Roberts Construction Group Pty Ltd v Drummond Carpentry Services Pty Ltd [2024] VSC 246

Nikki Miller  |  Isobel Carmody  |  Madeleine Matkowsky

Key takeouts

• Whether services claimed in a payment claim were rendered under one construction contract or another will not be a jurisdictional fact for the purposes of determining whether the claim is valid for the purposes of the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act).  Therefore an adjudication determination will not be reviewable by a superior court for jurisdictional error on the basis that the payment claim identified the incorrect construction contract which the relevant works were performed under.

• A response that rejects the payment claim without providing reasons for withholding payment will not be considered a valid payment schedule for the purposes of the SOP Act. Parties must be careful to ensure that any response to a payment claim clearly responds to the payment claim in accordance with the requirements of the SOP Act.
  
  
• A notice given under s 18(2)(a) of the SOP Act does not need to expressly refer to that section of the SOP Act, nor does it need to remind the respondent of its obligation to serve a payment schedule within 2 business days of receiving the notice.  The SOP Act does not impose an implied obligation on claimants to ensure respondents are aware of their statutory rights.
  

Facts

Drummond Carpentry Services Pty Ltd (Drummond) provided labour hire services for concrete works and timberworks on a project.  Roberts Construction Group Pty Ltd (Roberts) was the head contractor on the project.  Roberts also had a subcontractor engaged on the project to complete timber works, being Timberworks (Vic) Pty Ltd (Timberworks).  Part way through the project, Roberts directed Drummond to issue invoices for labour hire services relating to the timber works to Timberworks instead of to Roberts. 

Drummond continued issuing invoices to Roberts, two of which were not paid. As a result, Drummond served a payment claim under the SOP Act.

In response to the payment claim, Roberts issued two emails.  The first email, issued the same day as the payment claim, stated that the invoices were unacceptable ‘as stated in previous communications‘ (but did not identify with any specificity the previous communications referred to) and that an accurate and realistic figure must be submitted based on supporting evidence.  In the second email, issued 7 days later, the Roberts stated that Drummond had failed to rectify defective works (and gave a list of defects) and provided the claimant two days’ notice to rectify the works before Roberts would engage another contractor to complete the defective works.

In response to this, Drummond’s lawyers sent a letter of demand stating an intention to apply for adjudication under the SOP Act.  Roberts did not reply.  A further email was sent to Roberts advising that as they had received no response they would commence preparing an adjudication application. Roberts did not reply to this email either, or provide any payment schedule.

Following the making of an adjudication application the adjudicator issued an adjudication determination in favour of Drummond.

Roberts sought judicial review to quash the adjudication determination on the following grounds:

1. Roberts was not a person who, under a construction contract, was or may be liable to make a payment, because Timberworks was the person the claims should have been issued to;
   
   
2. one of Robert’s email responses to the payment claim was a payment schedule within the meaning of s 15 of the SOP Act and therefore, the application for adjudication was made out of time for the purposes of s 18(3)(c) of the SOP Act; and
   
   
3. if Robert’s email responses were not valid payment schedules, then Drummond did not provide the notification required under s 18(2)(a) of the SOP Act, because the two communications from Drummond’s lawyers did not state that Roberts had two days to file a payment schedule from the date of receipt.

Decision

The court found that none of the grounds on which review were sought had been made out and dismissed the claim for the following reasons:

1. There was no textual basis to conclude whether the services provided under the relevant construction contract was a jurisdictional fact, and treating that fact as jurisdictional would be contrary to the purpose of the Act (being facilitating prompt payment of progress payments separate form and in addition to a contractor’s entitlement under a construction contract to receive payment for completed work).  Therefore, once the existence of a construction contract has been determined, whether or not the invoices were lodged under the correct construction contract is not a jurisdictional fact that would invalidate an otherwise valid payment claim under the SOP Act. Instead a debate over whether or not the works have been performed pursuant to the relevant construction contract is an issue to be resolved through the statutory processes laid out by the SOP Act.  That is, this is a matter for the adjudicator to determine and it is within the adjudicator’s jurisdiction to reach the wrong conclusion on this point.
   
   
2. The two emails responding to the payment claim from Roberts could not be taken to be a valid payment schedule, as the correspondence was a bare assertion that further substantiation of the amount claimed was required before it could be assessed or paid.
   
   
3. Section 18(2)(a) of the SOP Act does not expressly require that a claimant advise a respondent of its rights (including the right to serve a payment schedule), and further there is no implied obligation on a claimant to advise a respondent of its rights under the Act.  Therefore, the s 18(2)(a) notification made by the Drummond’s lawyers was valid.

The court also made some comments about the availability of review of non-jurisdictional errors of law. Niall JA referred to the High Court’s decision in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 5; 264 CLR1 which was based on the equivalent NSW SOP Act and noted that he was unable to discern a reason to distinguish this approach for the Victorian SOP Act.  It is not clear from the judgment whether His Honour was directed to Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor [2009] VSC 156, or Hunters Green Retirement Living Pty Ltd v J.G. King Project Management Pty Ltd [2023] VSC 536, where it was held that a similar construction to that given to the New South Wales legislation by the High Court in the Probuild decision was not available for the Victorian Act because of the operation of s 85(5) of the Construction Act 1975 (Vic).