Article by Riki Kerr

The Building and Construction Industry Payments Act 2004 ("BCIPA") remains a powerful tool for contractors in the recovery of payment for their works.The Queensland Supreme Court recently in Civil Mining & Construction Pty Ltd -v- Isaac Regional Council [2014] QSC 231 once again reinforced this point in its consideration of the validity of a payment claim in the face of a previous payment claim of same fact being declared void and the matter concurrently being dealt with under the mechanisms provided in the contract.

Background

Civil Mining & Construction Pty Ltd ("CMC") and the Isaac Regional Council (the "Council") entered into a contract for road works construction. As part of the many disputes that occurred throughout the construction CMC served a payment claim under BCIPA (described as payment claim 8).In considering payment claim 8the adjudicator awarded CMC $9,923,090.87 of the $20,063,438.16 claimed. The Council in response applied to the court to declare the adjudication decision void because of defective service. In response to the Court's early indication that the Council's request would likely be upheld the parties consented to orders to have the Adjudicator's decision set aside.

Around the same time of consenting to the orders CMC served a further payment claim for $36,451,859.29 for work completed up to final stage including works already considered in the now void payment claim 8 (the new payment claim being referred to as payment claim 11). In response the Council served its payment schedule for a lesser amount and applied to the Court for an injunction preventing the matter from going to adjudication. Council's position was that:

  1. Nearly all of the components of payment claim 11 fell within the previous void claims including payment claim 8;
  2. CMC was aware that the claim is substantially disputed by the Council; and
  3. CMC had also invoked the dispute resolution provisions of the contract which was expected to result in an arbitration of effectively the same matters.

Supreme Court Decision

Justice McMurdo decided that although the previous adjudicator decisions were declared void, the declaration did not have the effect of preventing a further payment claim being made. The setting aside of the decision of the adjudicators had the effect of putting the parties in the same position as if there had been no adjudication at all.

Whilst s17(5) of BCIPA prevents a contractor from serving more than one (1) payment claim in relation to the reference date, the Council conceded that payment claim 11 had a different reference date from that of payment claim 8. As a result, CMC was entitled pursuant to s17(6) to include in its payment claim an amount that has been the subject of a previous claim.

Justice McMurdo went on to consider the Council's second argument in which it was alleged that CMC's knowledge of the fact that the claim was substantially disputed would prevent an adjudicator's consideration of payment claim 11. Justice McMurdo found that such a fact could not be a bar to pursuit of a claim under BCIPA which clearly provides claimants with the remedy of an adjudication in the very circumstance where their claims are disputed.

In consideration of Council's third argument, Justice McMurdo determined that it has been well established that the statutory remedies provided in BCIPA and other remedies contained within the contract could be pursued concurrently in relation to the same dispute.

What this means

The fact remains, the recipient of a payment claim must act quickly in preparing and serving a payment schedule regardless of what else is occurring with the disputed works. Failure to do so could result in the recipient losing its right of reply and being required to pay the full amount of what is claimed.

Contractors on the other hand should consider the possibility of serving a payment claim under BCIPA even if the matter is disputed under the contract and/or an adjudication decision was previously declared void.

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.