Leighton Contractors Pty Ltd v Campbelltown Catholic Club Ltd [2003] NSWSC 1103
In the Equity Division of the Supreme Court of New South Wales, Einstein J held that a builder should have summary judgment on a payment claim under the Building and Construction Industry Security of Payment Act (NSW) as it then stood, because the claim was valid despite including old rock excavation work and delay costs and the superintendent's certificate was not a payment schedule [102], [104], [106], [112]. His Honour also held that the principal's separate proceedings should be summarily dismissed, among other reasons as an abuse of process [108].
What the court decided
Leighton contracted with the Club on 13 February 2002 to carry out works at Campbelltown on the AS 4000-1997 general conditions [1]. On 28 July 2003 Leighton faxed the Club progress claim 18 with a letter seeking $2,789,517.00 (excluding GST) "for your review and subsequent certification" [36]. That covering letter ended by stating that it was a payment claim made under the Act [36]. Leighton also sent the claim to the superintendent under a letter in almost identical terms [37].
The superintendent then issued a progress payment certificate certifying $23,674 as due [38]. Treating that amount as paid, Leighton demanded the balance of $3,044,794.70 [42]. Leighton sought summary judgment in respect of the payment claim, which was for $3,068,468.70, under the Building and Construction Industry Security of Payment Act 1999 (NSW) [3]. His Honour observed that the Act had been amended once and remained a source of difficulty [6]. In separate proceedings the Club sought a declaration that it owed no more than the certified amount, and an order that Leighton repay whatever it recovered [4].
Preferring the views of Nicholas J in Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd and Parist Holdings Ltd v WT Partnership Australia Pty Ltd to the obiter views of Austin J in Jemzone Pty Ltd v Trytan Pty Ltd, his Honour held that the claim sufficiently identified the construction work [55], [56].
Turning to whether a progress payment had been claimed, his Honour said that a payment claim must leave the recipient in no doubt that the Act has been engaged, judged objectively by a reasonable person [57], [58]. He called the question a close one [59]. The tail-end words seeking review and certification, and the attached statutory declaration, were otiose and apt to cause confusion [61], [63], [64]. Even so, a reasonable person reading the materials as a whole would have been in no material doubt that they were a payment claim under the Act, as the covering letter's last sentence conveyed [65]. The Club's submissions that no progress payment had been claimed were therefore rejected [66], [67]. The payment claim comprised the covering letter and all the attached materials, so the claim itself stated that it was made under the Act [68], [69].
Broadly adopting Leighton's submissions, his Honour rejected the Club's contention that Leighton had no entitlement when it served the claim because the superintendent had not yet certified any amount [70], [71].
It was common ground that some of the claimed rock excavation work had been carried out more than a year before 28 July 2003 [82]. No previous decision appeared to have dealt with section 13(4)(b) [85]. In his Honour's view, "the construction work to which the claim relates" refers to the work in a general way, so that if any item of it was carried out in the 12 months before service, the claim may also include items carried out earlier [94]. That construction was in effect the one Leighton contended for [96]. It was consistent with the Minister's second reading speech for the Amendment Act, and seemed consistent with the amended definition of progress payment, which includes a final payment [98], [99]. His Honour said that the matter was ultimately one of impression [101].
The challenge based on section 13(4)(b), and other items raising the same issue, therefore failed [102].
Applying Walter and Paynter Dixon Constructions Pty Ltd v JF & CG Tilston Pty Ltd, his Honour also held that including delay costs that might not be construction work did not invalidate the claim [103], [104].
Adopting Leighton's submissions, his Honour found that the certificate was not a payment schedule, as it replied to the contractual progress claim, did not identify the payment claim and did not indicate the amount the Club proposed to pay [106]. Nor was it served by the Club, because in certifying under the contract the superintendent acted as an independent certifier and not as the Club's agent [107].
His Honour gave several reasons for dismissing the second proceedings, including that they were brought to frustrate the summary judgment application and were an abuse of process, a backdoor route to outflank section 15 of the Act [108]. The Club remained entitled to bring substantive proceedings for final relief at an appropriate time, as section 32 of the Act recognises [111].
The Club's submissions that summary judgment should be withheld because it had arguable defences were not of substance and would undermine section 15(4) and section 16(4) [112]. The proper exercise of the discretion was to grant Leighton summary judgment as sought [112]. Short minutes of order were to be brought in, with costs then to be argued [113].
Why it matters
The decision reads the time limit generously, though his Honour treated the question as one of impression and as not previously decided. It also shows that a statutory claim dressed as a contractual progress claim invites challenge, and that a superintendent's certificate will not readily double as a payment schedule. Readers should check the current text of the Act.
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.