Validity of payment claims solely for work previously performed but not claimed in an earlier payment claim in respect of an earlier reference date under the BCISOP Act

Commercial & Industrial Construction Group Pty Ltd v King Construction Group Pty Ltd [2015] VSC 426

Will a Payment Claim under the BCISOP Act be valid if it:

1. only claims for work not previously claimed in an earlier payment claim made pursuant to an earlier reference date; and / or,
2.  does not contain a claim for work performed since the last reference date ?

Background

The Plaintiff made a payment claim under the Building and Construction Industry Security of Payment Act 2002 “BCISOP” Act dated 21 January 2015 for work that had been the subject of earlier payment claim (23.12.14) made pursuant to an earlier reference date (5.1.15), and did not include a claim for any “new” work performed since the preceding reference date of 5 January 2015.

The Plaintiff’s payment claim 21 January 2015 was made prior to the next available reference date arising under Act, 3 February 2015.

The Defendant served a payment schedule under the Act in which it relevantly contended that the payment claim was invalid on the bases that:

1. there was no new work claimed since the last reference date of 5 January 2015 and therefore a reference date did not arise (the no new work defence);
2. because the claim was only for work performed prior to an earlier reference dates which had been the subject of earlier payment claims, the Plaintiff was making a second payment claim with respect to those earlier reference dates. As a result, it submitted that the payment claim was invalid for contravention of s14(8) of the Act which provides that a claimant may only submit one payment claim in relation to each reference date (the s14(8) defence).

Adjudication

The Defendant was unsuccessful in relation to the no new work defence. The Adjudicator found that ss. 14(8) and (9) should not be construed as implicitly requiring that a payment claim must include new work performed since the last reference date in order to be valid. The Adjudicator found that Jotham Property Holdings Pty Ltd v Cooperative Builders Pty Ltd & Ors. [2013] VSC 552 (Jotham) at [57] and [58] did not call up a requirement for new work, only different work and placed reliance upon the Queensland Court of Appeal decision of Spankie & Ors v James Trowse Constructions Pty Ltd [2010] QCA 355 (at [23]).

The Defendant was also unsuccessful in relation to the s14(8) defence.

Judgment

The Court found in favour of the Plaintiff in relation to the no new work defence (at [99]-[113]).

The Court however found against the Plaintiff in relation to the s14(8) defence (at [81] – [98]).

The Court relevantly found that:

1. the preceding payment claim dated 23 December 2014 was a premature payment claim with respect to the reference date of 5 January 2015 in accordance with the principals enunciated in Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 (at [107] – [14]) (Metacorp).
2. the payment claim was not for new work performed since the last payment claim dated 23 December 2014 or the preceding reference date of 5 January 2015;
3. the payment claim was for work performed in respect of an earlier reference date (5 January 2015) that had been the subject of the earlier payment claim dated 23 December 2014;
4. when read as a commercial document in accordance with the principals enunciated in Pacific Carriers Ltd v BNP Paribas (2004) 208 ALR 213 (at [22]) the payment claim could not be construed as a premature payment claim with respect to the next reference date of 3 February 2015 in Metacorp.

Conclusion

The Court has implicitly found that work is temporally connected to a reference date for the purposes of s14(8) by reference to when it was performed.

Therefore, if a claimant is proposing to serve a payment claim under the BCISOP Act, it must include a claim for all of the work performed since the last reference date. If it does not do so it will be barred from claiming a progress payment for any unclaimed work for that period in a later payment claim for a progress claim under s14(8).

On a practical level this is likely to create two difficulties for contractors.

Firstly, a contractor may not have received a detailed account from one of its subcontractors in relation to some works performed since the last reference date. In accordance with this decision, if the Contractor wishes to prosecute a properly detailed claim for this work under the BCISOP Act that complies with s14(2)(c), it may be required to wait until the next reference date once such details have been provided. This seems to be contrary to one of the principal objectives of the BCIPSOP Act which is to provide a fast track entitlement to cash flow.

Secondly, this decision is likely to result in factual disputes concerning when construction works were performed. The claimant will contend that some or all of the construction work the subject of the payment claim having been performed before an earlier reference date that was the subject of an earlier payment claim.

This construction appears to be at odds with:

1. the clear intention of s14(9) which is to permit payment claims under the BCISOP Act for works performed prior to earlier reference dates that have been the subject of earlier payment claims under the BCISOP Act;
2. the Courts finding that a claimant is not precluded from claiming for work performed prior to an earlier reference date provided that the reference date applicable to that work was not the subject of an earlier payment claim under the BCISOP Act (at [100] – [113]).