The recent Federal Court decision in Protectavale Pty Ltd v
K2K Pty Ltd  FCA 1248 provides a valuable reminder of
the minimum requirements for submitting valid payment claims under
the Building and Construction Industry Security of Payment Act
2002 (Vic) (SoP Act).
Protectavale and K2K were joint venturers in a residential and
retail development known as "Chadstone Gate". In April
2006 they engaged a contractor to carry out the construction work.
The parties fell into dispute, an element of which concerned an
invoice the contractor submitted to the joint venturers for monies
it claimed it was owed under the contract. The contractor sought a
summary judgment on the basis that the invoice was a valid payment
claim under the SoP Act.
The invoice which was submitted a short time after practical
completion was certified, claimed the entirety of the contract sum
(as adjusted by variations and a prolongation claim), less amounts
previously paid and less retention. While the invoice did attach a
schedule providing details of the variations and the prolongation
claim, no details were provided as to the outstanding contract sum
Finkelstein J considered whether the invoice met the
requirements of section 14 of the SoP Act. Finkelstein J noted that
while the test is objective, it should not be applied in an unduly
critical manner given that the parties to the contract might
understand more of the content of an invoice than a third party. An
important factor in determining whether an invoice meets the
requirement of section 14 is whether the claim enables
the principal to ascertain with sufficient certainty the work to
which the claim relates in order to provide a meaningful payment
The payment claim was made in the usual way – the
contract sum plus adjustments less amount paid. Finkelstein J held
that the contractor's failure to identify the work to which the
claimed amount of the contract sum related was fatal, despite the
fact that practical completion had been achieved and as set out in
the payment claim the amount was the contract sum less amounts
previously paid by the joint venture. Finkelstein J said that
without this information the joint venturers could not value the
work to which the claimed amount related, make their own assessment
of the amount payable or provide a payment schedule as required
under the SoP Act. Accordingly, the contractor's application
The decision highlights the importance of ensuring that, when
submitting a payment claim, the requirements of the SoP Act are
met, in particular that the work to which the claim relates is
properly identified and explained to enable the principal to
appropriately assess and respond. In some circumstances, a standard
form invoice may simply not be enough.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
This part will cover the legal position in relation to promotional materials and misleading and deceptive conduct.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).