Is your payment schedule sufficient: Style Timber Floor Pty Ltd v Krivosudsky [2019] NSWCA 171

A recent NSW Court of Appeal decision in Style Timber Floor Pty Ltd v Krivosudsky [2019] NSWCA 171 highlights the need to take care in preparing a document that is intended to be relied upon as a payment schedule for the purposes of Building and Construction Industry Security of Payment legislation in Australia.

In that case the respondent Mr Krivosudsky (contractor) was retained by the appellant Style Timber Floor Pty Ltd (principal) to perform floor finishing works on five different projects. The principal expressed dissatisfaction with the contractor’s works and refused to pay some invoices. The contractor then served an emailed payment claim on the principal under s. 13 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (NSW SOP Act).

The principal responded to the payment claim by email asserting that the contractor had caused damage in excess of the value of the contractor’s payment claim. Reference was made in the principal’s email to, inter alia, “many emails, photos, videos, back charges from builders and other trades, complains (sic) from my clients” that were said to support the principal’s position.

The principal asserted that its emailed response read in conjunction with the referenced correspondence satisfied the requirements of s. 14 of the NSW SOP Act and constituted a valid payment schedule.

The contractor was successful in obtaining summary judgment on his payment claim at first instance in the NSW District Court. The principal applied for leave to appeal. The Court of Appeal granted leave to appeal but dismissed the appeal. Central to the Court of Appeal’s reasoning were the following matters:

• A payment schedule does not require the degree of formality of a pleading for example but that “is not a licence for informality or an excuse for vague, generalised objections to payment.” [per Bell P at para 2]
• While documents can be incorporated into a payment schedule by reference “documents to be so incorporated would need to be identified with sufficient particularity so that the recipient of the schedule knew what was being incorporated.”[per Bell P at para 3 and Leeming JA at para 76]
• The generic reference to documents in the principal’s response was inadequate [per Bell P at paras 4-7] and there was nothing in the principal’s response that was directed towards any particular invoice or project [per Leeming JA at para 71].
• In the absence of sufficient explanation of the reasons why it is asserted that there is no obligation to pay a payment claim it is not enough to simply assert that the principal has set-offs that exceed the value of the payment claim [per Leeming JA at para 75].

Andrew Laird

MTECC welcomes Adam Rollnik as a member

Adam Rollnik has recently joined MTECC as a member. Adam is barrister and a Fellow of the Chartered Institute of Arbitrators and has particular expertise in contractual disputes, real property law, commercial arbitration (international and domestic), building and construction (including security of payment), large infrastructure disputes, owners corporations, commercial leasing, franchising, contract of employment and insurance.

Congratulations to Michael Whitten QC on his appointment

Michael Whitten QC, the chair of MTECC, has been appointed as the next Lord Chief Justice of the Kingdom of Tonga, commencing on 1 September 2019. MTECC congratulates Michael on his appointment and wishes him and his family all the best in his new endeavour.

MTECC members presenting ICU Legal Seminars in September and November 2019

A number of MTECC members are presenting at ICU Legal Seminars on 20 September and 22 November 2019:

• Jim Stavris is presenting on “Recent cases on the Building and Construction Industry Security of Payment Act 2002” on 20 September 2019;
• Nicholas Gallina is presenting on “Rectification of Construction Contracts” on 20 September 2019; and
• Michael Sharkey is presenting on “Ethical Issues in Engaging Expert Witnesses” on 22 November 2019.

More information can be found here and here.