MTECC news edition 19.15
Is your payment schedule sufficient: Style Timber Floor Pty Ltd v Krivosudsky  NSWCA 171
A recent NSW Court of Appeal decision in Style Timber Floor Pty Ltd v Krivosudsky  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].