The recent Queensland District Court decision in Allencon Pty Ltd v Palmgrove Holdings Pty Ltd [2022] QDC 90 concerned a summary judgment application by the Subcontractor (Allencon) claiming a debt due from the Contractor (Palmgrove) under s77 of the BIF Act due to its failure to provide a payment schedule within time.
The payment clause in the Subcontract required the Contractor to issue progress certificates within 21 days of receipt of a progress claim. It was not disputed that the progress claim and progress certificate in issue constituted a valid payment claim and payment schedule for the purposes of the BIF Act.
At issue was whether the Contractor’s payment schedule given on 28 January 2022 (in response to a 24 December 2021 payment claim) satisfied s76 of the BIF Act. Under the Subcontract, ‘days’ were defined as calendar days and made no allowance for public holidays or the industry Christmas shutdown period between 22 December and 10 January allowed in the BIF Act definition of ‘business days’.
The Subcontractor argued the payment schedule was not given within the lesser period of 21 days required by s76 of the Act and the Contractor was liable for the full amount of the payment claim under s77 of the BIF Act.
However, the Court considered the 21 days contractual period offended s200 of the BIF Act (i.e. prohibition to contracting out) by limiting the operation of the Act by failing to provide a moratorium on the industry Christmas shutdown period. The payment clause was read down such that the 15 business day period in s76(1)(b) of the BIF Act was the required period for giving the payment schedule. The payment schedule was thereby given within time and the Contractor was not liable under s77 of the BIF Act.
Based on this and earlier authority, to effectively replace or modify the BIF Act timeframes in a payment clause, that intention needs to clearly stated in the contract and the modifications must not exclude or limit the operation of the Act.
