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

Litigation

May 24

In Roberts Construction Group Pty Ltd v Drummond Carpentry Services Pty Ltd [2024] VSC 246, Merton Lawyers’ building and construction division was recently successful in having the Supreme Court of Victoria dismiss an adjudication review application on behalf of a subcontractor client.

Drummond Carpentry Services Pty Ltd (DCS), is a family run Victorian labour-hire company which supplied labour hire tradesmen and tradeswomen to a builder named Roberts Construction Group Pty Ltd (RCG) for a project in Ormond. On 8 June 2023 DCS served a final payment claim under the Building and Construction Industry Security of Payment Act 2002 (Vic) (BCISPA) in the sum of $199,905.75. Having only received two limited email responses to the payment claim, DCS served a written 18(2) notice then applied for adjudication of its payment claim.

DCS was successful at adjudication leading to RCG seeking judicial review on three grounds.

Grounds

Among others, two significant issues were contested by Kings Counsel for either party during the review proceeding:

RCG alleged an email which contained only the following two sentences was a payment schedule within the meaning of the BCISPA:

-Those invoices are not acceptable as stated in previous communications.

An accurate realistic figure must be submitted that is based on supporting evidence.

2. RCG alleged a ‘letter of demand style’ section 18(2) notice, as well as a follow up email, provided by DCS giving notice of a potential adjudication application, was not a compliant notice under the BCISPA.

Judgment:

In response to those review contentions, the Court held:

Payment Schedule

Section 15 of the BCISPA prescribes the relevant details which must be contained in a valid payment schedule. If RCG had provided a payment schedule, DCS’ application for adjudication (made on the basis of no payment schedule having been served) would not have been made in time or in accordance with section 18(3) of the BCISPA.

Contrary to the decision of the adjudicator, Niall JA held that it may be inferred by a simple email, which does not accept a payment claim, that RCG proposed to pay nothing in respect of DCS’ payment claim, as a respondent to a payment claim may accept that some money may be owing under the construction contract but propose to pay nothing in response to the particular payment claim it has received.

The consideration of RCG’s payment schedule therefore turned on whether it contained reasons for withholding payment sufficient for the purpose of the BCISPA. Niall JA held that the purpose of ensuring the timely payment of progress claims and narrowing the area of dispute would not be served by treating RCG’s purported payment schedule as sufficient to constitute the giving of reasons as required by the BCISPA. The purported payment schedule was said to amount to little more than a bare assertion that further substantiation of the payment claim by way of supporting evidence was required.

18(2) Notice

Niall JA held that there was no statutory obligation for DCS to advise RCG of its rights and obligations under the BCISPA. The purpose of a notice under section 18(2)(a) is to put the respondent on notice of a potential adjudication application and forestall that process to allow an adjudication response by the provision of a payment schedule. Niall JA held that DCS complied with its obligation under the BCISPA by notifying RCG of its intention to apply for adjudication, and that RCG could have complied with the BCISPA by serving a payment schedule, but it did not do so.

Merton Lawyers’ client was successful in having the judicial review proceeding dismissed. All security funds held in Court were ordered to be paid in full to the subcontractor.