The Supreme Court of Queensland decision in Kangaroo Point Developments MP Property Pty Ltd v RHG Construction Fitout and Maintenance Pty Ltd & Ors  QSC 30 continues the trend of the Court in applying a common-sense approach where parties argue that competing documents amount to a payment schedule for the purposes of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act).
On 27 July 2020, RHG Construction Fitout and Maintenance Pty Ltd (the Contractor) served a payment claim on Kangaroo Point Developments MP Property Pty Ltd (the Developer).
The Developer sent a letter to the Contractor stating that the Developer intended to respond with a payment schedule for the purposes of the BIF Act, and that any document issued by the Superintendent under the contract in response to the payment claim would not, on that occasion, be a payment schedule insofar as the BIF Act was concerned.
On 10 August 2020, the Superintendent issued his assessment of what was due under the payment claim, entitling the document ‘Payment Schedule’.
On 17 August 2020, the Developer’s solicitors issued a payment schedule on behalf of the Developer to the Contractor which was expressly said to be a payment schedule for the purposes of the BIF Act. Relevantly, both the Superintendent’s payment schedule and the Developer’s solicitor’s payment schedule were issued within the time permitted by the BIF Act.
The Contractor applied for an adjudication under the BIF Act and in the application form, nominated the Superintendent’s payment schedule as the payment schedule. The adjudicator made a determination on 4 December 2020 and the Developer applied to the Court for orders that the Superintendent’s schedule was not a payment schedule under section 76 of the BIF Act and consequently, that the adjudication application and decision was invalid.
The Court’s decision
Justice Dalton ruled in favour of the Developer. Firstly, Justice Dalton referred to sections 79(2)(a) and (c) of the BIF Act which provide that an adjudication application ‘must’ be in the approved form and ‘must’ identify the payment schedule. Justice Dalton noted that the use of the word ‘must’ means the provisions are a mandatory requirement. Secondly, the Court noted that the Superintendent’s payment schedule stated that ‘Payment is recommended for the following amount: -$1,361,442 including GST’. Justice Dalton held that the payment schedule did not comply with section 69(b) and was not a payment schedule because it did not state the amount of the payment, if any, that the Developer proposed to make. The Superintendent’s schedule instead only contained a recommendation by the Superintendent to the Developer relating to payment. The adjudication application, therefore, was not in the approved form and the decision was void.
What does this mean?
The decision demonstrates the importance of strictly complying with the provisions relating to responding to payment claims and applying for adjudications under the BIF Act. A payment schedule must contain the requirements detailed in section 69 and an adjudication application must refer to the correct payment schedule, or there is the potential for an adjudication application and subsequent decision of an adjudicator to be void.