BuildLaw Issue 27 March 2017 | Page 20

case in brief: Double edition

C. J. Parker Construction Ltd
(in Liq) v Ketan [CA, 03/02/2017]

by John Green


Background
The case involved an appeal against the dismissal of a summary judgment application on the basis that the appellant had not served a valid payment claim under section 20 of the Construction Contracts Act 2002 (the Act).
In or about early 2013, the parties had negotiated about a price for certain renovation work to a motel owned by the respondents, but no contract was ever executed. The renovation work began in mid-February 2013 but there was no agreed contract price, nor agreement of terms relating to payment method, progress payments and payment claims.
In July 2013, the respondents terminated C.J. Parker Construction Ltd’s (C.J. Parker) involvement with the project before the work was completed. C.J. Parker then submitted an invoice that was stated to be a payment claim under the Construction Contracts Act 2002. However, the purported payment claim did not set out the details of how C.J. Parker had arrived at what it said was reasonable value for the work it had undertaken.
C. J. Parker applied for summary judgment on the basis that its invoice was a valid payment claim in terms of section 20 of the Act, the respondents did not reply to its invoice with a valid payment schedule within seven working days, and therefore the invoiced amount was a due debt under section 23 of the Act.
The respondents resisted summary judgment on the basis that the purported payment claim did not indicate the manner in which the payee calculated the claimed amount as required by section 20(2)(e) of the Act. They argued that several parts of the invoice did not make sense and that it was unclear how C.J. Parker calculated the amount claimed.
On 5 October 2015, Woolford J dismissed the application for summary judgment by C.J. Parker. Applying section 17(4) of the Act, the Judge said the value of the construction work was to be calculated with regard to the reasonable value of the work. His Honour held that C.J. Parker had not served a valid payment claim in terms of section 20 of the Act as it did not properly address the reasonable value of the work, and did not enable the respondents to respond effectively and in detail to the claim. Without determining the issue, he also observed that Dr Ketan’s email in response to the invoice was likely to be a valid payment schedule in terms of section 21.
C J Parker appealed. The appeal raised a question about how much information must be provided by a payee to constitute a valid payment claim. The parties also disagreed about how much information must be provided by a payer to constitute a valid payment schedule.
It was submitted for the appellant that because section 17(4) applied and the calculation of price was simply by “reasonable value”, it was not necessary for the invoice to provide a more detailed description of the way in which calculations were made. It was argued that it should be open to a payee therefore to simply indicate what the payee considers to be “reasonable value” on the basis that the use of the word “indicate” in s 20(2)(e) suggests that a detailed explanation is not required… It would then be open to the payer to provide a payment schedule disputing the “reasonable value”.