so, it has the benefit of the limitations, on the respondent, set out in s 15(4)(b). Alternatively, the claimant may make an adjudication application (s 15(2)(a)(ii)). The second, or alternative, right may be lost for non-compliance with s 17(2)(a). But that does not mean that the first is also lost. It follows that, even if (which I assume without deciding) s 15(2)(a) contains some notion of inconsistent alternative remedies, and thus of election, there can be no prohibition on suing to recover the claimed amount as a debt where an adjudication has not been made (because it cannot be made). (Emphasis added.) 217 Put shortly, even if the door to adjudication is closed, the door to judgment remains open; and the ability of the respondent to bar access through that door to judgment is limited."
8. These observations reflect the reasoning of Bergin J in Kell & Rigby Pty Ltd v Guardian International Properties Pty Ltd, [52] In that case the contractor filed an adjudication application but failed to give the notice required by s 17(2)(a) of the Security of Payment Act. The adjudicator refused to proceed with the adjudication. The contractor then sought summary judgment against the principal pursuant to s 15(2)(a)(i). [53]
9. Bergin J rejected the principal's contention that the contractor was precluded from bringing curial proceedings because it had elected to pursue the adjudication option. Her Honour referred to the principle stated by McHugh J in GJ Coles Ltd v Retail Trade Industrial Tribunal as follows: [54] "One of the basic doctrines of common law jurisprudence is the failure to perform a mandatory condition imposed by statute invalidates the doing of any act dependant on the fulfilment of that condition. In so far as such an act imposes duties or creates rights, the effect of non-fulfilment of the condition is that the act is totally incapable of creating legal consequences. For legal purposes, the act has no effect and may be disregarded. Administrative and constitutional law provide many illustrations of this basic doctrine." (Emphasis in original.)
10. Bergin J was satisfied that: [55] "the absence of the word 'valid' before the words 'adjudication application' in s 15(2)(a)(ii) of the Act does not mean that the legislature intended that a party could make an invalid application. This is particularly so having regard to the rights that are triggered when an adjudication application is made, including the right of the respondent to receive notice of the intention to make the application and the right of the respondent to have the fresh opportunity to file a payment schedule. I am of the view that the adjudication application was a nullity by reason of the plaintiff's failure to comply with the mandatory condition imposed by s 17(2) of the Act. Accordingly the act of filing and serving that document was incapable of creating legal consequences, including the legal consequence of the making of an election under s 15(2) of the Act."
11. The consequences of an adjudication determination being "invalid" by reason of a jurisdictional error were considered in a different context by this Court in Cardinal Project Services Pty Ltd v Hanave Pty Ltd. [56] In that case an adjudicator purportedly made a determination on 8 January 2010. Seven months later, on 6 August 2010, the Supreme Court made a declaration by consent that the determination was "void and of no effect". The basis for the declaration was not made clear. On 9 August 2010, the claimant purported to withdraw the adjudication application and on 12 August 2010 purported to lodge a second adjudication application. [57] The question was whether the second application was out of time and whether the second adjudication determination was therefore invalid.
12. Section 26(2) of the Security of Payment Act permitted a claimant to withdraw an adjudication application if the adjudicator "fail[ed] to determine the application" within ten business days of accepting the application. Section 26(2) also permitted the claimant to make a new application, but s 26(3) required a new application to be made within five business days after the claimant became entitled to withdraw the previous adjudication application.
13. The Court unanimously held that an adjudicator who issues an invalid determination "fails to determine the application" within the ten day period specified in s 26(2). [58] The issue on which the Court divided was whether the five day period for the lodgement of a new application commenced on the expiration of the ten day period within which the adjudicator had to make a (valid) determination, or whether the period commenced from the date the Court declared the purported adjudication determination to be void.
14. Macfarlan JA held that a "void determination is no determination at all" and that the clear language of s 26(2) and (3) meant that the claimant had five days from when the adjudicator should have made a valid determination in which to make a new determination. [59] Thus the second adjudication was well out of time. Tobias AJA reached the same conclusion. [60]
15. Basten JA, in dissent, applied his reasoning in Chase Oyster Bar [61] and characterized as false the "assumption that a decision made without jurisdiction must "be without any legal status or effect". [62] His Honour observed that between the date of an adjudication determination and a subsequent declaratory order no one can be sure as to whether the determination is valid. Accordingly he considered that the determination should be regarded as effective for the purposes of s 26(1)(b) until set aside or declared ineffective by a court to be ineffective. [63]
16. Despite the apparently unqualified observations of McHugh J in GJ Coles, a decision affected by jurisdictional error - even a failure to comply with a "mandatory" statutory precondition to the exercise of a power - is not necessarily devoid of legal consequences. In New South Wales v Kable Gageler J speaking of an invalid law said: [64] "Yet a purported but invalid law, like a thing done in the purported but invalid exercise of a power conferred by law, remains at all times a thing in fact. That is so whether or not it has been judicially determined to be invalid. The thing is, as is sometimes said, a "nullity" in the sense that it lacks the legal force it purports to have. But the thing is not a nullity in the sense that it has no existence at all or that it is incapable of having legal consequences. The factual existence of the thing might be the foundation of rights or duties that arise by force of another, valid, law. The factual existence of the thing might have led to the taking of some other action in fact. The action so taken might then have consequences for the creation or extinguishment or alteration of legal rights or legal obligations, which consequences do not depend on the legal force of the thing itself."
17. As the passage indicates, legislation may attach consequences to an act or decision that is "invalid" by reason of a jurisdictional error. The issue in the present case is therefore one of statutory construction: accepting that s 16(2)(a) provides "exclusive alternatives" to a claimant in the circumstances identified in s 16(1), does a claimant who lodges an adjudication application outside the period specified in s 17(3)(d) "make an adjudication application under s 17(1)(a)(ii)" for the purposes of s 16(2)(a)(ii) of the Security of Payment Act? The question must be addressed on the basis that compliance with s 17(3)(d) is an essential precondition for a valid adjudication application and valid adjudication determination.

Construction of s 16(2)(a)(ii)

1. Seymour's contention is that Parliament intended the "adjudication application" in s 16(2)(a)(ii) to refer to an "adjudication application in fact". Mr Robertson pointed out this contention requires "adjudication application" in s 16(2)(a)(ii) to be read as including a purported adjudication application that does not comply with essential statutory conditions for a valid adjudication application.
2. Section 8 of the Security of Payment Act: "makes it clear that a person who meets the description of a person who has undertaken to carry out construction work … under a construction contract is immediately by force of that provision 'entitled to a progress payment' on and from each reference date under the contract." [65] The amount of the progress payment to which a person is entitled is determined by the terms of the contract (s 9(a)). The progress payment is to be made in accordance with the applicable terms of the contract.
3. Part 3 of the Security of Payment Act sets out the procedures by which a claimant may enforce his or her statutory entitlement to a payment. As the High Court has pointed out, the procedures are designed to operate quickly. This is indicated by the "brutally fast" deadlines imposed on the claimant, the respondent and the adjudicator to ensure prompt resolution of payment disputes. [66] Part of the price for creating a series of stringent and inflexible preconditions for the making of valid adjudication applications is that a claimant may unwittingly fail to comply with one of the essential preconditions.
4. The effect of Seymour's submission is that non-compliance with a precondition for a valid adjudication application would deprive the claimant any means of enforcing the statutory entitlement to a progress payment. If, for example, a claimant notified the respondent 21 days after the due date for payment of the intention to apply for an adjudication determination, rather than within the 20 days required by s 17(2)(a), the claimant would be precluded from invoking the summary curial procedure available under s 16(2)(a)(i) of the Security of Payment Act to recover the unpaid portion of the scheduled amount. This would be a surprising result given that the first object of the legislation is: "to ensure that any person who undertakes to carry out construction work … under a construction contract is entitled to receive, and is able to recover, progress payments." (Emphasis added.) The result would also be difficult to reconcile with the intention to "stamp out the practice of developers and contractors delaying payment to subcontractors and suppliers". [67]
5. The statutory language does not suggest that such a result was intended. Section 16(2)(a)(ii) does not refer simply to an "adjudication application" but to an "adjudication application under section 17(1)(a)(ii)". It is true, as Mr Christie submitted, that s 17(1)(a)(ii) does not of itself specify the requirements for a valid adjudication application. But s 17(2) and (3) set out preconditions for a valid adjudication application. The natural reading of s 16(2)(a)(ii) is that it is referring to an application that is made in the circumstances described in s 17(1)(a)(ii) (where the respondent has failed to pay the whole or any part of the scheduled amount) and that complies with the essential conditions set out in s 17 itself.
6. This reading of s 16(2)(a)(ii) is reinforced by the absence of any time limit for a claimant to institute summary curial proceedings pursuant to s 16(2)(a)(i). The absence of any such time limit contrasts with the "brutally fast" time limits applicable to an adjudication application and adjudication determination. Had Parliament wished to prevent a claimant pursuing the summary procedure to recover the unpaid portion of the scheduled amount as a debt outside the time limits applicable to an adjudication application it could have done so readily.
7. It is also necessary to bear in mind that although the Security of Payment Act: "does not speak of 'interim' entitlements and payments … the label aptly reflects how the statutory entitlement interacts with any underlying contractual liability … The clear legislative intention is to ensure that the statutory entitlement can be determined and enforced with minimum delay. The Security of Payment Act defers the final determination of contractual rights to a different forum, in which the consequences of any erroneous determination can and must be taken into account." [68] Construing the legislation to allow a claimant who fails to meet a stringent deadline for one mechanism for enforcing an interim entitlement to pursue an alternative statutory mechanism not subject to the same time limits does not detract from the respondent's right to a final determination of contractual rights in a different forum.
8. Mr Christie submitted that to construe s 16(2)(a)(ii) as referring only to a valid adjudication application would create uncertainty in a scheme meant to operate expeditiously and to ensure that each party knows where it stands at any given point in time. However, once the issue is resolved, it does not create any greater uncertainly than that inherent in the statutory scheme. The uncertainty as to applicable time limits in the present case, for example, was created by Ostwald's contention that the Contract should be rectified.
9. In practice, as the latest review of the legislation has concluded, the security of payment regimes (including the Security of Payment Act) are "unduly complex and this has discouraged their usage and caused confusion". [69] In part the confusion is a product of the opportunities available to respondents to challenge the validity of adjudication applications and adjudication determinations by reason of jurisdictional error, as that concept has been interpreted in relation to the Security of Payment Act. [70] Construing s 16(2)(a) to allow a claimant an alternative route to a swift determination of its statutory entitlement if the first route is not validly pursued enhances the stated objectives of the legislation.
10. The primary Judge was therefore correct to conclude that had the Adjudication Determination been invalid by reason of Ostwald's failure to comply with s 17(3)(d) of the Security of Payment Act, he would have held that Ostwald was entitled to seek recovery of the unpaid Scheduled Amount pursuant to s 16(2)(a)(ii). Since I have concluded that the Adjudication Determination was invalid and liable to be set aside, it follows that, subject to Seymour's other arguments, Ostwald was entitled to seek recovery of the unpaid Scheduled Amount by means of its Cross-Claim.

Election

1. Since the Adjudication Certificate was invalid and there was no impediment to Ostwald exercising its statutory right to institute proceedings to recover the Scheduled Amount as a debt, no question of election arises.

Primary Judgment

1. The primary Judge identified three questions arising from the winding up of Ostwald: [71] (i) Whether the Security of Payment Act continues to apply to Ostwald's payment claim. His Honour identified the "particular question [to be] whether Ostwald continues to be a 'claimant' for the purposes of Pt 3 of the [Security of Payment Act]". (ii) If Ostwald continues to be a "claimant": "whether the statutory process for enforcing an adjudication determination as a judgment for debt under ss 24 and 25 should be stayed in light of the mandatory 'set off' procedure under s 553C of the Corporations Act, which must operate where a company is in liquidation." (iii) Whether there is a constitutional inconsistency between the provisions in the Security of Payment Act relating to the filing of an adjudication certificate as a judgment for debt is inconsistent with the setoff procedure laid down by s 553C of the Corporations Act.
2. The primary Judge considered it neither necessary nor appropriate to address the constitutional issue. As has been noted, Seymour did not press the constitutional contention on the appeal.
3. The primary Judge accepted that in Façade Treatment Engineering Pty Ltd (in liq) v Brookfield Multiplex Constructions Pty Ltd [72] the Victorian Court of Appeal held that s 9(1) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (Victorian Act) (NSW s 8): [73] "creates an entitlement to progress payments only for persons who have undertaken to, and continue to, carry out construction work or supply related goods and services. The term 'the claimant' used throughout Pt 3 is commensurately limited. Consequently, the payment regime in Pt 3 of the [Victorian] Act is not available to companies in liquidation, since such companies cannot carry out construction work or supply goods and services, and thus do not satisfy the requirements for 'a claimant'." (Emphasis added.)
4. His Honour acknowledged that since the legislation in each State was identical in material respects [74] he was obliged to follow the decision in Façade unless he concluded that it was "plainly wrong". [75] In his view, however, Façade was plainly wrong. In particular, the primary Judge said that, contrary to the reasoning in Façade, there is nothing in the text of the legislation to compel the conclusion that "undertake" means not only undertake to carry out construction work but to continue to perform such activities. [76]
5. The primary Judge considered that the Court in Façade overlooked that "Claimant" is defined in the Victorian Act to mean "a person who serves a payment claim under section 14 [NSW s 13]." [77] The Court of Appeal had wrongly assumed that a "claimant" must be someone who is or claims to be entitled to a progress payment by reason of having undertaken to carry out construction work. In the primary Judge's view, a person's status as a claimant does not depend on whether that person has undertaken to carry out construction work and also continues to perform such work. A person is a "claimant", his Honour held, if the person has served a payment claim and is or claims to be entitled to a progress payment for construction work undertaken. [78]
6. The primary Judge concluded as follows: [79] "155 My opinion … is that the Victorian Court of Appeal erred in its consideration of the text of the statute. Its failure to have regard to the definition of 'claimant' in s 4 of the Victorian Act led it to conclude that 'claimant' was defined in Vic s 14/NSW s 13 which, in turn, led it to conclude that its interpretation of the word 'undertaken' in Vic s 9/NSW s 8 was determinative of the question of who was a 'claimant'. 156 I do not agree with the Victorian Court of Appeal's interpretation of 'undertaken'. That is, perhaps, a matter about which minds might differ and not, itself, a reason to conclude the Court was 'plainly wrong'. But the Court's failure to consider the definition of 'claimant' in Vic s 4, and its consequent misunderstanding of the definition of 'claimant' leads me to conclude that it was 'plainly wrong' and that I should not follow it. 157 Accordingly, my conclusion is that Ostwald remains a 'claimant' notwithstanding it has been wound up. The Act, by its terms, continues to apply to Ostwald, notwithstanding that it is in liquidation …"
7. The primary Judge then addressed whether Ostwald, having gone into liquidation before the Adjudication Determination was made, could enforce a judgment obtained by registration of an adjudication certificate issued as a consequence of the Adjudication Determination. Since s 553C of the Corporations Act automatically applies to any mutual dealings between a claimant in liquidation and a respondent to a payment claim, the effect is: [80] "to substitute for the parties' rights under the contract and for such rights as Ostwald retains by reason of the adjudication determination, the right to have an account taken under s 553C and: (a) in the case of Ostwald, to recover from Seymour … any amount found following the taking of such accounts to be due by Seymour … to it; and (b) in the case of Seymour … to be able to prove in the winding up of Ostwald for any amount found to be due by Ostwald to it." (It will be recalled that in this Court Seymour did not rely on any argument based on s 553C of the Corporations Act. [81] )
8. His Honour pointed out that s 32(1)(c) of the Security of Payment Act preserves the rights of the parties under the construction contract. Accordingly, cross-claims and defences to the builder's claims are protected as mutual dealings under s 553C of the Corporations Act. In his Honour's opinion, it would be wrong if Seymour was required to pay Ostwald's payment claim in full but be left to prove in the liquidation in respect of any cross-claim. In those circumstances his Honour saw: [82] "no option but to stay any judgment that Ostwald obtains by reason of filing an adjudication certificate following the adjudication determination until the parties' rights are finally determined by the account that must now be taken under s 553C."

Façade

1. The facts in Façade can be stated shortly. Façade, as subcontractor under a construction contract, submitted two payment claims to Multiplex, the principal contractor, in August and September 2012. Multiplex paid part of the first payment claim but did not serve a payment schedule. Multiplex made no payments in respect of the second payment claim and again did not serve a payment schedule. On 10 October 2012, Multiplex served a notice taking the works out of Façade's hands. On 25 October 2012, Façade served a demand on Multiplex for payment of the unpaid claims.
2. The Supreme Court of Victoria made an order for the winding up of Façade on 6 February 2013. Façade commenced proceedings in September 2014 under the Victorian Act seeking to recover the unpaid claims as a debt from Multiplex. During the proceedings Multiplex alleged that Façade was liable to it for completion costs and liquidated damages substantially in excess of Façade's claims.
3. The trial judge was satisfied that Multiplex had multiple claims it intended to advance against Façade. The judge upheld Multiplex's constitutional argument based on what he held was an inconsistency between ss 16(2)(a)(ii) and 16(4)(b) of the Victorian Act (NSW ss 15(2)(a)(i) and 15(4)(b)) and s 533C of the Corporations Act. The trial judge did not consider whether, as a matter of construction, the Victorian Act continued to apply after Façade had been placed in liquidation.
4. Façade appealed and Multiplex filed a notice of contention seeking to affirm the trial judge's decision on the basis of the construction argument not addressed by the trial judge. The Victorian Court of Appeal dealt with the construction argument before considering other issues, including the question of s 109 inconsistency.
5. The Court commenced its analysis by referring to the judgment of Young CJ in Eq in Brodyn Pty Ltd v Dasein Constructions Pty Ltd. [83] In that case his Honour held that there was a conflict between s 25 of the Security of Payment Act and s 553C of the Corporations Act and that s 553C prevailed. [84] In his view, once a claimant ceased to be a going concern, it no longer needed cash flow and therefore the mischief covered by the Security of Payment Act was not present. [85] Accordingly, his Honour concluded that the Security of Payment Act was only intended to operate when the head contractor and subcontractor were "going concerns".
6. The Court in Façade acknowledged that Young CJ in Eq focused on the purposes underlying the legislation rather than on the statutory text and that it was necessary to start with the text. [86] Their Honours considered, however, that in creating a person's entitlement to progress payments s 9(1) of the Victorian Act (NSW s 8(1)): [87] "emphasises that person's entitlement to perform actions under the construction contract, rather than, say, the person's status as a party to the contract." The text therefore "accords importance to the actions of carrying out construction work and supplying related goods and services".
7. This led the Court of Appeal to identify two ways in which s 9(1) could be interpreted: [88] "The first is that it is available to any person who has undertaken to carry out construction work or supply related goods and services under a construction contract. The second is that it is only available to a person who not only has undertaken to carry out construction work or supply related goods and services, but also continues to perform such activities." (Emphasis added.)
8. Their Honours observed that s 14 (NSW s 13), which provides for the service of payment claims, is available to a "person referred to in s 9(1) who is or who claims to be entitled to a progress payment". Adopting the narrower interpretation of s 9(1) (that is, the second of the alternatives) meant that: [89] "the term 'the claimant' is only apt to cover persons who still carry out construction work or who still supply related goods and services pursuant to the construction contract. Consequently, once a winding-up order is made in respect of a builder, such that it only continues to exist for the purpose of being wound up, it would cease to be a claimant for the purposes of Pt 3 of the [Victorian] Act. It would therefore lose the right to issue payment claims under s 14, or recover unpaid amounts pursuant to s 16(2) [NSW s 15(2)]."
9. The Court identified a number of matters supporting the narrower interpretation:

• Section 16(2)(b) (NSW s 15(2)(b)) permits a claimant to serve notice on a respondent who has not produced a payment schedule of the claimant's intention to suspend work. This language contemplates that a claimant is still carrying out construction work. [90]
• Part 3 of the legislation creates an interim regime and provides for a respondent who makes a payment to "claw back" some or all of the payment. But where the claimant is in liquidation any payment made by the respondent enters the general pool of assets for distribution to creditors. The respondent would be unlikely to see much, if anything, returned so that the interim payment, in effect, becomes final. [91]
• The extrinsic materials showed that the driving concern underpinning the legislation centred on the cash flow problems facing contractors within the construction industry. But "cash flow problems cease to be a concern where a company goes into liquidation". [92]

1. The Court noted that the subcontractor relied on observations made by the Queensland Court of Appeal in RJ Neller Building Pty Ltd v Ainsworth [93] to the effect that the equivalent Queensland legislation was designed to shift the risk of a subcontractor's insolvency to the head contractor. The Court in Façade said that: [94] "So much may be accepted. However, once a builder enters into liquidation, it is no longer a question of the risk of insolvency; insolvency is a certainty." (Emphasis in original.) Their Honours went on to distinguish Neller on the ground that the builder in that case was "teetering on the edge" of insolvency, but had not yet fallen over.
2. The Court in Façade also rejected the subcontractor's argument that a "narrow" interpretation of the legislation would invite owners or head contractors to find ways of delaying payment until the builder entered into liquidation: [95] "the timeframes imposed by the [Victorian] Act are short … The claimant can therefore pursue enforcement within a relatively short period. Of course, delays may occur in enforcement and a builder already in a perilous financial state may enter into liquidation in a matter of months, as was the case here. However, in our view this consideration does not justify construing the legislation so that it confers benefits on companies in liquidation in the manner for which Façade contends. In the usual case, the legislation is designed to help avoid builders going into liquidation. The fact that this goal will not always be achieved, and may sometimes be frustrated, is not a reason for construing the statute so that it has an operation wider than the statutory purpose we have identified."
3. For these reasons the Court concluded that the Victorian Act: [96] "does not create an entitlement to progress payments for persons who are in liquidation (that is, persons in respect of whom a winding-up order has been made). This is because such persons no longer carry out construction work or supply related goods and services pursuant to a construction contract. On the construction we adopt, Pt 3 of the [Victorian] Act is not available to persons in liquidation."
4. In view of the Court's construction of the Victorian Act, it was unnecessary for their Honours to consider the issue of s 109 inconsistency. Nonetheless, their Honours proceeded to consider the constitutional question. In brief, their Honours reasoned as follows:

• The taking of the account and the balance produced by s 553C applies automatically at the commencement of the litigation and has the effect that the original claim ceases to exist. Thus only the balance between the claims is admissible to proof or payable to the company, as the case may be. [97]
• Courts in the United Kingdom have given primacy to insolvency law over security of payment legislation when a party to a construction contract is placed in liquidation. [98]
• The practical effect of the summary judgment procedure made available by s 16(2)(a)(i) of the Victorian Act (NSW s 15(2)(a)(i)) on the right of set off conferred by s 553C of the Corporations Act is: [99] "direct and significant in that it interferes with the rights made available under the Corporations Act. This is so because the [Victorian] Act purports to preclude reliance upon cross-claims or defences, by reason of s 16(4)(b)(i) and s 16(4)(b)(ii), whereas that reliance is protected under Commonwealth law. Cross-claims and defences are protected, where relevant, as mutual dealings under s 553C. Without the protection afforded by s 553C, summary judgment would mean that Façade would receive from Multiplex the full amount of the sum owed under the relevant payment claims, whereas Multiplex would be left to prove in the liquidation of Façade in respect of its counterclaim."
• If summary judgment had been granted to the subcontractor, any moneys received would have formed part of the fund available for distribution among Façade's creditors. If Multiplex could not rely on its counterclaim as a cross-claim or defence, it would receive only a pro rata dividend despite having paid the full amount. This is the very injustice s 553C is designed to avoid. [100]
• Section 16(2)(a)(i) and s 16(4)(b) alter, impair or detract from s 553C of the Corporations Act. The test for constitutional inconsistency is therefore satisfied. [101]

1. The Court in Façade held that this conclusion was not affected by the "roll-back" provision in Part 1.1A of the Corporations Act, since the conditions specified in Part 1.1A were not satisfied. [102]
2. The Court added the following observation: [103] "We consider that the finding of inconsistency also provides independent additional support for the narrow construction we have adopted, that is, independent of the text and contextual considerations we examined above. This is because s 6 of the Interpretation of Legislation Act 1984 (Vic) directs that every Victorian Act is to be construed so as not to exceed the legislative power of the State of Victoria but is to be interpreted as a valid provision to the extent to which it is not so in excess. As we have concluded that s 16(2)(a)(i) and ss 16(4)(b)(i) and 16(4)(b)(ii) of the [Victorian] Act are invalid with respect to their application to a company in liquidation, they ought be construed, alongside the other relevant provisions in pt 3 of the [Victorian] Act as inapplicable to companies in liquidation (that is, persons in respect of whom a winding-up order has been made). The narrow construction, which we adopted above for other reasons, is also to be favoured because it preserves the validity of the [Victorian] Act." (Footnote omitted.)

Seymour's submissions

1. Seymour's written submissions in this Court in substance adopted the reasoning in Façade and Brodyn. The submissions invited the Court to hold that the primary Judge erred in characterising the Victorian Court of Appeal's construction of the legislation as "plainly wrong". Mr Christie's oral submissions, however, took a very different course. He frankly acknowledged that the reasoning in Façade contains significant flaws.
2. First Mr Christie accepted that there was no textual foundation for the Court of Appeal to interpret s 9(1) of the Victorian Act to mean that a person is entitled to a progress payment only if that person not only "has undertaken to carry out construction work under the contract" but also continues to carry out construction work (or supply related goods or services) pursuant to the contract. Mr Christie placed no reliance on the Court of Appeal's construction of s 9(1) which, in effect, reads words into the provision which are not there. In response to a question from the bench as to whether this concession removed "the very foundation of the Court of Appeal's reasoning", Mr Christie responded: "Yes, I see the force in that, your Honour, I see the force in that".
3. Secondly, Mr Christie acknowledged that the Court of Appeal was wrong to say that the term "claimant" in s 14(1) of the Victorian Act (NSW s 13(1)) is apt only to cover persons who still carry out construction work or who still supply related goods and services pursuant to the construction contract. [104] This acknowledgement recognises that the definition of "progress payment" expressly includes "the final payment for construction work carried out … under a construction contract". A builder or subcontractor who has completed all work under the construction contract is entitled by s 8(1) of the Security of Payment Act to the final payment notwithstanding that the builder or subcontractor has completed all construction work. As the High Court noted in Southern Han, the definition of "progress payment" makes it clear that the Security of Payment Act is not only concerned with providing a statutory mechanism for receiving payments that occur during the currency of an existing contract. The legislation contemplates that in some circumstances a claim for a progress payment might be made after the contract has expired [105] and therefore might be made after the builder or subcontractor has carried out all construction work under the contract.
4. Thirdly, Mr Christie accepted that the Victorian Court of Appeal was wrong to rely on s 6 of the Interpretation of Legislation Act 1984 (Vic) to read down the relevant provisions of the Victorian Act to avoid possible inconsistency with s 553C of the Corporation Act. [106] Mr Christie correctly recognised that s 6, like its counterparts in other jurisdictions: [107] "does not speak to the situation where the issue is not one of the absence of legislative power, but is one of the extent of inconsistency, by operation of s 109 of the Constitution, of a State law made in the exercise of concurrent power". [108]
5. Despite these formidable obstacles, Mr Christie did not abandon his contention that the decision in Façade should not be regarded as "plainly wrong". He submitted that the reasoning of the High Court in Probuild Constructions demonstrates that the Security of Payment Act can be read subject to restrictions that may not be expressly stated. Since the "fundamental purpose" of the legislation is to ensure the financial survival of builders, so he argued, that purpose is not served once a builder or subcontractor goes into liquidation.
6. Mr Christie identified three matters supporting this contention: (i) Section 32 of the Security of Payment Act makes it clear that the rights conferred on a claimant are interim only and that payments made by a respondent should be capable of being reversed upon final determination of the parties' contractual rights. (ii) Parliament must be taken to have been aware that in general a company wound up in insolvency is not a going concern and there will be no return to creditors. (iii) Parliament must also be taken to have been aware that where a payment is made to a company being wound up in insolvency or which is in fact insolvent ordinarily the interim payment will not be capable of reversal pursuant to s 32 of the Security of Payment Act.

Ostwald's submissions

1. Ostwald's submissions are reflected in part in the concessions made on behalf of Seymour. Ostwald's additional submissions appear sufficiently from the reasoning below.

The statutory text

1. In the present case, Ostwald served its payment claim on 28 July 2017 and Seymour served its payment schedule on 11 August 2017. On the findings that have been made, the due date for Seymour to pay the Scheduled Amount was 18 August 2017. All these events occurred before 25 August 2017, the date Ostwald's winding up is deemed to have commenced.
2. It would seem that Ostwald was continuing to carry out construction work under the Contract until Seymour terminated the Contract on 24 August 2017. Even on the reasoning in Façade, therefore, the payment claim was valid when served and the Scheduled Amount became due and payable on 18 August 2017.
3. I have concluded that Ostwald's Adjudication Application was invalid but that the making of that Application did not preclude Ostwald from seeking to recover from Seymour the unpaid portion of the Scheduled Amount as a debt pursuant to s 16(2)(a)(i) of the Security of Payment Act. The question of statutory construction that arises is therefore whether s 16(2)(a)(i) entitled Ostwald to recover the unpaid Scheduled Amount as a debt in proceedings instituted after the date the winding up is deemed to have commenced.
4. The facts in Façade were in substance the same as in the present case, except that the company was wound up by order of the Court and Multiplex (the respondent to Façade's claim) did not serve a payment schedule. Façade brought the summary curial proceedings pursuant to the equivalent of s 15(a)(i) of the Security of Payment Act.
5. Both parties accepted that the decision in Façade is directly in point and that this Court, like the primary Judge, is bound to follow Façade unless convinced that the Victorian Court of Appeal's construction of the legislation is plainly wrong. As the plurality remarked in Probuild Constructions in a slightly different context, it is a "strong thing" for this Court to decline to follow a decision of the intermediate appellate court of another State which is precisely in point.
6. Even though there could be no issue that the payment claims in Façade were valid when made, the reasoning depended heavily on the Court's construction of the equivalent to ss 8 and 13 of the Security of Payment Act. [109] Notwithstanding Mr Christie's concessions in argument, it is appropriate to address the construction of those provisions in the light of the High Court's decision in Southern Han.
7. In Southern Han the High Court held that the existence of a reference date is a precondition to the making of a payment claim and that service of a valid payment claim under s 13(1) is an essential precondition to taking subsequent steps in the adjudication procedure set out Pt 3. [110] The expression "[a] person referred to in s 8 who is or who claims to be entitled to a progress payment" in s 13(1), therefore means a person: [111] "who has undertaken to carry out construction work or supply related goods or services under a construction contract in respect of which a reference date has arisen."
8. The Court in Southern Han explained that Pt 2 of the Security of Payment Act draws a distinction between a progress payment to which a person is entitled and the amount of the progress payment to which that person is entitled: [112] "59 … Cast in the present tense, s 8(1) makes clear that a person who meets the description of a person who has undertaken to carry out construction work or supply related goods and services under a construction contract is immediately by force of that provision 'entitled to a progress payment' on and from each reference date under the construction contract. Cast in the future tense, in contrast, s 9 makes clear that the amount of a progress payment to which the person is so entitled is not fixed by force of that section but 'is to be' ascertained in the manner prescribed by that section, and quantifies the amount of the progress payment to which a person is entitled by force of s 8(1). Section 9 in that way anticipates the procedure for recovery of a progress payment set out in Pt 3. Under that procedure, in the event of a dispute between a claimant and a respondent, the ascertainment of the amount, if any, of the progress payment to be recovered is committed to the jurisdiction of an adjudicator to determine under s 22. 60 That distinction drawn in Pt 2, between a present entitlement to a progress payment and the future ascertainment of the amount of the progress payment to which that present entitlement relates, explains the two-part description in s 13(1) of a person who is able to make a payment claim so as to trigger the procedure for recovery set out in Pt 3. The first part of the description - '[a] person referred to in section 8(1)' - refers to a person whom s 8(1) makes 'entitled to a progress payment'. The second part of the description - 'who is or who claims to be entitled to a progress payment' - neither contradicts nor qualifies the first part of the description. The second part of the description rather recognises, consistently with s 9, that the amount of the progress payment to which that person is entitled might ultimately be ascertained, according to the procedure set out in Pt 3, to be less than the amount that the person claims to be due and might even be ascertained according to that procedure to be nothing." (Emphasis added.)
9. The Court also explained that there is: [113] "an important limitation that is implicit in the overall design of the Act, and that has been so from the time of its original enactment. That limitation is that the Act is concerned to provide a statutory mechanism for securing payment of an amount claimed to be payable in partial or total discharge of an obligation to pay for work (or for goods and services supplied) imposed by the contractual force of a construction contract."
10. The language of s 8(1) of the Security of Payment Act, read in the light of the analysis in Southern Han, creates an entitlement to a progress payment in an amount to be quantified in accordance with Pt 3 of the Act. A person acquires that entitlement on satisfaction of two conditions: (i) the person has undertaken to carry out construction work under a construction contract; and (ii) a reference date under the construction contract has arisen.
11. The progress payment to which a person is entitled as and from the reference date is a payment for work done, or for work undertaken to be done where some element of advance payment has been agreed under the contract. [114] In short, a progress payment is an amount that a contract requires to be paid as part of the total price of construction work. [115]
12. There is nothing in the language of s 8(1) to support an implication that the entitlement to a progress payment cannot arise unless the builder or subcontractor continues to carry out construction work under the contract. Section 8(1) refers to a person who "has undertaken to carry out construction work under the contract". This is a reference to a contractual undertaking, not to the physical performance of work. The analysis of the High Court in Southern Han is entirely consistent with this construction of s 8(1).
13. The statutory entitlement to a progress payment does not arise until a reference date has arrived. That date is determined by the terms of the contract as that date on which a claim for a progress payment may be made in relation to work carried out or undertaken to be carried out under the contract. The reference date is: [116] "a date set by contractual force as a date for making a contractual claim to be paid the whole or part of the contracted amount … [T]he date is … fixed by operation of one or more express provisions of the contract." A reference date can arise regardless of whether the claimant is actually continuing to carry out construction work under the contract on that particular date (although it may be necessary, in conformity with Southern Han, for the contract or at least the contractual entitlement to be paid, to remain in force).
14. There is also nothing in the language of s 13 of the Security of Payment Act which implies that a person can only serve a payment claim at a time when that person is actually carrying out construction work under the contract. As Southern Han expressly recognises, a claim may be made even after a contract has expired, for example, in relation to a final payment.
15. Two further points should be noted. First, the text of the Security of Payment Act distinguishes between work undertaken to be carried out and work carried out. Section 8(2), for example, refers to "work carried out or undertaken to be carried out". [117] The reference in s 8(1) to a "person … who has undertaken to carry out construction work" contrasts with the reference in s 15(2)(b) and s 16(2)(b) to a claimant serving notice of intention to suspend "carrying out construction work". [118] This suggests that if Parliament intended s 8(1) to be subject to a requirement that the claimant actually carry out construction work on the reference date it would have said so.
16. Secondly, ss 15(2)(b) and 16(2)(b) of the Security of Payment Act apply where a respondent fails to pay the claimed amount or the unpaid portion of the scheduled amount. Those provisions permit a claimant to serve a notice of the claimant's intention to suspend carrying out construction work. The Court in Façade said that the provisions favoured the Court's construction of s 9(1) of the Victorian Act (NSW s 8(1)) because they "[contemplate] a claimant who is still carrying out construction work". [119]
17. It is true that ss 15(2)(b) and 16(2)(b) contemplate that some claimants will be carrying out construction work when the due date for a progress payment arrives and that those claimants may wish to take advantage of the statutory entitlement to suspend construction work. But that does not mean that the provisions contemplate that an entitlement to a progress payment under s 8(1) depends on the claimant actually performing construction work under the contract on the reference date. Nor does it mean that ss 15(2) and 16(2) only permit a claimant to invoke the statutory procedures if on the due date for payment the claimant is carrying out construction work under the Contract.
18. In my opinion Mr Christie was correct to accept that the Victorian Court of Appeal was in error in construing s 9(1) of the Victorian Act (NSW s 8(1)) as creating an entitlement to a progress payment only in a person who continues to carry out construction work under a construction work. With great respect, it follows that the Court was in error in adopting this construction of the provision as the basis for the conclusion that a "claimant" for the purposes of the equivalent to ss 15(2) and 16(2) of the Security of Payment Act must be a person who continues to carry out construction work under a contract. Mr Christie was also correct to accept that his concession removes the principal basis advanced by the Victorian Court of Appeal for its construction of the legislation.

Implications

1. Mr Christie's attempt to support the decision if not the reasoning in Façade rested on implications to be derived from the "fundamental purpose" of the Security of Payment Act to ensure the financial survival of builders. It is a permissible approach to construction to draw implications from the text, structure and evident objectives of the legislation. Thus in Probuild Constructions, the High Court considered that the language, structure and purposes of the Security of Payment Act were not consistent with allowing an adjudication determination to be quashed for non-jurisdictional error, even though the legislative text did not explicitly preclude judicial review of such a determination. [120] In Southern Han the High Court identified an important limitation implicit in the overall design of the Security of Payment Act. [121]
2. Three matters were identified by the Victorian Court of Appeal that might be said to support an implication to the effect advanced by Mr Christie. The first was that a company in liquidation cannot carry out construction work or supply goods and services under a contract. [122] Accordingly "cash flow problems cease to be a concern when a company enters liquidation". [123]
3. This proposition overlooks the express power conferred on the liquidator of a company to: "carry on the business of the company so far as is, in the opinion of the liquidator, required for the beneficial disposal or winding up of that business." [124] It may not be common for the liquidator of a builder or building subcontractor, in particular, to seek to carry on the business of the company by continuing to perform work under an existing construction contract. But the circumstances in which an insolvent company is placed in liquidation vary greatly. It is possible for a construction company in liquidation to need a progress payment for much the same cash flow reasons as a company "teetering on the edge of insolvency".
4. A liquidator may consider it expedient to carry on the company's business with a view to disposing of it or winding it up in the most beneficial manner. To this end, the liquidator may make a payment claim on behalf of the company pursuant to an existing construction contract, perhaps in respect of work completed prior to the commencement of the liquidation. The liquidator may then seek to invoke the statutory procedures for quantifying and enforcing the claim. Receipt of the progress payment could be crucial to the liquidator's endeavours to dispose of the business beneficially, for example by enabling the company to discharge its few remaining obligations under a construction contract, thereby entitling it to a substantial payment under the contract.
5. The second matter the Victorian Court of Appeal thought significant was that once a winding up order is made in respect of a building contractor: "it is no longer a question of the risk of insolvency; insolvency is a certainty." [125] (Emphasis in original.)
6. A company is insolvent for the purposes of the Corporations Act if it is unable to pay its debts as and when they fall due. [126] Even a company wound up on the ground of insolvency [127] may ultimately be found to have a surplus of assets over liabilities. It is therefore not necessarily inevitable that creditors of a company wound up on the ground of insolvency will suffer a shortfall in recovering the moneys due to them. If the Court of Appeal was implying that the creditors of a construction company wound up in insolvency can never ultimately recover the full amounts due to them, that proposition is not correct.
7. Mr Christie did not fully adopt the reasoning of the Court of Appeal on these two matters. But he did submit that Parliament must have been aware of the practical difficulties that generally confront creditors in a winding up in insolvency. That, however, is a tenuous basis on which to imply limitations on statutory language not supported by the text of the legislation.
8. The third matter relied on in Façade and adopted by Mr Christie is the interim character of the statutory entitlement. As the High Court observed in Probuild Constructions, [128] the Security of Payment Act creates an entitlement that is determined informally, summarily and quickly and then summarily enforced without prejudice to the common law rights of the parties which are to be determined "in the normal manner".
9. The principal provisions that define the nature of a claimant's entitlement to a progress payment are the following:

• Sections 15 and 16 permit the claimant to recover the unpaid portion of the claimed amount or the scheduled amount (as the case may be) as a debt in any court of competent jurisdiction. The respondent is not entitled in the proceedings to bring a cross-claim or raise a defence in relation to matters arising under the construction contract.
• Section 24 enables the claimant to obtain an adjudication certificate if the respondent fails to pay the whole or any of the adjudicated amount by the "relevant date". Section 25 provides for the adjudication certificate to be filed as a judgment for debt in a court. If the respondent commences proceedings to set aside the judgment, the respondent is not entitled in those proceedings to bring a cross-claim, raise any defence in relation to matters under the construction contract or challenge the adjudicator's determination (except for jurisdictional error).
• Section 32 provides that nothing in Part 3 affects the rights of the parties under the construction contract proceedings arising under the contract and nothing done under Pt 3 affects any civil proceedings. However, in any proceedings in relation to a matter arising under a construction contract, the court: "(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."

1. The Court in Façade considered that these provisions envisage that a respondent will be able to claim back any amounts paid to the claimant pursuant to Pt 3 of the legislation. If the claimant is in liquidation the respondent will be unlikely to be able to claim back moneys paid in satisfaction of any judgment debt because the moneys will form part of the claimant's pool of assets to be distributed to creditors. [129] Accordingly, the interim nature of the claimant's entitlement supports a construction that denied a claimant the entitlement to lodge a payment claim against a company in the liquidation insolvency.
2. The assumption underlying this argument is that it is unfair to a respondent to permit a claimant company in liquidation to recover its "interim" statutory entitlement in full while relegating the respondent to the status of an unsecured creditor, notwithstanding that s 32 of the Security of Payment Act expressly preserves the parties' contractual rights. Although there is some support in the authorities for this assumption, its validity is by no means beyond argument. The circumstances of the present case illustrate the point.
3. In response to Ostwald's payment claim served on 28 July 2017, Seymour served a payment schedule stating that it proposed to pay the Scheduled Amount of $2,505,237.58. The due date for payment was 18 August 2017, prior to termination of the Contract and appointment of the administrators to Ostwald. Had Seymour paid the Scheduled Amount on the due date as was its statutory obligation, its only remedy against Ostwald, once it went into liquidation, was to lodge a proof of debt as an unsecured creditor. In that situation, depending on the assets available for distribution, the "interim" payment could well have effectively become final.
4. Seymour's contention is that it would be unfair if it had to satisfy a judgment obtained by the liquidator for Ostwald pursuant to s 16(a)(ii) of the Security of Payment Act when any claim by Seymour against Ostwald would simply be as an unsecured creditor.
5. Seymour is only in a position to advance this contention because it refused to pay the Scheduled Amount, despite stating that it proposed to do so. It is difficult to see how rewarding a head contractor for delaying a progress payment it has stated that it intends to make promotes the objectives of the Security of Payment Act.
6. If, however, enforcement of a judgment for a progress payment would unfairly prevent a respondent from effectively asserting its contractual rights against the claimant, s 553C(1) of the Corporations Act provides a mechanism that, within its field of operation, alleviates the unfairness. The High Court stated the rationale for the set-off provision in the context of bankruptcy [130] in Gye v McIntyre: [131] "the object of set-off in bankruptcy is, in the words of Parke B. in Forster v. Wilson [132] , 'to do substantial justice between the parties, where a debt is really due from the bankrupt to the debtor to his estate'. Where there are genuine mutual debts, credits or other dealings, it would be unjust if the trustee in bankruptcy could insist upon having 100 cents in the dollar upon the whole of the debt owed to the bankrupt but at the same time insist that the bankrupt's debtor must be satisfied with a dividend of some few cents in the dollar on the whole of the debt owed by the bankrupt to him. It was to prevent such injustice that the 'mutual credits' and 'mutual debts', and later 'mutual dealings', provisions were introduced into bankruptcy legislation … To the extent necessary to achieve that legislative purpose of 'substantial justice' to the parties, it is established by authority that a provision such as s. 86 of the Act should be given 'the widest possible scope'." (Most citations omitted.)

Conclusions

1. I have reached the following conclusions:
2. The primary Judge erred in making an order for rectification of the Contract.
3. The Adjudication Application was not made within the period specified in s 17(3)(d) of the Security of Payment Act and was therefore invalid.
4. Ostwald was entitled to institute proceedings against Seymour pursuant to s 16(2)(a)(i) of the Security of Payment Act seeking to recover the unpaid portion of the Scheduled Amount as a debt.
5. The fact that Ostwald's liquidation was deemed to have commenced before it filed its cross-claim seeking judgment against Seymour does not prevent it pursuing that claim to judgment.
6. Ostwald's cross-appeal challenged the primary Judge's conclusion that he had no option but to stay any judgment obtained by Ostwald by filing the Adjudication Certificate. Since the Adjudication Certificate was invalid, Order 7 made by the primary Judge cannot stand. [139]
7. Since I have concluded that there is no impediment at present to Ostwald obtaining summary judgment against Seymour pursuant to s 16(2)(a)(i) of the Security of Payment Act, an issue would remain as to whether any judgment so obtained should be stayed. In view of the undertaking given to the Court on behalf of Ostwald, it would seem that there is no need to address the question of a stay.
8. The most convenient course is for the parties to agree on short minutes of order giving effect to these reasons for judgment. In the absence of agreement the parties should each file draft short minutes of order together with brief written submissions in support. In the absence of agreement as to costs, the parties' written submissions should also address the question of costs in this Court and in the Equity Division proceedings. Any dispute will be resolved on the papers.
9. The orders I propose are:
10. Direct the parties to file agreed short minutes of order within fourteen days giving effect to these reasons for judgment and dealing with the costs of the proceedings in this Court and the Equity Division.
11. To the extent that there is disagreement as to the proposed short minutes of order or costs, direct Seymour to file and serve its proposed short minutes of order (including on costs), together with written submissions in support (not to exceed five pages) within fourteen days.
12. Ostwald to file and serve its proposed short minutes of order (including on costs), together with written submissions in support (not exceeding five pages) within a further fourteen days.
13. EMMETT AJA: A significant question in this appeal concerns the interaction between the Building and Construction Industry Security of Payment Act 1999 (NSW) (Security of Payment Act) and the Corporations Act 2001 (Cth) (the Corporations Act). The appeal also raises a question as to the meaning of the phrase "adjudication application" in s 16(2)(a)(ii) of the Security of Payment Act. Finally, there is a question as to whether a building contract between the appellant and respondent should be rectified.
14. By a works sub-contract dated 6 September 2000 (the Contract), the first respondent, Ostwald Bros Pty Ltd (in Liquidation) (Ostwald), as Sub-contractor, agreed with the appellant, Seymour White Constructions Pty Ltd (Seymour), as Contractor, to perform road works near Grafton, New South Wales. Ostwald served a progress payment claim on Seymour pursuant to s 13(1) of the Security of Payment Act. Seymour responded by providing a payment schedule stating the amount it proposed to pay, pursuant to s 14 of the Security of Payment Act (the Scheduled Amount). Ostwald then purported to make an adjudication application under s 17(2)(a)(ii) of the Security of Payment Act (the Adjudication Application). The Adjudicator then purportedly made an adjudication determination pursuant to s 22 of the Security of Payment Act (the Adjudication Determination), which determined an amount due by Seymour to Ostwald (the Adjudicated Amount). Ostwald has not been paid either the Adjudicated Amount or the Scheduled Amount.
15. Seymour thereafter commenced proceedings in the Technology and Construction List of the Equity Division claiming that the Adjudication Determination was invalid. The basis for that claim was that Ostwald made the Adjudication Application outside the time limit provided for in the Security of Payment Act. In the meantime, Ostwald went into liquidation and Seymour was granted leave under s 440D of the Corporations Act to continue the proceedings against Ostwald.
16. In addition, Ostwald filed a cross-claim seeking rectification of the Contract. If the claim for rectification were to be successful, Ostwald's Adjudication Application was made within the time prescribed by the Security of Payment Act. However, if the Contract were not to be rectified, the Adjudication Application was made out of time and was therefore invalid. In the alternative, Ostwald sought payment of the Scheduled Amount as a statutory debt under the Security of Payment Act.
17. A judge of the Equity Division (the primary judge) concluded that rectification of the Contract should be ordered and that the Adjudication Application was therefore valid. The primary judge also concluded that, if the Adjudication Determination had been invalid, Ostwald was entitled to recover the Scheduled Amount as a debt due to it under the Security of Payment Act. His Honour also concluded that, on its proper construction, the Security of Payment Act continued to apply notwithstanding the commencement of the winding up of Ostwald. However, his Honour ordered that any judgment obtained by Ostwald be stayed until the rights of the parties were finally determined, in the winding up of Ostwald, by an account of their mutual dealings under s 553C of the Corporations Act.
18. Seymour appealed from the orders made by the primary judge. Ostwald filed a cross-appeal. In its appeal, Seymour contended that the primary judge erred in holding that the Contract should be rectified and erred further in holding that Ostwald could claim payment of the statutory debt in circumstances where it had elected to make an Adjudication Application and to pursue the Adjudication Application to a determination. Seymour also contended that his Honour erred in holding that provisions of the Security of Payment Act are available to a company in liquidation.
19. In its cross-appeal, Ostwald challenged his Honour's decision to stay any judgment obtained by it pursuant to the filing of any Adjudication Certificate. In addition, Ostwald contended that, if the Adjudication Application was void, his Honour should have ordered Seymour to pay the Scheduled Amount plus interest. Seymour filed a Notice of Contention in respect of the cross-appeal seeking to support the stay until the taking of the account required by s 553C of the Corporations Act.
20. I have had the considerable advantage of reading in draft form the proposed reasons of Sackville AJA. I agree with his Honour that the primary judge erred in concluding that the evidence supported a finding that the common intention of the parties was not reflected in the terms of the Contract and in ordering rectification. Accordingly, Ostwald did not make the Adjudication Application within the time specified by the Security of Payment Act and the Adjudication Determination was invalid and liable to be set aside.
21. It follows from that last conclusion that Ostwald was entitled to seek recovery of the Scheduled Amount pursuant to its cross claims, subject to Seymour's contentions in relation to the interplay between the Corporations Act and the Security of Payment Act. In that regard, the primary judge declined to follow a decision of the Victorian Court of Appeal. I agree with Sackville AJA that, on its proper construction, the Security of Payment Act is capable of operating for the benefit of a builder or sub-contractor notwithstanding that the builder or sub-contractor has gone into liquidation in insolvency. I agree with Sackville AJA, with the greatest respect, that the decision of the Victorian Court of Appeal in question was plainly wrong and should not be followed.
22. I agree with Sackville AJA that the stay order made by the primary judge cannot stand and there would be no impediment for Ostwald obtaining summary judgment against Seymour under the Security of Payment Act. I agree that the orders proposed by Sackville AJA are appropriate.

Endnotes

1. Relevant provisions of the Security of Payment Act are set out at [71]-[91] below.
2. Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) [2018] NSWSC 412 (Primary Judgment).
3. Section 109 of the Constitution provides that when a State law is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former, to the extent of the inconsistency, be invalid.
4. Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (No 2) unrep, 20 April 2018.
5. Clause 9.1 of the Special Conditions to the Contract specified the time within which amounts due to Ostwald were to be paid: see [94] below.
6. Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liquidation) [2018] NSWCA 139. The Court assumed, without deciding, that leave was necessary.
7. Being the date on which the administration of Ostwald began: Corporations Act, ss 513B(b), 513C; see [110] below
8. Security of Payment Act, s 32(1), (2), (3); Grosvenor Constructions (NSW) Pty Ltd (in administration) v Musico [2004] NSWSC 344 at [27]-[32] (Einstein J); Veolia Water Solutions v Kruger Engineering (No 3) [2007] NSWSC 459 (Veolia) at [72]-[92] (McDougall J).
9. Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (Probuild Constructions) [2018] HCA 4; (2018) 351 ALR 225 at [3] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ). The New South Wales Legislation has been amended on several occasions, notably by the Building and Construction Industry Security of Payment Amendment Act 2002 (NSW) and the Building and Construction Industry Security of Payment Amendment Act 2013 (NSW). The legislation in force in the various Australian jurisdictions has recently been examined in the Review of Security of Payment Laws (December 2017) (Murray Report).
10. See, for example, Probuild Constructions at [4]-[18]; Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (Southern Han) (2016) 260 CLR 340; [2016] HCA 52 at [3]-[19] per curiam.
11. New South Wales, Legislative Assembly, Parl Deb, 12 November 2002 at 6542. (Hon Morris Iemma MLA), quoted in Southern Han at [4] and Probuild Constructions at [39].
12. Southern Han at [14].
13. See at [131] below.
14. See at [50] above.
15. Primary Judgment at [18].
16. (2010) 78 NSWLR 393; [2010] NSWCA 190 (Chase Oyster Bar).
17. Primary Judgment at [39].
18. (2016) 260 CLR 85; [2016] HCA 47 at [41], [42], [103], [104]; Primary Judgment at [56]-[58].
19. Primary Judgment at [66].
20. Primary Judgment at [60]-[63].
21. Primary Judgment at [68].
22. Primary Judgment at [73]-[75].
23. Primary Judgment at [77]-[78].
24. Simic at [103]-[104] (Gageler, Nettle and Gordon JJ).
25. Simic at [41], [42].
26. (1859) 4 De G&J 250; 45 ER 97.
27. Australian Gypsum Ltd v Hume Steel Ltd (1930) 45 CLR 54; [1930] HCA 38 at 64 (Rich, Starke and Dixon JJ); Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336; [1973] HCA 23 at 349 (Mason J); Pukallus v Cameron (1982) 180 CLR 447; [1982] HCA 63 at 457 (Brennan J).
28. (1859) 4 De G&J 250 at 265; 45 ER 97 at 103; see also Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 at [451]-[458], [511] (Campbell JA, Allsop P and Giles JA agreeing on these issues).
29. [2004] NSWSC 214; (2004) 11 BPR 21,629 at [30]; see also Franklins Pty Ltd v Metcash Trading Ltd at [459]-[460].
30. [2017] NSWCA 132; 345 ALR 633.
31. Samm Property Holdings Pty Ltd v Shaye Properties Pty Ltd at [114] (Gleeson JA and Sackville AJA agreeing).
32. Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 at [182] (Tobias JA (Mason P and Campbell JA agreeing)); at [272] (Campbell JA, Mason P agreeing).
33. Compare Samm Property Holdings Pty Ltd v Shaye Properties Pty Ltd at [120]-[124].
34. (1979) 142 CLR 531; [1979] HCA 9 at 551 (Gibbs ACJ, Jacobs and Murphy JJ).
35. The Departures Table recorded that Seymour's insistence that Ostwald had to bear the costs of any materials testing was "Non-negotiable". As executed, however, the Contract provided that Seymour would pay for "conforming tests only". Similarly, the Departures Table recorded that Seymour would entertain no further discussions on the clause providing for liquidated damages of $20,000 per day for delays in completion. Clause 16.7 and Particular 17 of the Contract reduced liquidated damages to $12,500 per day, a 37.5 per cent reduction from the figure in the Departures Table.
36. See at [106] above.
37. Primary Judgment at [116]-[120].
38. See at [84] above.
39. Security of Payment Act, ss 21(1), 22(2)(d).
40. Rojo Building Pty Ltd v Jillcris Pty Ltd [2007] NSWSC 880 at [56], [62]. The observations concerned s 15(2) but apply equally to s 16(2).
41. Schedule 1 [27]. This Act also inserted the current s 16(4): Schedule 1 [28].
42. Southern Han at [16].
43. New South Wales v Kable (2013) 252 CLR 118; [2013] HCA 26 at [21] (French CJ, Hayne, Crennan, Kiefel, Bell and Keane JJ).
44. Chase Oyster Bar at [117]-[119], [189].
45. Chase Oyster Bar at [108].
46. Chase Oyster Bar at [3] (Spigelman CJ), at [70], [71], [103] (Basten JA), at [261] (McDougall J).
47. Chase Oyster Bar at [33]-[56] (Spigelman CJ), at [96] (Basten JA), at [222] (McDougall J).
48. Chase Oyster Bar at [2] (Spigelman CJ), at [66], [108] (Basten JA), at [261] (McDougall J).
49. Chase Oyster Bar at [93].
50. (2002) 209 CLR 597; [2002] HCA 11 at [12] quoting Leung v Minister for Immigration and Multicultural Affairs (1997) 79 FCR 400; [1997] FCA 1313 at 413 (Finkelstein J).
51. Chase Oyster Bar at [216]-[217].
52. [2007] NSWSC 554 (Kell & Rigby).
53. Kell & Rigby at [1]-[9].
54. (1986) 7 NSWLR 503 (GJ Coles) at 525.
55. Kell & Rigby at [24]-[25].
56. (2011) 81 NSWLR 716; [2011] NSWCA 399 (Cardinal Project).
57. Cardinal Project at [63]-[66].
58. Cardinal Project at [14] (Basten JA, at [84] (Macfarlan JA, Tobias AJA agreeing).
59. Cardinal Project at [83], [86].
60. Cardinal Project at [111].
61. See Chase Oyster Bar at [93].
62. Cardinal Project at [40].
63. Cardinal Project at [50].
64. New South Wales v Kable at [52]; see Plaintiff S297/2013 v Minister for Immigration and Border Protection (2015) 255 CLR 231; [2015] HCA 3 at [32] per curiam.
65. Southern Han at [59].
66. Probuild Constructions at [40].
67. Probuild Constructions at [36], citing the second reading speech for the 2002 legislation amending the Security of Payment Act; see also Southern Han at [4].
68. Probuild Constructions at [39], [47].
69. Murray Report at (xiii).
70. See, for example, the Murray Report's recommendation that the legislation should abandon use of the expression "reference date": Murray Report at [11.1], Recommendation 14.
71. Primary Judgment at [123]-[125].
72. [2016] VSCA 247; (2016) 337 ALR 452 (Façade).
73. Façade at [84].
74. The numbering of the sections in each Act is slightly different.
75. Primary Judgment at [130].
76. Primary Judgment at [138].
77. Victorian Act s 4. As the primary Judge noted at [143]-[144], the definition in s 4(1) of the Security of Payment Act is to the same effect but expressed in the passive voice: see at [80] above.
78. Primary Judgment [148].
79. Primary Judgment at [155]-[157].
80. Primary Judgment at [165].
81. See at [67] above.
82. Primary Judgment at [168].
83. [2004] NSWSC 1230 (Brodyn). Although the Court in Façade did not refer to the appeal in Brodyn, this Court in substance dismissed the appeal: Silvia v Brodyn Pty Ltd [2007] NSWCA 55. However the Court did not need to address the construction or constitutional issues to dispose of the appeal.
84. Brodyn involved a corporation subject to a deed of company arrangement. However, s 553C applied to the deed: Corporations Act s 444A(5); Corporations Regulations 2001 (Cth) reg 5.3A.06, Sch 8A, cl 5.
85. Brodyn at [87].
86. Façade at [74].
87. Façade at [77].
88. Façade at [78].
89. Façade at [79].
90. Façade at [80].
91. Façade at [81].
92. Façade at [82].
93. [2009] 1 Qd R 390 (Neller) at [40] (Keane JA, Fraser JA and Fryberg J agreeing).
94. Façade at [86].
95. Façade at [87].
96. Façade at [90].
97. Façade at [166].
98. Façade at [174].
99. Façade at [177].
100. Façade at [178].
101. Façade at [179].
102. Façade at [185]-[187].
103. Façade at [189].
104. Façade at [79]. See at [203] above.
105. Southern Han at [65].
106. Façade at [189]. See at [210] above.
107. See, for example, Interpretation Act 1987 (NSW), s 31.
108. Sportsbet Pty Ltd v New South Wales (2012) 249 CLR 298; [2012] HCA 13 at [13] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ); Bell Group NV (In Liq) v Western Australia (2016) 260 CLR 500; [2016] HCA 21 at [71] (French CJ, Kiefel, Bell, Keane, Nettle and Gaudron JJ).
109. In this section I shall use the numbering of the Security of Payment Act.
110. Southern Han at [42], [44], [63].
111. Southern Han at [46].
112. Southern Han at [59], [60].
113. Southern Han at [66].
114. Southern Han at [67] citing Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd [2004] NSWSC 116; 20 BCL 276 at [34] (Barrett J).
115. Southern Han at [68] citing Co-Ordinated Construction Co Pty Ltd v JM Hargreaves (NSW) Pty Ltd (2005) 63 NSWLR 385; [2005] NSWCA 228 at [41] (Hodgson JA)
116. Southern Han at [70].
117. See also ss 9(b), 10(1) where the same expression is used.
118. See also ss 11(3) and 27(1) where the same expression is used.
119. Façade at [80].
120. Probuild Constructions at [48].
121. Southern Han at [66]. See at [226] above.
122. Façade at [84]. See at [207] above.
123. Façade at [82].
124. Corporations Act, s 477(1)(a); MGR Gronow and S Maiden, McPherson's Law of Company Liquidation, 5th ed Thomson Reuters, at [8.2060].
125. Façade at [86].
126. Corporations Act, s 95A.
127. Corporations Act, ss 459A, 459P.
128. Probuild Constructions at [44], citing Falgat Constructions Pty Ltd v Equity Australia Corporation Ltd (2005) 62 NSWLR 385; [2005] NSWCA 49 at [22] (Handley JA, Santow JA and Pearlman AJA agreeing).
129. Façade at [81].
130. Section 86 of the Bankruptcy Act 1966 (Cth) is the equivalent provision in bankruptcy to s 533C of the Corporations Act.
131. (1991) 171 CLR 609; [1991] HCA 60 at 618-619 per curiam.
132. (1843) 12 M & W 191 at 204; 152 ER 1165 at 1171.
133. [2007] NSWSC 894; 64 ASCR 633 at [17]-[18].
134. [2012] VSC 112; 93 ACSR 1 at [66]-[68].
135. Greenaways Australia Pty Ltd v CBC Management Pty Ltd [2004] NSWSC 1186 at [11] (Barrett J); Shellbridge Pty Ltd v Rider Hunt Sydney Pty Ltd [2005] NSWSC 1152 at [37] (Barrett J); Veolia at [18], [31] (McDougall J).
136. Veolia at [24].
137. Paul Michael Pty Ltd v Urban Traders Pty Ltd [2010] NSWSC 1246 (Paul Michael) at [5] (White J); Romaldi Constructions Pty Ltd v Adelaide Interiors Linings Pty Ltd (No 2) [2013] SASCFC 124 at [75]-[79] (Blue J, Sulan and Stanley JJ agreeing), compare Neller at [39]-[41].
138. Veolia at [75]; Paul Michael at [59]-[60].
139. See at [55] above.

Amendments 03 October 2019 - [9] and Cover sheet - deleted [2011] 1 WLR 770 from citation of Pink Floyd Music Ltd v EMI Records Ltd [2010] EWCA Civ 1429 [10] and Cover sheet - replaced Miwa Pty Ltd v Siantan Properties Pty Ltd [2011] NSWCA 297 with Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297 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: 03 October 2019