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[2026] NSWSC 728
Supreme Court of NSW
2026-06-19
Peden J
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: VSD Investments Pty Ltd as trustee for The VSD Investments Trust v Builtcom Constructions Pty Ltd; Builtcom Constructions Pty Ltd v VSD Investments Pty Ltd as trustee for The VSD Investments Trust [2026] NSWSC 728
Hearing dates: 15 June 2026
Date of orders: 19 June 2026
Decision date: 19 June 2026
Jurisdiction: Equity - Technology and Construction List
Before: Peden J
Decision: Answer to reframed separate question is “Yes”. Orders granting leave to first defendant to amend List Response to withdraw an admission. Costs orders: at [59]
Catchwords: CONTRACTS – Construction – Commercial construction – modified Australian Standard construction management contract AS4916-2002 – Where contract terminated for convenience by principal – Whether clause 28.2 provides construction manager with entitlement to claim termination payments as a contractual debt in final rights proceedings, or is limited to a progress claim regime – Whether clause 28.2 distinguishes progress claims and final rights claims
CIVIL PROCEDURE – Separate determination of question – Where it is appropriate to reframe the separate question – Whether construction manager’s claim for items specified in subclauses 28.2(a)-(g) is maintainable irrespective of the progress claim’s compliance with subclauses 25.1(g), (i) and/or whether the progress claim was made within 28 days of receipt of the termination notice
Original judgment source is linked above.
Legislation Cited: Civil Procedure Act 2005 (NSW)
Personal Property Securities (Commonwealth Powers) Act 2009 (NSW)
Building and Construction Industry Security of Payment Act 1999 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Aquatec-Maxcon v Minson Nacap (2004) 8 VR 16
Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99
Bond v Hongkong Bank of Australia (1991) 25 NSWLR 286
Brewarrina Shire Council v Beckhaus Civil Pty Ltd (2003) 53 NSWLR 576
Crawley v Vero Insurance Ltd [2012] NSWSC 593
Creative Building Services v Jolene Investments [2013] NSWSC 391
For the Good Times Pty Ltd v Coltern Pty Ltd [2007] NSWSC 108
H & D Retail Pty Ltd v TransMS Pty Ltd [2021] NSWSC 87
Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd [2025] NSWCA 49
Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104
The Owners Corporation SP 90832 v Dyldam Developments Pty Ltd [2024] NSWSC 1519
Tin-Tagel Majikk Pty Ltd v Hockey [2026] NSWCA 72
Tricontinental Corporation v HDFI (1990) 21 NSWLR 689
Warragamba Winery Pty Ltd v State of New South Wales [2010] NSWSC 66
Category: Principal judgment
Parties: VSD Investments Pty Ltd as trustee for The VSD Investments Trust (Plaintiff)
Builtcom Constructions Pty Ltd (First Defendant)
Nicholas Bechara (Second Defendant)
Conquest Corporation Pty Limited (Third Defendant)
Michael Akkawi (Fourth Defendant)
Representation: Counsel:
D L Williams SC with T Immidi (Plaintiff)
T J Breakspear SC with W Marshall (First and Second Defendants)
Solicitors:
HWL Ebsworth Lawyers (Plaintiff)
Fortis Law (First and Second Defendants)
Clayton Utz (Third and Fourth Defendants)
File Number(s): 2024/00468843
Publication restriction: Nil
The sole issue for determination is the proper construction of clause 28.2 of “Australian Standard Construction Management – General Conditions” (AS4916-2002) (Contract).
VSD Investments Pty Ltd is a property developer, which, on 27 October 2022, contracted with builder, Builtcom Constructions Pty Ltd, to construct a 30-storey mixed use retail, commercial and residential apartment building in Burwood.
The Contract is a “cost plus” contract in the form of an agreed modified standard AS4916-2002. VSD’s “fundamental obligation” was to pay Builtcom’s Actual Reimbursable Costs plus a management fee (covering site preliminaries, profit and overhead) pursuant to clause 2.2 of the Formal Instrument and General Conditions.
On 25 October 2024, VSD elected to terminate the Contract “for convenience” pursuant to clause 28.1. Builtcom does not challenge the exercise of that right.
The broader proceedings concern a determination of the parties’ accrued rights under the terminated Contract. Builtcom seeks payment of in excess of $21 million, including sums specified in clause 28.2 as payable by VSD for exercising its clause 28.1 right to terminate for convenience.
The proper construction of clause 28.2 is necessary to answer the separate question ordered pursuant to rule 28.2 Uniform Civil Procedure Rules 2005 (NSW) (UCPR) by Nixon J:
Are any, and if so which, of the amounts which have been claimed by [Builtcom] from [VSD] in [Progress Claim 23] and are claimed by [Builtcom] in the Cross-Summons and Amended Cross-Claim List Statement for each of the items in clause 28.2(a)-(g) of the Contract unrecoverable by reason of [Builtcom’s] failure to include with [Progress Claim 23] the material referred to in clauses 25.1(g) and 25.1(i) of the Contract within 28 days of the receipt of the Termination Notice [pursuant to clause 28.1(a) of the Contract].
The separate question was intended to determine whether clause 28.2 provides Builtcom with the right to seek payment of the clause 28.2 sums by way of a “progress claim” and/or as a contractual debt in final rights proceedings. If, properly construed, clause 28.2 provides that the only mechanism for payment of the clause 28.2 sums is by way of a progress claim, then the issue is whether Builtcom complied with the contractual requirements for such a progress claim; any failure to do so would shut Builtcom out of payment for those sums forever.
For the reasons that follow, I consider Builtcom is not limited to seeking the sums in clause 28.2 by way of a progress claim. Whether Progress Claim 23 (PC23) was contractually valid is not a matter that ought to be determined now, because the parties did not make detailed submissions on the proper construction of subclauses 25.1(g) and 25.1(i), and there appear to be disputed facts that cannot currently be determined because the parties indicated further evidence could be required.
The parties agreed facts for the purpose of the ordered separate question, which are:
On 27 October 2022, VSD as principal and Builtcom as construction manager entered into the Contract.
On 25 October 2024, VSD validly terminated the Contract for convenience pursuant to clause 28.1(a)(i) (Termination Notice).
Builtcom purported to have made a progress claim, PC23, under cover of a letter dated on its face 22 November 2024 pursuant to clauses 25.1 and 28.2 of the Contract, which claim was not made before 22 November 2024.
Builtcom alleges that PC23 was made on 22 November 2024 upon the placement of it under the door of Shop 1, 36 Victoria Street in Burwood. The parties did not seek a determination of the validity of this contention in this judgment.
VSD alleges that PC23 was found by it under the door of Shop 1, 36 Victoria Street in Burwood (being its former office) on 25 November 2024 and so received on 25 November 2024. The parties did not seek a determination of the validity of this contention in this judgment.
In PC23 Builtcom sought payment of $30,625,050.75 pursuant to clause 28.2 of the Contract.
In its amended cross-claim, Builtcom seeks payment of $20,455,830.79 pursuant to clause 28.2 of the Contract in respect of items included in PC23.
The material referred to in clause 25.1(g) of the Contract was not provided with PC23 and that material was not otherwise provided within 28 days of the Termination Notice.
25 Payment
25.1 Progress claims Subject to:
a) the provisions of the Contract;
b) the Construction Manager complying with subclause 15.1,
the Construction Manager is entitled to make a claim for payment by submitting a progress claim:
c) on the 28th day of the calendar month; and
d) within the time prescribed by subclause 25.5.
An early progress claim shall be deemed to have been made on the date for making that claim.
Each progress claim shall be given in writing to the Principal and Principal’s Representative and shall include details for the value of the Services carried out and the value of the project completed as at the date of the progress claim, including:
e) any Actual Reimbursable Costs; and
f) any amounts on account of the management fee.
The Construction Manager shall include with its progress claim, on an open book basis:
g) certified copies of all relevant documents to substantiate the value being claimed by it for each item of works within a trade package or Construction Manager’s trade works in excess of $25,000.00 excluding GST in the progress claim (including time sheets, invoices, remittance advices, dockets, confirmations of orders, and photographs);
h) all certificates required by clause 6.9 that relate to the Services the subject of that progress claim;
i) a reconciliation of amounts claimed against the lump sum price for each subcontract;
j) where requested by the Principal or Principal’s Representative, sufficient evidence to verify that all labour utilised on the project has been charged under a subcontract or as Construction Manager’s trade work, variations or Actual Reimbursable Cost but not double charged, double counted or double margins applied;
…
m) any other information reasonably requested by the Principal or Principal’s Representative.
Notwithstanding anything to the contrary in this Contract or otherwise, the Construction Manager acknowledges and agrees that:
n) its monthly entitlement to payment in respect of Preliminaries in each month after the date of execution of the Contract is:
i) the amount set out for the corresponding month in the Drawdown Schedule; and
ii) any amounts payable in accordance with adjustments to the Preliminaries Cap in accordance with clause 23.5
o) its monthly entitlement to payment in respect of Profit and Overhead in each month after the date of execution of the Contract is:
i) the amount set out for the corresponding month in the Drawdown Schedule; and
ii) any amounts payable on account of profit and overhead for variations in accordance with clause 24.3(f)-(g).
p) it must not claim and will not be entitled to payment in respect of Preliminaries in any given month in excess of the amount calculated in accordance with sub-paragraph (n) above;
q) it must not claim and will not be entitled to payment in respect of Profit and Overhead in any given month in excess of the amount calculated in accordance with subparagraph (o) above; and
The Construction Manager acknowledges and agrees that, in respect of the management fee, its only entitlements are to claim for:
r) Preliminaries up to but not exceeding the applicable Preliminaries Cap (together with additional amounts permitted by subclause 23.5 above) in accordance with sub-paragraph (n) above; and
s) Profits and Overheads up to but not exceeding the Profit and Overhead Cap (together with additional amounts permitted by subclause 24.3(f) -(g) above) in accordance with sub-paragraph (o) above.
25.2 Payment Schedule
The Principal’s Representative shall, within 10 Business Days of receiving a progress claim under subclause 25.1 issue to the Construction Manager (on behalf of the Principal) and the Principal a payment schedule which identifies the progress claim to which it relates, and which sets out:
a) its determination of the value of the Services and the project carried out in accordance with this Contract including the management fee and the Actual Reimbursable Costs;
b) the amount already paid to the Construction Manager;
c) the amount the Principal is entitled to retain, deduct, withhold or set-off under this Contract;
d) a certificate evidencing the Principal’s Representative’s assessment of security (if any) and moneys due from the Construction Manager to the Principal pursuant to the Contract;
e) the amount (if any) then payable by the Principal to the Construction Manager on account of the management fee and the Actual Reimbursable Costs and which the Principal proposes to pay to the Construction Manager; and
f) if the amount in paragraph (d) is less than the amount claimed in the progress claim:
i) the reason why the amount in paragraph (d) is less than the amount claimed in the progress claim; and
ii) if the reason for the difference is that the Principal proposes to retain, deduct, withhold or set-off payment for any reason, the reason for the Principal retaining, deducting, withholding or setting-off payment.
The issue of a payment schedule by the Principal’s Representative does not constitute approval of any work nor will it be taken as an admission or evidence that the part of the Services covered by the payment schedule has been satisfactorily carried out in accordance with this Contract.
Failure by the Principal’s Representative to set out in a payment schedule an amount, or the correct amount, which the Principal is entitled to retain, deduct, withhold or set-off from the amount which would otherwise be payable to the Construction Manager by the Principal will not prejudice the Principal’s right to subsequently exercise its right to retain, deduct, withhold or set-off any amount under this Contract.
The Principal’s Representative may, in any payment schedule, correct any error and modify any assumptions or allowances made in any previous payment schedule issued by the Principal.
25.3 Payment Schedule operation
Subject to clause 26, the Principal shall pay the Construction Manager the amount set out in the payment schedule referred to in subclause 25.2 above within 15 business days after receipt by the Principal and Principal’s Representative of the Construction Manager’s progress claim. The Principal must use all reasonable endeavors to pay the Construction Manager the amount set out in the payment schedule as soon as possible and in any event, prior to 15 Business Days after receipt of the Construction Manager’s progress claim. A payment of money shall not be evidence that the Services or the project have been carried out satisfactorily. All payments shall be regarded as a payment on account only.
If under the payment schedule an amount is required to be paid by the Construction Manager to the Principal, the Construction Manager must pay to the Principal the amount required to be paid by the payment schedule within 30 business days after the Construction Manager receives the payment schedule.
The Principal and the Construction Manager agree that the payment schedule issued by the Principal’s Representative is deemed to be a payment schedule issued by the Principal to the Construction Manager in compliance with the provisions of the SOP Act.
…
25.5 Final payment and certificate
Subject to the provisions of the Contract, within 35 days after the expiration of the last Defects Liability Period, the Construction Manager shall give the Principal and Principal’s Representative a written final payment claim, endorsed ‘Final Payment Claim’ being a progress claim together with all other claims whatsoever in connection with the subject matter of the Contract.
Within 10 Business Days after the issue of the final payment claim, the Principal’s Representative shall issue to the Construction Manager a final certificate evidencing the moneys finally due and payable between the Construction Manager and the Principal on any account whatsoever in connection with the subject matter of the Contract.
Those moneys certified as due and payable shall be paid by the Principal or the Construction Manager, as the case may be, within 7 days after the debtor receives the final certificate.
The Construction Manager shall be deemed to have released the Principal from any Claim that has not been made within the time under this clause in respect of any fact, matter or thing arising out of, or in any way in connection with the subject matter of this Contract. Notwithstanding the foregoing, the release will not operate to prevent the Construction Manager from issuing a cross claim against the Principal in circumstances where the Construction Manager is seeking to merely pass on any liability for a claim made against it by a third party.
…
25.7 Other moneys due
The Principal may set off, deduct or withhold from moneys otherwise due to the Construction Manager and from any security:
a) any debt or other moneys due and payable from the Construction Manager to the Principal (including any debt due and payable from the Construction Manager to the Principal pursuant to section 26C of the SOP Act); or
b) any amount that is less than or equal to the amount claimed to be owed under a payment withholding request served on the Principal pursuant to Division 2A of the SOP Act;
c) any genuine bona fide claim to money which the Principal has against the Construction Manager or a related body corporate
whether for damages or otherwise, whether under or in connection with this Contract or relating to the work, whether for damages (including liquidated damages) or otherwise.
The rights given to the Principal under this subclause 25.7 are in addition to and do not limit or affect any other rights of the Principal under the Contract or at law and nothing in this subclause 25.7 affects the right of the Principal to recover from the Construction Manager the whole of the debt, monies, amounts or claim in question or any balance that remains owing.
Failure by the Principal to deduct from an amount otherwise due to the Construction Manager or the security any amount which the Principal is entitled to deduct under this subclause 25.7 will not prejudice the Principal’s right to subsequently exercise its right of deduction under this subclause.
This subclause 25.7 will survive any termination of the Contract.
…
28.2 Payment upon termination for convenience or termination by frustration
If the Contract is terminated by the Principal under subclause 28.1 or is frustrated, the Principal shall pay the Construction Manager, subject to subclause 25.7:
a) any amount then due to the Construction Manager but unpaid for the Services carried out to the date of termination or frustration which are not included in a previous payment claim;
c) the cost of materials and equipment reasonably ordered by the Construction Manager for the project and which the Construction Manager is liable to accept, but only if they will become the Principal’s property upon payment;
d) the costs reasonably incurred in returning to their place of engagement the Construction Manager, subcontractors and their respective employees engaged in the Services at the date of termination or frustration;
e) the Construction Manager’s reasonably incurred demobilisation costs (including the costs of removing construction plant from the site) and break costs to subcontractors and consultants; and
g) a fixed termination fee of $1,500,000 which for the avoidance of any doubt the Construction Manager acknowledges and agrees will be the Construction Manager’s sole relief or remedy for or in connection with any indirect or consequential loss (including loss of profit) by reason of the termination or frustration.
The Construction Manager must make its progress claim for payment in respect of any such amount due to it under this subclause 28.2 within 28 days after receiving the notice of termination referred to in subclause 28.1 or frustration of the Contract. Such progress claim must be in accordance with the requirements of clause 25 and will be dealt with in accordance with the terms of that clause. The Construction Manager’s entitlement to payment under this subclause 28.2 is its sole right arising out of or in relation to the termination of the Contract under subclause 28.1 or frustration. Upon receipt of the notice of frustration or the notice referred to in subclause 28.1 the Construction Manager shall have no Claim other than as is provided for in this subclause 28.2.
To the extent it has not had recourse to them, after the Construction Manager has complied with all of its obligations under this subclause 28.2 and subject to the Principal’s rights to have recourse to security in this Contract, the Principal shall release any remaining security then held by the Principal.
This subclause 28.2 survives the termination or frustration of the Contract.
includes any claim, cross-claim, action, demand or proceedings by the Construction Manager for the payment of money (including damages) or for an extension of time:
a) under, arising out of, or in any way in connection with the Contract, including a breach of the Contract by the Principal or any direction of the Principal’s Representative;
b) arising out of, or in any way in connection with the Services, the works, prior works or the project; and
c) otherwise at law or in equity, including by statute, in tort (including negligence) or for restitution.
The principles that apply to the construction of commercial contracts are well-established.
VSD claimed it has no obligation to pay Builtcom any sums based on its construction of clause 28.2 because clause 28.2 only required VSD to pay the clause 28.2 sums if Builtcom submitted a valid progress claim for payment, which it did not because:
Builtcom’s PC23 was not received within 28 days of the notice of termination. That factual issue of the timing of receipt is not one to be determined now.
Builtcom did not attach all the relevant documentation to PC23 as required by clause 28.2, which incorporated the requirements of clause 25. This point is raised on the separate question, however, for the reasons that follow I do not consider it appropriate to determine it now.
VSD relied on the language of clause 28.2, which it asserted was unambiguous. Builtcom submitted VSD’s construction was “unmeritorious” and would result in “draconian” consequences that placed too much “emphasis on the administrative procedures by which the amounts due are to be claimed, and insufficient emphasis on the accrued obligation on VSD to pay such sums to Builtcom”.
I accept VSD’s submission that merely because the proper construction of a contract gives rise to what appears to be a harsh result does not give a Court a licence to rewrite the contract: see eg Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99 at 109-110 (Gibbs J) (ABC). However, in determining the appropriate construction a Court may consider the practical effect of various possible constructions, based on the assumption that the more commercial outcome would likely have been intended by the parties. This is so even where there is no ambiguity in the sense of two equally possible meanings, and provided no contrary intention is indicated: see Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104 at [51] (French CJ, Nettle and Gordon JJ); ABC at 110. This is not to say that the Court departs from the language used by the parties: see Tin-Tagel Majikk Pty Ltd v Hockey [2026] NSWCA 72 at [87] (Price AJA) (and citations therein).
For the reasons below, I prefer Builtcom’s submission that the better construction of clause 28.2 allows it to make a “progress claim” in accordance with clause 25, in which case the scheduled amount would be paid promptly, and/or it can sue for the amounts quantifiable under clause 28.2(a)-(g). Builtcom distinguished between a “claim” as based on enforcing a progress claim, such as PC23, which it is not seeking to do in the proceedings, and its right to be paid the contract price (including clause 28.2 amounts), which is how it brings its amended cross-claim.
In effect, Builtcom submitted that the process prescribed in clause 28.2 for a progress claim incorporated the administrative requirements of clause 25 and was designed as a cash-flow mechanism; it provided a “provisional amount as a progress payment which will be adjusted on final accounts”: see eg Brewarrina Shire Council v Beckhaus Civil Pty Ltd (2003) 53 NSWLR 576 at [70], [79] (Young CJ in Eq, in dissent) (Brewarrina).
I consider the following features of the drafting conclusive.
First, it does not appear controversial that clause 28.2 is designed to provide Builtcom with agreed compensation for VSD’s exercise of its right to terminate the Contract for convenience, or where the Contract otherwise comes to an end through frustration; in neither case is Builtcom at fault. VSD’s counsel submitted, and I accept, it can be inferred that the parties negotiated the “categories” of payment VSD is to make, as they are numbered (a), (c), (d), (e) and (g), with (b) and (f) missing. This was the bargain the parties struck. VSD would have no right to terminate for convenience at common law.
The clause stresses that Builtcom’s entitlement is limited to what is specified in those subclauses (a)-(g):
Subclause (g) indicates that it provides Builtcom’s “sole relief or remedy for or in connection with any indirect or consequential loss (including loss of profit) by reason of the termination or frustration”; and
The text below clause (g) indicates that the entitlement to “payment under this subclause 28.2 is [Builtcom’s] sole right arising out of or in relation to the termination … or frustration” (emphasis added).
The clause also indicates that Builtcom “shall have no other Claim other than as is provided for in this subclause 28.2” (emphasis added).
The language identifies with precision the only claims payable. The clause is therefore avoiding any argument that Builtcom might be entitled to some form of consequential loss or statutory entitlement (eg for frustration) outside the categories in the clause. However, I do not accept that it has the effect that Builtcom would only be able to claim for the clause 28.2 component of the Contract price if it complied with clause 25.
Secondly, it is perhaps unfortunate that the clause deals with both a “progress claim” for the amounts under clause 28.2 and also the limitation of the types of claims in the same paragraph. However, there would need to be clear words to lead to the conclusion that:
VSD was liable to pay costs, including the “fixed termination fee”, which did not need to be quantified; and
Builtcom would be completely denied any entitlement to the itemised costs including the fixed fee if it failed to strictly (or substantially) comply with the administrative requirements and timing of a “progress claim”.
The clause clearly distinguishes between a progress claim and a final rights claim for these reasons:
The clause commences with the obligation, “Principal shall pay”. What follows identifies what must be paid. The restrictions on a “progress claim” for payment do not diminish VSD’s obligation to pay, being its negotiated “price” for terminating for convenience or avoiding dispute about the impact of frustration.
The clause uses different language for “progress claim for payment” and “entitlement to payment”. The clause does not specify that a failure to submit a compliant and timely progress claim obviates the “entitlement to payment”.
The clause indicates that Builtcom’s “right” to the clause 28.2 payment arises “upon receipt of the notice” of termination. It does not indicate that the entitlement only ever arises if Builtcom submits a “progress claim” within 28 days of receipt of the notice. Instead, if Builtcom wanted a fast interim payment then it was required to submit such a progress claim, but otherwise could sue for its clause 28.2 entitlement.
The final sentence provides, “This subclause 28.2 survives the termination or frustration of the Contract”. The effect is that Builtcom’s entitlement survives and can be enforced. Had it been the case that Builtcom was only entitled to a right that survived 28 days after termination, as VSD submitted, then it would have been unnecessary to include this sentence.
I reject VSD’s submission that reference to “such progress claim” imports an intention that payment under clause 28.2 can only be by way of a progress claim. The language does not need to be read that way and should not be. The clause states that a progress claim under clause 28.2 must be dealt with in accordance with the “terms” of clause 25; that clause concerns payment for progress claims, not entitlement to any payment more broadly. It does not mean clause 25 cannot apply separately.
Thirdly, the Contract has a detailed clause 25 concerning progress claims, which provides a regime similar to that under the Building and Construction Industry Security of Payment Act 1999 (NSW). The legislative purpose is well known; “pay now, fight later”: see Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd [2025] NSWCA 49 at [8] (Payne JA, Gleeson JA and Griffiths AJA agreeing) (Martinus). This is to ensure that “a contractor who carries out construction work for a principal receives progress payments for carrying out that work”: Martinus at [3].
Progress claims are required to comply with clause 25.1, which specifies timing and requirements as to writing and inclusion of “details of the value of the Services carried out and the value of the project completed”. Further, it provides that Builtcom “shall include with its progress claim” various documents, including certified copies of documents to substantiate value, necessary certificates, and a reconciliation of amounts against the lump sum price for each sub-contract.
Under clause 25.2, upon receipt of a progress claim, the Principal’s Representative is required to issue a payment schedule within 10 business days determining the amount considered payable against the progress claim. Clause 25.2 importantly includes the Principal’s entitlement to have a final rights dispute:
The issue of a payment schedule … does not constitute approval of any work nor will it be taken as an admission or evidence that the part of the Services covered by the payment schedule has been satisfactorily carried out in accordance with this Contract.
Clause 25.3 obliges the Principal to pay Builtcom the amount in the schedule within 15 business days of receipt of the claim. However, as with clause 25.2, it is provided that “All payments shall be regarded as a payment on account only”.
I do not accept that because the language indicates that the Principal’s payments are “on account” it means that Builtcom is not entitled to challenge the amount paid pursuant to a schedule. Clause 25.1 specifies that Builtcom acknowledges that it is not entitled to more than the “Preliminaries Cap” (as adjusted under the Contract) and the “Profit and Overhead Cap” (as adjusted). Therefore, it appears the parties have agreed that Builtcom is entitled to agitate for those amounts and dispute any adjustments if not agreed. The progress claims do not therefore determine final rights to payment.
Clause 25.4 provides that the Principal “shall not be liable to pay for unfixed plant and materials unless” inter alia, Builtcom “has perfected for the purposes of the [Personal Property Securities (Commonwealth Powers) Act 2009 (NSW)], any Security Interest it holds in the unfixed plant and equipment” … and “where the item… is an item to be imported into Australia, [Builtcom] has provided to [VSD] a clean on board bill of lading…”. VSD’s counsel accepted that Builtcom would need to engage with third parties in order to comply with this clause if it sought to be paid concerning such plant and materials.
Clause 28.2 requires submission of any progress claim for amounts under the clause within 28 days of receipt of the notice. This is distinguishable from the clause 25.1 requirement of submission of a progress claim on the 28th day of the month. I do not accept this timeframe creates a requirement for strict compliance, failing which Builtcom was denied any entitlement to the clause 28.2 amounts. Instead, the reference to 28 days for a clause 28.2 progress claim was merely because the clause 28.1 notice may come a day or so before the 28th day of the month (as in clause 25.1).
The mandatory language of “must” in the context of Builtcom making a progress claim under clause 28.2 is given effect to, including by the requirement to comply with clause 25. A failure to comply with the clause 25 requirements (as properly construed) would entitle VSD to reject a progress claim or calculate a reduced scheduled amount. Similarly, it is consistent with the fact that the Principal’s Representative “may” correct errors and/or modify any assumptions or allowances made in those previous payment schedules. However, the true calculation of the amount payable under clause 28.2 is a matter the parties are entitled to litigate in a final rights hearing.
A commercially sensible construction would not shut Builtcom out from making a claim for the full amounts under clause 28.2 if it failed to comply with either the time or documentation requirements in clause 25, where:
There would be no prejudice to VSD if it was not required to pay the agreed sums promptly and instead it kept its money longer until a complete claim was made.
It would be reasonably foreseeable that it may take longer than 28 days to document a payment claim for all amounts. For example, it may be that there would be some time taken up with dealing with third parties, either in relation to plant and equipment, or reasonably incurred “break fees” with sub-contractors. Again, to shut out a claim because Builtcom was unable to provide complete documentation within 28 days would place an incredible risk on Builtcom that it would be paid none of the promised amounts because it was required to demobilise, organise plant and equipment, negotiate with sub-contractors’ break fees and provide all documentation for its final claim for payment within 28 days, even if delays were caused by third parties.
It would be very inconsistent to allow a final rights dispute concerning earlier progress claims that were not paid in full, and to restrict Builtcom to what VSD’s counsel said was its “final claim” under clause 28.2 within 28 days.
I do not accept that because clause 28.1 provides that VSD ought to warn Builtcom of the possible termination for convenience, that somehow provides Builtcom with more time to submit its progress claim, ameliorating the impact of VSD’s construction. Builtcom had no extra time, because it was obliged to continue performing the Contract until it received the notice to terminate.
Fourthly, I do not accept that the authorities to which VSD referred determine the issue or materially assist it. None of them dealt with the particular clauses in issue here.
Obviously, if it is determined that the proper construction of the Contract is that there is a condition precedent to VSD’s obligation to pay the clause 28.2 sums, then a failure by Builtcom to comply with that condition precedent will provide VSD with a defence to any claim for payment. However, it is a question of construction in every case.
Both parties referred to Brewarrina*.* Ipp JA (Mason P agreeing) concluded that the obligation of the superintendent to issue a payment certificate under clause 42.1 of AS2124-1992 was subject to a condition precedent that the contractor support the claim with evidence of the amount due to it, because the language of the clause provided that the contractor “shall deliver” those documents: see [22]-[26], [34]. However, that clause also provided that any payment under a certificate would not “prejudice the right of either party to dispute … whether the amount so paid is the amount properly due and payable …”: at [4].
In issue was an interim payment and the preconditions to its assessment and payment. As Young CJ in Eq noted at [72], “The purpose of the clause is to provide a speedy provisional determination of what should be paid to the contractor to keep the work moving”. See also *Aquatec-*Maxcon v Minson Nacap (2004) 8 VR 16 at [29] (Winneke P, Buchanan and Eames JJA).
Here, the issue is whether clause 28.2 creates a condition precedent to any payment ever of the clause 28.2 sums, or only a condition precedent to a progress claim payment under clause 25. I consider it the latter, as outlined above.
Similarly, I do not consider that cases such as Tricontinental Corporation v HDFI (1990) 21 NSWLR 689 (Tricontinental) assist VSD. In Tricontinental, the contract included a lengthy clause 2.2.1 which concerned “entitlement to make demand” for promised money under a facility: at 711. Clause 2.2.1 provided that it was subject to clause 2.8, which specified “pre-conditions to entitlement to make demand” including “the entitlement … to make a demand … shall be subject to the following conditions precedent”, including that facility documents had been executed and lodged with authorities and all approvals and consents had been obtained: at 713. Clause 2.2.1 also required the provision of a notice in writing being provided within time frames of an awareness of an event of default.
Samuels JA and Waddell AJA considered that there was no available reading of the clauses in question other than strictly, particularly because the issue was the liability of a surety: Tricontinental at 706-707. Here, there is a very different situation. VSD is not a surety and is aware that its exercise of the right to terminate for convenience would trigger a liability to make the clause 28.2 payments, and would likely already have some information around the approximate quantum of those sums. Further, the language in clause 28 and the Contract as a whole is quite different to that in Tricontinental*.* See also, for example, Bond v Hongkong Bank of Australia (1991) 25 NSWLR 286.
I consider the most analogous case is the ex tempore judgment of McDougall J in Creative Building Services v Jolene Investments [2013] NSWSC 391. There, the issue was whether a builder was entitled to final payment when a number of express requirements for a progress payment found in clause 13 had not been satisfied.
McDougall J considered the builder was entitled to be paid, as the owner had promised to pay for the works in clause 3.1, albeit in accordance with clause 13 and schedule 4.
His Honour focused on the purpose of clause 13, which was construed to provide a mechanism for progress payments, and concluded at [26], [29]-[31] that:
It is not cl 13 that imposes the obligation to pay, and gives the entitlement to be paid. That function is served by cl 3.1. What cl 13 does is provide an entitlement to, and a mechanism or instalment pattern for, progress payments.
… to go further, and to say that a mechanism as to how payments are to be claimed and made has the further function of conditioning, precedentially, the entitlement to payment of the price as a whole seems to me to be putting far too high a burden on cl 13, either read on its own or in the context of the contract as a whole.
… a failure to comply with the requirements of cl 13 would provide a proprietor with a defence to a claim for a particular progress payment. Thus, if the builder had taken the opportunity to sue for one or more of the unpaid progress claims that it rendered, the proprietor could have raised, by way of defence failure to comply with (for example) cll 13.1 and 13.5. If factually, those defences were made good, then the entitlement to the progress claim would be defeated.
… it does not seem to me that the Court should construe clause 13, so as to impose that as an obligation to be satisfied before the now defined balance due is paid, unless the language is intractable. And for the reasons that I have given, I do not think that it is.
After the separate question hearing was listed, the parties submitted it was expedient to have me also determine at the same time Builtcom’s more recently filed motion to withdraw admissions concerning the legal operation of elements of clause 25.1.
Despite indications and written submissions that VSD strongly opposed Builtcom being granted such leave, virtually no oral submissions were made. No real prejudice was identified by VSD’s counsel, should leave be granted.
Leave ought to be granted. Builtcom’s solicitor gave uncontested evidence that his filing of the pleadings including admissions as to the legal operation of certain parts of clause 25 were in the context of understanding that only very narrow issues were being taken by VSD in relation to Builtcom’s PC23. During the debate before Nixon J about whether a separate question ought to be ordered and its terms, the case became clearer. Builtcom therefore seeks to clarify its admissions, to retain the ability to argue the proper construction of clause 25.1, and whether, as a matter of fact, PC23 is compliant. Builtcom further seeks to withdraw what might be seen as an admission that the clause 25.1 requirements are promissory, by withdrawing an admission there has been a “breach” of clause 25.1.
I accept Builtcom’s explanation.
I consider that in the context of litigation run in the Technology and Construction List and the overriding purpose of the Civil Procedure Act 2005 (NSW) (CPA), it is appropriate to grant Builtcom the leave sought. An erroneous admission ought to be withdrawn unless there are significant factors that make it inappropriate to allow withdrawal: see eg For the Good Times Pty Ltd v Coltern Pty Ltd [2007] NSWSC 108 at [3] (Young CJ in Eq). I consider it in the interests of justice to grant leave for the withdrawal of the admission: see H & D Retail Pty Ltd v TransMS Pty Ltd [2021] NSWSC 87 at [11] (Stevenson J).
VSD wishes to file further evidence on the clause 25.1 issue, which is appropriate and avoids any possible prejudice. There is no suggestion that some legal argument about the proper construction of clause 25.1 and consideration of aspects of PC23 would delay the progress of the litigation in any way. In contrast, to deny Builtcom to withdraw the admissions may deny it of a material defence.
In the circumstances it is appropriate for VSD to pay Builtcom’s costs of the motion, where VSD effectively capitulated during the hearing. However, to the extent that there are costs thrown away by reason of Builtcom’s amendment, Builtcom must pay them.
I do not consider it appropriate to answer the separate question originally ordered. It is inappropriate to determine issues of the proper construction of clause 25.1(g) and (i) and its application to PC23 where those matters are in contest, the parties have indicated that further evidence may be required, and the parties did not provide detailed submissions: see eg The Owners Corporation SP 90832 v Dyldam Developments Pty Ltd [2024] NSWSC 1519 at [5], [20]-[21], [41] (Hammerschlag CJ in Eq) (Dyldam). In relation to clause 25.1(g), VSD relies on an agreed fact that “material referred to in clause 25.1(g) of the Contract was not provided with PC23 and that material was not otherwise provided within 28 days of the Termination Notice”. However, that does not assist with the construction of the clause nor whether a valid progress claim was issued under PC23.
Where there is an ongoing factual debate, rather than merely a question of fact or mixed fact and law, a separate question is not generally appropriate: see eg Dyldam at [39]. In those circumstances, I consider it appropriate to revoke that order for a separate question: Dyldam at [5]; see also Warragamba Winery Pty Ltd v State of New South Wales [2010] NSWSC 66 at [22] (Harrison J).
Instead, I consider it appropriate to answer a reframed question which more specifically and efficiently answers the matters debated before me: see Crawley v Vero Insurance Ltd [2012] NSWSC 593 at [16], [19]-[20] (Beech-Jones J); see also s 56 CPA. In circumstances where the revised question identifies the matters raised by the parties in the hearing before me, it is not necessary nor in the interests of the overriding purpose of the CPA to require further submissions from the parties on that revised question. It is appropriate here to make an order for a revised separate question after the hearing: see r 28.2 UCPR.
The question to be answered is (adopting the definitions in the original question and detailed in the orders below):
Can Builtcom maintain its claim in the Cross-Summons and ACCLS for items specified in subclauses 28.2(a)-(g) of the Contract irrespective of PC23’s compliance with subclauses 25.1(g) and/or 25.1(i) of the Contract, and/or whether PC23 was made within 28 days of the receipt of the Termination Notice?
The answer to that question is “Yes”.
Therefore, I make the following orders:
The separate question under order 1 of the orders made by Nixon J on 18 May 2026 is revoked.
By reference to the agreed facts set out in Annexure A to these orders, the Court orders pursuant to r 28.2 UCPR, the determination of the following question:
Can Builtcom maintain its claim in the Cross-Summons and ACCLS for items specified in subclauses 28.2(a)-(g) of the Contract irrespective of PC23’s compliance with subclauses 25.1(g) and/or 25.1(i) of the Contract, and/or whether PC23 was made within 28 days of the receipt of the Termination Notice?
In the above question:
ACCLS means the first defendant’s Amended Cross-Claim List Statement filed 29 September 2025;
Contract means the contract referred to in prayer 1 of the Further Amended Summons filed 18 September 2025;
Cross-Summons means the first defendant’s Cross-Summons filed 5 September 2025;
PC23 means Progress Claim 23 referred to in prayer 3 of the Further Amended Summons filed 18 September 2025; and
Termination Notice means the notice dated 25 October 2024 pursuant to clause 28.1(a)(i) of the Contract amended to reflect the revised question as above.
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Annexure A - VSD orders made on 19 June 2026 (16.0 KB, docx)
Amended reference to Building and Construction Industry Security of Payment Act 1999 (NSW) in cover sheet and paragraph [27]
(2004) 8 VR 16
(1973) 129 CLR 99
(1991) 25 NSWLR 286
(2003) 53 NSWLR 576
(2015) 256 CLR 104
(1990) 21 NSWLR 689