Last month, Troy Legal published a reminder for Queensland commercial construction businesses of the importance of properly preparing valid payment claims under the BIF Act by adopting the principles applied in KDV Sport – see https://www.troylegal.com.au/articles/bif-act-payment-claim-fundamentals.
Earlier this month a decision of the Queensland District Court in Denbrook Constructions Pty Ltd v CBO Developments Pty Ltd – https://archive.sclqld.org.au/qjudgment/2022/QDC22-184.pdf again highlights pitfalls for claimants who ignore the principles applied in KDV Sport for preparation of valid payment claims under the BIF Act.
The plaintiff, Denbrook, prepared regular progress claims under a Master Builders Construction Management Contract, claiming payment in accordance with an itemised breakdown of the agreed Construction Management Budget used to calculate the lump sum price of the Works under the Contract (CM Budget).
Progress claims were submitted as % complete for each item within the CM Budget (skip bins, security, tools, consumables, labour hire, fencing, contract administration, etc). For example, if a budget figure of $53,486 was allocated to labour hire in the CM Budget, it was claimed progressively as % complete with each progress claim with no further information given apart from the % previously claimed and the % now claimed for that item.
Denbrook sought summary judgment before the Court for its final payment claim 26 (purportedly made under the BIF Act) in circumstances where the defendant, CBO, failed to give a payment schedule within the time required by the Act. The defendant’s failure to provide a payment schedule within time was not disputed and it instead argued payment claim 26 was not a valid payment claim under the BIF Act for its failure to properly identify the work the subject of the claim.
Although payment claim 26 was in a different form to earlier progress claims, like earlier claims, it did not properly describe the work performed the subject of the claim for each CM Budget item since the previous progress claim.
This failure offends the fundamental principle in KDV Sport. If claiming for work progressively by % complete, a claimant must give sufficient information in the payment claim itself to allow the recipient to understand the further work performed (that constitutes the greater % now claimed) since the previous claim. Although there were other deficiencies and errors in payment claim 26, this was a fundamental error identified by the Court preventing the defendant from sufficiently identifying the work claimed.
Troy Legal regularly provides advice to commercial contractors, subcontractors, consultants and suppliers ensuring that they prepare valid payment claims under the BIF Act. Contact julian@troylegal.com.au for more information.
