Supreme Court of Queensland|2010-08-04|Before: Philip McMurdo J, Lyons J

The applicant seeks a declaration that the second payment claim is void and injunctive relief. It also contends that the issue of the second payment claim constitutes an abuse of the processes of BCIPA. In essence the question of abuse of process, it seems to me, depends upon the resolution of the first question. That is to say, if the second payment claim is not authorised by the Act then its issue is an abuse of the processes of the Act. On the other hand, if it is authorised by the Act, then it seems to me that a separate submission that it is an abuse of process cannot be maintained. However, I understand the applicant to maintain both grounds for seeking relief.

The applicants' position is based, essentially, on two contentions. The first contention is that the BCIPA does not permit the making of successive payment claims for identical amounts for the same work, regardless of whether another reference date has passed, and the second claim is sought to be related to it.

I propose to commence by dealing with the first contention, which raises issues about the construction of the BCIPA.

Section 12 provides that from each reference date under a construction contract a person is entitled to a progress payment if the person has undertaken to carry out construction work under the contract. It seems not to be controversial that the qualification describing the person means that the person has promised to carry out construction work under the contract.

The term "reference date," is defined in Schedule 2 of the BCIPA, so far is as relevant for present purposes, as a date worked out under the contract as the date on which a claim for a progress payment may be made for construction work carried out under the contract.

At this point I do not propose to deal with the provisions of the contract, but to proceed on the basis that there is a separate reference date for each of the two claims. The effect of s 12, it seems to me on its natural reading, is that on each reference date a right accrues to a progress payment.

Section 13 then goes on to deal with the amount of the progress payment. That amount is, for present purposes, the amount calculated under the contract. For the submission with which I am presently dealing it may be assumed that the amounts in the second claim are amounts calculated under the contract.

Section 17(1) provides that a person who, under s 12, is entitled to a progress payment may serve a payment claim on the other party to the contract. Section 17(2) then states that the claim must identify the work to which the progress payment relates and must state the amount of the progress payment that the claimant claims to be payable. It also provides that the payment claim must state that it is made under the BCIPA.

At this stage it is not necessary to refer to section 17 (3) and (4). Section 17(5) provides a claimant cannot serve more than one payment claim, "in relation to each reference date," under the construction contract.

Section 17(6) then provides as follows, "However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim."

It is necessary to consider the effect of these provisions together before considering any other provision relied upon by the applicant.

Read naturally the language of the provisions seems to me to have the effect that as at each reference date a person is entitled to a progress payment being the amount calculated under the contract. That right is limited by subsection (5) to making only one claim in relation to a particular reference date. However, subsection (6) on its natural reading seems to envisage that when another reference date has passed, a fresh claim may be made and that claim may be made for an amount that has been the subject of a previous claim.

It is submitted on behalf of the applicant that the word, "including," in subsection (6) has the effect that there must be a larger claim, the subject of the second payment claim, which may include an amount that has been the subject of a previous claim. In my view, focussing simply on the language of the statutory provisions, that conclusion is not inevitable.

The term payment claim is defined in schedule two to mean a claim referred to in s 17. Section 17, subsection (1) refers to service of a payment claim and identifies things that must appear in it. It seems to me, therefore, that the payment claim is what is served, and includes the matters referred to in s 17(2). To state, in that context, that the payment claim may include an amount the subject of a previous claim does not inevitably mean that that can occur only if some other amount is also claimed.

Looked at as a matter of statutory construction, therefore, it seems to me that more than one view is open in respect of s17(6) . Indeed, the natural reading of the provisions seems to me to favour the view that a payment claim may be made for an amount that has been the subject of a previous claim and only for that amount.

Section 7 of the BCIPA sets out the objects of the Act. They include ensuring that a person is entitled to receive and is able to recover progress payments (with qualifications not relevant for the issue under consideration). In other words, the Act seeks to achieve two things. One is to ensure the existence of a right to progress payments. The second is to ensure the ability to recover progress payments.

Section 14A of the Acts Interpretation Act 1954 (Qld) requires me to prefer the interpretation of s 17 that will best achieve the purpose of the Act. As one of the purposes of the Act is to ensure the ability of a person in the respondent's position to recover progress payments, it seems to me that even if I did not favour the view of s 17 to which I have referred, I would be required to adopt the construction I have identified.

In reaching that conclusion, I am conscious that there are a number of decisions of members of this Court which are to the opposite effect. They are Doolan v Rubikcon (Qld) Pty Ltd [2007] QSC 168; [2008] 2 Qd R 117, (particularly at page 121); Northside Projects Pty Ltd v Trad [2009] QSC 264; and Simcorp Developments and Constructions P/L v Gold Coast

Titans Property P/L; Gold Coast Titans Property P/L v

Simcorp Developments and Constructions P/L [2010]

QSC 162, (particularly at [35]).

I am also conscious that in Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69; (2009) 74 NSWLR 190, Allsop P noted (at [8] and following) that a claimant is limited to one payment claim in respect of each reference date and that his Honour saw no warrant under the New South Wales Act (which has marked similarities to the BCIPA) for permitting a party in the claimant's position to create fresh reference dates by lodging the same claim for the same completed work in successive payment claims.

While that was the basis on which Allsop P reached his conclusion in Dualcorp, I also note that a different approach was taken by the other members of the Court. They relied upon the fact that there had been an adjudication of the first claim which they considered, by application of the principles of issue estoppel, to preclude a second claim for a greater amount; and that the seeking of summary Judgment on the basis of it was inconsistent with the earlier adjudication.

The fact that two members of the Court proceeded on that basis, notwithstanding the approach of Allsop P, seems to me to reflect some caution about the approach taken by his Honour and to provide some, at least, indirect support for the conclusion to which I have come.

The major difficulty I have with the approach of his Honour is that it does not seem to me to recognise the effect of the provision which is the equivalent of s17(6) of the BCIPA.

The applicants also rely upon a passage from the judgment of Applegarth J in John Holland Pty Limited and Schneider Electric Buildings Australia Pty Ltd [2010] QSC 159 at [48]. There his Honour adopted the conclusions reached by the Court in Dualcorp that the New South Wales Act, "as a whole generally manifests an intention to prevent the repetitious re-agitation of the same issues."

Particular reliance was placed on his Honour's statement of his conclusion which was that, "subject to certain exceptions, the Act precludes the re-agitation of the same issues that had been earlier determined."

His Honour's conclusion, it seems to me, is consistent with the decision in Dualcorp and, in particular, with the decision of MacFarlan JA and Handley AJA. It will be recalled that in Dualcorp there had been a binding adjudication of the first claim. It is, in my view, well understandable and consistent with the correct construction of the provisions of the BCIPA that once an adjudication has occurred, there can be no re-agitation of the same issues.

That is not the case here. The effect of the decision of Philip McMurdo J is, it is common ground, that there is no adjudication by an adjudicator under the BCIPA of the respondent's earlier claim.

The applicant seeks to contend that the conclusion of Applegarth J is to be adopted and extended to a case where there is no binding determination. I see nothing in his Honour's statement of his conclusion for that view; nor do I see any compelling reason so to extend his Honour's conclusion. Indeed, it seems to me to be inconsistent with s17(6). By that I mean that if an earlier claim includes an amount, and a later claim includes that amount and other amounts, there is, in the sense which the applicants seek to say is prohibited, an authorised re-agitation, at least by a raising of it in the claim, of the liability of a party to the construction contract for the amount common to both claims.

The applicant also relies upon passages from the judgment of Hammerschlag J in The University of Sydney v Cadence Australia Pty Ltd [2009] NSWSC 635 at 39, where his Honour, having referred to the reasoning of Allsop P in Dualcorp, went on to say, "I would, with respect, add s(17(1)) ... that section gives a person claiming to be entitled to a progress payment (the claimant) the statutory right to serve a single 'Payment claim' under the construction contract on the person who is or may be liable to make the payment. And s(21) affords the person the statutory right to have the payment claim adjudicated. Together these provisions afford only one opportunity and when it is availed of and completed, the statutory entitlement has been exhausted." (Qld section numbers substituted.)

The first thing to notice about his Honour's statement is that his Honour refers to the statutory opportunity being both availed of and completed. That is not the case here. The completion to which his Honour referred is apparent from the quotation which I have set out. It is the opportunity, both to make the payment claim and to have the payment claim adjudicated.

As I have said it is common ground that there has been no adjudication of the first claim. It follows that his Honour's statement taken literally would not apply.

Read as the applicants would seek to have his Honour's statement read, however, it seems to me to encounter difficulty with s17(6) . In other words, if his Honour meant that once a payment claim has been made the statutory entitlement has been exhausted and there is no further opportunity to make a claim for the same amount, that is not consistent, in my view, with s17(6).

I should add that I find the same difficulty with a literal reading of at least the opening sentence of paragraph 35 of a decision in Gold Coast Titans.

There is, in my view, an additional reason for adopting the construction of s17 to which I have come. On the view contended for by the applicants a second payment claim can be made in respect of a later reference date and it can include the amount which has been the subject of a previous claim if additional work is done after the first reference date and which may be related to the second reference date.

The result is that the second claim, providing the additional work to which part of the second claim relates may, nevertheless, claim for an amount the subject of the previous claim. It seems clear that the intention of the legislature, therefore, is not to preclude the making of a second payment claim which includes an amount the subject of a previous claim.

If that is so, it is difficult to see why the statutory intention is to permit the making of such a claim but the prevention of making a claim which relates only to an amount that has been the subject of a previous claim.

To take an extreme example, if the first claim relates to a very substantial amount of work and results in a very large claim and, thereafter, a very small amount of work is done with a very small additional claim that would be permitted as a result of s17(6) on the submissions of the applicant, and, indeed, that would be consistent, as I read it, with the reasoning in Doolan.

It is difficult to see why the legislature would intend to permit the making of such a claim, but to preclude the making of a claim which related only to an amount the subject of a previous claim. In the general context of the provisions of the BCIPA that seems to me to be an unlikely intention and, as I have indicated, inconsistent with one of the objects of that Act.

In my view, although I am conscious of the decisions to which I have referred and, notwithstanding the deference which those judgments deserve, I find it difficult to adopt the view adopted in them for the reasons stated above and accordingly it seems to me that s17 does not preclude the making of the second claim in this case, providing, of course, the conditions for the making of the claim are otherwise satisfied.

That brings me to the second submission made on behalf of the applicants. It is, in effect, that there is not a second reference date for which the claim is made; rather it is said that, in truth, the second claim relates to the reference date for the first claim because on the proper construction of the contract there is no additional reference date.

I have previously referred to the definition of reference date. Under the contract between the parties the reference date is worked out by reference, first, to clause 37.1, which provides that the respondent is to claim payments progressively in accordance with item 28.

Item 28 includes the following, "Times for progress claims 28th ... day of each month for WUC done to the 28th end day of that month."

The term, "WUC" is defined in clause 1 of the contract to mean the work which the respondent is or may be required to carry out and complete under the contract, with some inclusions which it is not necessary to state.

The applicants submit that the effect, particularly, of item 28, is that a progress claim may be made only in a month where work under the contract has been carried out.

It seems to me that item 28 and clause 37.1 should be read together. The effect is to provide that the respondent is to claim payment progressively, the times for progress claims being the 28th day of each month; for work under the contract done to the end of that month.

The applicant contends that the expression "for work under the contract done to the end of that month" means that a claim may only be made if work is done in that month.

The definition of reference date in the BCIPA identifies a reference date as a date on which a claim for a progress payment may be made. It seems to me that the natural reading of the relevant provisions of the contract is that a progress claim may be made on the 28th day of each month; however, the work in respect of which such a claim may be made is limited to work done to the end of that month.

In other words, the qualification about work done to the end of the month limits the extent of the work rather than identifies when a progress claim may be made. Beyond that, counsel for the respondent referred to another part of clause 37.1 which expressly provides that a progress claim may include, in addition to details of the value of work done under the contract, detail of other money then due.

The first thing to note about this provision is that it does not limit the entitlement to make a progress claim to work done within the month, rather it permits a progress claim to be made simply for work done under the contract. Even if it were read more narrowly and in a way consistent with the construction advanced on behalf of the applicants, the balance of the relevant part of clause 37.1 permits the inclusion of details of other moneys then due to the respondent.

It is difficult to see why that does not extend to amounts due in respect of earlier periods. In my view, therefore, on the correct construction of the contract a progress claim may be made, whether or not work was done in the month, the 28th day of which gave rise otherwise to a right to make the claim.

The result of that is that there are reference dates subsequent to the reference date which gave rise to the first of the two claims relevant for these proceedings; and the Act authorised the making of the second claim.

Shortly after the delivery of these reasons, it occurred to me that I had not expressly dealt with a submission made on behalf of the applicants, which I had considered in reaching my conclusion in this matter. It relates to the question whether BCIPA permits the making of a second claim for an identical amount. I arranged for the parties to be informed that when revising my reasons, I would add to them.

The submission drew attention to s 32 on the BCIPA. That section applies if an adjudicator does not decide an adjudication application within the time provided by s 25(3). As a result of the decision of Philip McMurdo J setting aside the adjudication decision, s 32 applies in the present case.

Subsection (2) then permits a claimant to withdraw the adjudication application, and to make a new adjudication application under s 21. However, subsection (3) limits the time within which the second adjudication application may be made, to five business days after a claimant becomes entitled to withdraw the earlier adjudication application. Subsection (4) then make other provisions of the BCIPA applicable to the second application.

It was submitted that s 32 exhaustively defines the rights of the respondent.

It may be accepted that s 32 exhaustively defines the rights of the respondent in respect of an adjudication application based upon the earlier payment claim. In my view, s 32 seeks to do no more than that. To give it some broader operation is to read it as limiting the effect of s 17(6). I see no warrant for that. It was suggested that it was necessary to do this, to render the provisions harmonious. I see no conflict between the provisions. As I have indicated, s 32 states the rights of a party in the position of the respondent, in respect of an adjudication application based on the earlier payment claim. It does not conflict with provisions permitting the making of another payment claim, and accordingly, is not in conflict with s 17(6).

It should be noted that it is by no means inevitable that the dispute which would arise from the second payment claim will be identical with that defined by the first payment claim and the payment schedule delivered in response to it. The second payment claim conferred on the applicants the right under s 18 of the BCIPA to deliver a payment schedule, stating new reasons for not paying the full amount claimed. The payment schedule then becomes part of the material to which the adjudicator's consideration is limited by s 26 of the BCIPA.

HIS HONOUR: I order that the applicant pay the respondent's costs on a standard basis.

Construction Industry Payments Act 2004

Spankie & Ors v James Trowse Constructions Pty Ltd & Ors [2010] QSC 336 (4 August 2010)

Spankie & Ors v James Trowse Constructions Pty Ltd & Ors [2010] QSC 336

At a glance

Court

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Before

Source

Judgment (61 paragraphs)

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Legislation Cited (1)

Cases Cited (2)

Spankie & Ors v James Trowse Constructions Pty Ltd & Ors [2010] QSC 336 (4 August 2010)