The court will impose a high threshold on an applicant for summary judgment in debt proceedings resulting from a failure to pay on a payment claim under security of payment legislation. Read on for the rest of the analysis by Justin Sadikoen.
Denham Constructions Pty Ltd (Denham) sought summary judgment against the Islamic Republic of Pakistan (Pakistan) in a claim for debt totalling $1,027,054.89. The debt arose out of a payment claim made under the Building and Construction Industry (Security of Payment) Act 2009 (ACT) (SOP Act).
On 11 September 2015, Denham allegedly served a payment claim on Pakistan. Pakistan responded by email denying Denham's 'claim to adjust the contract' (Email Response) on the basis that that claim was time-barred.
Denham alleged that Pakistan failed to provide a payment schedule and as a result Pakistan became liable to pay the claimed amount.
Denham's application for summary judgment was dismissed.
Pakistan denied that the document served by Denham on 11 September 2015 was a payment claim under the SOP Act (Invalidity Argument) on the bases that the payment claim was:
- for adjusted time costs, and was therefore not a claim for construction work and/or the supply of related goods and services as required by the SOP Act; and/or
- not for additional works but repeated claims for variations that had been previously rejected, and was therefore invalid or otherwise an abuse of process.
In the alternative, Pakistan also argued that the Email Response was sufficient to constitute a payment schedule and that the SOP Act did not apply because the land to which the construction contract related was subject to the exclusive jurisdiction of the Commonwealth (Alternative Arguments).
The court stated the principles relevant to summary judgment:
- summary judgment is only granted in situations where the defence is 'so obviously untenable that it cannot possibly succeed';
- applicants face a 'very high threshold';
- the lack of a cause of action must be 'clearly demonstrated'; and
- the procedure calls for 'exceptional caution'.
The court held that although the Invalidity Argument appeared to be weak, there were factual issues to be resolved and the Invalidity Argument should be considered on full argument. Given that the court had found that the Invalidity Argument was an arguable defence, it was unnecessary for the court to consider the Alternative Arguments.