Recently the Queensland Court of Appeal handed down a
decision1 that has major consequences nationwide for
owners and contractors in responding to payment claims served under
Security of Payment legislation. The Court held that, in the
circumstances of this case, a document served in response to a
payment claim that failed to respond to the major item of the claim
was not a "payment schedule".
The consequences of not serving a "payment schedule"
within 10 business days of receiving a payment claim are dire. In
those circumstances the claimant serving the payment claim will be
entitled to the entire amount claimed whether or not that claim is
due under the contract; the respondent cannot raise merits
defences. There are presently no monetary caps on payment
The decision is also authority for the proposition that the
first document served within the 10 business days in response to
the payment claim will not necessarily be the payment schedule if
it provides that it is a preliminary document for a later document
to be the "payment schedule".
The Court also confirmed that an adjudicator's error in
adopting the wrong document as the payment schedule is a
jurisdictional error. Whether an error is jurisdictional is
critical as only a jurisdictional error may permit a challenge to
an adjudicator's decision.
Although decided on discretionary grounds, having found
jurisdictional error, the Court declined to remit the matter back
to the adjudicator given the purpose of the legislation to provide
for the quick, cheap and simple resolution of construction payment
disputes. There are also procedural difficulties in remitting a
decision back to an adjudicator to re-adjudicate according to
This case involved a $26 million payment claim submitted by
Heavy Plant Leasing Pty Ltd (administrators appointed) (receivers
and manager appointed) (HPL) on McConnell Dowell
Constructors (Aust) Pty Ltd (MacDow) in relation
to a subcontract as part of GLNG's coal seam gas project in
On 6 March 2013, MacDow served a three page response that
included a rejection of HPL's claim for $18 million of
variation claims. The three page document was described as a
"Progress Certificate" and the only reference given for
rejecting the $18 million of variation claims was the statement
"refer to variations register". The variations register
was not attached. Two days later on 8 March 2013 (within the 10
business days for serving a payment schedule) MacDow served its
payment schedule described as a "payment schedule".
That document included the variations register. The adjudicator
decided that the 6 March document was the payment schedule and
disregarded the 8 March document in its entirety. The adjudicator
then awarded the entire claimed amount for variations by
MacDow successfully applied to the Supreme Court and obtained
orders declaring the adjudicator's decision void because the
adjudicator failed to have regard to the 8 March document (found to
be the payment schedule), which unlike the earlier 6 March
document, fully responded to the major part of HPL's payment
claim. That decision was upheld on appeal.
Generally it is the respondent seeking to argue that a document
is a payment schedule. In this case, the respondent was arguing the
opposite, which is unusual. This case highlights the importance of
responding to all the major parts of a payment claim when preparing
a payment schedule.
1Heavy Plant Leasing Pty Ltd v McConnell
Dowell Constructors (Aust) Pty Ltd & Ors  QCA
386 2There are limitations in Victoria on claiming disputed
variations for contracts over certain values, however this is not a
monetary cap on claims.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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