In the Supreme Court on Tuesday, 18 May 2010, Gold Coast Titans Property Pty Ltd as trustee for the Gold Coast NRL Property Trust was successful in arguing that a payment claim served by Simcorp Developments and Constructions Pty Ltd was invalid under the Building and Construction Industry Payments Act 2004 (BCIPA). The effect was that Simcorp couldn’t rely on the payment claim in question to support and enforce the adjudication decision made in its favour on 14 May 2010.

Background

In June 2009, Simcorp was engaged to build the Titans Centre of Excellence training facility at Robina, next to Skilled Park Football Stadium, but earlier this year the Titans purported to terminate the building contract. The payment claim in question was delivered to the Titans on 10 March 2010 and sought to recover just over $5.2million.

Validity of the claim

At the core of the Titans’ argument was the suggestion that the payment claim in question was not a claim under the BCIPA, but at most, a progress claim. The Titans argued that the terms of the contract between it and Simcorp provided for superintendent progress certificates to be issued before Simcorp was able to issue a payment claim under the BCIPA. In very general terms, the procedure laid out by the terms of the contract required:

1. That the superintendent issue a progress certificate by the 30th day of the month after receiving a progress claim (and that if the superintendent did not issue the progress certificate by that date, then the progress claim would be deemed to be the relevant progress certificate).
2. Only after receipt of the superintendent’s progress certificate, or its deemed receipt, does the contract allow for delivery of a BCIPA payment claim to the Titans.

The findings

The Court held that under the legislation and under the contract between Simcorp and the Titans, the issuing of a progress certificate by the superintendent was a necessary precondition to the delivery of a BCIPA payment claim. No certificate had been issued from the superintendent and thus Simcorp’s claim was not one made under the BCIPA.

One of the potential hurdles the Titans faced in its argument was around the concept of the reference date under the contract to then work out the date on which a BCIPA claim could be made. Simcorp issued its claim on 10 March 2010 and said that its reference date was 28 February 2010. The Titans argued that no superintendent certificate was required under the contract until 30 April 2010, or the 30th day of the month after receiving the progress claim, and 30 April 2010 was therefore the date worked out under the contract on which a claim for a progress payment could be made. While there was some discussion by the Court about the actual interpretation of the terms of the contract (and whether the date was 30 March 2010 or 30 April 2010), it accepted the Titans argument that the construction contract did allow for working out a reference date. The Court also determined that this did not offend the anti-contracting out provisions of the BCIPA.

In this case, the contract created the precondition for the timing of the payment claim and the date for the progress payment to be made. If the contract didn’t do that, then the Titans and Simcorp would have had to adopt the reference date provided by the definition of a reference date in the BCIPA which allows a payment claim to be made from the last day of the month when the construction work was first carried out under the contract, and the last day of each later month.

Summary

The BCIPA clearly stipulates that the due date of a progress payment depends on the terms of the contract. It recognises that a construction contract may contain terms that fix the date for delivery of a payment claim, or terms which lay out certain procedures. In this case involving the Gold Coast Titans, the Court determined that the contract with Simcorp contained such provisions and as a result, Simcorp’s claim was invalid. 

HG recommends

Pre-conditions to payment in construction contracts are becoming commonplace. They can be used against you or in your favour. The devil is in the detail and attention should be given at the drafting stage of these contractual arrangements. HopgoodGanim can review your existing contractual clauses that relate to making valid payment claims to ensure your contracts work in your favour.

Adam Carlton-Smith, Partner
Alexander de Luca, Trainee Solicitor