Should we complain about the service? Challenging service under the Security of Payment regime
The recent decision of the Supreme Court of Queensland on 4 April 2019 is an important reminder that statutory claims must comply with the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (although this case refers to the then in force, Building and Construction Industry Payments Act 2004 (Qld) (BCIPA)) in respect of service on the person liable and valid service of the notice.
This decision also serves as a reminder that parties should undertake careful consideration in determining the extent of the Superintendent’s role as certifier, and should ensure that amendments, particularly to AS contracts, reflect this.
The applicant (principal) entered into a design and construction amended AS4902-2000 contract with the respondent for student accommodation. The respondent submitted a payment claim on 13 December 2018 pursuant to BCIPA, which was received directly by the Principal’s Representative who issued the relevant payment certificate in response. On 28 February 2019, the adjudicator delivered its decision requiring an amount due to be paid by the applicant to the respondent.
In its application for review, the applicant sought an order that the adjudicator’s decision be declared void, where the payment claim was not properly served on the applicant.
Clause 37 of the contract provided the regime for payments, which was deemed to include progress payments considered to be payment claims under BCIPA. The clause stipulated that progress claims are to be given in writing to the Principal’s Representative, who would in turn issue a progress certificate to the applicant and respondent. Clause 45.3 of the contract deemed that a progress certificate compliant with clause 45 would constitute a payment schedule pursuant to BCIPA, issued by the Principal’s Representative under its authority as agent of the applicant.
As to notices generally, clause 7A of the contract required service of any notice under BCIPA on the principal’s physical address, as opposed to the Principal’s Representative address. However, His Honour, Applegarth J found that this clause applied to notices under the Act other than payment claims (for example, adjudication applications).
The Court’s primary consideration was whether the construction contract permitted valid service of a payment claim pursuant to BCIPA on the Principal’s Representative or whether the respondent was required to serve it on the Principal, at the Principal’s physical address provided in the contract.
On consideration of the construction of the contract, the Supreme Court dismissed the application and upheld the adjudicator’s jurisdiction to consider the adjudication application, on the basis that service of notices, including payment claims under BCIPA by an agent expressly authorised to receive such a document, was permitted by the contract.
The applicant submitted that a valid payment claim must be served in accordance with section 17(1) of BCIPA (now section 75(1) of the BIF Act), requiring a claim to be served on ‘the person who, under the construction contract concerned, is or may be liable to make the payment’. On this basis, the applicant argued that clause 7A of the contract required a notice under BCIPA to be served on the applicant’s physical address, which the respondent failed to do so.
The respondent contended that clause 37 solely governed service of payment claims under BCIPA, which clause 45.3 of the contract permitted to be served on the Principal’s Representative, as agent of the applicant.
The Court determined that the contract had been amended to the effect that clause 37 and 45.3 provided for progress payments to constitute payment claims under BCIPA, and a progress certificate issued is a payment schedule pursuant to BCIPA issued by the Principal’s Representative as agent.
The Court directed its attention to section 103 of BCIPA (now section 102 of BIF Act) which deems notices served on a person authorised to do so under the relevant construction contract. On construction of clause 37, it was deemed that the parties did not intend to have a dual track mechanism of contractual and statutory claims, and that clause 37 was an all-encompassing provision for the service of progress payments which constitute payment claims under BCIPA.
On one view, this decision is not entirely consistent with Penfold Projects Pty Ltd v Securcorp Limited  QDC 77 and the grey area created by some amendments to AS contracts will ensure that this is not the last time such an issue is before the Court.
For more information or discussion, please contact HopgoodGanim Lawyers’ Construction team.