Payment schedules – whether a payment schedule provided by the superintendent was provided by agent of the respondent for the purposes of the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act).
If a superintendent is authorised by a principal to provide a payment schedule, the payment schedule will be taken to have been issued on the principal's behalf for the purposes of the Act.
On 18 January 2013, Lewance Construction (plaintiff), as the contractor, entered into a construction contract with Southern Han Breakfast Point (defendant), as principal. The contract required the plaintiff to appoint a superintendent, who was identified in the contract as Mr Kwee. All progress claims were to be given in writing to the superintendent, and within 14 days the superintendent was required to provide a progress certificate to the parties evidencing his opinion of the moneys due from the defendant to the plaintiff. The contract also allowed the superintendent to appoint individuals as the superintendent's representative. On 5 February 2014, Mr Kwee advised the plaintiff of the appointment of Mr McMahon as the superintendent's representative.
On 6 February 2014, Mr McMahon had a conversation with the director of the plaintiff in which Mr McMahon advised that the defendant and superintendent had agreed that 'from here on' he would be assessing the plaintiff's progress claims and issuing payment schedules.
Between 6 February 2014 and 7 July 2014, Mr McMahon assessed the plaintiff's progress claims 9 – 14. On each occasion, Mr McMahon provided to the plaintiff a document titled 'Contractor Payment Schedule' and a payment voucher or progress certificate for the scheduled amount.
On 8 August 2014, the plaintiff sent progress claim 15 for $2,189,897.40. On 22 August 2014, Mr McMahon delivered a letter to the plaintiff which included a 'Contractor Payment Schedule' and a progress certificate for the scheduled amount of $1,133,791.45. The defendant paid the scheduled amount.
The plaintiff sought to recover the unpaid portion of progress claim 15 on the basis that Mr McMahon was exercising the superintendent's function under the contract to act as an independent certifier and was not acting on behalf of the defendant for the purpose of providing a payment schedule under the Act.
The court held that the evidence supports the finding that Mr McMahon was authorised by the defendant to provide the payment schedule on its behalf, and the plaintiff was not entitled to recover the unpaid portion of progress claim 15 as a debt due under section 15(2) of the Act.