State Asphalt Services Pty Ltd v Leighton Contractors Pty Ltd

Decision 4In my opinion, the answer to each of these questions is "No".

Background 5By a contract made on 21 December 2011 ("the Contract") between SAS and the defendant Leighton Contractors Pty Limited ("Leighton"), SAS agreed to perform certain pavement resurfacing works on the M5 East Motorway. 6On 20 March 2012, SAS made a variation claim of $308,596.29 ("the Variation Claim"). The Variation Claim did not purport to be a payment claim made under the Act. 7On 29 March 2012, a meeting took place between representatives of SAS and Leighton. Leighton claims, and SAS disputes, that at this meeting SAS represented that it would: - "...not seek to recover payment for variations or other extra costs until completion of the project when the parties had reconciled SAS's claims and [Leighton's] offsetting claims". ("the Representation") I will return to that contention below. 8On 10 April 2012, an incident occurred on the site that resulted in damage to a tunnel and several vehicles ("the Incident"). Leighton contends that the Incident was the fault of SAS. The Incident gave rise to an offsetting claim by Leighton. 9Because of the Incident, on 13 April 2012, Leighton suspended SAS's works under the Contract. 10On 1 June 2012, SAS served on Leighton a payment claim dated 31 May 2012 ("the First Payment Claim") for $328,455.13 (plus GST) pursuant to s 13 of the Act. 11In circumstances that I will discuss further below, Leighton did not serve on SAS a payment schedule pursuant to s 14 of the Act in respect of the First Payment Claim. 12In early August 2012, Leighton re-tendered the balance of the Contract. SAS submitted a tender on 15 August 2012. However, on 1 September 2012, Leighton awarded the works to a member of the Boral group. 13On 5 October 2012, SAS served on Leighton a further payment claim ("the Second Payment Claim"). The Second Payment Claim was in the same amount, and for the same work, specified in the First Payment Claim. 14On 19 October 2012, Leighton responded to the Second Payment Claim with a payment schedule pursuant to s 14 of the Act. The payment schedule valued the Second Payment Claim at nil based on a valuation of back charges claimed by Leighton against SAS in the amount of $769,527.20 (including GST). 15SAS did not serve an adjudication application, pursuant to s 17 of the Act, in response to this payment schedule. 16Rather, on 16 November 2012, SAS commenced proceedings (originally in the District Court of New South Wales, but now transferred to this Court) seeking to enforce the amount of the First Payment Claim as a judgment debt, pursuant to s 15(2)(a)(i) of the Act. 17Thereafter Leighton: - (a)filed a defence and cross-claim in the District Court proceedings; and (b)commenced these proceedings seeking that the District Court proceedings be transferred to this Court. 18On 1 February 2013, Hammerschlag J ordered that the District Court proceedings be transferred to this Court and made consequential orders.

SAS's contentions 19SAS contends that it is entitled to judgment because: - (1)the First Payment Claim satisfied the requirements of s 13(2) of the Act, and was thus a "payment claim" for the purposes of s 13(1); (2)as Leighton did not serve a payment schedule under s 14 of the Act in response to the First Payment Claim within the time specified by s 14(4)(b) (or at all), by reason of s 14(4) Leighton became liable to pay the "claimed amount" on the relevant due date; (3)as Leighton did not pay that amount by the due date, it was entitled to, and did, seek to recover the unpaid amount in a "court of competent jurisdiction" (namely the District Court; and now this Court) pursuant to s 15(2)(a)(i) of the Act; (4)as the Court can be satisfied of the matters referred to in s15(1) of the Act (namely, that Leighton has become liable to pay, and has not paid, the relevant amount), SAS is entitled to judgment by reason of s 15(4)(a); and (5)by reason of s 15(4)(b) of the Act, Leighton is not entitled to bring any cross-claim against SAS, or "raise any defence in relation to matters arising under the construction contract".

Leighton's Defences 20In its Amended Defence, served in compliance with the orders I made on 15 March 2013, Leighton pleaded the following matters. 21First, Leighton contends that, on the proper construction of s 13 and s 14 of the Act, where a claimant includes in a subsequent payment claim an amount that has been the subject of a previous claim (as permitted by s 13(6)), then by operation of s 14(1): - (a)the respondent has another opportunity to reply to the claim by providing a payment schedule to the subsequent payment claim; (b)by reason of the respondent having such an opportunity, any liability that the respondent had under s 14(4) arising from a failure to provide a payment schedule to the previous payment claim, "expired or became unenforceable" by reason of the subsequent payment claim being made; and (c)accordingly, any liability that Leighton had under s 14(4) arising from its failure to provide a payment schedule in response to the First Payment Claim, "expired or became unenforceable" upon SAS making the Second Payment Claim (or alternatively, upon Leighton replying to the Second Payment Claim in the payment schedule served in response thereto). 22Second, Leighton contends that it is an abuse of the Act for SAS to seek to recover judgment in respect of the First Payment Claim in circumstances where SAS gave Leighton another opportunity to provide a payment schedule in answer to the identical "claim" included in the Second Payment Claim. 23Third, Leighton submits that: - (1)by the Representation allegedly made on 29 March 2012, SAS represented that it would not seek to recover payment for variations or other extra costs until the parties had reconciled SAS's claims and Leighton's offsetting claims at the completion of the project; and (2)the Representation induced Leighton to assume it was not required to serve a payment schedule in response to the First payment Claim; and (3)SAS is thereby estopped from acting on the First Payment Claim. 24Fourth, Leighton contends that: - (1)by making the Representation; and (2)by impliedly representing, by service of the Second Payment Claim, that the First Payment Claim was withdrawn and that SAS would not seek judgment in respect of it ("the Implied Representation"), SAS engaged in misleading or deceptive conduct in contravention of s 18(1) of the Australian Consumer Law ("ACL") (contained in sch 2 of the Competition and Consumer Act 2010 (Cth)), and that SAS should be enjoined from proceeding to judgment on the basis of the First Payment Claim. 25Fifth, Leighton contends that, by commencing these proceedings, SAS has sought to invoke the Court's jurisdiction for an illegitimate purpose, namely to recover judgment on the First Payment Claim, in circumstances where SAS: - (a)knew that such proceedings were contrary to the Representation and Implied Representation made by it; and (b)knew, from the terms of the payment schedule served by Leighton in response to the Second Payment Claim, that Leighton disputed its liability to pay the amount claimed in the First Payment Claim.

A strange result? 26There are some curiosities arising from the course that SAS contends it is entitled to take. 27It is clear from s 13(6) of the Act that a claimant may include in a payment claim an amount that has been the subject of a previous payment claim. Thus, a claimant may (as SAS has done) include in a payment claim all of the amounts that had been the subject of an earlier payment claim. This might be unusual. Normally, one might suppose, the claimant's course of action, one way or the other, will be determined by the response it receives to its original payment claim. Either the response to the payment claim will be service of a payment schedule (in which case the claimant can elect to do nothing, or make an adjudication application), or not (in which case the claimant can do nothing, move for judgment or make an adjudication application). 28Where, as here, a claimant, having served a payment claim in response to which no payment schedule is served, does not exercise the rights which thereby accrued to it but, rather, does nothing and then, later, serves an identical payment claim in response to which a payment schedule is served, it seems a strange result that the claimant can then eschew from pursuing the second payment claim (by adjudication) and seek to enforce its accrued rights under the first. 29No doubt it is commonplace that a claimant include in a subsequent payment claim an amount in an earlier payment claim in addition to other claims. Thus, a claimant might serve a payment claim for work done in, say, March and then include that amount in a payment claim which also includes a claim for work done in, say, April. On SAS's argument, if no payment schedule was served in respect of the first of these payment claims, but a payment schedule was served in respect of the second payment claim disputing all the March and April claims, the claimant could elect to go to adjudication in respect of the second payment claim, or simply apply for judgment in respect of the first. 30Another curiosity is why SAS bothered to serve the Second Payment Claim in October 2012, rather than simply moving for judgment in June 2012 - or later - relying on the First Payment Claim. That was not explained on the evidence. 31It may be that SAS did not, immediately, move for judgment in respect of the unanswered First Payment Claim, for fear such action might jeopardise its tender of 15 August 2012 (see [12] above). However that may be, it is hard to understand why, once its tender was not accepted, SAS did not simply move for judgment on its First Payment Claim, rather than serve a second. Had SAS taken that course, it is hard to see what answer Leighton would have had. The question is, does any different result follow from the fact that, for whatever reason, SAS served the Second Payment Claim? 32The conclusion to which I have come is that, on the proper interpretation of the Act, and in the circumstances that have happened, the course SAS has followed is open to it. 33The first question to be determined is whether anything in the Act has the effect of preventing SAS from pursuing this course.

Statutory Interpretation 34The starting point must be the words of the legislation. 35In Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 384 McHugh, Gummow, Kirby and Hayne JJ said: - "[T]he duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute, or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning." 36In Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross; Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Thelander [2012] HCA 56 at [23] - [32] French CJ and Hayne J restated "some basic principles" of statutory construction, and after referring to Project Blue Sky stated (at [26]): - "The purpose of legislation must be derived from what the legislation says, and not from any assumption about the desired or desirable reach or operation of the relevant provisions." 37Their Honours cited Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at [47] per Hayne, Heydon, Crennan and Kiefel JJ: - "This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy." (citations omitted) 38Section 13(1) of the Act provides that a person who claims to be entitled to a progress payment must serve a payment claim. 39Section 13 is in the following terms: - "13 Payment claims (1) A person referred to in section 8 (1) who is or who claims to be entitled to a progress payment (the "claimant") may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment. (2) A payment claim: (a) must identify the construction work (or related goods and services) to which the progress payment relates, and (b) must indicate the amount of the progress payment that the claimant claims to be due (the "claimed amount"), and (c) must state that it is made under this Act. (3) The claimed amount may include any amount: (a) that the respondent is liable to pay the claimant under section 27 (2A), or (b) that is held under the construction contract by the respondent and that the claimant claims is due for release. (4) A payment claim may be served only within: (a) the period determined by or in accordance with the terms of the construction contract, or (b) the period of 12 months after the construction work to which the claim relates was last carried out (or the related goods and services to which the claim relates were last supplied), whichever is the later. (5) A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract. (6) However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim. " 40Sections 14 and 15 of the Act are in the following terms: - "14 Payment schedules (1) A person on whom a payment claim is served (the "respondent") may reply to the claim by providing a payment schedule to the claimant. (2) A payment schedule: (a) must identify the payment claim to which it relates, and (b) must indicate the amount of the payment (if any) that the respondent proposes to make (the "scheduled amount"). (3) If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent's reasons for withholding payment. (4) If: (a) a claimant serves a payment claim on a respondent, and (b) the respondent does not provide a payment schedule to the claimant: (i) within the time required by the relevant construction contract, or (ii) within 10 business days after the payment claim is served, whichever time expires earlier, the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates. 15 Consequences of not paying claimant where no payment schedule (1) This section applies if the respondent: (a) becomes liable to pay the claimed amount to the claimant under section 14 (4) as a consequence of having failed to provide a payment schedule to the claimant within the time allowed by that section, and (b) fails to pay the whole or any part of the claimed amount on or before the due date for the progress payment to which the payment claim relates. (2) In those circumstances, the claimant: (a) may: (i) recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction, or (ii) make an adjudication application under section 17 (1) (b) in relation to the payment claim, and (b) may serve notice on the respondent of the claimant's intention to suspend carrying out construction work (or to suspend supplying related goods and services) under the construction contract. (3) A notice referred to in subsection (2) (b) must state that it is made under this Act. (4) If the claimant commences proceedings under subsection (2) (a) (i) to recover the unpaid portion of the claimed amount from the respondent as a debt: (a) judgment in favour of the claimant is not to be given unless the court is satisfied of the existence of the circumstances referred to in subsection (1), and (b) the respondent is not, in those proceedings, entitled: (i) to bring any cross-claim against the claimant, or (ii) to raise any defence in relation to matters arising under the construction contract." 41As Leighton did not serve a payment schedule in response to the First Payment Claim, by reason of s 14(4) it became "liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates". 42The "claimed amount" was the amount in the First Payment Claim (see s 13(2)(a)). There is no dispute that this amount was not paid by the "due date". 43SAS thereby obtained an accrued right that it could enforce in one of the two ways specified in s 15(2); by either moving for judgment, or making an adjudication application. SAS, eventually, took the first option. 44The question is, is there anything in the words of the Act to compel the conclusion that the right that accrued to SAS ceased to exist once it served the Second Payment Claim? 45Leighton's submissions focussed on the "distinction" between a "payment claim" (defined in s 3), on the one hand, and a "claim" (said to be an "undefined term") on the other. 46Mr Rudge SC, who appeared for Leighton, submitted that s 14 gives to a party served with a "payment claim" an opportunity to "reply to the claim" and that if a claimant: - "[C]hooses to include in a payment claim an amount for the same work that has been the subject of a previous claim (ie a repeat claim), then section 14(1) gives the respondent an opportunity 'to reply to the claim' ie the 'claim' is the repeat claim" (emphasis in original)... and ...if a claimant elects under s13(6) to include the repeat claim in a subsequent payment claim, then any section 14(4) liability in respect of the repeat claim and any consequent right the claimant had under section 15(1) must have expired because the respondent has a statutory entitlement and opportunity to reply to the repeat claim in a payment schedule under section 14(1)" (emphasis added). 47Insofar as this submission relies on a "distinction" between "payment claim" and "claim", I do not accept it. "Payment claim" is defined in s 3 of the Act to mean "a claim referred to in s 13". That makes clear, in my view, that the reference to "claim" in s 14(1) is a reference to the "claim" made in the "payment claim" to which s 14(1) refers. 48Further, as Mr Simpkins SC, who appeared for SAS, submitted, where a previously claimed amount is included in a subsequent payment claim, there is an opportunity, provided by s 14, to respond to the "claim" made in that "payment claim" by service of a payment schedule. I do not see why it follows from the inclusion by a claimant of a "repeat claim" in a subsequent payment claim that the claimant's accrued rights in respect of an earlier payment claim "must have expired". 49Leighton was not otherwise able to point to, and I cannot see, any words in the Act that removed from SAS the right that accrued to it once Leighton failed to serve a payment schedule in response to the First Payment Claim. 50Leighton pointed to the fact that a claimant may include in a subsequent payment claim a claim made in an earlier payment claim, and submitted that a "continuation of a liability under section 14(4)" in respect of claims that are repeated in a subsequent payment claim "would render superfluous the opportunity to reply to the repeated claims in the subsequent payment claim provided by operation of section 14(1)". 51I do not accept this submission. Leighton's "opportunity" (which it took by serving a payment schedule) to respond to the Second Payment Claim had the effect that it did not "become liable" under s 14(4) in respect of the Second Payment Claim on the due date of that claim. But it does not follow that Leighton ceased to be liable in respect of the First Payment Claim. Nor does it follow that Leighton's "opportunity" to respond to the Second Payment Claim was rendered "superfluous". 52Leighton also submitted that if, as permitted by the Act, claims are repeated, "there is a further opportunity to answer them" and that provision of that further opportunity "cannot co-exist with a pre-existing liability for the same claims that is based on a previous failure to answer them". 53I do not accept this submission. If a claim made in one payment claim is repeated in one made subsequently, the same "opportunity" to answer arises on each occasion. The question is, what is the consequence of not answering the first? Both opportunities can "co-exist" unless there is wording in the statute that removes the first, once the second arises. I see no such wording. 54Leighton further submitted that the construction for which SAS contended is one which would permit "a claimant to approbate and reprobate, in that it would permit a claimant who had repeated claims in a subsequent payment claim that is answered with a payment schedule to go back to an earlier unanswered claim and seek judgment for the full amount of the claim". The submission continued: - "The respondent to a payment claim that contains claims for repeated amounts from an earlier unanswered payment claim should not be left in a position where there is doubt as to whether the claimant will proceed on the subsequent payment claim or will instead seek to go back to the earlier payment claim and enforce it. This would impermissibly afford the claimant with a technical advantage that could not have been intended by the legislature." 55In my opinion, this submission begs the question of what the Act means. As SAS submits, there can be no objection that a subsequent payment claim includes a component, or perhaps the whole, of an earlier payment claim; the Act permits this: s 13(6). Whether or not a respondent to a payment claim "should not be left in a position where there is doubt" as to what action the claimant will take in relation to an earlier payment claim is not a question I find useful in determining what the Act means. 56Leighton drew attention to the comments of McDougall J in Urban Traders Pty Ltd v Paul Michael Pty Ltd [2009] NSWSC 1072 at [94]: - "In the present case, there has been no adjudication of the claim raised by payment claim 19. It is not a case where the builder is seeking to have another adjudicator do what a previous adjudicator failed to do to its satisfaction. It is not a case where the builder is seeking to use the processes of the Act repetitiously, in an attempt to get a better outcome. On the contrary, if the builder's contention - that no payment schedule was provided in response to payment claim 19 - is correct, it has obtained the best outcome that it can get, in respect of the particular payment claim. That is because, by operation of s 14(4), the proprietors are liable for the amount claimed. The builder cannot do better than that in any adjudication. By repeating the claim in a subsequent payment claim, the builder gave the proprietors another opportunity to provide a payment schedule. In that payment schedule, the proprietors were entitled to answer not only the fresh aspects of the claim, but also those aspects that (as permitted by s 13(6)) had been included in the earlier payment claim." (emphasis as provided by Leighton) 57In my opinion, his Honour's remarks cast no light on the question before me. His Honour was doing no more than recognising that repetition of a claim in a subsequent claim gives the respondent an "opportunity" to serve a payment schedule in respect of all of the matters in the subsequent payment claim. I do not read his Honour's observations to address in any way the statutory consequence of the failure of a respondent to serve a payment schedule in respect of an earlier payment claim. 58Leighton also referred to the observations of McDougall J in Cardinal Project Services Pty Ltd v Hanave Pty Ltd [2010] NSWSC 1367 at [37] - [38] as follows: - "Of course, that does not mean that the claimant is entirely without remedy. Except where the outer time limit fixed by s 13(4)(b) of the Act has expired, the claimant retains the right to serve a fresh payment claim. That claim may include amounts that were the subject of previous claims (s 13(6)). In the circumstances under consideration, there could be no estoppel or abuse of process, on the principles discussed in cases such as Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 and Watpac Constructions v Austin Corp [2010] NSWSC 168. It is correct to say that, if a fresh payment claim were served, the respondent would have a fresh, and unqualified, opportunity to raise further "defences" in its payment schedule. That, no doubt, is an inconvenience from the claimant's perspective. But the Act's object, to secure cash flow, does not to my mind require that plain words should be given a strained construction so as to enable the claimant to retain some perceived tactical advantage." (emphasis as provided by Leighton) 59Again, I do not find that his Honour's observations assist me in resolving the question before me. The question before his Honour was whether a respondent to a payment schedule could make a second adjudication application which had as its subject the same payment claim raised in a previous adjudication that had been declared void, by consent, by the Court. His Honour was not considering a situation where an earlier payment claim had not been responded to. 60I see nothing in the Act which had the effect of extinguishing SAS's accrued rights under s 14(4) following upon Leighton's failure to serve a payment schedule in response to the First Payment Claim. I see no basis in the words of the statute to conclude that service by SAS on Leighton of the Second Payment Claim had the effect that its accrued rights under s 14(4) "expired or became unenforceable". 61I therefore reject Leighton's submission that, as a matter of statutory interpretation, SAS is not entitled to move for judgment on the basis of the First Payment Claim.

Abuse of the Act 62Leighton's submission that it is an abuse of the Act for SAS to seek to recover judgment depended upon the correctness of its submissions concerning the proper construction of s 13 and s 14 of the Act. 63As I have rejected Leighton's submissions on that question, it follows that Leighton's submissions as to abuse of the Act also fail.

Estoppel 64Leighton's argument concerning estoppel depends on its contentions concerning the alleged Representation of 29 March 2012. In submissions, both counsel referred to a "standstill agreement" allegedly made on 29 March 2012. Indeed, in his reply submissions, Mr Rudge referred to the "contractual regime" achieved on that occasion. Leighton's pleaded case is, however, that: - (a)the Representation was made on 29 March 2012; (b)the making of the Representation caused Leighton to assume that it was not required to respond to the First Payment Claim with a payment schedule; (c)Leighton will suffer detriment if SAS is permitted to act contrary to the Representation; and (d)SAS should be estopped from relying on its accrued right to move for judgment. 65As I have mentioned, on 20 March 2012, SAS made the Variation Claim. 66On 28 March 2012, Mr David Higgins, an engineering services manager at Leighton, sent an email to Mr Andrew Apergis (the General Manager of SAS) and Mr Ton Akerboom (the Business Contracts Manager of SAS) proposing a meeting to resolve the Variation Claim. 67Mr Higgins' email read: - "I believe there is merit in your request for this variation due to the scheduling of the program of works and the requirement for certainty by Leighton Contractors, though there are some conditions and mitigating costs that should be considered in your calculations [including]: - ... [a]ll variations, once agreed, should be retained until the completion of payment works and final agreed variation issued to consolidate all costs. I would like to resolve this variation with you and discuss the financial structure for the project moving forward into April at a meeting with Aedan Hewitt...Are you available tomorrow (Thursday 29 March)... Issues for discussion at this meeting are: 1. Resolving this variation...". 68The meeting of 29 March 1012 was attended by Mr Higgins, Mr Akerboom Mr Apergis and Mr Paul Thompson, a civil project engineer for the project from Leighton. Mr Aedan Hewitt, Leighton's Operations and Maintenance Manager, attended the meeting briefly as a "scene setter" but was not present when the critical conversation is said to have occurred. 69Mr Higgins gave evidence of the following conversation at the meeting: - "Mr Higgins: Since we are both going to incur costs due from each other, this variation and all other extra costs should be held until the completion of the project when we can reconcile all costs into a single claim that we both agree on." Mr Apergis: Yes, of course, that will be OK." 70The Representation is said to arise from Mr Apergis' allegedly positive response to Mr Higgins' proposal. 71Mr Apergis agreed that Mr Higgins had made the proposal but denied agreeing to it. Mr Apergis said that his response was: - "I do not agree with you, I am not prepared to postpone or to deal with those payments at the end of the contract". 72Mr Akerboom said that at no time during the course of the meeting did he hear Mr Higgins say words to this effect or hear Mr Apergis agree to a proposal to that effect. 73Mr Hewitt said that, after the meeting, Mr Higgins reported to him that: - "SAS agreed to commit to completing the project. We would actively monitor their activity and performance. They agreed to put the variation claim on hold until completion of the project along the lines we discussed". 74Mr Thompson did not give evidence. He ceased to be employed by Leighton in June 2012. There was no other explanation for his absence from the witness box, and no suggestion that he was not available to give evidence. I infer that he was not able to give evidence of assistance to Leighton: see Jones v Dunkel (1959) 101 CLR 298. 75Neither party made a note of what occurred at the 29 March 2012 meeting. Mr Higgins agreed that he made no written record of the agreement for which he now contends until October 2012. 76I am not able to reconcile the conflict between the evidence of Mr Higgins and Mr Apergis by reference to the manner in which they gave their evidence. Both presented as being confident as to the correctness of their recollection on the critical point. I have found the best guide as to what, if anything, was agreed at the meeting of 29 March 2012 to be the manner in which the parties acted after 29 March 2012. 77The following day, 30 March 2012, Mr Higgins sent an email to Mr Akerboom commenting on individual components of the Variation Claim and making a "total offer for this variation" of $214,576 (subject to "justification" of two elements of the claim). 78On 17 April 2012, SAS made a payment claim under the Act for $1.6 million that included an amount in respect of the Variation Claim. 79On 1 May 2012, Mr Thompson wrote an email, which was copied to Mr Hewitt. Mr Thompson referred to Leighton's "reconciliation" of the claim sent by SAS to Leighton on 20 April 2012. 80In relation to the Variation Claim, Mr Thompson said: - "...the variations for March to total $366,766.29 is denied on the basis that they failed to achieve the intent of improved productivity, SAS is requested to justify this item." 81Mr Thompson then referred to the Incident and continued: - "At this stage we need to understand and determine under what arrangement we continue paying SAS any remaining monies until we identify the extent of the claim for damages [in respect of the Incident]." (emphasis added) 82Although Mr Thompson was present at the 29 March 2012 meeting, he made no reference to the alleged Representation. Indeed, he made statements that seem to me to be inconsistent with the making of the Representation. Thus, he stated that Leighton would not pay the Variation Claim because SAS had "failed to achieve the intent of improved productivity". He also queried under "what arrangement" Leighton would "continue paying" any money to SAS. 83On 3 May 2012, Mr Spiro Papargyriou, Project Engineer at SAS, sent an email to Mr Thompson referring to SAS's Variation Claim (and another claim) and concluded: - "We expect payment of the two above claims in full as discussed with David Higgins." (emphasis added) 84SAS thus made clear that it expected the Variation Claim to be paid "in full" and that it regarded that as being a matter already "discussed with David Higgins". So far as the evidence reveals, the only occasion upon which anything was "discussed with David Higgins" was at the meeting of 29 March 2012 85Mr Papargyriou also asked Mr Thompson to specify "why SAS failed to achieve productivity". 86On the same day, Mr Thompson replied to Mr Papargyriou (copied to Mr Hewitt and Mr Higgins) stating: - "Your response is noted. Nevertheless SAS has not adequately answered and justified the variation claimed in March invoice to a value [of] $366,766.29. In this regard we maintain and justify our rejection of your invoice and await your resubmission covering amounts and fair values of work undertaken consistent with the contract and our subsequent variation discussions". 87While Mr Thompson's reference to "our subsequent variation discussions" is capable of referring to the meeting of 29 March 2012, the reason Mr Thompson gave for Leighton's "rejection of your invoice" was not the alleged Representation, but rather SAS's alleged failure to adequately justify the Variation Claim. 88On 8 May 2012, Mr Thompson sent an email to Mr Apergis (copied to Mr Hewitt and Mr Higgins) stating that Leighton had paid SAS for its February invoice and continued: - "Accordingly I believe [Leighton] is currently up to date with the payment cycle to SAS. In this regard I confirm that we shall continue to pay SAS based upon correct and approved claims however as advised we also need to establish an arrangement to secure funds against the repairs [referrable to the Incident]... The invoice for [the] month of March was received on 17th April and is the subject of review and adjustment discussed in [Mr Thompson's email of 3 May 2012 referred to above]. Despite your request that we accept as presented but adjust and pay to our [sic] review and approval, such practice is not consistent with our Leighton procedures. Accordingly I advise that SAS is requested to re-present the invoice either consistent with the instructions and adjustments [in Mr Thompson's 3 May 2012 email], or arrange to meet later this week for discussion and resolution. ... Upon receipt of the adjusted invoice, we can thereafter process further payments." (emphasis added) 89Mr Thompson's suggestion that Leighton would "continue to pay SAS based on correct and approved plans", his reference to the need to "establish an arrangement to secure funds" against the repairs arising from the Incident, and his statement that, once SAS submitted an "adjusted invoice" for March Leighton would "thereafter process further payments" are each inconsistent with the making of the alleged Representation. This is especially significant coming from Mr Thompson because, as I have mentioned, he was at the meeting of 29 March 2012, and has not been called by Leighton to give evidence. 90On 1 June 2012, SAS served on Leighton the First Payment Claim. 91On the same day, Mr Thompson sent an email to Mr Hewitt (copied to Mr Higgins) enclosing the First Payment Claim and asking that it be "reviewed/processed for approval". That request cannot be reconciled with the making of the Representation. Mr Thompson was seeking approval to pay the First Payment Claim. On Leighton's case, the effect of the Representation was that the Variation Claim would be "held until completion of the project". 92On 3 June 2012, Mr Hewitt sent an email to Mr Thompson and Mr Higgins:- "I was not aware of the size of this Claim. Can we please get together to review and discuss this? ... Before we approve or deny, can you please prepare a summary to date of our costs vs. revenue?" (emphasis added) 93Mr Hewitt thus stated that what he required before "we approve or deny" payment of the First Payment Claim was a summary of Leighton's revenue and costs to date. Mr Hewitt made no reference to the alleged Representation. 94Shortly thereafter, Mr Hewitt instructed Mr Higgins not to process or pay the First Payment Claim. 95In his affidavit Mr Hewitt said: - "I did not believe there was any necessity to respond to [the First Payment Claim] or advise [SAS] of our position at that time. This was because of my reliance on what I understood the parties had agreed on 29 March 2012 concerning the assessment of SAS's variation claims at the end of the job and [Leighton's] cross claims at the same time." 96Mr Higgins gave evidence to similar effect. 97In cross-examination, Mr Hewitt gave this evidence: - "Q: And were you still as at this date in June, namely 3 June 2012, seeking to determine as a result of the review whether the June payment claim should be approved or denied and if so in what amount or amounts? A: Yeah, I was seeking to actually get a full understanding of the costs and revenue, how it effects the profitability of that project ... Q: And you say, do you, that at some stage after this you gave an instruction to Mr Higgins...that there wasn't any need to process the claim? A: Yes, because at that stage we still didn't have a full grasp on the costs that Leighton's were incurring as a result of the project." 98So far as concerns the question of Leighton serving a payment schedule in response to the First Payment Claim, Mr Hewitt said "I didn't turn my mind to that all". Mr Higgins agreed that there was never any discussion at Leighton about service of a payment schedule. 99The Chief Executive officer of SAS, Mr Rocky Giannetta, gave evidence that he tried to contact Mr Higgins by telephone to discuss payment of the amount claimed by SAS. He said he finally managed to speak to Mr Higgins in about September 2012 and had the following conversation: - "Mr Giannetta: I'm chasing payment of our outstanding claim. When can we expect to receive it? Mr Higgins: Give us a couple of weeks. Mr Giannetta: That's unacceptable. It's been outstanding for a long time. Mr Higgins: We need to do a reconciliation of amounts owed to us. Mr Giannetta: What for? Mr Higgins: We need to work out the cost of [the Incident]. Mr Giannetta: We have not received details of what you say the cost is so that we can pass it on to our insurer who can look after that payment. It's not relevant to our variation claim. Mr Higgins: Under the contract we can deduct damages due to your negligence. Mr Giannetta: As far as we're concerned, [the Incident] is a matter for the insurers. If we don't receive payment, we're going to have to take action. 100Mr Giannetta said that Mr Higgins made no mention of the alleged Representation. Mr Giannetta was cross-examined briefly, but was not challenged about this conversation. Mr Higgins' response to Mr Gianetta's request for payment is inconsistent with the making of the Representation.

Conclusion about the alleged Representation 101In my opinion, the conduct of the parties (Leighton in particular) after 29 March 2012 is inconsistent with, and indeed cannot be reconciled with, the making of the Representation. 102After 29 March 2012, SAS was continuing to seek payment for the Variation Claim immediately, and not at the end of the project. Further, as I have set out above, the reasons advanced by Leighton to SAS for not making payment made no reference to and were inconsistent with the alleged Representation. 103I reject Leighton's contention that a "standstill agreement" was achieved on 29 March 2012 by virtue of the Representation. I do not accept that Mr Apergis affirmatively responded to Mr Higgins' proposal. The parties' conduct after 29 March 2012 points strongly to the probability that Mr Apergis did not agree to the proposal Mr Higgins made on 29 March 2012; and I so find. 104Further, I do not accept the evidence given by Mr Hewitt and Mr Higgins that Leighton's decision to not respond to the First Payment Claim had anything to do with the alleged Representation. Mr Thompson clearly thought payment should be made forthwith (see [91] above). Mr Higgins' evidence at [97] above, and Mr Hewitt's email of 3 June 2012 (see [92] above) show that the reason Leighton did not to process payment of the First Payment Claim was because Leighton had not then ascertained its own "costs v. revenue" position concerning the project. 105Further, as the evidence of Mr Hewitt and Mr Higgins made quite clear, there was no connection between the alleged Representation and Leighton's failure to serve a payment schedule in response to the First Payment Claim. Neither Mr Hewitt nor Mr Higgins even turned their mind to that question. 106For those reasons I reject Leighton's estoppel claim. 107Mr Simpkins also submitted that if there was a "standstill agreement" it was void for uncertainty, not supported by consideration, subject to a condition precedent which was not fulfilled and void by reason of s 34 of the Act. 108In view of the conclusions to which I have come, it is not necessary for me to deal with these submissions.

Arising from the alleged Representation 109In view of my finding that the alleged Representation was not made, Leighton's contention that SAS engaged in misleading or deceptive conduct by reason of making the First Payment Claim in the face of the alleged Representation must also fail.

Arising from the alleged Implied Representation 110Leighton's alternative case is that: - (a)SAS made the Implied Representation (see [24] above); (b)the Implied Representation was false, or alternatively misleading or deceptive "in that SAS has by these proceedings" sought judgment on the First Payment Claim; (c)Leighton relied on the Implied Representation "by serving a payment schedule in reply to the Claim the subject of the Second Payment Claim"; (d)Leighton will suffer loss if it is not entitled to offset its claims against those made in the First Payment Claim; and (e)Accordingly, SAS should be enjoined from moving for judgment on the First Payment Claim. 111The provisions of the Act do not preclude reliance on s 18(1) of the ACL: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; (2006) 67 NSWLR 9 at [12] per Hodgson JA; [17] per Tobias JA and [96] per Basten JA; see also Austruct Qld Pty Ltd v Independent Pub Group Pty Ltd [2009] QSC 001 at [65] per Dutney J. 112A representation arising implicitly from a party's conduct can constitute "conduct" within the meaning of s 18 of the ACL (see, eg, EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 per White J (where his Honour was dealing with s 52 of the Trade Practices Act 1975 (Cth) ("TPA")). 113I see substance in Leighton's contention that, by making the Second Payment Claim, SAS implicitly represented that it no longer relied on the First Payment Claim. From Leighton's point of view, assuming that anyone there thought about it at all, what else could it make of the service of the Second Payment Claim? 114However, assuming it was misleading or deceptive of SAS to so represent, I am not able to accept Leighton's submission that it has suffered damage "by" the conduct relied on (see s 82 and s 87 of the Competition and Consumer Act 2010 (Cth)) such as to enliven my jurisdiction to make an order "enjoining" SAS from moving for judgment relying on the First Payment Claim. 115Leighton claims it relied on the Implied Representation by serving a payment schedule in response to the Second Payment Claim. 116Mr Higgins gave evidence that Leighton served that payment schedule. He did not say that Leighton did so in reliance on any representation implicitly made by service of the Second Payment Claim that the First Payment Claim was withdrawn. In this part of his evidence, Mr Higgins made no reference at all to the First Payment Claim. If there was anyone at Leighton who could give evidence that, in serving the payment schedule, Leighton relied on the alleged Implied Representation that the First Payment Claim was withdrawn, it was Mr Higgins. 117It is of course not necessary that express evidence be given of reliance. In Gould v Vaggelas (1985) 157 CLR 215 at 236, Wilson J said, in the well known passage, that if "a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation". 118In Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242, Rolfe AJA (with whom Kirby P and Mahoney JA agreed) stated (at 269): - "Whether the court will draw the inference, in the absence of direct evidence of reliance from witnesses called, will be a matter for decision having regard to the facts of each case. However Gould v Vaggelas establishes that the inference may be drawn by the tribunal of fact notwithstanding that witnesses have been called and direct evidence of reliance has not been led from them." 119It does not seem likely to me that Leighton served the payment schedule because of any apprehension it had about the status of the First Payment Claim. More likely, Leighton served the payment schedule because it was conscious of the unfavourable statutory consequences of not doing so. If it wished to avoid those consequences, it had to serve a payment schedule. At the time of service on it of the Second Payment Claim, there was nothing Leighton could do about the First Payment Claim. Even if the Implied Representation was not made, if Leighton did not wish for a further statutory right to accrue to SAS, it had no option but to serve a payment schedule in response to the Second Payment Claim. 120In Gould v Vaggelas, Wilson J pointed out, in the passage to which I have referred, that for the purpose of the TPA, and thus the ACL, it is not necessary that a representation be the sole inducement to action "so long as it plays some part even if only a minor part in contributing to" (at 236) the relevant state of affairs. 121However, in the absence of evidence of reliance from Mr Higgins, and looking at the objective probabilities, I am not prepared to infer that the First Payment Claim played any role in Leighton's decision to serve a payment schedule in response to the Second Payment Claim. 122Accordingly, I decline to make any order enjoining SAS.

Abuse of process 123The basis of Leighton's pleaded claim that SAS has abused the process of the Court by commencing these proceedings, is that: - "SAS has sought to invoke the court's procedures for an illegitimate purpose namely to recover judgment on the First Payment Claim in circumstances where SAS knew that such proceedings are [contrary to the Representation and the Implied Representation]." 124 Mr Rudge's submissions, however, ranged somewhat wider. 125First, he submitted that SAS "could not have had a bona fide belief in the validity of the First Payment Claim" because of the making of the Representation and the Implied Representation. 126Mr Rudge also submitted: - "...it would be an abuse of process to allow SAS to move on a superseded First Payment Claim in circumstances where they were aware that the claims in the First Payment Claim had been fully answered and rejected by Leighton in its payment schedule to the Second Payment Claim." 127Mr Rudge referred to Bitannia Pty Ltd v Parkline Constructions Pty Ltd and submitted: - "The potential injustice identified [in Bittania] was that a claimant sought judgment on its payment claim in full knowledge of the grounds upon which the respondent denied its claims referenced in earlier payment schedules. The same injustice would occur in this case, as SAS has sought to enforce judgment for the full amount of its claim in full knowledge of Leighton's counter-claims by reference to Leighton's Payment Schedule." 128In Bitannia, a claimant served two successive payment claims, in response to each of which the respondent served a payment schedule. The claimant then served a third payment claim. The respondent did not respond to the third payment claim because of conduct of the claimant that the respondent contended was misleading or deceptive. 129As Mr Simpkins has pointed out, the sequence of events in Bitannia (two answered payment claims followed by an unanswered payment claim) was the reverse of that in this case (an unanswered payment claim followed by an answered payment claim). 130The focus of the Courts' attention in Bitannia was on the question of whether it was necessary for a claimant under a payment claim to have a bona fide belief in its entitlement of the monies claimed. The Court held that it did not: Hodgson JA at [2], Tobias JA at [20] and Basten JA at [73] and [75]. 131However, in Bitannia, the recipient of the payment claims (i.e. the party in the corresponding position to that of Leighton) raised the question of abuse of process. It contended it was an abuse of process for the claimant: - "...to commence proceedings ... invoking the summary judgment mechanism of [the Act] when the [claimant] knew at the time it made the relevant payment claim and at the time it commenced those proceedings that to was not entitled to the payment claimed" (quoted at [64]). 132At [65], Basten JA commented that: - " ... it could be seen as opportunistic for [the claimant] to take proceedings to enforce a statutory debt in circumstances where there had been a technical non-compliance with [the Act]". 133If anything, the claimant's conduct in Bitannia was more "opportunistic" than that of SAS in this case. In Bitannia, the claimant knew, prior to service by it of the payment claim on which it moved for judgment, that the respondent had twice disputed earlier payment claims for the same amount. It must have been obvious to it that the third payment claim was not responded to because of some mistake on the respondent's part. Yet I see no suggestion in the Court's judgment of the claimant's conduct being an abuse of process. 134Indeed, Basten JA, in the course of concluding that it was not necessary that a party making a payment claim under the Act have a "bona fide belief in its entitlement to the moneys claimed" (at [75]) said: - "Apart from modern requirements as to verification of factual assertions in pleadings, the beliefs or motivations of the plaintiff in proceedings have generally been treated as irrelevant, unless they reach the stage of a improper purpose. Thus, in Williams v Spautz (1992) 174 CLR 509, the High Court held that proceedings would constitute an abuse of process, where brought, not to prosecute them to a conclusion, but to use them as means of obtaining some advantage extraneous to the legal process" (at [74]). 135If the claimant's conduct in Bitannia was not an abuse of process, I cannot see how I could reach a different conclusion in this case. 136The substance of Mr Rudge's submission was that it is an abuse of the process of the Court for SAS to seek to invoke the Court's aid in giving effect to the summary procedures set forth in s 14(4) and s 15(2)(a)(i) of the Act (pursuant to which a payment claim gives rise to an enforceable debt "without court proceedings relating to the merit of the respective positions of the proprietor and the builder": per Basten JA in Bitannia at [59]) in circumstances where SAS has "full knowledge" that the merits of its claims are contested by Leighton. 137As to what constitutes an abuse of process, Mr Rudge referred to Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 244 CLR 427 at [89] where the High Court stated: - "As the majority pointed out in Batistatos v Roads and Traffic Authority (NSW), '[w]hat amounts to abuse of court process is insusceptible of a formulation comprising closed categories'. In Ridgeway v The Queen, Gaudron J noted that the concept extended to proceedings 'instituted for an improper purpose', and to proceedings that are 'seriously and unfairly burdensome, prejudicial or damaging' or 'productive of serious and unjustified trouble and harassment'. In Rogers v The Queen, McHugh J concluded that, although the categories of abuse of process are not closed, many cases of abuse can be identified as falling into one of three categories: '(1) the court's procedures are invoked for an illegitimate purpose; (2) the use of the court's procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court's procedures would bring the administration of justice into disrepute'." (citations omitted) 138I do not see the present case as falling into any of these (admittedly not closed) categories. 139There is no doubt that SAS has brought these proceedings with a view to having them dealt summarily on the basis of the propositions set out at [19] above. Indeed, prior to the making of the orders for the determination of the separate questions that are before me, SAS had moved for summary judgment upon that basis. 140It is also true that SAS is aware that Leighton disputes the merits of the claim that SAS made in the First Payment Claim, and repeated in the Second Payment Claim. That is because of the terms of the payment schedule served by Leighton in response to the Second Payment Claim. 141However, it does not follow, in my opinion, that SAS is abusing the Court's process in bringing this claim. 142SAS is exercising what I have found to be a right conferred on it by the Act. I have found that in so doing it is not acting contrary to the alleged Representation and that, assuming it made the Implied Representation, Leighton has not made out a basis upon which SAS should be enjoined from acting inconsistently with the Implied Representation. 143The mere fact that it is moving for summary relief knowing that its claim is, on the merits, disputed, does not, in my opinion, lead to the conclusion that these proceedings are an abuse of process. The particular abuse contended for is that SAS is seeking to invoke the Court's authority for "an illegitimate purpose". But the mere fact that SAS knows that Leighton disputes the merits of its claim is not sufficient, in my opinion, to so characterise SAS's conduct. 144A claimant might serve a payment claim knowing (for example, because of discussions which took place before service of the payment claim, or even during the ten business days during which the respondent could serve a payment schedule) that the claim was disputed. It may be that the respondent, through ignorance of the provisions of the Act, or through "illness, accident or other unforeseeable and unavoidable circumstances" (Bitannia at [62] per Basten JA), failed to serve a payment schedule in time, or at all. In these circumstances, in my opinion, the claimant's knowledge of the respondent's view of the merits of its claim would not, without more, render proceedings subsequently brought by the claimant, in exercise of its rights under the Act, an abuse of process. 145Such circumstances might be relevant to the question of whether there should be a stay of any judgment so obtained (see, eg, Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421 at [85] per Hodgson JA (with whom Mason P and Giles JA agreed); Bitannia at [5] per Hodgson JA and at [62] per Basten JA).

Leighton's cross claim 146Leighton did not dispute that, were SAS to be successful in relation to the issues set out above, it would follow that, by reason of s 15(4)(b)(i) of the Act, Leighton is precluded from maintaining its cross-claim. 147Leighton contended that, nonetheless, it would not be precluded from bringing the claims in the cross-claim in separate proceedings: s 32 of the Act. 148Leighton submitted that, in those circumstances, the cross-claim should not be dismissed but should be listed for directions. I do not accept that submission. The effect of my findings is that, by reason of s 15(4)(b)(i) of the Act, Leighton is not entitled to bring the cross-claim. It should be dismissed.

Conclusion 149I invite the parties to bring in short minutes to give effect to these reasons.

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: 09 May 2013