Yuanda Vic Pty Ltd v Facade Designs International

Citation: [2021] VSCA 44

In most of Australia and in Singapore, where the “East Coast model” of the so-called security of payment legislation applies, construction adjudication is available only upstream, and it is limited to contractual claims, thereby leaving claims for quantum meruit, damages and the like outside the scheme of the legislation. In Victoria, there is a further restriction: various categories of contractual claims (including claims for interest, some claims in respect of variations and time-based claims) are prescribed as “excluded amounts”, outside the scheme of what is recoverable.

The East Coast model has a somewhat Draconian version of default judgment. A claimant can serve a payment claim, and if the respondent does not provide a payment schedule, responding to that claim, within 10 business days, then the sum claimed becomes automatically payable. In New South Wales, the payment claim does not even need to identify itself as such. Unsurprisingly, administrative oversight frequently means that the respondent fails to serve a payment schedule in time.

In those all-too-common circumstances, a claimant then has two options. It can either commence an adjudication, which is something of a turkey shoot because the respondent is not to be heard on any reasons as to why the sum claimed is not truly due, or it can go directly to court and ask for judgment. In practice, claimants often choose to go to adjudication, because the process of going through adjudication and getting an adjudication determination registered as it were a court judgment is typically quicker than getting an appointment from the court for a hearing.

In Victoria, with its excluded amount regime, there is a provision that the court is not to give judgment under the “shortcut” route if the claimed amount includes an excluded amount. Claimed amount here is a defined term: it means the amount claimed in the payment claim that was served.

In Yuanda v Façade [2021] VSCA 44, the question arose: “If the amount claimed in the payment claim includes excluded amounts, can the court give judgment for a lesser sum, thereby excluding the excluded amounts?

At first instance, the court said “Yes”. For the purpose of an appeal, Yuanda instructed Keating Chambers International Member Robert Fenwick Elliott, with Laura Mills of the Victorian bar as his junior.  Describing these as important issues, the Court of Appeal of Victoria reversed the first instance decision, finding that the provision means what it says. If the amount that was claimed in the payment claim includes any excluded amount, the shortcut route is not available at all. In this case, the claimant had admittedly included a claim for excluded amount (the claim to interest) in its payment claim and the consequence was that the whole of the claimant’s claim was dismissed.

Counsel

Robert Fenwick Elliott

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