The parties' submissions
16 Mr Corsaro of Senior Counsel, who appeared for the owners corporation, submitted that the payment claim in question had not been served in accordance with s 31 of the Act. He submitted that for a payment claim to be valid it must be served in accordance with a manner permitted by s 31. In other words, he submitted, section 31, although providing for a variety of means of service, should be taken to set out a code in relation to service. I pause to observe that if that is correct, the code includes "the provisions of any other law with respect to the service of notices."
17 Mr Corsaro relied on the decision of Einstein J in Emag Constructions Pty Ltd v Highrise Concrete Contractors (Aust) Pty Ltd [2003] NSWSC 903. In that case, his Honour said at [38] that service in accordance with the Act "is critical as it governs the commencement of the time limitations following such service." It was critical, his Honour said, because "[t]he consequence of non-compliance with the time limitation periods is harsh." Thus, his Honour said at [59], whatever principles the general law might show in relation to actual or ostensible authority for someone to receive documents on behalf of another (in the particular case, the question was whether a solicitor had such authority to receive documents on behalf of a respondent) those principles "must yield to the strictures of the strict requirement to prove service." His Honour continued by observing:
[59] In my view the character of the subject legislation is such that general principles of actual or ostensible authority in solicitors to receive service of copies of relevant notices must yield to the strictures of the strict requirement to prove service. The service provisions of the Act require to be complied with in terms. Prudence dictates that those responsible for complying with the service provisions take steps to be in a position to strictly prove service in the usual way. One only example of the difficulties which may arise is where a solicitor who may have been instructed to act in relation to an adjudication application has his/her instructions withdrawn. There are no provisions similar to those to be found in the Supreme Court Rules 1970 for notices of ceasing to act and the like. The Act here under consideration simply proceeds by requiring particular steps to be taken by the parties and by the adjudicator and proof of strict compliance with the Act is necessary for the achievement of the quick and efficient recovery of progress payments and resolution of disputes in that regard.
18 Mr Corsaro observed, correctly, that RHM was not, and could not have been thought to have been, a person who, under the construction contract in question, is or might have been liable to make the payment that was claimed. He submitted, again correctly, that those words in s 13 refer, in the circumstances of this case, to the owners corporation.
19 Further, Mr Corsaro submitted, there was nothing in the contract to authorise or justify service of a payment claim on the owners corporation through the provision of that payment claim to RHM. On the contrary, cl 4 of the contract said nothing as to that question.
20 Mr Dempsey of Senior Counsel, who appeared for CQP, submitted that RHM, as the superintendent under the contract having the functions to which I have referred, was the agent of the owners corporation for the purpose of service of progress claims. Thus, he submitted, the contract both authorised and required CQP to serve payment claims on RHM. Alternatively, Mr Dempsey submitted, the factual history that I have briefly summarised shows that the parties were content for payment claims to be served in the manner that the particular payment claim was. Thus, he submitted, there was a previous course of dealings putting the owners corporation on notice of that practice and, thereby, authorising RHM to receive service on behalf of the owners corporation.
21 As a further alternative, Mr Dempsey submitted that the practice that had developed formed part of the contract or arrangement that constituted the construction contract in this case. He referred to the definition of "construction contract" in s 4 of the Act which, of course, includes "a contract or other arrangement under which one party undertakes to carry out construction work...for another party."
Decision
22 The question, although in narrow compass, is not an easy one. I accept the general proposition flowing both from the decision of Einstein J in Emag and from the decision of Hodgson JA in Brodyn that service of a payment claim is an essential matter if the processes of the Act are to be engaged. Although the decision of Einstein J in Emag was given before the Court of Appeal handed down its judgment in Brodyn, nothing seems to me to turn on that. On the contrary, I think, the reasoning of Einstein J is in substance (if not in detail) consistent with the view taken by Hodgson JA in the passage in Brodyn to which I have referred.
23 However, that does not answer the question. It simply focuses attention on the real question which is whether the payment claim in this case was served on the owners corporation. The answer to that question must take into account the requirements of s 31 of the Act. It follows from s 31(1)(e) that it must also take into account any relevant provision of the construction contract.
24 The starting point of the analysis is to observe that service, for the purposes of s 13 (read in conjunction with s 31) can only be valid if in some way RHM had been authorised to receive service of payment claims on behalf of the owners corporation. I do not think that it is correct to say that RHM should be regarded as the agent of the owners corporation. The owners corporation is required to ensure there is a superintendent to fulfil all aspects of the role of the superintendent to the contract "reasonably and in good faith." It follows from that that the superintendent should not be beholden to, or more specifically owe obligations to, one of the parties to the contract that could compromise the independence, or ability to act in good faith, of the superintendent. If the superintendent were the agent of the owners corporation for a particular purpose, it would presumably owe fiduciary duty obligations to the owners corporation. It is not hard to see that, in an appropriate case, those fiduciary duty obligations might conflict with the ability of the superintendent to act reasonably and in good faith.
25 However, it does not follow from this conclusion that the superintendent is not authorised to receive payment claims on behalf of the owners corporation. Whether or not that is so depends, in the first place, on an analysis of cl 23 of the contract read in conjunction with the Act.
26 I start with the the proposition that the Act is concerned with ensuring, relevantly, that those who carry out construction work under a construction contract recover progress payments for the value of that work. That is why s 8 gives a statutory right to a progress payment and why s 13 and the following sections provide a mechanism for enforcing the statutory right given by s 8. However, the Act operates supplementary to, and not to the exclusion of, relevant provisions of the contract. If the contract gives a right to progress payments, and does so in a manner that cannot be seen to offend s 34 of the Act, the contractual regime has to be made to coexist with the statutory regime.
27 Again, s 13 of the Act has as its general subject the provision of a mechanism, or the initiating point of a mechanism, for enforcing a right to a progress payment given (or confirmed) by s 8. The mechanism is, as I have said, the service of a payment claim. The phrase "payment claim" is defined, in a wholly circular and unhelpful fashion, to mean "a claim referred to in section 13."
28 A progress claim under a contract, given in relation to a contractual right to receive a progress payment, may be a payment claim under the Act if it includes the statement required by s 13(2)(c). In those circumstances it will have a dual character. Relating that to the circumstances of this case, one aspect of the dual character is that it is a progress claim which initiates the progress of assessment and payment set out in cl 23. The other aspect of that dual character is that it is a payment claim that initiates the enforcement mechanism set out in Part 3 of the Act.
29 The parties should not be taken to have contracted unaware of the provisions of the Act. Accordingly, it seems to me, if one looks at the matter objectively, the intention of cl 23 of the contract should be taken to be that it deals with claims to progress payments not only having regard to their contractual character but also having regard to their statutory character. Looking at the matter objectively, it seems to me that the parties could not have intended that there should be a dual track mechanism whereby contractual claims were provided and assessed in one way and statutory claims were provided and assessed in quite a different way. That would be a most unbusiness-like way to go about the administration of their contract.
30 It is correct to say, as Mr Corsaro observed, that the superintendent has 14 days to assess a progress claim, whereas a respondent to a payment claim has 10 business days within which to provide a payment schedule (see s 14(4) of the Act). Although the difference may be noted, it is unlikely ever to be of real practical significance given that any period of 10 business days will, of necessity, include at least two weekend days. In any event, it is possible to comply with both regimes by ensuring that certification is effected within 10 business days if that is a lesser period of time than 14 days.
31 However, it seems to me, the more helpful way of understanding the parties' objective intention is that they appear to have engaged in a regime whereby documents purporting to be both progress claims under the contract and payment claims under the Act were delivered, as one document, to the owners corporation in care of RHM. The parties appear to have treated that, in at least one case, as being capable of giving rise to a dispute that could be referred to adjudication. That would only be possible if the document that was served had been served on the owners corporation. Lest it be thought that the point was simply overlooked, I should observe that when the earlier adjudication took place, the owners corporation was represented by the same firm of solicitors that represented it in these proceedings.
32 For those reasons, it seems to me, as a matter of construction the regime set out in cl 23 of the contract should be taken to extend not only to progress claims strictly so called but also to the parallel track statutory mechanism for payment claims.
33 For those reasons, I conclude that the payment claim was served in a manner authorised by the contract, and thus that it was validly served for the purposes of s 31 of the Act.
34 In case I am wrong in that, I will deal with the alternative argument. As I have said, Mr Dempsey submitted that in this case the contract (more accurately the construction contract) included an arrangement whereby payment claims could be validly served in the manner that the particular payment claim was served, and would be taken by the parties, or accepted by the parties, to have been served on the owners corporation through service on RHM.
35 In my view, that submission should be accepted. The evidence is that, on the 25 prior occasions, a document purporting to be both a progress claim under the contract and a payment claim under the Act was served on the owners corporation in care of RHM, and was assessed and paid. On one occasion, as I have said, the failure to pay it gave rise to a reference to adjudication in which no point as to service was taken. Were it necessary to do so, I would conclude that there was a practice or arrangement whereby, notwithstanding (on this hypothesis) the strict terms of cl 23 of the contract, the parties agreed or arranged that payment claims for the purpose of the Act could be served on the owners corporation by being served, in their dual capacity as progress claims under the contract, on RHM.
36 Thus, were it necessary to do so, I would conclude, as I have said that there was an arrangement that encompasses the practice on which, in the alternative, CQP relied in this case.