In case further confirmation of the courts support for the strict enforcement of the Building and Construction Industry Payments Act (Act) was required, the Queensland Supreme Court, on Thursday, 13 September 2012 handed down its decision in The State of Queensland v T&M Buckley Pty Ltd (Receivers & Managers Appointed).
The issue was the operation of purported preconditions to the existence of a reference date under the Act and as such, a Claimant's ability to serve a payment claim under the Act.
The relevant portion of the clause provided as follows:
Subject to the prior receipt by the Superintendent of the information required by clause 43.2, at the times for payment claims stated in the Annexure....
Clause 43.2 of the contract provided that prior to the making of a payment claim the Contractor must deliver to the Superintendent a statutory declaration in the normal form attesting to the fact that all Subcontractors had been paid all amounts due and payable as at the date of submission of the payment claim.
The Contractor purported to serve a payment claim under the Act without having provided the statutory declaration. Unsurprisingly, the Respondent rejected the payment claim on the basis that it was invalid as the reference date had not arisen (by operation of the precondition). The matter proceeded to adjudication and the Claimant was successful. The Respondent applied to the Supreme Court for a declaration that the adjudication decision was void on the basis that no reference date had arisen and as such, the payment claim was void.
The Queensland Supreme Court however concluded that whilst the precondition operated to restrict the right of the Contractor to deliver a contractual claim it did not effect the reference date under the Act and did not operate as a precondition to the reference date arising under the Act. In reaching this decision, the court also questioned the correctness of the previous Supreme Court decision in Simcorp Developments.
This decision is the second decision within the last month where the court has restricted the operation of such a clause to only the contractual claim under the contract. In BHW Solutions Pty Ltd v Altitude Constructions Pty Ltd the Queensland Supreme Court concluded that a clause which purported to operate as a precondition to payment was only applicable to the contractual claim under the contract and not a payment claim under the Act.
Whilst at first glance these decisions may appear restrictive they garner support from the New South Wales Supreme Court decision in Thiess Pty Ltd v Lane Cove Tunnel Nominee Company Pty Limited where the court concluded that if the time period for service of a payment schedule under the Act was to be reduced it would require clear and express words to that effect to be contained in the contract.
Accordingly, these two decisions do not "close the door" on preconditions to payment and/or preconditions to reference dates. However, these decisions establish (without any doubt) that for such preconditions to operate successfully in relation to claims made pursuant to the Act clear and express words will be required to be included in the contract.
If we can be of any assistance in ensuring such clauses are appropriately worded in your contracts please do not hesitate to contact us.
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.