Samco Steel & Precast Pty Ltd v Roxton Commercial Builders Pty Ltd [2024] VCC 783  

Chris Hey  |  Isobel Carmody |  Courtenay Wood

Key takeout

• A timely payment schedule should always be provided where a payment claim is received, even where the party receiving the payment claim disagrees as to the terms or existence of the contract.
• Where a contract is made in the course of an ongoing series of communications between the parties, the point of formation and the terms of the relevant contract must be determined objectively by reference to the correspondence as a whole and the express intention of the parties. 
• While respondents who have failed to issue a payment schedule are not entirely precluded from raising defences to applications for judgment as a debt due for amounts claimed in payment claims under the security of payment legislation, those defences must generally be connected to things such as the manner of serving the payment claim and not the performance (or failure to perform) the construction works under the contract or conduct that occurred months after the claim was issued.

Facts

Samco Steel & Precast Pty Ltd (Samco) supplied and installed structural steel and concrete panels to Roxton Commercial Builders Pty Ltd (Roxton) in relation to three properties. Samco served ten payment claims in respect of the three properties and Roxton did not serve any payment schedules in response.

Samco applied for judgment under section 16(2) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act) against Roxton for failing to provide payment schedules. Roxton disputed the requirement to pay the amounts in the payment claims and contended that it was not precluded from raising a defence under section 16(4)(b)(ii) of the SOP Act.

The main issue was how the contracts were formed and the relevant terms of the contracts.  Samco argued that the contracts were formed by way of offer from Samco in its quotations and the acceptance by Roxton when it issued a purchase order or by telephone conversation.  Roxton argued that the issue of a purchase order was a counter offer which was accepted by Samco by its conduct in carrying out the works.  Roxton argued that the terms of the contracts were the ‘Roxton Commercial Builders contract conditions’ because the purchase orders contained in small print a statement that those terms applied.  Samco had never been provided and had not seen a copy of these Roxton standard terms before or during the works and Roxton had never mentioned those standard terms in any email communications or discussions with Roxton (beyond the reference in the purchase orders).

Roxton argued that relying on the Roxton contract conditions, it was entitled to raise defences to the payment claims, including that the payment claims:

• were not made in accordance with the applicable reference dates;
• included a deposit which was not provided for in the contract;
• included variations which were not claimable variations; and
• were for construction work completed after the relevant reference date arose.

Roxton also argued that following completion of the works, Samco damaged or removed precast panels and unfixed steel from the site and therefore Roxton was entitled to raise defences of unconscionable conduct, estoppel and a total failure of consideration to the application for judgment for the amounts in the payment claims.

Decision  

The court held that Samco was entitled to judgment for the full amount of the payment claims.

The court found that each of the contracts were formed by offers made by Samco’s quotations and acceptance by Roxton by the purchase orders and a telephone conversation.  The terms of the contracts were contained in Samco’s quotations and Roxton’s standard contract conditions were not incorporated into the contracts.

In determining when a contract is made in the course of ongoing communications the communications must be considered as a whole.  The starting point for determining whether terms are imported into a contract is whether it is reasonable to assume a party assented to those terms.

The court found that the purchase orders were not expressed or framed as a counter offer. The emails accompanying the purchase orders made clear that the parties regarded the process of entering into the contract as complete and intended for the works to commence on that basis.  The wording of those emails was inconsistent with a suggestion that the parties were still negotiating, including because the emails did not indicate that the purchase orders were counter offers or that Samco would need to ‘accept’ the purchase order to conclude the agreement.  The reference to Roxton’s contract terms was not mentioned elsewhere before, during or after the negotiations and Roxton acted as if the quotations provided by Samco were accepted.  Further, to rely on those terms, Roxton should have drawn Samco’s attention to those terms before Roxton’s acceptance.

Having found that the terms of the contracts were contained in Samco’s quotes, the court found:

• the reference dates were the milestones set out in Samco’s quotations;
• the payment claims were made after the relevant reference date;
• the terms contained in Samco’s quotations did allow Samco to claim a deposit; and
• the variations included in the payment claims were the second class of claimable variation, and therefore not ‘excluded amounts’,

and therefore all of the payment claims were valid and supported the application for judgment for the full amount of the payment claims.