Harsh consequences follow when payment schedules do not meet requirements prescribed by the Building Industry Fairness (Security of Payment) Act 2017 (BIF).
In a decision delivered on 10 September 20191, Justice Brown of the Queensland Supreme Court confirmed that payment schedules responding to payment claims made under BIF must:
- Identify the payment claim to which the payment schedule responds;
- States the amount of the payment, if any, to be made; and
- State reasons for any differences between the amount claimed and the amount to be paid.
The developer of 16 townhouses in Manly West (Queensland) sought to set aside an adjudicator’s decision because the adjudicator found no valid payment schedule had been delivered, and the adjudicator did not consider the developer’s adjudication response. The developer argued that a payment schedule delivered after the later (and relevant) payment claim referring to an earlier (and substantially similar) payment claim was a valid payment schedule (for the later payment claim).
Justice Brown found that the developer failed to deliver a payment schedule in response to the later payment claim because the alleged payment schedule did not identify the later payment claim as the document being responded to. Also, the alleged payment schedule did not identify any amount proposed to be paid in respect of the later payment claim.
Her Honour also referred to BIF’s requirement that reasons be ‘stated‘, and compared this to the requirement in equivalent NSW legislation that reasons be ‘indicated‘. She observed that BIF “uses the term “state” rather than ‘indicates”, suggesting a greater level of detail in the reasons is required [in Queensland] than under the New South Wales legislation” (emphasis added).
As the developer failed to deliver a valid payment schedule, the adjudicator correctly ignored the developer’s adjudication response, and the developer was required to pay the full amount of the payment claim.
The developer is also at risk of prosecution under s76(1) of BIF, with a maximum penalty for corporations of $66,7252.
Justice Brown acknowledged that this outcome might appear harsh, and explained that “the onus is on the respondent to ensure it has complied with [BIF’s] requirements … just as the claimant must provide a payment claim that accords with the Act“3.
This decision confirms that developers and head contractors responding to payment claims must take care to ensure their payment schedules:
- Correctly identify the payment claim being responded to;
- State the amount, if any, to be paid in respect of that payment claim; and
- State reasons for any differences between the amount claimed and the amount to be paid … with a greater level of detail than might be accepted in New South Wales.
This article was written by Karyn Reardon, Partner and Michelle Hall, Special Counsel.
1 Melaleuca View Pty Ltd v. Sutton Constructions Pty Ltd as Trustee for the Mal Sutton Family Trust & Ors [2019] QSC 226
2 See BIF s76(1) and Penalties and Sentences Act 1992 s181B(3)
3 At [73]