IN THE COUNTY COURT OF VICTORIA
AT Melbourne
COMMERCIAL DIVISION
BUILDING CASES LIST	Revised
Not Restricted
Suitable for Publication	

Case No. CI-19-00387

STEMCON PTY LTD	Plaintiff	
		
v		
		
6-14 WELLS ROAD DEVELOPMENTS PTY LTD	Defendant	

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JUDGE:	HIS HONOUR JUDGE COSGRAVE 	
WHERE HELD:	Melbourne	
DATE OF HEARING:	Both parties filed written submissions on 10 April 2019 and the plaintiff filed reply submissions on 16 April 2019.	
DATE OF RULING:	1 May 2019 	
CASE MAY BE CITED AS:	Stemcon Pty Ltd v 6-14 Wells Road Developments Pty Ltd (No 2)	
MEDIUM NEUTRAL CITATION:	[2019] VCC 564		

REASONS FOR RULING

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APPEARANCES:
	Counsel	Solicitors	
For the Plaintiff	Mr B Reid	Giannakopoulos Solicitors	
			
For the Defendant
	Mr T Greenway	DCA Legal	

HIS HONOUR:

1	In my reasons for ruling handed down on 5 April 2019 (“the principal reasons”), I made findings with respect to the plaintiff’s application for summary judgment in relation to both the PC payment claim and the DLP payment claim.  These reasons assume familiarity with the principal reasons and adopt the same terminology.
2	In relation to the PC payment claim, I found that the defendant’s argument that it was served prematurely had a real, as opposed to a fanciful, prospect of success.  Accordingly, I refused to grant summary judgment in respect of the PC payment claim.
3	In relation to the DLP payment claim, because I found that it was served at a time which the defendant accepted as valid and not premature, I considered that the defence on this point had no real prospect of success.  Accordingly, I allowed the application for summary judgment with respect to the DLP payment claim. 
4	I directed the parties to produce minutes of order reflecting those reasons, and if they could not agree, to file and serve copies of the orders each party sought together with written submissions setting out the arguments in favour of those orders.
5	The plaintiff argued in its submissions dated 10 April 2019 that, because I had granted judgment to the plaintiff with respect to the DLP payment claim, the plaintiff should recover:
(a)	judgment in the sum of $228,626.40 (representing the full amount of the DLP payment claim, namely $328,626.40, less $100,000 paid by the defendant on 23 November 2018);
(b)	interest in the sum of $27,757.03; and
(c)	the costs of the proceeding to be taxed on a standard basis.
6	The defendant argued for a judgment in the sum of $55,930.83 plus interest of $5,654.38 together with costs reserved.  The defendant also sought directions for trial regarding the PC payment claim.
7	The plaintiff’s reply submissions noted that the defendant argued in its written submissions that the first retention sum of $172,695.60 (“the first retention sum”), as claimed in the PC payment claim and claimed again (as to part) in the DLP payment, should be severed from the judgment sum.  This was said to be significant because:
(a)	the defendant did not put this argument regarding severance to the Court on 14 March 2019, either orally or in its written submissions;
(b)	the argument regarding severance was inconsistent with the ruling;
(c)	the argument regarding severance contradicted the defendant’s own affidavit material about the amount due and owing to the plaintiff.
8	I do not recall any reference being made to the severance point at the initial hearing.
9	The argument as to inconsistency with the ruling appears to be based on the view that, because there was a triable issue about the plaintiff’s entitlement to the first retention sum, then the plaintiff cannot claim any entitlement to that sum or any part thereof unless and until that issue is determined by the Court.  Thus, the defendant contended that the plaintiff had “no present entitlement” to the outstanding balance of the PC payment claim.
10	As I understood the defendant’s argument at the initial hearing, its objection to the DLP payment claim was the same as that to the PC payment claim – namely, it was premature and therefore invalid.  Having found against the defendant on this latter point, it seems to me that the plaintiff is prima facie entitled to the judgment sought on the DLP payment claim.  Especially is this so in circumstances where the defendant failed to serve a payment schedule on the plaintiff.
11	The plaintiff correctly summarised the effect of my initial ruling: due to the defendant’s contention that practical completion occurred on 25 January 2018 and not 12 January, it arguably followed that the PC payment claim was premature and therefore, not a valid claim under the Act.  As a result of the proposed defence having a real and not fanciful prospect of success, the plaintiff was not entitled to summary judgment. Contrary to the defendant’s contention, I did not decide that the plaintiff had no present entitlement to the first retention sum or the outstanding balance of the PC payment claim.  Half the retention moneys were payable within 7 days of practical completion. The other half (“the second retention sum”) was due at the expiration of the defects liability period.  Accordingly, if there were an arguable issue about the plaintiff’s entitlement to the first retention sum due to the possible premature service of the payment claim, it would not necessarily follow that the claim made in July 2018, which included a claim for the outstanding balance of that first retention sum, was also subject to the same objection.  In circumstances where the claim for the outstanding balance of the first retention sum could not have been premature in July 2018 because the claim was made months after the contractual entitlement to that sum arose, the plaintiff was within its rights to include within the DLP payment claim a claim for the unpaid balance of the first retention sum.
12	As Vickery J made clear in Jotham Property Holdings Pty Ltd v Cooperative Builders Pty Ltd & Ors, a plain reading of section 14(9) of the Act provides that, if another earlier payment claim has been made but the amount of that claim has not been paid, the unpaid amount may be included in a subsequent payment claim covering different construction work.  This was the same approach as Vickery J took in the earlier decision of Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd.  In the present case, the DLP payment claim comprised the unpaid part of the PC payment claim and the second retention sum which only became due when the defects liability period expired.
13	With respect to the DLP payment claim and quantum, the affidavit material filed by the parties showed that they were almost agreed on the amount outstanding at the time the plaintiff served the DLP payment claim on the defendant.  The plaintiff claimed $228,626.40.  The defendant acknowledged in its financial records a debt of $228,626.39.  
14	On the question of interest, the parties agreed that the applicable interest rate was 15% per annum.  Under the contract between the parties, if the proprietor failed to refused to strictly comply with any of its payment obligations to the contractor, the contractor was entitled to interest on all outstanding amounts at the rate of 15% per annum from the time payment fell due until it received full payment.
15	Clause 1.12 of the contract provided a due date for making progress or other payments.  Such payments were to be made no later than five business days following service of the relevant payment claim.
16	The plaintiff claimed that interest began accruing on 1 August 2018 while the defendant submitted that time ran from 8 August 2018.  In my view, where the payment claim was served on 26 July 2018, time ran from 3 August 2018.  This allowed for five business days to pass after 26 July 2018.  The money was due by the end of the fifth day and was overdue from 3 August.
17	The DLP payment claim was for $328,626.40. Payment of that claim became overdue on 3 August 2018. On 23 August 2018, the defendant made a further payment to the plaintiff of $100,000.00. From that day, the outstanding amount owing to the plaintiff dropped to $228,626.40. Accordingly, I calculate the interest as follows:

Amount	Period
outstanding	Daily rate	Days overdue	Interest	
$328,626.40
(being the DLP Payment Claim)	3 Aug 2018 to 
22 Nov 2018	$135.05	111	$14,990.55	
$228,626.40 (being $328.626.40 minus the part payment of $100,000.00 on 23 Nov 2018)	23 Nov 2018 to 
1 May 2019	$93.96	159	$14,939.64	
			TOTAL	$29,930.19	

18	The plaintiff claims its costs of the proceeding on a standard basis, save for the costs of its primary and reply submissions which it seeks on an indemnity basis.  The plaintiff claimed that it had been wholly successful in the proceeding and there was no offer of compromise or relevant matter which warranted the displacement of the presumption that costs follow the event.
19	In contrast, the defendant contended that costs should be reserved because the court had to determine whether there was a statutory entitlement to the first retention sum. 
20	Perhaps the only immutable rule in relation to costs is that the award of costs lies in the discretion of the court. This discretion must be exercised judicially and not arbitrarily or capriciously. A good summary of some of the general principles about costs is found in the judgment of Robson J in GT Corporation Pty Ltd v Amare Safety Pty Ltd. 
21	The plaintiff made application for judgment under two different payment claims – it failed on one and succeeded on the other.  If the plaintiff were to receive the whole of its costs taxed on a standard basis, that would, in my view, pay insufficient regard to the success of the defendant’s argument in relation to the PC payment claim.  This becomes particularly significant where the plaintiff no longer wishes to pursue that claim to trial and, in effect, abandons or discontinues the claim. 
22	In the circumstances, I consider that it is appropriate to make separate orders in favour of the successful party with respect to each of the payment claims.
23	In my view, there is no proper basis to award the plaintiff indemnity costs in relation to its submissions. The plaintiff’s submissions did not advance any persuasive argument and, in any event, the facts did not warrant such an order.  
24	Accordingly, I order that:
(a)	there be judgment for the plaintiff against the defendant in the sum of $228,626.40 (including GST);
(b)	the defendant pay interest to the plaintiff for the period from 3 August 2018 until 1 May 2019 in the sum of $29,930.19;
(c)	the defendant pay the plaintiff’s costs of and incidental to the DLP payment claim, such costs to be taxed on a standard basis in default of agreement.
(c)	the plaintiff pay the defendant’s costs of and incidental to the PC payment claim, such costs to be taxed on a standard basis in default of agreement.