289 Grange Road Developments Pty Ltd & Anor v Dalle Projects Pty Ltd [2017] VSC 409 (17 July 2017)

August 27, 2017 |

Associate Justice Randall considered two applications to set aside separate statutory demands in 289 Grange Road Developments Pty Ltd & Anor v Dalle Projects Pty Ltd [2017] VSC 409.  The underlying debts related to progress payments for building works undertaken.  That meant it was a factually involved case with  quite a technical arguments involving the operation of the Building and Construction Industry Security Payment Act 2002 .


Each application was made  pursuant to s 459G of the Corporations Act 2001 (Cth) (‘Corporations Act’) to set aside separate statutory demands, each dated 15 March 2017 in relation to:

  • 289 Grange Road Developments Pty Ltd (“289 Grange”)
  • 11 Mitchells Lane Development Pty Ltd (“11 Mitchells”)

Each plaintiff is a different company incorporated for distinct projects [1]

The schedule, at [2] to the statutory demand for 289 Grange was:

Payment claim certificate 1 dated 24/10/16


Less amount paid


Total for payment claim certificate 2:


Payment claim certificate 2 dated 30/11/16


Payment claim certificate 3 dated 10/12/16


Interest accrued to 1/02/17


Total debts:


The 11 Mitchell’s statutory demand the schedule, at [3], was:

Payment claim certificate 1 dated 20/12/16


Interest accrued to 1/02/17


Total debts


On 8 August 2016 the parties entered into a building contract for the construction of a 17 apartment buildings over two floors plus a basement at Grange Road. Because of funding issues it was agreed that the defendant would only carry out demolition work and on 18 August 2016 it was so instructed [7]. On 14 September 2016 the defendant emailed the plaintiff requested confirmation about funding for the Grange Road project. The Plaintiff responded on 15 September 2016 stating that funding was ‘not far away’ [8].

On 27 October 2016 the defendant issued the first payment claim for Grange Road [9] and on 22 November 2016 sought the first payment [11].  In response to a chase up the Plaintiff emailed the Defendant on 24 November 2016 stating that it was ‘working on this to get paid’ [11]. On 1 December 2016 the defendant made a second payment claim [12]. The Defendant chased payments by emails on 8 December, 9 December and 14 December 2016 [13].

On 14 December 2016 the defendant issued payment claims dated 31 October 2016, 30 November 2016 and 31 December 2016 totalling $239,830.03 [14] . In late November 2016, the defendant signed the main contract for work at Mitchells Lane [14].  The parties corresponded in December regarding the costs of remediation of contamination on the site, culminating with the defendant providing a report on variations costs [16] – [19].  The Defendant provided its first Mitchells Lane progress claim on 29 December 2016 and pressed for immediate payment [20] & [21].  The Plaintiff responded on 30 December stating that the full payments can’t be made now, the costs were high and it would be a good idea to stop works until the parties the parties “..get this sorted out.”  [22].

On 15 March 2017 the Defendant served each of the statutory demands were served, [23],  and received by the plaintiff on 21 March 2017 [25].  On 16 March 2017 an interim quantity surveyor, produced a report with respect to the value of the works at Grange Road [24] .

On 22 March 2017 the defendant emailed the plaintiff cancelling out part of the work from the system and re doing other work to match the assessment [25].  This became a significant issue both as to the timing of the variation and the overall quantum.

Each of the contracts is in the same standard form, namely AS4000-1997 and  arguably covered by the Domestic Building Contracts Act 1995 (Vic) [27] with key provisions, at [28], being

Superintendent Means the person stated in Item 5 as the Superintendent or other person from time to time appointed in writing by the Principal to be the Superintendent and notified as such in writing to the Contractor by the Principal and, so far as concerns the functions exercisable by a Superintendent Representative, includes a Superintendent Representative;

37.2 Certificates

The Superintendent shall, within 14 days after receiving such a progress claim, issue to the Principal and the Contractor:

(a) A progress certificate evidencing the Superintendent’s opinion of the monies due from the Principal to the Contractor pursuant to the progress claim and reasons for any difference (‘progress certificate’); and

(b) A certificate evidencing the Superintendent’s assessment of retention monies and monies due from the Contractor to the Principal pursuant to the Contractor.

If the Superintendent does not issue the progress certificate within 14 days of receiving a progress claim in accordance with sub-clause 37.1, that progress claim shall be deemed to be the relevant progress certificate. The Principal shall within 7 days after receiving both such certificates for within 21 days after the Superintendent receives the progress claim, pay to the Contractor the balance of the progress certificate after deducting retention monies and setting off such of the certificate in paragraph (b) as the Principal elects to set off. [emphasis added] …

38. Payment of workers and sub-contractors38.1 Workers and Sub-contractors

The Contractor shall give in respect of a progress claim, documentary evidence of the payment of monies due and payable to:

(a) workers of the Contractor and of the Sub-contractor; and

(b) Sub-contractors,

in respect of WUC the subject of that claim.

The  Plaintiff did not appoint a superintendent. The relevant progress claims were provided directly to the principal [29].


The Plaintiff submitted that:

Regarding Grange Road

  • as the payment claim was revoked and replaced in March 2017 after service of the statutory demand, the amount sought in the statutory demand cannot constitute a debt within the meaning of s 16(2)(a)(i) of Building and Construction Industry Security Payment Act 2002 (Vic) (‘BCISP Act’) [4];
  • a genuine dispute exists for the purposes of s 459 H of the Corporations Act because there are competing assessments by quantity surveyors, a lack of verification of contractor’s payments (not pursued at the hearing) and it is a commercial dispute requiring a detailed assessment of disputed facts [5].
  • as a Superintendent had not been appointed, the provisions of the contract could not be relied upon to transform any progress claim into debts [34].

to which the Defendant submitted:

  • the payment claims had as at 14 January 2017 already became payment certificates that were due and payable on 21 January 2017 [62].
  • the revised payment claim was only intended as a demonstration what the payment claims would look like if they were revised in accordance with the plaintiffs’ wishes.
  • The document was unsigned and as such clearly a draft document only.
  • even if it constituted a revised payment claim then under the contract

(i) it became due and payable by the plaintiff on 10 April 2017;

(ii) such payment certificate would then be for the sum of $204,848.09 a sum that exceeded the claim set out in the statutory demand by $34,876.96. In those circumstances, the sum under the statutory demand was still undisputed in existence and amount.

  • according to the Graywinter principle as the dispute has not been raised in some form within the affidavit that is filed and served within the 21 days the application must fail [62]. The court found his point had no merit as it was referred to in paragraph 11 of the 21 day Grange Road affidavit.

Mitchells Lane

  • the building contract is a major domestic building contract regulated by the BCISP Act & it is free to dispute the amount claimed;
  • there are competing assessments by quantity surveyors, a lack of verification of contractors’ payments by way of statutory declaration in accordance with the contract and a factual dispute over the entitlement to include the variations [6].
  • as a Superintendent had not been appointed, the provisions of the contract could not be relied upon to transform the progress claim into debts [34].
  • is a commercial dispute between a builder and a developer that requires detailed assessment of disputed facts and investigating issues of credit [50]

Findings regarding Mitchell Lane

The Court stated that the 14 days elapsed since the progress claim was deemed to be a progress certificate. Accordingly within the further seven days, the principal was required to pay the amount specified in the deemed progress certificate relying on Warren CJ’s decision in Kane Constructions v Sopov  which affirmed long standing authority that a principal under a building contract is bound to pay upon the terms of a properly issued certificate  even if the amounts are do not correctly represent the ultimate amounts owing.  As such each of the amounts claimed by the Defendant were due and payable at the end of that period and constituted a debt within the meaning of s 459E at the date of the service of the statutory demand [35].

 The Court had little regard for the submission that the failure to appoint a Superintendent meant the contract could not be relied upon stating:

  • the  well-established legal maxim that no person can take advantage of their own wrong [35]
  • it was arguable that the failure by the plaintiff to appoint a superintendent meant the responsibility reverts to the plaintiff. As the progress claims were provided directly to the plaintiff does not mean that the contractual provisions could not be relied upon because the plaintiff would be taking advantage of its own failure pursuant to the contract [39]

The Court rejected the plaintiff’s submission that the defendant did not take advantage of the BCISP Act by seeking an adjudication or obtaining a judgment pursuant to that Act finding:

  • that section 3(4) does not limit any other entitlement or remedy [42] & [43]
  • there is no impediment to the service of a statutory demand without first having embarked upon the regime under the BCISP Act [44].
  • the BCISP Act is not relevant to determination if the amount set out in each statutory demand is due and payable which is determined by reference to the contract [45].
  • 56 there was no evidence of a commercial dispute with the correspondence consistent with the plaintiff having insufficient funding [56]

The court dismissed the originating application with no order as to costs.

Findings regarding Grange Road

The Court found that “it is clearly reasonably arguable”  that upon the Defendant withdrawing some payment claims the payment certificate upon which the statutory demand was based ceased to operate or have force or effect.  It was a case of the debt upon which the statutory demand was based was withdrawn and a a new debt did not have crystallise until after the initial time for compliance with the statutory demand had lapsed. The court found that the new debt might be used as the basis for a new statutory demand but not in the statutory demand before the court [72].

The court set the statutory demand aside with no order as to costs.


The intersection between building claims and statutory demands can be complicated.  The disputes are usually fact dense and sometimes quite complicated.  While reliance of payment claims under the  Building and Construction Industry Security Payment Act 2002 can simplify the basis for a statutory demand it is a complex piece of legislation.  The Plaintiff sought to rely on certain technicalities in the contract and operation of the Act which came to nought. That does not mean there are no complications.

As the Mitchell Lane decision highlights there is significant, and often fatal, dangers in varying the claim after the statutory demand has been served and before the 21 day period elapses.







One Response to “289 Grange Road Developments Pty Ltd & Anor v Dalle Projects Pty Ltd [2017] VSC 409 (17 July 2017)”

  1. 289 Grange Road Developments Pty Ltd & Anor v Dalle Projects Pty Ltd [2017] VSC 409 (17 July 2017) | Australian Law Blogs

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