In the recent Victorian County Court case of APR Structural Steel Pty Ltd v Devco Project & Construction Pty Ltd [2021] VCC 1577 (APR v Devco), Her Honour Judge Burchell has provided useful guidance for building practitioners relating to “low value” claims that are made pursuant to the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act).

The process of obtaining judgment [see previous post: Options for Claimants After Adjudication] for a debt due in accordance with the SOP Act is usually one of summary procedure. This means that, for a Respondent who has failed or neglected to respond to a SOP claim within the required statutory timeframe (as amended from time to time by contract), there is very little means for that Respondent to subsequently resist a Claimant from obtaining summary judgment in respect of the debt claimed. In these circumstances, a Respondent will have no ability to raise a defence on the merits, other than challenging the Claimant’s compliance and conformity to the SOP Act.

For these reasons, commencing an application pursuant to the SOP Act on a summary basis is seen as the path of least resistance to obtaining judgment. In practice, this is done by way of filing a summons on originating motion, along with a supporting affidavit evidence. However, for low value SOP claims (typically claims less than $100,000.00), Claimants may elect to commence their application for judgment in the Magistrates’ Court of Victoria, as noted by Her Honour (at [24]):

Occasionally, a plaintiff nevertheless applies for relief under s16 of the SOP Act by bringing a proceeding commenced by writ and statement of claim, then issuing a summons seeking summary judgment pursuant to s61 of the Civil Procedure Act 2010 (Vic) (“the CPA”). This can add an additional layer of complexity in determining the test to be applied to any defences raised.

The issue with this approach is that the civil procedure rules of the Magistrates’ Court of Victoria do not allow for Claimants to commence their application by summons on originating motion with supporting affidavit evidence. As such, this may hinder the Claimant from having their application being progressed and heard expeditiously by the Courts.

However, Her Honour’s judgment notes that parties should not be deterred from initiating a SOP application in the Building Cases List of the County Court for amounts under $50,000.00”. Specifically, Her Honour observes some of the reasons why the County Court has inherent procedural advantages (at [26]):

“this is because the Magistrate Court:

(a) does not allow for issuing proceedings by originating motion so the parties are unable to take advantage of the summary procedure adopted in this Court with a truncated process for determining SOP applications and a less complex test required to enter judgment;

(b) requires the issuing of a complaint which would necessitate a default judgment application if the defendant fails to file a notice of appearance or defence – otherwise the plaintiff must file a summary judgment application by summons which then imposes the higher standard under s63 of the CPA; and

(c) does not have a specialist building and property list so the matters can be heard and determined faster in this Court and before a Commercial Judge (consistent with the SOP Act objectives).

Her Honour has foreshadowed potential changes and updates to the Building Case List practice notes issued by the County Court of Victoria (at [27-28]):

This Court is currently in the process of revising its Building Cases List practice notes for the new legal year which will seek to clarify that, generally, there will not be any costs consequences under r63A.24 of the Rules if parties issue security of payment applications in the County Court if they seek to recover less than half the jurisdictional limit of the Magistrates Court for the reasons set out above.

The proposed practice note will seek to build in ways of limiting or fixing costs for those under $50,000.00 with a truncated process for determining them (eg, on the papers, page limited written submissions, and with provision of very brief pro-forma reasons).

Further, Her Honour endorsed the practice of the specialised list in the Country Court fixing the Claimant’s costs on the basis that it is in the interests of the administration of justice and the just, efficient, timely and cost effective resolution of the issues in dispute to have costs fixed than subject to taxation.

Whilst it has previously been considered cost effective to pursue low quantum SOP claims via the Victorian Magistrates’ Court, Her Honour’s decision has clarified that prospective Claimants should not be dissuaded from bringing their summary application through specialised list of the Victorian County Court. In fact, commencing such an application through the latter jurisdiction may be more cost effective and has inherent procedural advantages for prospective Claimants.

This decision, and the commentary provided by Her Honour, represents an accessible and common sense approach for Claimants who are seeking recovery of low value SOP claims.

How we can help

Merton Lawyers can assist and advise on all aspects of the Act including:

Strategies for using the regime to get paid or to defend claims;
Advising on and assisting with the preparation of payment claims and payment schedules;
Preparing adjudication applications and responses; and
Advising on the enforcement of adjudication determinations.

Author, Adrian Follacchio.

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