IN THE COUNTY COURT OF VICTORIA
AT Melbourne
COMMERCIAL DIVISION	Revised
Not Restricted
Suitable for Publication	
BUILDING CASES LIST	
Case No. CI-24-00350

DIAMOND BUILDERS PTY LTD (ACN 143 972 016)	Plaintiff	
		
v		
		
VSTAR CAMBERWELL PTY LTD (ACN 622 798 690)	Defendant	

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JUDGE:	HIS HONOUR JUDGE MACNAMARA	
WHERE HELD:	Melbourne	
DATE OF HEARING:	On the papers	
DATE OF JUDGMENT:	3 April 2024	
CASE MAY BE CITED AS:	Diamond Builders Pty Ltd v Vstar Camberwell Pty Ltd	
MEDIUM NEUTRAL CITATION:	[2024] VCC 390		

REASONS FOR JUDGMENT
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Subject:	Building and Construction Industry Security of Payment Act 2002 (Vic)
Catchwords: 	Claim by contractor under construction contract against principal – service of payment claim pursuant to s14 of the Building and Construction Industry Security of Payment Act 2002 (Vic) – no service of payment schedule under s15 of that Act – claim remaining unpaid – proceeding commenced by contractor – no appearance filed on behalf of defendant principal – judgment in favour of principal for amount of progress claim
Legislation Cited:	Building and Construction Industry Security of Payment Act 2002 (Vic)
Judgment:	(1)	Within 14 days the plaintiff must bring in short minutes to give effect to these reasons
	(2)	Costs reserved	

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APPEARANCES:
	Counsel	Solicitors	
For the Plaintiff	Mr A R Morrison	Ward & Co Legal Consultants	
			
For the Defendant	No appearance		

HIS HONOUR:

Background
1	By an agreement styled “Design and Construct Deed” said to be based on AS4902, the defendant, Vstar Camberwell Pty Ltd (“Vstar”), as principal, and the plaintiff, Diamond Builders Pty Ltd (“Diamond”), as contractor, agreed upon terms whereby Diamond would construct a development comprised of some 12 apartments at 439 Camberwell Road, Camberwell for a contract price of $6,157,800 inclusive of Goods and Services Tax (GST) (Affidavit of Waleed Khalid Ahmed Abu Khumra sworn 18 January 2024, paragraph 6, Exhibit WK-1 pages 19-182).
2	By Clause 37.1 (WK-1 86), the parties agreed that the price would be paid progressively on the 25th day of each month (Item 33, Part A, WK-1 110).  Rays Projects Pty Ltd (ACN 628 131 626) was appointed superintendent for the purposes of the contract (Clause 1, WK-1 42, Item 5, WK-1 102).
3	Clause 37.1 provided for progress claims to be given in writing to the superintendent (WK-1 86). Clause 37A.1 provided for the service of notices upon the parties to their address shown in the contract or last communicated to the person giving the notice.  The clause provided that if a notice be sent by email, it was deemed received “at the time sent, unless the sender is notified, by a system or person involved in the delivery of the email, that the email was not successfully sent.” (WK-1 52)
4	According to Mr Khumra’s affidavit ([10]), Diamond issued its progress claims to the superintendent as follows:
(a)	Ray Zhao at ray@raysprojects.com.au; and or
(b)	Ben Huang at ben@raysprojects.com.au; and or
(c)	Alex Zhao at vic.alexzhao@gmail.com. 
5	Mr Khumra said that for completeness and as directed by “Vstar”, Diamond “routinely issued progress claims to, amongst others, davidgao2010@gmail.com” ([11]).  Mr Khumra said this was a reference to Yu Gao, the Director of Vstar.  He said that Diamond also corresponded with the following email addresses:
(a)	alexzhao@gmail.com; and
(b)	danielzsc@outlook.com. 
6	An email dated 25 January 2023 was sent to all of the above email addresses at 4.09pm. The email was addressed to “Dear All” and stated:
“	Please find attached our payment claim no. 9 for the word [sic] done for the period ending 25th January 2023. Please note that this payment claim includes the unpaid amounts that have been the subject of the previous payment claim no. 8.
Please note that this payment claim is made under the BUILDING AND CONSTRUCTION INDUSTRY SECURITY OF PAYMENT ACT 2002 (Vic).” (WK-1 183)
7	The email covered a document styled “Tax Invoice” addressed to Vstar, claiming $1,494,000 as progress claim number 9 which, including GST, required payment of a total of $1,643,400. There was a further page which was said to cover the period 26 October 2022 to 25 January 2023, purporting to be a breakdown of the amount sought in the tax invoice and including a statement at the top:
“	Note: This payment claim is made under the Building and Construction Industry Security of Payment Act (2002) VIC.” (WK-1 185)
8	Clause 37.2 of the contract required the superintendent “within 10 Business Days after receiving…a progress claim” to issue to Vstar and Diamond “a progress certificate”.
9	Diamond contends that since no payment schedule under s15(4) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (“the Act”) was provided, the amount became payable by Vstar to Diamond on 16 February 2023, being 15 days after Vstar received the payment claim.
10	Diamond seeks an order pursuant to the statute for payment of the amount sought under the claim.
This proceeding
11	Solicitors acting for Diamond issued an Originating Motion commencing this proceeding on 24 January 2024.
12	The matter was referred to me for determination on the papers on 5 March 2024.
13	According to an affidavit of service affirmed 30 January 2024 by Mr Timothy Ng, he served the Affidavit of Waleed Khalid Ahmed Abu Khumra sworn 18 January 2024, Originating Motion, Summons and Overarching Obligations Certificate and Proper Basis Certificate by registered post addressed to the defendant “at around 4:32pm on 25 January 2024”.
14	No appearance has been entered on behalf of the defendant and the matter now proceeds on an undefended basis.
Plaintiff’s contentions
15	Counsel for the plaintiff, Mr A R Morrison, by written outline dated 15 February 2024, contended that in the circumstances Diamond was entitled to the relief which it sought under the Act.
Statutory framework
16	In enacting the Act, on the basis of which the present proceeding has been brought, the Victorian Parliament stated:
“1	The main purpose of this Act is to provide for entitlements to progress payments for persons who carry out construction work or who supply related goods and services under construction contracts.” 
17	In establishing its own special regime for the recovery of progress payments, the statute enacts:
“47(2)	Nothing done under or for the purposes of this Part affects any 	proceedings arising under a construction contract (including any 	arbitration proceedings or other dispute resolution proceedings), 	whether under this Part or otherwise, except as provided by 	subsections (3) and (4).” 
This section is found within Part 3 of the Act - “Procedure for Recovering Progress Payments”. Determinations made under the Act may be revisited in ordinary contractual proceedings between the parties, with amounts awarded under the statute susceptible of restitutionary reversal. The statute establishes a regime of “pay now, litigate later”.
Section 47(3) provides:
“In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal – 
 (a)	must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order, determination or award it makes in those proceedings; and 
 (b)	may make such orders as it considers appropriate for the restitution of any amount so paid, and such other orders as it considers appropriate, having regard to its decision in those proceedings.” 
18	Section 5 of the Act provides a detailed definition by way both of inclusions and exclusions of the phrase “construction work”.  Neither party suggested that the work in question here did not fall within that phrase as defined.
19	The entitlement to progress payments referred to in the introductory purpose section of the Act is provided for in s9, which states as follows:
“(1)	On and from each reference date under a construction contract, a person— 
	(a)	who has undertaken to carry out construction work under the contract; or
	(b)	who has undertaken to supply related goods and services under the contract— 
	is entitled to a progress payment under this Act, calculated by reference to that date. 
 (2)	In this section, ‘reference date’, in relation to a construction contract, means— 
	(a)	a date determined by or in accordance with the terms of the contract as— 
		(i)	a date on which a claim for a progress payment may be made; or 
		(ii)	a date by reference to which the amount of a progress payment is to be calculated— 
		in relation to a specific item of construction work carried out or to be carried out or a specific item of related goods and services supplied or to be supplied under the contract; or 
	(b)	subject to paragraphs (c) and (d), if the contract makes no express provision with respect to the matter, the date occurring 20 business days after the previous reference date or (in the case of the first reference date) the date occurring 20 business days after— 
		(i)	construction work was first carried out under the contract; or 
		(ii)	related goods and services were first supplied under the contract; or 
	(c)	in the case of a single or one-off payment, if the contract makes no express provision with respect to the matter, the date immediately following the day that—
		(i)	construction work was last carried out under the contract; or 
		(ii)	related goods and services were last supplied under the contract; or 
	(d)	in the case of a final payment, if the contract makes no express provision with respect to the matter, the date immediately following— 
		(i)	the expiry of any period provided in the contract for the rectification of defects or omissions in the construction work carried out under the contract or in related goods and services supplied under the contract, unless subparagraph (ii) applies; or 
		(ii)	the issue under the contract of a certificate specifying the final amount payable under the contract a final certificate; or 
		(iii)	if neither subparagraph (i) nor subparagraph (ii) applies, the day that— 
			(A)	construction work was last carried out under the contract; or 
			(B)	related goods and services were last supplied under the contract.”
20	Section 10 headed “Amount of progress payment” provides inter alia:
“(1)	The amount of a progress payment to which a person is entitled in respect of a construction contract is to be— 
	(a)	the amount calculated in accordance with the terms of the contract; or 
	(b)	if the contract makes no express provision with respect to the matter, the amount calculated on the basis of the value of— 
		(i)	construction work carried out or undertaken to be carried out by the person under the contract; or 
		(ii)	related goods and services supplied or undertaken to be supplied by the person under the contract— 
	as the case requires.
	…” 
21	As to the valuation of construction work, s11 provides inter alia:
“(1)	Construction work carried out or undertaken to be carried out under a construction contract is to be valued— 
	(a)	in accordance with the terms of the contract; or 
	(b)	if the contract makes no express provision with respect to the matter, having regard to—
		(i)	the contract price for the work; and 
		(ii)	any other rates or prices set out in the contract; and 
		(iii)	if there is a claimable variation, any amount by which the contract price or other rate or price set out in the contract, is to be adjusted as a result of the variation; and 
		(iv)	if any of the work is defective, the estimated cost of rectifying the defect.
 …” 
22	As to the date when such progress payments are due, s12 provides:
“(1)	A progress payment under a construction contract becomes due and payable— 
	(a)	on the date on which the payment becomes due and payable in accordance with the terms of the contract; or 
	(b)	if the contract makes no express provision with respect to the matter, on the date occurring 10 business days after a payment claim is made under Part 3 in relation to the payment.
 …” 
23	The statute contemplates that building contractors and others claiming to be remunerated for construction work may serve payment claims which, if served in accordance with the statute, create a liability to pay the amount claimed in the absence of service of, what the statute describes as, a “payment schedule”.  Sections 14 and 15 provide:
“14   Payment claims
	(1)	A person referred to in section 9(1) who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment. 
	(2)	A payment claim—
		(a)	must be in the relevant prescribed form (if any); and 
		(b)	must contain the prescribed information (if any); and 
		(c)	must identify the construction work or related goods and services to which the progress payment relates; and 
		(d)	must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount); and
		(e)	must state that it is made under this Act. 
	(3)	The claimed amount— 
		(a)	may include any amount that the respondent is liable to pay the claimant under section 29(4); 
		(b)	must not include any excluded amount. 
	(4)	A payment claim in respect of a progress payment (other than a payment claim in respect of a progress payment that is a final, single or one-off payment) may be served only within— 
		(a)	the period determined by or in accordance with the terms of the construction contract in respect of the carrying out of the item of construction work or the supply of the item of related goods and services to which the claim relates; or 
		(b)	the period of 3 months after the reference date referred to in section 9(2) that relates to that progress payment— 
		whichever is the later.
	(5)	A payment claim in respect of a progress payment that is a final, single or one-off payment may be served only within— 
		(a)	the period determined by or in accordance with the terms of the construction contract; or 
		(b)	if no such period applies, within 3 months after the reference date referred to in section 9(2) that relates to that progress payment. 
	(6)	Subject to subsection (7), once a payment claim for a claimed amount in respect of a final, single or one-off payment has been served under this Act, no further payment claim can be served under this Act in respect of the construction contract to which the payment claim relates.
	(7)	Nothing in subsection (6) prevents a payment claim for a claimed amount in respect of a final, single or one-off payment being served under this Act in respect of a construction contract if— 
		(a)	a claim for the payment of that amount has been made in respect of that payment under the contract; and 
		(b)	that amount was not paid by the due date under the contract for the payment to which the claim relates. 
	(8)	A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract. 
	(9)	However, subsection (8) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim if the amount has not been paid. 
15   Payment schedules 
    	(1)	A person on whom a payment claim is served (the respondent) may reply to the claim by providing a payment schedule to the claimant. 
	(2)	A payment schedule— 
		(a)	must identify the payment claim to which it relates; and
		(b)	must indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount); and
		(c)	must identify any amount of the claim that the respondent alleges is an excluded amount; and 
		(d)	must be in the relevant prescribed form (if any); and 
		(e)	must contain the prescribed information (if any). 
	(3)	If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent's reasons for withholding payment. 
	 (4)	If— 
		(a)	a claimant serves a payment claim on a respondent; and 
		(b)	the respondent does not provide a payment schedule to the claimant—
			(i)	within the time required by the relevant construction contract; or 
			(ii)	within 10 business days after the payment claim is served; 
			whichever time expires earlier—
		the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.” 
24	Section 16 provides that when a payment schedule has been served and payment is not made, the claimant may recover the amount claimed from the respondent “as a debt due to the claimant, in any court of competent jurisdiction”.  It is this jurisdiction which the plaintiff invokes, or purports to invoke, in this proceeding.
25	Section 17 says that if payment is not made by a respondent in accordance with the terms of the payment schedule, the unpaid portion may similarly be recovered “in any court of competent jurisdiction”.
26	Where a payment schedule indicates a payment less than the amount claimed, the claimant may seek an adjudication from an adjudicator under s18 of the statute.  Section 28M and the following sections, make provision for payment by the respondent to the adjudication application of the amount determined by the adjudicator.
Conclusions
27	No objection has been raised as to the form of the various steps taken by or on behalf of Diamond as being in accordance with the Act. In the absence of an appearance on behalf of Vstar, the matter proceeds on an undefended basis.
28	The payment claim is expressed to be made under the terms of the Act and appears to be in compliance with s14 of the Act.  
29	According to Mr Khumra’s evidence, no payment schedule in accordance with s15 of the Act has been served. According to Mr Khumra’s affidavit, the progress claim/payment claim was served on relevant persons on behalf of the defendant, including the superintendent.
30	The covering email states that the payment claim “includes the unpaid amounts that have been the subject of the previous payment claim no. 8.” (WK-1 183)
31	Section 14(8) of the Act precludes the service of more than one payment claim in respect of each reference date under the construction contract.
32	Mr Morrison observed that the payment claim relied on was for the period dated 25 January 2023. Insofar as it apparently repeated amounts that were the subject of a previous claim, there is no multiplicity of payment claims for the same reference date.  Hence, the prohibition quoted has no application.
33	There should be judgment in favour of Diamond for the sum of $1,643,400 inclusive of GST.  I will direct that Diamond bring in short Minutes to give effect to these reasons allowing for the calculation of statutory interest.
Costs
34	I have heard no submission on the question of costs and so I will reserve them.