S.H.A PREMIER CONSTRUCTIONS PTY LTD v LANSKEY CONSTRUCTIONS PTY LTD No BS1485 of 2019

The case covers a few key issues.

Background: This Australian case relates to the issue of a payment schedule. Under the Security of Payment Act, each payment claim shall be replied to by the CA with a payment schedule within a specified period. Also, CA cannot issue one payment schedule for multiple payment claims. If no payment schedule is issued, C is entitled to get paid for the payment claimed (even if there is no entitlement under the contract). CA issued a payment schedule for the payment claims as the payment due is “NIL”. So, the C trying to establish that the additional work they executed is a separate contract rather than variations, so he should be paid as no payment schedule was issued for the additional work/separate contract.

 

1)Is the additional work a variation or a separate contract?

1.     Contract- All V to be in writing as directed by the CA (Superintendent in this case)

2.     Email dated 29 August 2017- From C to CA:

“We have noticed some changes like additional freezer room; therefore, are we to proceed on this basis, or is this subject to variation approval”.

3.     Email dated 30 August 2017- From CA of the E to C:

“Should this result in a cost or time impost pls submit a variation which will be processed in the normal manner. Work orders will be raised on all approved variations. No work to proceed without work orders.”

The above email is significant due to the following reasons:

·         Work orders will be raised

·         No work to proceed without work orders

·         Issued by the CA(in the contract superintendent)

·         The project was conducted thereafter in accordance with that direction

·         The director was never revoked

 4.     So, the above email is an affirmation of the work order as a confirmation of an approved variation.

5.     CA issues number of Work Orders

6.     Conclusion- None of the work orders constituted separate contracts. Each was an approved variation.

 

2) Is there a waiver?

 1.     E waived the requirement for strict compliance with the variation provisions

““A party may expressly or impliedly give up its right to insist on a contractual condition. On the evidence, the referee found that that was what the plaintiff had done. By its conduct throughout it had waived a right to insist on strict performance of the conditions of the Contract with respect to the making of claims generally…” (Hammerschlag J in Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1163 [110] )

“According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right by acting in a matter inconsistent with that right.” (Mason CJ in Commonwealth of Australia v Verwayen (1990) 107 CLR 394 at [406]-[407] )

2.     Conclusion - E’s conduct in respect of the approval of the additional work on the contract constituted a waiver of its right based on the following:

·         The email of 23 February 2018 did not direct the first respondent to cease all work

·         E intended the C to continue to make enquiries with respect to the requirements for the roadworks.

 

How to avoid such issues: Make sure the CA issue V only uses a pre-defined format, not via email, etc. As the QS, always ask for the V instruction when certifying the payment.

 

Case: https://archive.sclqld.org.au/qjudgment/2019/QSC19-081.pdf

Note: The article was also published on www.aact.lk