26 April 2019

How to make a payment claim under security of payment in Queensland

This article explains how to make an effective payment claim under the Building Industry Fairness (Security of Payment) Act 2017 (Qld).


1. Make sure you have a construction contract that is covered by the Act

The Act only applies to contracts, whether written or not, for construction work carried out or for related goods or services supplied in Queensland.

Certain types of building contracts are excluded, such as contracts for domestic building work.
You will not have any rights under the Act without a relevant construction contract.

2. Check if there is an available reference date

The Act gives contractors the right to claim progress payments from each ‘reference date’.

Without a reference date, a payment claim under the Act cannot be made.

Your contract will identify when reference dates occur. Usually this will be once per month, and typically towards the end (or on the last day) of the month.

If the contract does not identify a reference date, the Act provides a reference date of the last day of the month in which the construction work was first carried out, or the related goods and services were supplied, and the last day of each month that follows.

Only one payment claim can be made in respect of each reference date (see section 75(4)). This is a critical consideration if you only have one reference date left (for example, practical completion has occurred and the contract allows only one further claim to be made). However, this does not prevent you from including in a payment claim an amount that has been the subject of a previous claim if the amount has not been paid. Section 75(5) of the Act expressly allows for this.

Importantly, if a construction contract is terminated, and absent a specific clause in the contract to the contrary, reference dates will cease to accrue. This means that, if you have already made claims in respect of all existing reference dates, you may not be able make a claim under the Act. This question was considered by the High Court in the Southern Han case, which you can find here.

3. Plan to serve the claim at the right time

A claim sent before the reference date will not be effective (see the FK Gardner & Sons case, which we discuss here). You may have to wait for the next reference date before you can make a claim.

A payment claim in respect of a progress payment, that is not a final payment, must be served only within the period determined by the construction contract, or the period of 6 months after the construction work to which the claim relates was last carried out or the related goods and services to which the claim relates were last supplied (see section 75(2)).

4. Address the claim to the right person

A payment claim must be served on the person, who, under the construction contract, is or may be liable to make the payment.

For example, you cannot serve your claim on a related entity of the entity (or person) with whom you entered the contract.

In a practical sense, you may have difficulty obtaining judgment or enforcing a determination unless the respondent’s details on your claim match those in your contract.

The courts have found that service of a payment claim on a superintendent given authority to receive payment claims on behalf of a principal may constitute valid service under the Act (see the Metacorp case). Whether this is true for your contract will depend on the terms of your contract and how the contract has been administered.

The courts have also found that a payment claim directing payment to a third party debt factor is an invalid payment claim for the purposes of the Act.

5. Clearly identify the construction work to which the claim relates

The payment claim should contain enough detail and information so that the respondent is aware of the issues in dispute.

In Multiplex v Luikens, the Court said:

“a payment schedule should not… be required to be as precise and as particularised as a pleading in the Supreme Court. Nevertheless, precision and particularity must be required to a degree reasonably sufficient to apprise the parties of the real issues in the dispute.”

Make sure your claim contains sufficient detail to enable the recipient to understand, with a reasonable degree of precision, what you are claiming and how the amount claimed has been calculated.

6. State the claimed amount

The payment claim should state the amount of the progress payment that you claim is payable by the respondent. It should also request payment of that amount. A document bearing the word “invoice” will be taken to have satisfied this second requirement.

The amount claimed may also include:

  • an amount that the respondent is liable to pay you because you have exercised a right to suspend carrying out construction work or supplying related goods and services and the respondent has removed any part of the work or supply from the contract; and
  • an amount that is held under the construction contract by the respondent and the claimant claims is due for release (i.e. retention moneys). See section 68(2) here.

7. Serve the claim properly

The time for the recipient to respond to your claim will not start until the claim has been served properly.

The safest way to serve the document is by hand (which can be done through a process server), but this will often be impractical.

The problem is that sometimes service by other means may not be effective.

For example, in a Queensland case (Conveyor & General Engineering v Basetec Services), service of documents by Dropbox was found to be ineffective as it was not contemplated by the contract.

Email can be effective, subject to the terms of the contract. If your contract expressly prohibits email service of payment claims, this may not amount to valid service. If you are going to use email and it is not prohibited, make sure you obtain a delivery and (if possible) read receipt.

Sending a cover letter with the details of the claim on a USB key may not be effective (see the Parkview case).

In all instances, check the contract and section 102 of the Act, as they will explain how you should proceed.

If you are sending the documents to a physical address, check the contract, and, if necessary, conduct an ASIC search to make sure you have the correct address for your desired recipient.

8. Keep evidence of service

Finally, make sure you keep written evidence of service. If you are serving the claim by email, this means retaining the email and (ideally) obtaining delivery and read receipts.

If you are serving by courier, this means a delivery receipt signed by the recipient and any other records the courier may be able to provide.

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About the Author

Bridgit Masson | Associate

Bridgit is a commercial lawyer whose practice is focused on transactional matters in the construction and technology space.


bridgit.masson@turtons.com | (02) 9229 2903

About Turtons

Turtons is a commercial law firm in Sydney with specialist expertise in privately owned construction and technology businesses.

Bridgit Masson | Associate

Author

Bridgit Masson | Associate

bridgit.masson@turtons.com

Bridgit is a commercial lawyer whose practice is focused on transactional matters in the construction and technology space.


bridgit.masson@turtons.com | (02) 9229 2903

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