Section 68 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) requires a payment claim to be a written document that:
- identifies the construction work or related goods and services to which the progress payment relates; and
- states the amount of the progress payment that the claimant claims is payable by the respondent; and
- requests payment of the claimed amount.
While many construction industry participants may have an understanding of what a valid payment claim looks like, a Queensland Court of Appeal decision from earlier this year emphasizes the need for strict compliance with the requirements of the BIF Act.
In MWB Everton Park Pty Ltd as trustee for MWB Everton Park Unit Trust v Devcon Building Co Pty Ltd [2024] QCA 94 (Devcon), the Queensland Court of Appeal determined that documents sent by the builder which included:
- a trade summary of the works; and
- the words “amount due this claim”,
did not constitute a valid payment claim for the purposes of the BIF Act.
The decision means that careful consideration is required to identify the construction work and related goods and services relevant to the specific payment claim.
Is my payment claim valid?
Step 1 – Does your payment claim identify the construction work to which it relates?
While the courts have previously taken a somewhat practical approach to determining whether a payment claim sufficiently identifies the work to which it relates, the importance of ensuring that a payment claim includes enough description to identify the work being claimed cannot be understated.
While a trade summary may be sufficient in some circumstances, depending on the nature of the works, a trade summary without any description of the actual works performed may lack sufficient detail of the works being claimed.
In the case of Devcon, despite the payment claim being in substantially the same form as the 16 previous claims before it, in determining that the documentation sent by the builder did not sufficiently identify the construction work to which it related, Justice JA found:
Contractual concepts such as waiver (if that is what the primary judge had in mind) are irrelevant to this. Further, whether or not the document claimed to be a payment claim meets the statutory definition must be a matter of objective construction; the Court cannot be concerned with a subjective understanding of the principal.
Step 2 – Does your payment claim state the amount of the progress payment that the claimant claims is payable?
Claimants who want to gain the benefit of the security of payment regime should ensure that care is taken, not just when preparing the covering summary of a payment claim but also when preparing its supporting documentation to ensure that it can be clearly identified from the entire payment claim the amount being claimed.
In Devcon, the documents provided by the builder included numerous tables which contained various values which did not add up to the total included in the first table and consequently, the Court of Appeal determined that the payment claim did not state the amount being claimed.
Step 3 – Does your payment claim request payment of the claimed amount?
At first glance, it may be difficult to distinguish the requirement for a payment claim to request payment of the claimed amount from the requirement for a payment claim to state the amount claimed.
However, Devcon highlights the independent statutory requirement to request payment of the claimed amount in that the Court of Appeal determined that the statement “amount due this claim” was not a request for payment and something more was required.
To avoid any uncertainty regarding compliance with the requirement to request payment of the claimed amount, claimants should consider including the word ‘Invoice’ on payment claims because by including this word, claimants are provided with certainty from section 68(3) of the BIF Act which provides that a written document bearing the word ‘invoice’ is taken to satisfy section 68(1)(c).
Why is this important?
Unless a payment claim meets the statutory definition provided by the BIF Act, a respondent has no statutory obligation to make payment or respond with a payment schedule. To attract the protections given by the security of payment regime, claimants need to ensure payment claims strictly adhere to the statutory definition under the BIF Act.
How can HWLE help you?
We have considerable experience in relation to the BIF Act and our lawyers can provide tailored advice at all stages.
This article was written by Colin Harris, Partner and Kelly Brook, Senior Associate.
