Barclay Mowlem v Tesrol Walsh Bay [2004] NSWSC 1232

What the court decided

Barclay Mowlem Construction Limited (BMC) served a payment claim on 7 May 2004 on the principal, Tesrol Walsh Bay Pty Limited (TWB), which prepared a letter in response on 18 May 2004 [1]. BMC sued, saying the letter was not a payment schedule and was not provided to it [1]. The parties agreed that the last day for providing a payment schedule was 21 May 2004 [33].

BMC conceded compliance with section 14(2)(a) but not with section 14(2)(b) or (3) [7]. His Honour applied the approach of Palmer J in Multiplex Constructions Pty Ltd v Luikens, as he had on BMC's unsuccessful summary judgment application [10], [11], [13]. He applied it although Palmer J had addressed another provision, as consistent with the evident legislative intention that entitlement to progress payments be resolved expeditiously [13].

McDougall J held that "nothing" is an amount for the purposes of section 14(2)(b), because a respondent proposing to pay nothing proposes to pay less than the claimed amount and the claimant should know why [15]. The contrary view would mean that such a schedule need only identify the payment claim, which he called "an obvious absurdity" [16]. It was plain from the letter, read as a whole, that TWB proposed to pay nothing [17]. The letter therefore satisfied section 14(2)(b), and did so a fortiori if "nothing" were not an amount [19].

BMC argued that, as the letter did not deal with every variation, it should be inferred that some were admitted without reasons [25]. His Honour's first answer was that section 14(3) requires reasons to be indicated but is not concerned with their adequacy [26]. A claimant facing inadequate reasons could seek adjudication, where section 20(2B) limits the respondent to its scheduled reasons [26]. His second answer was that some variations had been paid, so it was not clear that the letter failed to deal with all disputed variations [27]. On the extension of time costs, the letter could be read with the letter of 12 May 2004 to which it referred [28]. It also supported a clear inference that TWB would set off its claim to liquidated damages of $145,000 [29].

The letter, written by the superintendent Mr Shepherd, was marked for courier delivery and left on an unattended reception desk [24], [34]. His Honour found that BMC had not received it [41]. He left open whether posting without receipt would suffice, though the Act appears to distinguish provision from receipt [42]. The evidence of posting was "inferential and exiguous" [43]. He found that the letter was not posted [46]. In any event he would have found the evidence insufficient to draw the inference of posting [47]. Whatever "provide" requires in section 14(1), it requires at least that the process of delivery be initiated, so the letter was not provided [49].

TWB's estoppel case rested on an alleged statement by BMC's Mr Dale in a call on 21 May 2004 [50]. His Honour accepted Mr Dale's denial, relying among other things on a contemporaneous email and the absence of the statement from Mr Shepherd's own record of the call [51], [53]. The estoppel failed on the facts, so whether such an estoppel could defeat BMC's rights under the Act did not arise [2], [55]. BMC was entitled to judgment for $1,111,923 with interest up to the date of entry of judgment [58].

Why it matters

A nil schedule can be valid, and a terse schedule may be read practically and with correspondence to which it refers. A schedule valid in form will not assist a respondent that cannot prove at least that delivery was initiated, so clients should record how schedules are sent. McDougall J saw nothing in Brodyn v Davenport about Multiplex as detracting from the reasoning he applied [14]. In Brodyn Pty Ltd v Davenport (2004) NSWCA 394 at paragraph 56 the Court of Appeal had disagreed with Palmer J about section 22(2), not the passage applied here. No later appellate decision reviewed for this note mentions it or decides its main points. The judgment does not identify any amendment to the Act, so readers should check its current text.

Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.