Revised payment claims under the Security of Payment Act may be invalid

A “revised” payment claim, for a different sum, served one day after another payment claim had been served was invalid because it was held to be a second payment claim and therefore in contravention of s 14(8) of the Building and Construction Industry Security of Payment Act 2002 (Vic) which prohibits more than one payment claim being served in respect of the same reference date.

Valeo Construction Pty Ltd v Pentas Property Investments Pty Ltd [2018] VSC 243

Background

The Plaintiff (Valeo) applied for judgment under s 16(2)(a)(i) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (the “Act”) against the Defendant (Pentas) for more than $1.5m as a result of Pentas failing to serve a payment schedule within the prescribed time following service of a payment claim.

On 28 February 2018 Valeo, the builder of a five-storey mixed commercial and residential building in Albert Park, served a payment claim on Pentas for $2,215,150.03.  On 1 March 2018 Valeo served a revised payment claim on Pentas for $2,240,160.13.  It was referred to by Valeo as “Rev 1” and “updated”.  The revised claim “updated” the sum payable for the works, resulting in an increase in the amount claimed of approximately $25,000.00.  On 6 March 2018 Valeo wrote to Pentas stating that Valeo had withdrawn the 28 February 2018 payment claim and relied on the 1 March 2018 payment claim.

By email dated 22 March 2018, the Superintendent served a payment schedule on Valeo, more than 10 business days after the service of the payment claim.  Valeo claimed that Pentas thereby became liable for the claimed amount on the due date.

Pentas argued that Valeo did not revise the first payment claim, but served two payment claims with respect to the same reference date, resulting in the second progress claim of 1 March 2018 being invalid.  Pentas also argued that, even if a claimant can withdraw and re-issue a claim under the Act, the conduct of Valeo was not sufficiently clear to found an express communication that the 28 February 2018 progress claim had been withdrawn.

Valeo argued that the revision or withdrawal and replacement of a payment claim is permitted under the Act.

The decision

Justice Digby accepted that a payment claim can be withdrawn or abandoned and a new payment claim can then be served in respect of the same reference date.  His Honour found, however, that the 1 March 2018 email, in which Valeo referred to the progress claim served that day as a revision of the 28 February 2018 payment claim, did not clearly and unequivocally convey to Pentas that the 28 February 2018 payment claim was being withdrawn.  The 1 March 2018 email did not clearly communicate to Valeo either that the 1 March 2018 claim was to be received as a replacement claim or was to be read together with the payment claim of 28 February 2018 as one and the same payment claim.  His Honour found that the 1 March 2018 claim was a different claim to the 28 February 2018 claim because it claimed a different total payment sum and contained an additional component relating to the builder’s margin for part of the works.  As a result, the 1 March 2018 payment claim was invalid because it breached s 14(8) of the Act, which prohibits more than one payment claim being served in respect of the same reference date.  His Honour added that the email of 6 March 2018, which unequivocally communicated the withdrawal of the earlier payment claim, highlighted the equivocal and confusing position created by Valeo as a result of the earlier service of the second payment claim on 1 March 2018.

In the course of his judgment, Digby J distinguished Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd (No 2) [2015] VSC 500 in which Vickery J found that two series of correspondence constituted one and the same payment claim.  In Amasya, the amounts claimed were the same and both correspondences referred to the same work.  In Valeo, the amount claimed in the second claim was different and therefore amounted to a different payment claim.

This case confirms that a party may withdraw and re-issue a payment claim made under the Act; however, it must do so unequivocally prior to issuing its “new” payment claim.  If it does not, it may contravene the prohibition in s 14(8) of the Act on making more than one payment claim in respect of the same reference date.

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