Services

HG Alert: Clash of the Titans: BCIPA v TPA - 25 Jan 2010

Under the provisions of the Building and Construction Industry Payments Act 2004 (Qld), if a payment schedule is not served in response to a payment claim within the time allowed, the respondent will be precluded from bringing a defence - effectively entitling the claimant to the full amount claimed.

Section 52 is fair play

It is now firmly established in Queensland that the BCIPA will not prevent reliance on section 52 of the Trade Practices Act 1974 (Cth) (dealing with misleading and deceptive conduct) where a payment schedule is not delivered in response to a payment claim.

In 2009’s landmark Queensland decision of Austruct Qld Pty Ltd v Independent Pub Group Pty Ltd, the Supreme Court opened the scope of defences available where a payment schedule has not been served.

Recent goals kicked in Queensland

In Austruct, the architect appointed to the project was led to believe that a bundle of documents received was an identical copy of a separate bundle delivered to the company’s registered office in Sydney. It transpired that the architect was incorrect, as there was a payment claim in the bundle of documents sent to Sydney.

The architect had passed this misleading information on to a representative of the respondent, who did not check the documents containing the payment claim, and as a result, the respondent failed to deliver a payment schedule within the prescribed time.

The Court ultimately found for the respondent and held that “it would be improper to permit the applicant to take advantage of the respondent’s failure to deliver a payment schedule in circumstances where that failure was brought about by the applicant’s misleading conduct”.

There are other cases where arguments under section 52 of the Trade Practices Act were successful. In Reed Constructions (Qld) Pty Ltd v Martinek Holdings Pty Ltd, the applicant (Reed) made representations in an informal agreement between the parties that it would not serve a payment claim for a certain period of time, while the parties underwent other joint venture negotiations. In reliance on these representations, the respondent (Martinek) did not make any payment for the amount claimed in a payment claim issued by Reed, nor did it issue a payment schedule. The Court held that there was an unspoken agreement between the parties to suspend Reed’s right to pursue a claim under the BCIPA while the joint venture negotiations were underway, and this was reinforced by Reed’s actions, which amounted to misleading and deceptive conduct. As such, the application was dismissed.

It’s not going to be an easy game…

Don’t be fooled into thinking that section 52 of the Trade Practices Act is easy to satisfy. The hallmarks of a section 52 claim are onerous:

  • A corporation in trade or commerce must engage in conduct that is misleading or deceptive or likely to mislead or deceive.
  • The other party must rely on the misleading or deceptive conduct/information and suffer some form of detriment.

It is not enough to satisfy only some of these requirements, as each factor is essential to a successful claim. Additionally, ignorance of process by the other party will not constitute misleading or deceptive conduct. For example, it is not the responsibility of the claimant to bring to your attention that a claim is made pursuant to the BCIPA.

In any event, we are seeing an increasing number of section 52 defences arising in response to applications to the court for summary judgment. Although not all successful, the courts of Queensland and New South Wales (see Bitannia Pty Ltd & Anor v Parkline Constructions Pty Ltd) have both shown a willingness to allow the remedies of the Trade Practices Act to apply even where the BCIPA expressly prevents the respondent from raising a defence.

Debrief

If you have not delivered a payment schedule as a respondent, all is not necessarily lost. You may have other options if the claimant hasn’t been upfront and honest in their dealings. However, as a rule, it should be common practice to always check the documents you are being sent and avoid accepting them on face value.

From a claimant’s perspective, it is important that you ensure any innocent steps taken to seek payment under the BCIPA don’t become something more, which could be construed as misleading and deceptive conduct. Always be transparent in your dealings with the BCIPA to avoid a defence of misleading and deceptive conduct eliminating your entire claim.

For more information on the Building and Construction Industry Payments Act 2004, please contact HopgoodGanim’s specialist Construction, Infrastructure and Major Projects practice.