Australia: Security of payment after termination: Walton Construction and Corrosion Control Technology
Contract is terminated: can a claimant under the BCIPA keep bringing claims?

Introduction

Your contract is terminated and there are amounts still owing to you – can you use the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA) to make another claim? The answer, according a recent Queensland Supreme Court decision, is only if you have an available reference date which arose before termination because reference dates (being dates from which a payment claim can be made) stop accruing post termination.  

This decision is unique to Queensland. For example, current law states that reference dates will accrue post termination under the New South Wales equivalent of the BCIPA.

Recap: what are reference dates?

A claimant under the BCIPA can only serve a payment claim from each reference date.

A reference date is (essentially) a date stated in the contract on which a claim for a progress payment may be made. If the contract says the contractor can make a progress claim, payment claim or claim for payment, whatever it happens to be called, on the 25th day of each month, then the reference date will be the 25th day of each month.

A claimant can only make one payment claim from each reference date. So a claimant who serves a claim on 27 October 2011 cannot then serve another payment claim until 25 November 2011; if it does, the later payment claims up until 25 November 2011 will be void.

What you need to know

If making a claim under the BCIPA then remember that no more reference dates will accrue post termination of the contract.

So if your contract provides that the reference date is the 25th day of each month and the contract is terminated on 1 December 2011, the only reference date left available to a claimant will be 25 November 2011. Because the claimant can only serve one payment claim for each reference date, it will only have one more opportunity to serve a valid payment claim under the BCIPA.

Therefore, if a claimant is planning to serve one claim on 4 December 2011 thinking that it will have another chance to put in another claim from 25 December 2011, think again. It will, according to that example, only have one shot at adjudication post termination.

However there is an exception: reference dates will continue to accrue post termination if the contract includes a term that the right to make a progress claim survives termination. This is a rare, almost non-existent, clause (you can understand why – it doesn't make much sense for a contractor to have a right to submit claims for payment post termination). However it is worth bearing mind when negotiating your contract.

The case

The principle that reference dates do not accrue post termination was determined by the recent Queensland Supreme Court decision of Walton Construction (Qld) Pty Ltd v Corrosion Control Technology Pty Ltd & Ors [2011] QSC 67.

The contract set the reference date as the 21st day of each month. The contract was terminated on 15 January 2010. The subcontractor served payment claims on 21 February 2010 and 22 March 2010. The subcontractor sought adjudication of the 22 March 2010 payment claim. The adjudicator's decision for the 22 March 2010 payment claim was void because it was the second payment claim made for the 21 December 2009 reference date; reference dates did not accrue post termination.

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.