IN THE COUNTY COURT OF VICTORIA
AT Melbourne
COMMERCIAL DIVISION	Revised
Not Restricted
Suitable for Publication	
  Building Cases List
Case No. CI-20-05003

Maxim Electrical Services Pty Ltd (ACN 088 295 907)	Plaintiff	
		
v		
		
Grocon Constructors (Victoria) Pty Ltd (ACN 088 295 907)	Defendant	

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JUDGE:	Judicial Registrar Burchell 	
WHERE HELD:	Melbourne	
DATE OF HEARING:	On the papers	
DATE OF JUDGMENT:	17 December 2020	
CASE MAY BE CITED AS:	Maxim Electrical Services Pty Ltd v Grocon Constructors Pty Ltd	
MEDIUM NEUTRAL CITATION:	[2020] VCC 2050		

REASONS FOR JUDGMENT
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Subject:		CONTRACTS 

Catchwords: 	Building contract – payment claim 

Legislation Cited:	Building and Construction Industry Security of Payment Act 2002 (Vic) ss3, 4, 5, 7, 9(1),10B, 12, 14, 15, 17(2), 47, 48, 50; Civil Procedure Act 2010 (Vic) s61, 63

Cases Cited:	Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; Rudyard Pty Ltd v ASEA 1 Pty Ltd [2019] VCC 1995; One Scaf Pty Ltd v Rudyard Pty Ltd [2020] VCC 1109.

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APPEARANCES:
	Counsel	Solicitors	
For the plaintiff	-	Hapgood Legal	
			
For the defendant	-	-	

JUDICIAL REGISTRAR:
1	The plaintiff (“Maxim”) applies for judgment against the defendant (“Grocon”) pursuant to s17(2)(a)(i) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (“the Act”). Maxim makes the application by summons on originating motion dated 12 November 2020. The application arises out of Maxim’s provision of electrical works at 2-16 Northumberland Street, Collingwood.
2	Maxim claims judgment on the basis that Grocon failed to make full payment in respect of payment claims 21-24.
3	Grocon has not filed a notice of appearance in the proceeding.
4	In my judgment, I am satisfied that the payment claims have been issued in accordance with s17(2)(a)(i) of the Act. 
5	Therefore, I will order that there be judgment for Maxim against Grocon in the sum of $662,105.82 (GST inclusive). I will order that Grocon pay Maxim’s costs of and incidental to the proceeding on the standard basis, in default of agreement, unless either party can show a basis for seeking a different order to costs. I invite the parties to prepare draft orders to give effect to these reasons. Any further issue as to costs will be determined on the papers.
The factual background
6	Maxim relies upon an affidavit of Paul Murray dated 10 November 2020; and two affidavits of service of Richard Hapgood dated 12 December 2020.
7	On or about 24 August 2018, Maxim contracted with Grocon to provide electrical works at 2-16 Northumberland Street, Collingwood.
8	Maxim submitted 24 payment claims in respect of the works (totalling $4,677,710.00 (excluding GST)).
9	Grocon served 24 payment schedules in response (scheduling a total of $4,652,460.00 (excluding GST)).
10	Variations totalling negative $21,448.29 (excluding GST) applied to the value of the works completed. Therefore, the adjusted total claim of Maxim was $4,656,261.71 (excluding GST). The adjusted total scheduled amount was $4,631.111.71 (excluding GST).
11	The date for service of payment claims was the 20th day of the month (Agreed Terms of the Contract clause 30.3).
12	The due date for payment was the latter of:
•	the last business day of the month following the month in which the progress claim is submitted; or
•	22 business days from the end of the month in which the payment claim is submitted (Agreed Terms of the Contract cl 30.7).
13	On 27 March 2020, Maxim sent payment Claim 21 to Grocon in the sum of $387,107.96 (excluding GST) or $425,818.75 (including GST). It was referrable to the reference date of 20 March 2020.
14	In payment schedule 21, Grocon certified that $425,818.76 was due on 30 April 2020. 
15	On 11 May 2020, Grocon made part-payment of payment claim 21 in the sum of $102,518.00. On 15 June 2020, Grocon made part-payment of $258,640.36. The balance owing from payment schedule 21 is $64,660,40.  
16	On 28 April 2020, Maxim sent payment Claim 22 to Grocon in the sum of $360,226.30 (excluding GST) or $396,248.93 (including GST). It was referrable to the reference date of 20 April 2020.  
17	In payment schedule 22, Grocon certified that $396,518.93 was due on 31 May 2020. Grocon has failed to pay the scheduled amount.
18	On 28 May 2020, Maxim sent payment claim 23 to Grocon for the sum of $166,629.00 (excluding GST) or $183,291.90 (including GST). It was referrable to the reference date of 20 May 2020. 
19	In payment schedule 23, Grocon certified that $183,291.90 was due on 30 June 2020. Grocon has failed to pay the scheduled amount.
20	On 26 June 2020, Maxim sent payment Claim 24 to Grocon for the sum of $65,726.90 (excluding GST) or $72,299.60 (including GST). It was referrable to the reference date of 20 June 2020. 
21	In payment schedule 24, Grocon certified that $44,634.59 was due on 31 July 2020. Grocon has failed to pay the scheduled amount.
22	Maxim claimed the amounts consistently with the contract schedule attached to each claim. 
Service of the defendant
23	As indicated above, the proceeding is undefended. Mr Hapgood deposed to his service of the defendant.
24	Mr Hapgood sent the following documents by express post to the registered office address of Grocon at Level 1 577 Little Bourke Street Melbourne VIC 3000 (“the served documents”):
•	a letter dated 12 November 2020;
•	the originating motion and summons dated 12 November 2020;
•	the affidavit of Paul Murray;
•	a filing confirmation notice; and 
•	an email from the Associates to Judge Woodward dated 14 December 2020, foreshadowing the hearing on 18 December 2020.
25	Mr Hapgood placed the served documents in an express post envelope, addressed to Grocon.
26	On 13 November 2020 at 9.35am, Mr Hapgood mailed the served documents from the Rosanna post office.
27	Thereafter, Mr Hapgood obtained a delivery report from Australia Post showing that the served documents were redirected to an unknown Greenvale destination.
28	To ensure service was affected, Mr Hapgood printed and bound the served documents for personal service at Level 1 577 Little Bourke Street Melbourne (“registered office”) and 3 Albert Coates Lane Melbourne (“contract office”).  
29	Mr Hapgood obtained the registered office address from an ASIC search of Grocon, and the contract office address from the contract.
30	At approximately 4.06 pm on 9 December 2020, Mr Hapgood attended at the contract office address and found that Grocon no longer occupied the premises and had not done so for approximately 18 months. The premises were then occupied by The Commons.
31	At approximately 4.37 pm on 9 December 2020, Mr Hapgood attended at the registered office address and found that Grocon still occupied the premises. He had no ability to enter the premises and the security guard or attendant was not authorised to allow him in, escort him to the floor or call anyone to let him in.
32	Mr Hapgood conducted a web search for a telephone number and was advised that someone would call him back within a day. He advised the receptionist that he was at the door and she said she would mark the call urgent. He left after waiting approximately 30 minutes. He is still yet to receive a call.
33	Upon his return to the office at 6.13pm, Mr Hapgood served the served documents on Grocon by email to Brinzi at JoeBrinzi@grocon.com.au and Rigg at JaimieRigg@grocon.com.au.
34	At 6.14pm, he received an automatic response from Rigg to advise that he was no longer with Grocon and to direct the email to Brinzi at joebrinzie@grocon.com.au.
35	At 7.08pm, Mr Hapgood forwarded the earlier email to Brinzi at joebrinzie@grocon.conn.au
36	At 10.36 pm, Mr Hapgood received an email from Dr Wolff of counsel recommending a regular mail attempt. The email copied joebrinzie@grocon.com.au into the reply.
37	On 10 December 2020 at approximately 7.19am, Mr Hapgood received a text message from Paul Murray from Maxim to advise that Brinzi had received Dr Wolff’s email with words to the effect of: “Not sure if your legal team has this right. Putting me on this particular email.”
38	The text message had an alert message embedded regarding "Grocon's network".
39	On 10 December 2020, Mr Hapgood conducted a second ASIC search of Grocon to determine if the registered office had been relocated. The registered office remains at the registered office.
40	On 10 December 2020 at 11.26am, Mr Hapgood mailed the served documents with a covering letter dated 10 December 2020, by prepaid parcel post, from the Rosanna Post Office.
41	At approximately 4.52 pm on 10 December 2020, Mr Hapgood emailed the served documents to Daniel.Grollo@grocon.com.au and daniel.grollo@grocon.com.au, copied to joebrinzie@grocon.com.au.
42	At approximately 4.53 pm on 10 December 2020, Mr Hapgood received a message from postmaster@grocon.com.au advising that Daniel.Grollo@grocon.com.au was not found at grocon.com.au.
43	Mr Hapgood has not received a message from postmaster@grocon.com.au advising that daniel.grollo@grocon.com.au was not found at grocon.com.au.
44	On the material before the court, I am satisfied that Grocon was validly served and is aware of the proceeding.
Procedural matters 
45	On 17 December 2020, the court made orders including that the proceeding be determined on the papers (“the 17 December orders”), pursuant to the overarching obligations under the Civil Procedure Act 2010 (Vic). 
46	In the submissions of the plaintiff dated 16 December 2020, two house-keeping matters were raised. Firstly, as Maxim conceded, the summons on originating motion ascribed a misdescribed ACN to the plaintiff. The correct ACN was 088 295 907.
47	Secondly, the summons on originating motion mistakenly sought relief under s16 of the Act. As the submissions and affidavit materials make clear, relief is sought under s17. I find that there is no breach of procedural fairness or prejudice suffered in these circumstances.  
48	Accordingly, the 17 December 2020 orders stipulated that the plaintiff has leave, pursuant to r36.01(1) of the County Court General Civil Procedure Rules 2008 (Vic), to amend its originating motion so as to correct the:
•	ACN of the plaintiff to ACN 088 295 907; and
•	basis of the application to a claim made under s17 of the Building and Construction Security of Payment Act 2002 (Vic).
The legal context
23	The Act seeks to ensure that persons who undertake to carry out construction work can recover progress payments for the performance of that work. Section 4 defines construction contract as a “contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services for another party”. The Act applies to any construction contract whether written or oral, or partly written and partly oral. “Construction work” is defined by s5. 
24	Section 14 of the Act concerns the form and content of payment claims. Sections 14(2) and (3) provide that a payment claim:
•	must be in the prescribed form (if any) and contain the prescribed information (if any) – neither is prescribed;
•	must identify the construction work or related goods and services to which it relates;
•	must indicate the amount of progress payment that the claimant claims to be due;
•	must state that it is made under the SOP Act; and
•	must not contain “excluded amounts”.
25	Section 14(4) of the Act addresses when a payment claim that is not a final, single or one-off progress payment can be served. It provides that such a payment claim may only be served within: 
•	the period determined in accordance with 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
•	the period of 3 months after the “reference date referred to in s9(2) that relates to the progress payment”.
26	Section 9(1) provides that “on and from each reference date under a construction contract” a claimant is “entitled to a progress payment under this Act calculated by reference to that date”. Section 9(2)(a) provides that a reference date is a date determined by or in accordance with the construction contract as:
•	a date on which a claim for a progress payment may be made; or
•	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. The rest of s9 concerns situations where the contract makes no express provision for reference dates.
27	In order to recover a progress payment, a claimant must first serve a “payment claim” in accordance with s14(1) of the Act.  Subsection 14(2) sets out the requirements for a valid payment claim. 
28	Under s15(1) of the Act, a person on whom a payment claim is served may reply to the payment claim by providing a payment schedule to the claimant.  Section 15(2) sets out the information which must be provided in a payment schedule. 
29	Section 17 of the Act sets out the consequences of not paying a claimant in accordance with a payment schedule.  Subsection 17(2)(a(i) of the Act provides that in those circumstances, a claimant may recover the unpaid portion of the scheduled amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction.  
30	Section 17(4) of the Act sets out the matters of which a court must be satisfied before the judgment is given in favour of the claimant.  
31	The available defences generally concern either the nature of the underlying contract or the form and service of the purported payment claim and thus, whether the payment claim triggers the procedures in Part 3 of the Act. 
32	Under section 47, nothing in Part 3 of the Act precludes bringing or continuing proceedings under the construction contract, including where those proceedings deal with the same issues in dispute in the proceeding relying on Part 3. Thus, a judgment under ss16 and 17 is a provisional judgment in what it grants and what it refuses. The statutory context both contemplates and permits inconsistent judgments. This section is, in effect, the statutory manifestation of the “pay now, argue later” epithet behind the SOP Act and its counterparts in other states. 
33	In considering any purported defences to a payment claim, it is important to consider s48 of the Act. This section provides that the provisions of the SOP Act have effect despite any contractual provision to the contrary. It further provides that any provision in any contract purporting to exclude, restrict or modify the operation of the Act or that may reasonably be construed as an attempt to deter a person from taking action under the Act, is void. 
34	This court has endorsed the hearing of applications under the Act on a summary basis by summons on originating motion with affidavit evidence. Such claims are assessed on the balance of probabilities. The court weighs the quality of the evidence having regard to the fact that the legislation intends to facilitate a swift but temporary remedy. 
Analysis
23	The contract in issue is a “construction contract” within the meaning of the Act. The contract for electrical services is a contract under which Maxim undertook to carry out construction work for Grocon (s4). Accordingly, Maxim was entitled to progress payments under s9(1) of the Act. 
24	Each payment claim was made on or from a reference date (s9(2)). Payment claims 21-24 were referable to the dates 20 March 2020, 20 April 2020, 20 May 2020 and 20 June 2020 respectively.  Consequently, Maxim was entitled to make its claims for the progress payments.
25	The amounts were claimed in accordance with s10 of the Act, for they were calculated in accordance with the terms of the contract (s10(1)(a)).
26	The claims include first class variations, which are claimable variations. This is because, consistently with s10A(2), in the payment schedules, Grocon agreed:
•	that the work has been carried out (it lists “variations”);
•	as to the scope of the work that has been carried out;
•	that the doing of the work constitutes a variation (“variation” is employed);
•	that Maxim is entitled to a progress payment that includes an amount in respect of the variation (an amount for variations is indicated); 
•	and as to the value of that amount; and 
•	as to the time for payment of that amount (due dates are specified).
27	The requirements for a valid payment claim, as set out in s14(2) of the Act, are satisfied.  Each claim identifies the construction work to which they relate (s14(c)) Each indicates the amount of the progress payment that Maxim claims is due (s14(d)). Each stipulates that it is a claim under the Act: “This claim is made under the BUILDING AND CONSTRUCTION SECURITY OF PAYMENT ACT 2002” (s 14(e)).
28	Maxim validly served payment claims 21-24 upon Grocon by way of the Aconex system.  (s 17(1)(a)). In response, Grocon served four payment schedules (s17(1)(b)). The schedules indicated an amount due (s17(1)(c)). 
29	Grocon thereafter made partial payments in relation to the payment claims in the sum of $102,518.00 and $258,640.36.  It follows that the total amount of $662,105.82 (GST inclusive) remains outstanding, being the total amounts scheduled as owing to Maxim, less the total scheduled amounts paid by Grocon.
30	Accordingly, Grocon is liable to pay the amount of $662,105.82 as a consequence of it having scheduled that amount as payable and having failed to make payment in respect of same before the due date for payment or at all.   
31	By force of s17(4) of the Act, Grocon as a respondent to a proceeding under s 17(2)(a)(i), is prohibited from bringing a cross claim or raising any defence in relation to the matters arising under a construction contract.  Even if Grocon appeared in this proceeding, it could not raise any claims or defences in this action by reason of this provision.  
32	Accordingly, in circumstances where:
a)	Maxim issued valid payment claims and served them on Grocon, 
b)	Grocon issued payment schedules certifying scheduled amounts owing to Maxim in response to Maxim’s payment claims;
c)	Grocon has failed to make payment in full of the scheduled amounts by their due date or at all; and
d)	the requirements of the Act in relation to obtaining judgment for a debt pursuant to s17 are satisfied. 
Maxim is entitled, pursuant to s17(2)(a)(i) of the Act, to recover the balance outstanding as a debt due in this court.  Maxim is also entitled to interest pursuant to s12(2)(a) of the Act, calculated pursuant to the Penalty Interest Rates Act 1983 (Vic).   
Conclusion 
33	For the foregoing reasons, there is judgment for the plaintiff in the amount of $662,105.82 (GST inclusive), together with interest pursuant to s12(2) of the Act and the costs of the application.   
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Certificate

I certify that these 11 pages are a true copy of the judgment of Judicial Registrar Burchell delivered on 17 December 2020

Dated: 17 December 2020

Sean Bricknell
Associate to the Judge in Charge of the Building Cases List