Resolving tension in the Building and Construction Industry Security of Payment Act 2002 – Façade Designs International Pty Ltd v Yuanda Vic Pty Ltd [2020] VSC 570

In Façade Designs International Pty Ltd v Yuanda Vic Pty Ltd [2020] VSC 570 the Victorian Supreme Court has resolved ambiguity in the prohibition in s 14(3)(b) of the Building and Construction Industry Security of Payment Act 2002 (the Act) against payment claims including any “excluded amount”.  Riordan J found that a payment claim that included an excluded amount was not necessarily invalid, although the court would not enter judgment unless the payment claim was reduced by the sum of any excluded amount.

The plaintiff (Façade) was a subcontractor to the defendant (Yuanda) in respect to the construction of commercial and residential towers at 447 Collins Street, known as ‘the Arch on Collins’.  On 30 September 2019, Façade served a payment claim on Yuanda seeking payment of $4,584.820.68. Yuanda failed to provide a payment schedule within 10 business days of Façade’s claim, and Façade subsequently sought judgment against Yuanda pursuant to s 16 of the Act. 

Yuanda resisted judgment. It argued that Façade’s payment claim was invalid as it (a) did not identify the construction work to which it related with sufficient precision, and was therefore invalid pursuant to s 14(2)(c) of the Act; (b) included excluded amounts, and was therefore invalid pursuant to s 14(3)(b) of the Act.  

Riordan J rejected both arguments.

In respect to Yuanda’s first argument, his Honour found that the payment claim was “detailed” and “referred to extensive supporting documentation”, such that “a reasonable building practitioner in the position of Yuanda would have understood the Payment Claim to be bona fide and to purport in a reasonable way to identify the particular work in respect of which the claim was made”.  In doing so, Riordan J refused to consider subjective, extrinsic, evidence put on by Yuanda that its personnel did not understand or were unable to calculate the amount claimed, noting that considering such material would be inconsistent with the weight of authority, and undermine the court’s ability to avoid ‘difficult, time-consuming, expensive and problematic’ consideration of extraneous material.

In respect to Yuanda’s second argument, Façade conceded that its claim included an excluded amount at the time it was made – namely a claim for $64,154.37 in interest under the Act – which was prohibited by s 10B(2)(d).  Notwithstanding that, Riordan J found that the inclusion of an excluded amount at the time the claim was made did not invalidate it entirely.  Instead, his Honour interpreted s 14(3)(b)’s prohibition against any “claimed amount” including any “excluded amount” as referring to the claim at the time of judgment. In circumstances where Façade had withdrawn its claim for interest, the court found that its claim did not include any excluded amount at judgment. 

Bill Stephenson

Liability limited by a scheme approved under professional standards legislation