TFM Epping Land Pty Ltd v Decon Australia Pty Ltd

Court of Appeal (NSW)|2020-04-21|Before: Basten JA, Meagher JA

Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd [2004] NSWSC 116; 20 BCL 276 Southern Han Breakfast Point Pty Ltd (In liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 Style Timber Floor Pty Ltd v Krivosudsky [2019] NSWCA 171 The Trustees of the Roman the Catholic Church for Diocese of Lismore v T F Woolam & Son [2012] NSWSC 1559 Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410; [1978] HCA 42 Texts Cited: Commentaries of Gaius and Rules of Ulpian, tr J T Abdy & Bryan Walker (Cambridge, 1885)

Courts Legislation Amendment Act 1998 (NSW); NSW Legislative Council, Parliamentary Debates (Hansard), 21 May 1998, p 5012

Solicitors: Dentons Australia (Applicants) Piper Alderman (Respondent) File Number(s): 2019/327380 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity - Technology and Construction List Citation: [2019] NSWSC 1379 Date of Decision: 11 October 2019 Before: Henry J File Number(s): 2019/205661

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

headnote [This headnote is not to be read as part of the judgment] The Court of Appeal has dismissed an appeal from a summary judgment in favour of a builder in relation to a payment claim lodged under the Building and Construction Industry Security of Payment Act 1999 (NSW) ("Security of Payment Act"). The appellants, TFM Epping and Katoomba Residence Investments Pty Ltd ("the principals") engaged Decon Australia Pty Ltd ("the builder") to construct a residential development on land at Hazlewood Place, Epping in Sydney. On 3 June 2019 the builder lodged progress claim 10 ("the progress claim") under the Security of Payment Act seeking some $6.4m. The principals did not serve a payment schedule within 10 day business days of the service of the claim, and so became liable to pay the claimed amount. That amount was not paid. On 3 July 2019, the builder filed a summons and a notice of motion seeking both summary judgment for the claimed amount. The principals filed a response challenging the validity of the claim and its service. On 11 October 2019, Henry J gave judgment for the builder, finding that the principals' response did not raise triable issues. The principals sought leave to appeal. The issues on appeal were whether: (a) the payment claim was invalid because it was a claim for payment in respect of variations to the contract which were not claims under the construction contract, but were quantum meruit claims (ground 2); (b) the payment claim was invalid because it was not made in respect of an available reference date (ground 3); and (c) the payment claim was not validly served because it was not accompanied by a supporting statement in accordance with s 13(7) of the Security of Payment Act (ground 1). The Court (Basten JA, Meagher JA, Emmett AJA) dismissed the appeal and held: In relation to issue (a):

The claim for variations was not formulated as a claim for quantum meruit, but rather was stated to be a claim for work undertaken under the contract: [19], [77], [92].
If the amounts claimed for variations did not properly arise under the contract, it was open to the principals to challenge the amounts on that basis, by way of a payment schedule pursuant to s 14 of the Security of Payment Act; that course was not taken. A challenge to the entitlement to a claimed amount did not invalidate the claim: [20], [23], [77], [97]. Southern Han Breakfast Point Pty Ltd (In liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52; Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (In liq) (2005) 64 NSWLR 462; [2005] NSWCA 409, discussed. In relation to issue (b):
As the contract remained on foot, and there was an available reference date, the builder was entitled to claim a progress payment for work done up until that date: [32], [77], [97 ]. The payment claim bore the necessary relationship to the reference date sufficient to satisfy entitlement to a progress payment under the Act: [37], [77], [92].
The inclusion of interest which accrued after the reference date did not mean the payment claim was not made with respect to that reference date: [27]; [77]; [94]-[96]. Southern Han Breakfast Point Pty Ltd (In liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52; discussed and distinguished. In relation to (c):
Section 13(7) provides a penalty for failure to comply with its requirements with respect to supporting statements: [72], [77], [89]. The section does not in terms invalidate a payment claim served without a supporting statement, nor does it invalidate the act of serving such a claim: [47], [77], [88]-[89]. There is no basis to imply a legislative intention that noncompliance invalidates a payment claim or service of an otherwise valid claim: [73]-[75], [88]-[89]. Central Projects Pty Ltd v Davidson [2018] NSWSC 523, approved; Greenwood Futures v DSD Builders; [2018] NSWSC 1407; Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602; The Trustees of the Roman Catholic Church for Diocese of Lismore v T F Woolam & Son [2012] NSWSC 1559, disapproved.

Judgment

BASTEN JA: The respondent, Decon Australia Pty Ltd ("the builder") was engaged by the applicants, TFM Epping Land Pty Ltd and Katoomba Residence Investments Pty Ltd ("the principals"), to construct a residential development on land at Hazlewood Place, Epping in Sydney. On 3 June 2019 the builder lodged progress claim 10 seeking payment of some $6.4 million. The claim was lodged pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) ("Security of Payment Act"). The Act required the principals, if they sought to resist liability for the claimed amount, to provide a "payment schedule" to the builder within 10 business days after service of the payment claim. That step was not taken. Accordingly, the principals became liable to pay the claimed amount on the due date for the progress payment to which the claim related: Security of Payment Act, s 15(4).
On 3 July 2019 the builder applied for judgment by a summons filed in the Equity Division, Technology and Construction List. The principals filed a response identifying as the issues likely to arise assertions that (i) valid service of the payment claim had not been effected, and (ii) the payment claim itself was "invalid", on four grounds. For reasons which are not entirely clear, the builder filed a notice of motion seeking summary judgment pursuant to Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), r 13.1. (All it needed was a final judgment based on a determination of the issues raised in the principals' response.)
In a judgment delivered on 11 October 2019, Henry J addressed the issues raised in the principals' response, dismissing each and giving judgment for the builder. [1] The principals sought leave to appeal.
As the judge correctly noted, "there is little difference between a summary and final determination of many of the issues raised": at [155]. Henry J dismissed each of the defences as not raising triable issues and gave judgment for the builder.
Although the judge addressed the questions by asking whether the response raised "a triable issue", in fact it would have been sufficient for her to deal with the matter, involving questions of law, on a final basis. That conclusion follows from the language of s 15 of the Security of Payment Act. So far as relevant, the section provides: "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 … … (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.

Whether leave to appeal required

Disputes under the Security of Payment Act require expeditious resolution in keeping with the scheme and purpose of the Act, which is to ensure a reliable flow of funds to contractors and to pass the risks of insolvency to developers. Where leave is required for an appeal, this Court should be restrained in granting leave, absent a clear justification, to avoid the inherent additional delay in achieving a resolution of a disputed payment claim. However, in this case there is doubt whether leave is required.
The judgment in favour of the claimant builder was not said to constitute an interlocutory judgment or order, for the purposes of s 101(2)(e) of the Supreme Court Act 1970 (NSW). Generally an order granting a plaintiff's application for summary judgment will be a final order. As explained by Campbell J in King Investment Solutions v Hussain: [2] "[25] In Thomson v Deputy Commissioner of Taxation [3] Brooking JA, delivering the judgment of the Court, held that a decision granting summary judgment of a plaintiff's claim was a final judgment. His Honour distinguished the decision in Cox Brothers (Australia) Limited and Another v Cox [4] on the ground that the relevant rules concerning the granting of summary judgment no longer made provision for leave to enter final judgment being granted. Similarly, the Supreme Court of Western Australia (Malcolm CJ, Murray and White JJ) in Hunt and Another v Knabe (No 2) [5] held that summary judgment, pursuant to a rule which did not make provision for any intermediate step of granting leave to enter judgment, was a final judgment. However, in Schiffer v Pattison [6] Weinberg J followed [Cox Brothers] in holding that summary judgment on a claim for a debt was interlocutory. The decisions of the Victorian Court of Appeal and the Full Court of the Supreme Court of Western Australia, to which I have just referred, were not cited to his Honour, and he declined to distinguish [Cox Brothers], notwithstanding that he recognised that there is 'something odd about the notion that an order granting such judgment is not one that finally determines "the substantive rights of the parties".' [7] . [26] In my respectful view, the basis upon which the Victorian Court of Appeal distinguished [Cox Brothers] is sound. Further, it is hard to think of a judgment more final than a judgment which grants possession of the defendants' land, orders it be sold, and orders that the defendants pay a sum of money. It is for these reasons that I conclude that the order of the learned Associate Judge was a final order."
That reasoning should be accepted. Accordingly, the principals did not require leave to appeal on this basis. However, as the summons noted, leave is required with respect to "a judgment or order of the Court in a Division on an application for summary judgment under the rules": s 101(2)(l). There may be implied limits on the scope of par (l), or at least acceptance of a significant degree of overlap with par (e). Paragraph (l) is not limited to summary judgments, but will include refusals of such applications, which will be interlocutory judgments, [8] as will a grant of judgment in favour of a defendant. [9] As explained in Macatangay at [13]: "Section 101(2)(l) is concerned with summary judgment dealt with in r 13.1 at the suit of the plaintiff in which the court gives judgment. Without a provision such as s 102(2)(l), such an order for judgment could be seen to be final." This case involves a judgment in favour of a plaintiff, based on a finding that the defence raised no triable issue.
Why leave is required in such a case is an important consideration in determining whether to grant leave. In O'Brien v Bank of Western Australia Ltd [10] Ward JA noted of s 101(2)(l): "[32] … Sub-paragraph (l) was inserted in the Act by the Statute Law (Miscellaneous Provisions) Act (No 3) 1992 without any relevant commentary in the Explanatory Memorandum. … [34] In the present case, the position is governed by s 101(2)(l), which in its terms requires that leave to appeal be obtained, this being an appeal from a judgment of the Court in a division upon an application by the plaintiff for summary judgment (as recognised in Macatangay v State of New South Wales (No 2); [11] Thomas v Stockman & Evans [12] ). (It is not necessary to enter into the debate as to whether that sub-paragraph also apples to an application by a defendant to dispose summarily of a matter, special leave in relation to which question was refused in Trau v University of Sydney. [13] )" Nor was any assistance provided by extrinsic material to the bill introducing an equivalent provision in relation to appeals from the District Court. [14]
One possible justification for requiring leave in relation to a summary judgment which finally disposes of a matter, where a final judgment would not require leave, is that the summary judgment involves a finding that the case for the party resisting judgment is not reasonably arguable. That is a stronger finding than the finding required for a final judgment following a trial. Accordingly, it is appropriate that the manifestly unsuccessful party should satisfy the court that it has real prospects of success in an appeal before obtaining a right to appeal.
The question in this case is whether the judgment in the Division was in truth a "summary judgment". In form it was a judgment on an application by the builder for summary judgment under UCPR, r 13.1; accordingly, s 101(2)(l) was engaged. However, there being no factual issue to be resolved, the matter could be, and was resolved by disposal of the legal questions. The builder's notice of motion was otiose. As noted by Leeming JA in a similar case, Style Timber Floor Pty Ltd v Krivosudsky, [15] "in many and perhaps most cases, there will be no distinction between a summary and a final determination of whether or not a document is a payment schedule." After addressing the issue, Leeming JA stated: "[80] The foregoing focusses upon the ultimate question, whether the 30 November 2017 email is a payment schedule. That question is binary. The wholly documentary nature of the question in the present case means that there is no difference between its determination on a final basis or on a summary basis." Henry J agreed with that analysis in this case. [16]
The matter was, nevertheless, dealt with on the application of the builder pursuant to UCPR r 13.1. It was an application for summary judgment. The judge applied the test required on such an application, namely whether the principals' response raised triable issues. On that basis, s 101(2)(l) is engaged and leave is required.
On the basis that leave is required, the principals should have conditional leave because (i) it was not opposed; (ii) the judgment is in substance and effect a final judgment; (iii) the amount in issue is substantially greater than the floor fixed by s 101(2)(r), and (iv) there are issues of principle raised by the notice of appeal which need to be resolved. That leave should be subject to the condition that it not extend to ground 4 as set out in the amended draft notice of appeal. That ground alleged that the primary judge ought to have found that there were triable issues as to whether the payment claim was valid. If on a proper application of principle the payment claim was valid, this Court should so hold and accordingly that issue does not arise.

Issues on appeal

It was not in dispute that the principals had not paid any part of the claimed amount. There was a dispute, of limited scope, before the primary judge as to whether they had filed a payment schedule. She held that the document relied upon did not constitute a payment schedule and that issue was not re-agitated on appeal. The only issues which remained alive in this Court were whether the document relied upon by the builder constituted a "payment claim" within the terms of s 13 of the Security of Payment Act, and whether it had been properly served in accordance with s 13(7), requiring that service of the claim be accompanied by a supporting statement.
Stated succinctly, the issues raised on the appeal were as follows: 1. the payment claim was invalid because it was a claim for payment in respect of variations to the contract which were not claims under the construction contract, but were quantum meruit claims (ground 2); 2. the payment claim was invalid because it was not made in respect of an available reference date (ground 3); and 3. the payment claim was not validly served because it was not accompanied by a supporting statement in accordance with s 13(7) of the Security of Payment Act (ground 1).
This statement of issues is in an appropriate order in which to address the issues, rather than the order of grounds 1-3 in the draft notice of appeal. That is, it is logical to address the content of the claim before determining the validity of service.

Issue (1): claim for variations

It is appropriate to deal with this issue first because it was the only one of the three grounds of challenge which was raised before the primary judge. The judge dealt with it, albeit briefly. [17]
The appellants' claim may be briefly stated. It relied upon the proposition that a claim for an amount payable for work done pursuant to a variation of a construction contract may be a claim under the contract, or it may be a claim on a quantum meruit, as noted by the High Court in Southern Han Breakfast Point Pty Ltd (In liq) v Lewence Construction Pty Ltd. [18] The Security of Payment Act, s 8, confers an entitlement to progress payments for work done "under a construction contract". That language does not permit a claim by way of quantum meruit, being a claim for reasonable remuneration not provided for under the contract, nor a claim for damages for breach of contract. The principals conceded that claims for variation might be brought under a contract, or might not. They submitted that it was arguable that, as a matter of construction of the payment claim, the amounts claimed for variations were not available pursuant to the contract; accordingly, the payment claim was arguably invalid.
The submission should not be accepted. First, the claim stated that it was a claim for "works completed in the Project performed in accordance with the building and construction contract". The amount claimed was broken down into a "Contract Sum" and an amount for "Variations", the latter being set out in Table 2. It was thus in its terms a claim for works completed under the contract. The contract itself being a standard form contract AS 4902-2000 included provision for variations in cl 36. Pricing was dealt with in cl 36.4.
It is possible that the amounts claimed for variations did not properly arise under the contract because, for example, relevant procedural steps had not been followed. However, to pursue that issue would involve raising a defence in relation to matters arising under the construction contract, a course prohibited by s 15(4) of the Security of Payment Act. Had the principals wished to challenge the claim on that basis, they could have done so by way of a payment schedule provided pursuant to s 14, indicating the claimed items intended to be paid and the reason for non-payment of any item not accepted. Such an issue would then have been addressed by the adjudicator appointed to determine any dispute thus arising. However, that course was not taken.
As the primary judge noted, this has long been the accepted understanding of the operation of the Security of Payment Act. In addressing an issue as to the sufficiency of the description of "the construction work … to which the progress payment relates" under to s 13(2)(a), Hodgson JA stated in Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (In liq): [19] "[35] It is true that, if a payment claim does not identify the work in a way comprehensible to the respondent to the claim, the respondent will be in difficulty in formulating a payment schedule, and this may give rise to further difficulty in any adjudication proceedings …. But in my opinion, if a respondent is unable to identify some of the work in respect of which a payment claim is made, it can in the payment schedule say it does not propose to make any payment in respect of that work because it cannot identify the work, and because for that reason it disputes that the work was done or done to a standard justifying payment, or was within the contract or within any variation of it, and that any pre-condition to payment was satisfied. If an adjudicator then determined that the work was not identified in the payment claim, presumably he or she would not award any payment in respect of that work; and if the adjudicator determined that it was identified, the adjudicator could address matters put in issue in that general way by the respondent. [36] That is, I do not think a payment claim can be treated as a nullity for failure to comply with s 13(2)(a) of the Act, unless the failure is patent on its face; and this will not be the case if the claim purports in a reasonable way to identify the particular work in respect of which the claim is made."
To similar effect, Ipp JA stated at [76]: "… Provided that a payment claim is made in good faith and purports to comply with s 13(2) of the Act, the merits of that claim, including the question whether the claim complies with s 13(2), is a matter for adjudication under s 17 and not a ground for resisting summary judgment in proceedings under s 15. In particular, if no adjudication is sought summary judgment cannot be resisted on grounds that could have been raised by way of a payment schedule leading to adjudication."
The principals acknowledged that the payments claimed for variations may have arisen under the contract, but asserted that there was "a triable issue" as to whether they were in fact claims for quantum meruit payments. On the face of the claim, the payments were sought under the contract. If they were not available under the contract, it might have been open to an adjudicator to reject those elements of the claimed amount. It was not open to the principals to resist judgment for the full amount of the payment claim on this basis. The trial judge was correct to reject this contention.

Issue (2): no available reference date for claim

At the relevant time the right to a progress payment conferred by s 8(1) operated "[o]n and from each reference date". A "reference date" was determined either in accordance with the terms of the contract or, if the contract made no such express provision, the last day of the month in which the construction work was first carried out: s 8(2). [20]
The existence of a relevant reference date was held by the High Court in Southern Han to be a jurisdictional requirement for a valid payment claim. The contract in that case had been terminated on 27 or 28 October 2014, prior to the lodgement of the payment claim. The payment claim did not specify a reference date which, under the contract, was the eighth day of each month. [21] The absence of a reference date was not fatal, but 8 October was the only plausible date. The payment claim was made for work undertaken prior to 8 October, but also for work undertaken thereafter, up to 27 October. Work done prior to 8 October had been the subject of a prior payment claim. The respondent had filed a payment schedule asserting that no amount was payable. The trial judge (Ball J) concluded that the builder's "only right to make a progress claim was the right which had accrued on 8 October 2014 and which had already been exercised." [22] On the facts of the case, the High Court held that that conclusion was correct. The Court identified the issue thus raised in the following terms: "[41] The issue raised by the last of Southern Han's grounds of appeal can be disposed of immediately. Against the statutory background of s 13(6) making plain that a claimant can include in a payment claim an amount that has been the subject of a previous claim, the mere fact that the purported payment claim served on 4 December 2014 claimed payment for work carried out before 7 October 2014 cannot be treated as indicating that it was in respect of the reference date of 8 October 2014. Rather, the fact that it also claimed payment for work carried out up to 27 October 2014 indicates that it is to be characterised as made in respect of some reference date after 27 October 2014. The purported payment claim was not in respect of the reference date of 8 October 2014 and s 13(5) was therefore not engaged."
After concluding that the existence of a reference date under a construction contract is a precondition to the making of a valid payment claim, at [62], the Court turned to address the means by which such a date should be identified, upholding the conclusion reached by the primary judge.
None of this is in issue in the present case. Rather, the principals derive from Southern Han the proposition that a payment claim which includes any amount which accrued after a reference date precludes the payment claim being made with respect to that reference date. That proposition is untenable. The proposition was derived from the passage in Southern Han at [41] set out above. That was not a statement of principle as to the construction of a payment claim. It appeared under the heading "The appeal to this Court", and is followed by passages under the headings "The need for a reference date" and "The determination of a reference date". The principles were set out under the last heading, and applied under a further heading, "The absence of a reference date", commencing at [72].
The relevant principles may be briefly identified. The first was "[t]he statutory contemplation … that a claim for a progress payment might be made after the contract has expired": at [65]. The second was the limitation that the payment be for work carried out or to be carried out "under" the construction contract, so as 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 … imposed by the contractual force of a construction contract": at [66]. Thirdly, that limitation explained the temporal requirement that "a statutory entitlement to a progress payment exists only on and from each reference date": at [69]. Fourthly, the Court referred to the separate provision for reference dates to be calculated under the contract, pursuant to s 8(2)(a) or, where the contract did not so provide, pursuant to s 8(2)(b). In that case, as in this, the contract did so provide and the reference date therefore depended upon the construction of the contract.
Under the next heading, "The absence of a reference date", the Court continued: "[72] From the preceding analysis of the Act, it follows that: the question whether the document served by Lewence on Southern Han on 4 December 2014 answered the description of a payment claim in s 13(1) turns on whether Lewence was on that date entitled under s 8(1) to a progress payment in relation to work carried out to 27 October 2014; and the question whether Lewence on that date had that entitlement under s 8(1) turns on whether a reference date under the Contract had then come to exist in relation to that work under s 8(2)."
In order to recover for work done after 8 October 2014, there would necessarily have to be a reference date of 8 November 2014. As the Court further noted: "[74] Examination of the potential application of s 8(2)(a) leads finally to the contractual question of whether cl 37 of the Contract continued to operate so as to fix 8 November 2014 as a reference date notwithstanding the events of 27 and 28 October 2014. That question falls to be addressed on the alternative hypotheses considered by the primary judge and the Court of Appeal."
The alternative hypotheses referred to were either that Southern Han had exercised a contractual right to take the whole of the remaining work out of Lewence's hands on 27 October 2014, or that Southern Han's conduct amounted to a repudiation, which was accepted by Lewence so that the contract terminated on 28 October 2014. On either hypothesis, the Court construed the contract as suspending further rights to payment, with the result that no right to payment accrued on the following potentially available reference date, namely 8 November 2014.
It may be seen from this outline of the reasoning in Southern Han that the circumstances were remote from those in the present case. First, no issue arose in this case as to suspension or termination of contractual rights. Secondly, there was an available reference date. Progress claims were to be made pursuant to cl 37.1 of the contract, "in accordance with item 33", which appeared in Part A of the annexure to the standard form contract. Item 33 identified the times for progress claims as being, in respect of each month, "the later of the 20th day of that month and the first Business Day after agreement by the Contractor and the Quantity Surveyor of the value of the WUC [work under the contract] to the 20th day of that month." As the principals accepted, so much of item 33 as purported to render the existence of a reference date conditional on an agreement between the contractor and a third party was void, pursuant to s 34(2)(a) of the Act. The principals accepted the consequence that item 33 identified a single reference date, namely the 20th day of each month. [23] Thirdly, the claim being made on 3 June 2019, an available reference day was 20 May 2019. Fourthly, there was an entitlement to make a progress claim for work done up to 20 May.
None of these propositions was disputed by the principals. Rather, their case was encapsulated by the following contentions set out in their written submissions: [24] "It is clear from the text of s 8(1) that the right to a progress payment arises on the reference date. A corollary of this is that the progress payment to which a claimant is entitled crystallises on the reference date. Events after the reference date cannot affect the entitlement that has so crystallised. … It is for this reason that, if a payment claim claims for amounts accruing after a particular date, it cannot be characterised as being in respect of that date. … [T]he making of a claim for an amount accruing after a particular date unequivocally indicates that the entitlement to payment for that work did not crystallise on that earlier date, and it is necessary to look elsewhere for a reference date. … Accordingly, a payment claim is invalid if it claims for work after a date which is the last available reference date under a contract; and that is so even if further reference dates may arise after the payment claim is served."
The proposition that a claim for any amount accruing after an available reference date prevents the claim being made with respect to that reference date is said to derive from the reasoning in Southern Han. However, as explained above, Southern Han did not support that reasoning, nor is it consistent with the language of s 8. Before returning to principles, it is convenient to set out how the issue arose with respect to progress claim 10: [25] "However, the payment claim cannot be in respect of the 20 May 2019 reference date. On its face, it claims for interest accruing up to (and possibly including) 23 May 2019 …. That is, it includes claims for interest accruing on (at least) 20, 21 and 22 May 2019. It cannot claim those amounts and also rely on a 20 May 2019 reference date. If it is to be in respect of a reference date, it must be in respect of the reference that might thereafter accrue on 20 June 2019. However, as indicated above, a payment claim cannot be served in advance of the reference date that it is in respect of."
The principals' contention may be seen as a particular application of a more general contention, namely that the inclusion in a payment claim of any amount which is not due and payable under the contract on or before the available reference date supporting that payment claim will invalidate it. That proposition is patently untenable. Even if the complaint turned on a question of law, namely the construction of the contract, the principal would not be entitled to resist judgment on that basis because of the express provision in s 15(4)(b)(ii) noted above. Thus, it would not matter if the claim for interest were unjustified, either because no interest was payable under the contract or because the particular claim had not crystallised. [26] Where such a claim was made and challenged pursuant to a payment schedule, entitlement to interest would be a matter to be determined by the adjudicator. Even if it appeared that the adjudicator had made an error or law in allowing such a claim, there would be no challenge on that basis to the adjudication. [27] That reasoning, dependent on the structure and purpose of the legislation, is not to be subverted by a contention that the payment claim must (as a matter of law) be construed as relating to a later reference date if any part of the claim relates to a debt arising after the available reference date.
In any event, the premise is not established. There was no submission that a payment claim could not include a claim for interest arising under the contract from a late payment of an earlier claim. The "work" to which the interest payment related had been carried out long before the reference date. It was not explained why, as a matter of law, an interest payment which accrued after the reference date, but before the payment claim was lodged, was not recoverable as part of that payment claim. To adopt the language of Barrett J in Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd, [28] accepted by the High Court in Southern Han, it would not follow that the payment claim does not bear the necessary relationship to the reference date which will satisfy the entitlement to a progress payment under s 8 of the Act.
In any event, it would not matter if some construction work had been undertaken after the reference date, so long as the payment claim was referrable to that reference date. The principals did not dispute that, apart from 3 days interest, the large amount claimed related to work done before the reference date of 20 May 2019. The claim might have failed in relation to that aspect of interest, if the matter had gone to adjudication, but it did not. The ground of appeal alleging the absence of a relevant reference date must be rejected.

Issue (3): claim not validly served because not accompanied by supporting statement

The final basis of challenge concerned an alleged breach of s 13(7) of the Security of Payment Act. Relevantly for present purposes, s 13 provides: 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. … (7) A head contractor must not serve a payment claim on the principal unless the claim is accompanied by a supporting statement that indicates that it relates to that payment claim. Maximum penalty: 200 penalty units. (8) A head contractor must not serve a payment claim on the principal accompanied by a supporting statement knowing that the statement is false or misleading in a material particular in the particular circumstances. Maximum penalty: 200 penalty units or 3 months imprisonment, or both. (9) In this section: supporting statement means a statement that is in the form prescribed by the regulations and (without limitation) that includes a declaration to the effect that all subcontractors, if any, have been paid all amounts that have become due and payable in relation to the construction work concerned.
The principals' contention was that progress claim 10 had been served, but had not been accompanied by a supporting statement complying with s 13(9). The payment claim was in fact accompanied by a document entitled "Supporting statement by head contractor regarding payment to subcontractors". It identified a particular subcontractor and included a declaration by a director of the builder that all amounts due and payable to subcontractors have been paid. The problem arose, the principals contended, because the statement contained the following sentence: "This statement applies for work between: 27 June 2018 and 3 July 2018 inclusive (the construction work concerned), subject of the payment claim dated 3 June 2019." This statement was in the terms required by the Building and Construction Industry Security of Payment Regulation 2008 (NSW) (Regulation). However, the limitation to one week was said to render the supporting statement inconsistent with the requirements of s 13(7), because the progress claim itself listed work done throughout the period of the contract. The absence of a compliant supporting statement was said to render the service of the payment claim invalid, or, in the alternative, to render the payment claim itself invalid. The language of invalidity conveyed a failure to comply with the mandatory requirements of s 13.
As this issue was not raised before the primary judge, this Court does not have the benefit of her consideration of the matter. The terms of the statement set out above are generally in accordance with the form prescribed by the Regulation. The form provides for details to be given of subcontractors by way of alternatives. The first requires identification of "a contract" with a subcontractor; the second refers to contracts with "subcontractors listed in the attachment to this statement". Because the supporting statement in question listed one contract only, there was no attachment. The principals contended that the absence of an attachment constituted a failure to comply with the Regulation. However, there was no failure to comply in this respect unless more than one subcontractor should have been listed. In short, it raised the same point, namely that the period should have been the two years of work covered by the payment claim.
The statement required in the form contains an ambiguity. It is not clear whether it requires the specification of the dates during which the subcontractor undertook work, or the dates over which work was undertaken by the contractor for which a progress payment was sought. The submission for the principals however does not turn on that question. This was not a claim for work done, for example, in a one month period. It was, they submitted, a claim for work done over an extended period for which payment had not yet been obtained.
There are two factual questions underlying the submission. The first is to identify the period over which work the subject of the claim was undertaken. The principals sought to do this by reference to the table of interest on overdue progress claims which commenced with a claim lodged in March 2017. The inference may be accepted. The way in which the claimed amount was detailed does not allow for an understanding as to which items have been the subject of an earlier claim and payment and which had not. Putting to one side the variations and the interest, the items listed total $28,215,000, less an amount paid of $27,387,291. Disregarding the claim for variations and GST, there was an unpaid amount of some $828,000. It is true, as the principals contended, that the inclusion in the supporting statement of a reference to only one subcontractor, who performed work approximately one year before the date of the payment claim, is puzzling. It may be that it was the only subcontractor which undertook work which was the subject of the outstanding progress payments. However, it is not possible to know that from the terms of the statement, even when read in combination with the payment claim.
The payment claim was also accompanied by a statutory declaration in a form required by cl 38.1(a) of the contract. It included the following statement: "(c) All amounts due from the Contractor to sub-contractors and consultants in connection with the work under the Contract have been paid in full."
Whilst that declaration complied with the requirements of the contract, it did not comply with the additional requirements of a supporting statement under s 13(7). It may be accepted that the purpose of s 13(7)-(9) was to mandate the disclosure of greater detail than the statement required under the standard forms of construction contracts.
The builder submitted that the supporting statement which in fact accompanied the payment claim complied with the definition in s 13(9) of a "supporting statement" and complied with the form in the Regulation. It submitted there was no deficiency apparent on the face of the document. However, against the possibility that those submissions were rejected, the builder also engaged with the important legal question, namely the consequence of a failure to comply with s 13(7). Because that question has been the subject of conflicting statements by judges in the Equity Division, it is appropriate that it be addressed on the basis that the supporting statement did not comply with the statutory requirements.
As in force at the relevant time (that is, the date of the contract [29] ), s 13 contained nine subsections. Subsections (1) and (7)-(9) have been set out above. Subsection (2) required that a payment claim "must identify the construction work … to which the progress payment relates" and must indicate the amount of the payment claimed to be due. Subsection (3) provided that the claim may include certain other amounts. As noted above, there is authority for the proposition that the requirements of s 13(2), and particularly the obligation to identify the construction work, is an essential precondition of a valid payment claim. Nevertheless, neither precision nor detail is required to establish validity. Subsections (4), (5) and (6) are differently expressed, and should be set out in full: 13 Payment claims … (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.
Any analysis of the effect of a contravention of s 13(7) must start with two propositions. First, the provision identifies its own consequence: it is a prohibition with a prescribed penalty, so that a contravener commits a statutory offence. Secondly, it does not in terms invalidate a payment claim served without compliance with the terms of s 13(7), nor does it invalidate the act of service, if that be considered an alternative consequence to invalidation of the claim itself. If it has either of those effects, they are implied consequences. How should the court determine whether they should indeed be implied?
The question is to be addressed by applying the principles of construction identified in the majority reasons in Project Blue Sky Inc v Australian Broadcasting Authority. [30] As stated by McHugh, Gummow, Kirby and Hayne JJ: "[69] The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. [31] The meaning of the provision must be determined 'by reference to the language of the instrument viewed as a whole'. [32] In Commissioner for Railways (NSW) v Agalianos, [33] Dixon CJ pointed out that 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed'. Thus, the process of construction must always begin by examining the context of the provision that is being construed. [34] "
Project Blue Sky itself involved a government authority exercising a power to determine standards relating to the Australian content of television programs. The power was to be exercised in a manner consistent with four matters identified by the power-conferring provision. The question was whether failure to exercise a power consistently with those matters invalidated the standard.
In Project Blue Sky the consequence of non-compliance with a statutory direction had to be identified in the absence of any stated consequence; the possible answers depended on implications. By contrast, an implied consequence is unnecessary in circumstances where the statute provides its own remedy for contravention. [35] Even in that case an additional consequence may be implied where the effect is to promote the purposes of the prohibition, but will less readily be implied where there is a tendency to conflict with the apparent purposes of the prohibition, [36] or may give rise to adverse consequences for third parties. The appropriate course is to identify the subject matter, scope and purpose of the current provision, read in its statutory context.
This exercise has been undertaken in a number of cases to which the Court's attention was drawn. First, in Kitchen Xchange v Formacon Building Services, [37] McDougall J considered the consequences of breaches of both s 13(5) and s 13(7). With respect to the operation of s 13(5), [38] the judge adopted a statement from the reasons of Allsop P in Dualcorp Pty Ltd v Remo Constructions Pty Ltd: [39] "The terms of s 13(5) are a prohibition. The words 'cannot serve more than one payment claim' are a sufficiently clear statutory indication that a document purporting to be a payment claim that is in respect of the same reference date as a previous claim is not a payment claim under the [Security of Payment] Act and does not attract the statutory regime of the Act."
The rationale for that approach had been explained by McDougall J in The Trustees of the Roman Catholic Church for Diocese of Lismore v T F Woolam & Son: [40] "[49] As I have indicated already, any other approach would set at naught the statutory prohibition. And if the statutory prohibition is not to be given effect, then the subsection serves no useful purpose. It would be as though s 13(5) reads to the effect that a claimant cannot serve more than one payment claim in respect of each reference date but, if it does so, the payment claim nonetheless initiates the statutory enforcement or recovery mechanisms."
With respect to s 13(7), McDougall J, while addressing an earlier form of the regulation and schedule, albeit in substantially identical terms, concluded that, the language of subs (7) also being prohibitory, the same conclusion should follow as with respect to s 13(5). [41] The critical reasoning may be found in the following passages: "[45] It is easy to see whether the requirement of subs (7) has been met, because it is easy to see whether the accompanying statement meets the requirements set out in subs (9), incorporating as it does the relevant clause and form set out in the Regulation. [46] To my mind, the better view of subs (7) is not that it renders the payment claim invalid but, rather, that it invalidates or renders ineffective service of a payment claim that is not accompanied by the requisite statement. It seems to me that the subsection recognises that the payment claim exists in fact, and requires it to be accompanied by a supporting statement. If it is not, it seems to me, the service is invalid. [47] To paraphrase what I said, of s 13(5), in Woollam & Son at [49], to hold that s 13(7) did not intend to invalidate service of a payment claim unaccompanied by the requisite statement would set at nought the prohibition. It would permit a claimant to engage the operation of Pt 3 of the Act without troubling to comply with a specific, and "mandatory", requirement for doing so."
One omission from this consideration was significant: no reference was made to the fact that s 13(7), unlike s 13(5), was a penalty provision. It would not "set at nought the prohibition" if it were not found to invalidate service; the express terms of the provision, namely that a penalty would apply, would remain.
Further, the judge referred to the second reading speech on the Building and Construction Industry Security of Payment Amendment Bill 2013, which introduced subss (7)-(9), and included the following passage: [42] "The provision addresses a key finding of the inquiry that statutory declarations made by head contractors under the Oaths Act for the purpose of securing a progress payment from a client, are often false, not enforced and frequently amended to convey the appearance that what was due and owing to a subcontractor was no longer an amount owed by the head contractor. There are practical advantages in establishing a legal requirement under the Act rather than police officers having the primary responsibility of investigating claims of falsely sworn statutory declarations under the Oaths Act. Authorised officers from agencies such as the Department of Finance and Services will have powers to investigate and prosecute breaches of the provisions relating to supporting statements." In short, the purpose was not to invalidate the payment claim, or service thereof, but to impose a penalty which was hoped to be more readily enforceable and thus more of a deterrent than that which was found in standard form contracts. That reasoning was consistent with the imposition of a further offence under s 13(8), where a supporting statement contained a false and misleading particular.
In Kitchen Xchange no document resembling a supporting statement had accompanied the payment claim. It was therefore unnecessary for McDougall J to consider the separate circumstances identified in subss (7) and (8). In simply stating that it would be "easy to see whether the requirements of subs (7) [had] been met" the judge was not directing his mind to the present circumstances in which a document, regular in form, accompanied the payment claim, but which was not said to contravene subs (8).
In two matters heard and determined in March and April of 2016, Meagher JA, sitting in the Equity Division, applied the approach of McDougall J in Kitchen Xchange. In Kyle Bay Removals Pty Ltd v Dynabuild Project Services Pty Ltd [43] Meagher JA considered a challenge by a principal to enforcement of an adjudication, on the basis that there had been no "payment claim" to found the adjudication. The operation of s 13(7) came into play in two ways. First, an initial payment claim had been served without a supporting statement. It was assumed for the purposes of that argument that the absence of any supporting statement rendered the service of the claim invalid. [44] Invalidity was in effect relied upon by the contractor on the basis that it prevented a second claim for the same work falling foul of the prohibition of two claims with respect to the same reference date, in s 13(5). The judge accepted that there was no breach of s 13(5): "[37] … The reference in s 13(5) to service is to service which has occurred in accordance with s 13. A payment claim served contrary to the prohibition in s 13(7) is not validly served: see Kitchen Xchange at [46], [50], [51]. It follows that even if the November claim was made in respect of the same reference date, no other payment claim had been served in respect of that date for the purpose of s 13(5)."
A further issue was raised by Kyle Bay on the basis that the supporting statement accompanying the second payment claim was false or misleading, to the knowledge of the contractor. Having rejected the factual premise, it was not necessary to determine whether a breach of s 13(8) would prevent the payment claim being one which could be the subject of an adjudication application. [45]
This judgment thus accepted, in circumstances where the contractor contended in favour of the invalidity of the first payment claim based on the absence of any supporting statement, the reasoning in Kitchen Xchange.
In Duffy Kennedy, [46] there were again two payment claims neither of which was accompanied by any supporting statement. The reasoning focused on the principal's need to withdraw an admission which was contrary to the evidence. Leave was granted. [47] Although the builder is recorded as having challenged the proposition that a breach of s 13(7) invalidated service of the payment claim, [48] there is no record of the basis of that submission. The issue was dealt with in the following terms: "[37] There remains to be considered DK's submission that service contrary to the prohibition in s 13(7) does not have the consequence that there has not been service within s 14(4)(a). The question whether such service is invalid, in the sense that it is not service for the purposes of the Act and does not attract the consequences of such service, was considered by McDougall J in Kitchen Xchange at [34]-[51]. His Honour concluded, relying on the reasoning of Allsop P in Dualcorp …, that service contrary to s 13(7) was not service within the meaning of s 14(4). I agree with his Honour's reasoning and conclusion, which I followed in Kyle Bay …."
It is not clear from the judgments whether in either Kyle Bay or Duffy Kennedy the reasoning of McDougall J in Kitchen Xchange was directly challenged. Even had it been, a judge in the Equity Division was bound to follow that reasoning unless persuaded it was clearly wrong.
The operation of s 13(7) appears not to have been addressed again until the judgment of Ball J in Central Projects Pty Ltd v Davidson in April 2018. [49] Although the progress claim in that case was accompanied by a supporting statement, it was said to be common ground that the statement did not list as subcontractors the names of a number of entities who had supplied goods to the contractor "during the period covered by the progress claim", and that the entities had been paid in full. The judge identified two issues, namely (i) whether the document entitled "Supporting statement" complied with s 13(9) of the Act, and (ii) whether, if it did not, the payment claim had not been validly served.
It was submitted that the supporting statement did not conform to the requirements of s 13(9), as a statement in the form prescribed by the regulations, because it failed to list all the subcontractors. The judge concluded that the failure to give a complete and accurate statement of all subcontractors did not deprive the document of its status as a "supporting statement" for the purposes of s 13(7) and (8). The judge was concerned that "an inadvertent failure to identify all subcontractors in the supporting statement would deprive a head contractor of the benefits of the Act." [50] Having noted that the policy behind the provisions in s 13(7) and (8) was to increase the likelihood that subcontractors were paid promptly, the judge also noted that the policy of the Act was to provide a mechanism by which head contractors were paid promptly. He concluded in relation to the asserted invalidity of the supporting statement: "It should not be inferred that that is what the legislature intended when the alternative interpretation does not deprive the provisions of their effectiveness in protecting subcontractors."
Having concluded that the payment claim was accompanied by a valid supporting statement, it was not necessary to answer the further question as to the consequences which would have followed had that not been the case. However, he addressed that question on the assumption that his answer to the first question might be held to be wrong. The reasoning commenced with the proposition that, "[h]ad there been no authority on the point, I would have concluded that the failure to serve a supporting statement did not render the payment claim invalid." [51] Ball J noted, however, that a different conclusion had been reached in Kitchen Xchange, Kyle Bay and Duffy Kennedy. After noting the reasoning in Kitchen Xchange, Ball J continued: "[39] With the greatest respect, I cannot agree with those conclusions. I accept that the language of s 13(7) is mandatory. The section contains a clear prohibition on serving a payment claim without a supporting statement. But the subsection provides its own remedy for a breach of the prohibition. It creates an offence with a maximum penalty of 200 penalty units. The question, therefore, is not whether the prohibition would be set at nought but whether the legislature implicitly intended breach of the prohibition to have other consequences. In my opinion, there are several reasons for thinking that it did not."
The judge gave, in effect, four reasons for rejecting the approach adopted in Kitchen Xchange. The first two may be set out in full: "[40] First, the language of s 13 does not readily accommodate an additional consequence. Section 13(2) sets out what is required of a payment claim. Subsection (7) takes as a starting point something that meets those requirements, since it says that a head contractor must not serve 'a payment claim' and it provides for a consequence if something is done with that payment claim (that is, if it is served without a supporting statement). Section 31 sets out how documents may be served under the [Security of Payment] Act and there is no question that the payment claim was served in accordance with that section. In order for subs (7) to have an additional consequence, it is necessary either to treat a document that meets the requirements of a payment claim and is referred to in the subsection as a payment claim as not being one or to treat it as not having been served when, on the face of things, it was. [41] Second, subs (7) is to be contrasted with subs (5). The latter states that a claimant cannot serve more than one payment claim in respect of a reference date. The language of the subsection is entirely consistent with the notion that any subsequent document purporting to be a payment claim cannot be one because only one can be served. And the subsection provides for no other consequence. In those circumstances, it is natural to read the subsection as treating any subsequent document purporting to be a payment claim as not being one."
The third reason derived from the identification of the problem with contractual declarations by an independent inquiry which preceded the 2013 Amendment Act. The report of the inquiry was reflected in the second passages from the second reading speech set out above. The fourth reason related to the second reading speech itself and was in the following terms: "[43] The consequence that a payment claim is not validly served is a significant one, since it deprives an adjudicator of jurisdiction to determine disputes where a payment claim served by a head contractor is accompanied by an incomplete supporting statement. It is to be expected that if that were an intended consequence of the amendments, there would have been some reference to it in the Inquiry's Final Report or in the Second Reading Speech. However, there is none."
Finally, in this line of authority, the issue came back before McDougall J on 13 September 2018 in Greenwood Futures v DSD Builders. [52] The principal, Greenwood Futures Pty Ltd, was, somewhat ironically, the challenger to the propositions contained in Kitchen Xchange. There were three payment claims served; two were withdrawn and the third was referred to adjudication. A determination was made in favour of the builder. The principal sought a declaration that the determination was void on the basis that although the first and second payment claims were not accompanied by a "supporting statement" they were not invalid. As a result, the third payment claim, which relied on the same reference date, was invalid because it contravened s 13(5) of the Security of Payment Act. Accordingly, the adjudication application, which depended on the third payment claim, was invalid. [53] The first issue to be considered was, therefore, whether the first two payment claims were void or ineffective because they were not accompanied by supporting statements.
McDougall J commenced his reasons in respect of that issue by noting that his observations with respect to a non-compliance with s 13(7) were "not essential to the decision in Kitchen Xchange." [54] He concluded, however, that the decisions in Kyle Bay and Duffy Kennedy required acceptance of his reasons in Kitchen Xchange. McDougall J then referred to the judgment of Ball J in Central Projects, noted that Ball J had expressed disagreement with the reasoning in Kitchen Xchange and concluded that, "the reasons that Ball J gave for that disagreement are powerful." [55] Nevertheless, he decided to follow his own earlier views in Kitchen Xchange because he was not satisfied that they were "plainly wrong." [56]
There remains an issue which, as McDougall J implied, can only properly be resolved in this Court. While it may fairly be said that the reasoning in Kitchen Xchange was not plainly wrong, the reasoning of Ball J is to be preferred. It is consistent with the proper application of the principles identified in Project Blue Sky.
The contrary view pays insufficient regard to the difference in form between s 13(5) (prohibiting repeat applications with respect to the same reference date) and ss 13(7) and 13(8) (providing penalties for failure to comply with requirements with respect to supporting statements). There are two aspects in which the provisions are self-evidently different.
First, each of subs (2), (4) and (5) explicitly constrains the conferral of power under subs (1) to serve a payment claim. Whilst subs (7) is expressed to condition the service of a payment claim upon the provision of a supporting statement, it does not qualify or attach a condition to the nature or content of the payment claim, which is the critical document giving rise to a legal right to recover a progress payment. As explained by Ball J, the purpose of s 13(7) is to encourage the payment of subcontractors before a claim for a progress payment is made which will include work done by those subcontractors. It does not purport to interfere with the right of the head contractor to obtain a progress payment, nor does it reduce the progress payment to the extent that a particular subcontractor has not been paid. Its purpose is ancillary to the principal purpose of the legislation, namely to ensure a timely flow of money to head contractors. As Ball J noted, if, without any express language, it had been intended that compliance with s 13(7) was a precondition to making a claim for a progress payment, that intention might be found somewhere in the extrinsic material; neither before Ball J, nor in this Court, was any such reference identified.
The second distinction is that s 13(5), despite its mandatory terms, would contain no adverse consequence for non-compliance by a claimant were the payment claim made in contravention not invalid. In stark contrast, subs (7) contains its own penalty. Indeed, as the extrinsic material makes clear, it was an identified purpose of subss (7)-(9) to improve the likelihood of enforceable penalties with respect to such a declaration as that required in a supporting statement.
The implication of further consequences should be approached with caution. It is a matter of identifying a relevant legislative intention to that effect. Such an intention will rarely be implied where one consequence is inconsistent with an express provision of the legislation. As the facts in Greenwood illustrate, to invalidate a payment claim (or the service thereof - the effect is the same) will allow a contractor to make a subsequent valid payment claim despite an apparent contravention of s 13(5). There is no basis for supposing that Parliament intended such an outcome.
It remains to identify one further issue raised in oral submissions. If a payment claim unaccompanied by a supporting statement is not a valid payment claim for the purposes of s 13(5), as accepted in Greenwood, it is necessary to give a different meaning to the phrase "payment claim" in subs (7). In other words, if a payment claim unaccompanied by a supporting statement is not a payment claim, the contractor will not have served a payment claim and therefore will not be in breach of subs (7). It is no doubt possible to cut the knot of circularity, but one might infer that had Parliament intended the consequence of invalidity, it would have avoided the awkwardness of the exercise required by the present phraseology.
Similar difficulties which attend the meaning of "supporting statement", as discussed in Central Projects, need not be addressed. However, if Ball J's analysis in that respect were correct, it might be concluded that, despite the limited coverage of the declaration identified by the principals, the supporting statement in the present case did not cease to be a supporting statement and there was, therefore, no offence committed under subs (7), nor presumably was the service of the payment claim ineffective.

Conclusions

Each of the three substantive grounds relied on by the principals as the basis of the proposed appeal must be rejected. The Court should make the following orders: 1. Subject to (2) and to the extent necessary, grant the applicants leave to appeal from the judgment in the Equity Division given on 11 October 2019. 2. Limit the grant of leave to grounds (1)-(3) set out in the amended draft notice of appeal dated 2 March 2020 and filed in this Court on that date. 3. Deem the amended draft notice of appeal to be filed pursuant to the grant of leave. 4. Dismiss the appeal. 5. Order the applicants/appellants to pay the respondent's costs in this Court.
MEAGHER JA: I agree with the reasons and orders proposed by Basten JA.
EMMETT AJA: These proceedings are concerned with the operation of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Payment Act), in the context of the development and construction of a residential apartment building in Epping. The proceedings arise out of a dispute between the appellants, TFM Epping Land Pty Ltd and Katoomba Residence Investment Pty Ltd (together the Principal) and Decon Australia Pty Limited (the Contractor). The disputes arise out of a building contract (the Contract) between the Principal and the Contractor in relation to the development in question.
More specifically, the relevant question raised in the proceedings concerns the service by the Contractor on the Principal of a document described as "Progress Claim Number 10 dated 3 June 2019" (the Progress Claim) claiming the sum of $6,355,352.46. The amount claimed in the Progress Claim was not paid by the Principal. The Contractor thereupon commenced proceedings in the Technology and Construction List of the Equity Division seeking judgment against the Principal pursuant to the Payment Act. On 11 October 2019, a judge of the Equity Division sitting in the Technology and Construction List (the primary judge) ordered summary judgment for the Contractor against the Principal in the sum of $6,355,352.46. The Principal now seeks leave to appeal from that order. A direction has been given that the application for leave and the appeal be heard concurrently.
It is desirable to say something about the scheme of the Payment Act as relevant to the questions raised in the proceedings. Under s 3 of the Payment Act, its object 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 in relation to the carrying out of that work. The means by which the Act ensures that a person is able to recover a progress payment is by establishing a procedure that involved:

the making of a payment claim by the person claiming payment;
the provision of a payment schedule by the person by whom the payment is payable;
the referral of any disputed claim to an adjudicator for determination; and
the payment of the progress payment so determined. It is intended that the Payment Act does not limit any other entitlement that a claimant may have under a construction contract or any other remedy that a claimant may have for recovering any such other entitlement.

Section 8 relevantly provides that on and from each reference date under a construction contract as defined, a person who has undertaken to carry out construction work under the contract is entitled to a progress payment. [57] Under s 9, the amount of a progress payment is to be the amount calculated in accordance with the terms of the contract.
Part 3 sets out the procedure for recovering progress payments. Under s 13, a person referred to in s 8 who is or 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. Section 13(2) provides certain prerequisites that must be satisfied by a payment claim. Section 13(5) relevantly provides that a claimant cannot serve more than one payment claim in respect of each reference date. Section 13(7) relevantly provides that a head contractor must not serve a payment claim on the principal unless the claim is accompanied by a supporting statement that indicates that it relates to that payment claim. Under s 13(9), a supporting statement is a statement that is in the form prescribed by the regulations and that includes a declaration to the effect that all subcontractors, if any, have been paid all amounts that have become due and payable in relation to the construction work concerned.
Under s 14, a person on whom a payment claim is served (the respondent) may apply to the claim by providing a payment schedule to the Claimant. A payment schedule must satisfy the prerequisites set out in s 14(2). Under s 14(4), if a claimant serves a payment claim on a respondent and the respondent does not provide a payment schedule to the Claimant within the time specified, the respondent becomes liable to pay the claimed amount to the Claimant on the due date of the progress payment to which the payment claim relates. Under s 15, where the respondent becomes liable to pay the claimed amount to the claimant under s 14(4), the Claimant may recover the unpaid portion of the claimed amount from the respondent as a debt due to the Claimant in any court of competent jurisdiction.
In its Technology and Construction List statement, the Contractor sought judgment against the Principal for the amount claimed in the Progress Claim. In their Technology and Construction List response, the Principal, in essence, asserted that the Progress Claims were payment for purported variations in circumstances where such variations were not the subject of directions or agreement under the Contract.
In their proposed notice of appeal, the Principal seeks to rely on three grounds. Two of the grounds were not raised before the primary judge, and the Contractor objects to the grounds being raised for the first time in this Court.
The first ground concerns the operation of s 13(7). The Principal asserts that the Progress Claim was not accompanied by a supporting statement. The form prescribed pursuant to s 13(9) of the Payment Act was set out in Sch 1 to the Building and Construction Industry Security of Payment Regulation 2008 (NSW) (the Regulation).

Endnotes

Vannella Pty Ltd atf Capitalist Family Trust v TFM Epping Land Pty Ltd; Decon Australia Pty Ltd v TFM Epping Land Pty Ltd; Vannella Pty Ltd v TFM Epping Land Pty Ltd [2019] NSWSC 1379.
[2005] NSWSC 1076.
Supreme Court of Victoria, Court of Appeal, 16 June 2000, unreported.
(1934) 50 CLR 314.
(1992) 8 WAR 96.
[2005] FCA 494; (2005) 215 ALR 505
At [61], 516.
Macatangay v State of New South Wales (No 2) [2009] NSWCA 272 at [11] (Allsop P, Tobias JA, Handley AJA).
See eg AB v State of NSW [2014] NSWCA 243 (Leeming JA).
[2013] NSWCA 71.
[2009] NSWCA 272 at [13].
[2012] NSWCA 444.
[1995] HCA Trans 409.
Courts Legislation Amendment Act 1998 (NSW); NSW Parliamentary Debates, Hansard, Legislative Council, 21 May 1998, p 5012; District Court Act 1973 (NSW), s 127(2)(d).
[2019] NSWCA 171 at [43].
Judgment at [60].
Judgment at [113]-[118].
(2016) 260 CLR 340; [2016] HCA 52 at [66] (Kiefel, Bell, Gageler, Keane and Gordon JJ).
(2005) 64 NSWLR 462; [2005] NSWCA 409 (Hodgson, Santow and Ipp JJA).
Section 8 was replaced in relation to contracts entered after 21 October 2019 to delete reference to a "reference date": Building and Construction Industry Security of Payment Amendment Act 2018 (NSW), Sch 1[4], [10], [38]. New subss 13(1A)-(C) were introduced.
Southern Han at [21], [27].
Southern Han at [33].
Applicants' amended summary of argument, 20 February 2020 at par 36.
Applicants' amended summary of argument, 20 February 2020, at pars 28, 29 and 32.
Applicants' amended summary of argument, par 38.
The provision for interest is to be found in brief terms in cl 37.5 and item 35.
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4.
[2004] NSWSC 116; 20 BCL 276 at [34].
See fn 20 above.
(1998) 194 CLR 355; [1998] HCA 28.
See Taylor v Public Service Board (NSW) (1976) 137 CLR 208 at 213, per Barwick CJ; [1976] HCA 36.
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320, per Mason and Wilson JJ; [1981] HCA 26. See also South West Water Authority v Rumble's [1985] AC 609 at 617, per Lord Scarman, "in the context of the legislation read as a whole".
(1955) 92 CLR 390 at 397.
Toronto Suburban Railway Co v Toronto Corporation [1915] AC 590 at 597; Minister for Lands (NSW) v Jeremias (1917) 23 CLR 322 at 332; [1917] HCA 41; K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 312, (Gibbs CJ); at 315, (Mason J); at 321, (Deane J); [1985] HCA 48.
Master Education Services Pty Ltd v Ketchell (2008) 236 CLR 101; [2008] HCA 38 at [28].
Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410; [1978] HCA 42.
[2014] NSWSC 1602.
See [46] above.
(2009) 74 NSWLR 190; [2009] NSWCA 69 at [14].
[2012] NSWSC 1559.
Kitchen Xchange at [47].
NSW Legislative Council, Parliamentary Debates (Hansard), 12 November 2013, p 25,330.
[2016] NSWSC 334.
Kyle Bay at [17] and [20].
Kyle Bay at [46].
Duffy Kennedy Pty Ltd v Lainson Holdings Pty Ltd [2016] NSWSC 371.
Duffy Kennedy at [34].
Duffy Kennedy at [30].
[2018] NSWSC 523.
Central Projects at [34].
Central Projects at [37].
[2018] NSWSC 1407.
Greenwood at [5].
Greenwood at [43].
Greenwood at [46].
Greenwood at [49].
Section 8 was substituted in 2018 by the Building and Construction Industry Security of Payment Amendment Act 2018 (NSW), Sch 1.
See the Commentaries of Gaius and Rules of Ulpian, tr J T Abdy & Bryan Walker (Cambridge, 1885) at p 371.
See Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340 at 362; [2016] HCA 52 at [66].

Amendments 15 May 2020 - Adding SC to counsel on coversheet 01 February 2021 - [8] Correcting paragraph number of Macatangay cited from [12] to [13]. 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: 01 February 2021

Building and Construction Industry Security of Payment Amendment Act 2018(NSW)

Building and Construction Industry Security of Payment Regulation 2008(NSW)

Bryan Walker (Cambridge, 1885) Courts Legislation Amendment Act 1998(NSW)

Courts Legislation Amendment Act 1998(NSW)

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