Most Read Contributor in Australia, September 2016
Limiting exposure to ambush payment claims under the
Building and Construction Industry Payments Act 2004
(BCIPA) is a serious issue for owners/developers and for main
Following the Jedfire decision in 2009, it was thought that
using a formula of words which permitted progress claims to
practical completion, at practical completion and at the final
claim stopped reference dates (and therefore payment claims)
arising during the defects liability period.
A recent NSW decision has created uncertainty as to whether this
view is correct.
It is accepted law that a contractual modification of the
relevant laws will not be effective unless it is clearly stated
that the contract is to supplant the stipulations stated. The
contractual modification cannot however contract out of BCIPA. If
it does so, it is void to that extent.
In the decision of The City of Ryde Council v AMFM
Constructions, the parties had entered into a construction
contract based on AS4300. The effect of the words is substantially
similar to the contract considered in the Jedfire decision.
The relevant wording of the payment clauses was unamended. The
annexure provided for the time for payment claims is the
"15th day of each month, payment by end of each
The Court found that as the wording of the payment clauses was
the pro forma contract, and more specifically, the progress payment
clause did not contain a clear limitation on further claims, which
was the case with the clause for the final claim, there was no
inference that could be drawn that the achievement of practical
completion (or the issue of the certificate of practical
completion) would result in periodic payment claims coming to an
end until the time for making the final claim.
To limit reference dates arising between practical completion
and final claim, clear words are required. To be effective, these
words have to be carefully drawn as to not fall within the ban on
contracting out of BCIPA.
We can assist you to update your contracts to prevent reference
dates arising during the defects liability period and to provide
maximum contract protection against claims made under the Building
and Construction Industry Payments Act 2002.
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.
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