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  4. Allencon Pty Ltd v Palmgrove Holdings Pty Ltd - [2022] QDC 90

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Allencon Pty Ltd v Palmgrove Holdings Pty Ltd[2022] QDC 90

Allencon Pty Ltd v Palmgrove Holdings Pty Ltd[2022] QDC 90

DISTRICT COURT OF QUEENSLAND

CITATION:

Allencon Pty Ltd v Palmgrove Holdings Pty Ltd [2022] QDC 90

PARTIES:

ALLENCON PTY LTD

(Applicant/Plaintiff)

v

PALMGROVE HOLDINGS PTY LTD

(Respondent/Defendant)

FILE NO:

356/22

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

District Court of Queensland

DELIVERED ON:

6 May 2022

DELIVERED AT:

Brisbane

HEARING DATE:

10 March 2022

JUDGE:

Burnett DCJ

ORDER:

  1. Application dismissed.
  2. In default of application for other orders being made within 14 days the applicant pay the respondent’s costs of and incidental to the application to be assessed on the standard basis, such costs to be the respondent’s costs in the cause in any event.

CATCHWORDS:

CONTRACTS – BUILDING AND CONSTRUCTION CONTRACTS – PAYMENT SCHEDULES – whether a payment certificate was issued out of time – where a building contract defined ‘day’ as ‘calendar day’ rather than ‘business day’ as defined in the relevant act – effect of contractual provision rendering timeframe less favourable than allowed for by relevant act

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where relevant legislation proscribes contracting-out of the provisions of the act

LEGISLATION:

Building Industry Fairness (Security of Payments) Act 2017 (Qld)

Building and Construction Industry Payments Act 2004 (Qld)

CASES:

Daysea Pty Ltd v Watpac Australia Pty Ltd [2001] QCA 49
Tailored Projects Pty Ltd v Jedfire Pty Ltd [2009] 2 Qd R 171
Thiess Pty Ltd v Lane Cove Tunnel Nominee Co Pty Ltd [2008] NSWSC 79

COUNSEL:

B. Vass for the applicant

L. M. Campbell for the respondent

SOLICITORS:

Piper Alderman for the applicant

Batch Mewing Lawyers for the respondent

Background

  1. [1]
    Allencon Pty Ltd (‘Allencon’), the applicant/plaintiff, as subcontractor under contract seeks orders for summary judgment based upon an unanswered claim for payment issued by it to Palmgrove Holdings Pty Ltd (trading as Carruthers Contractors) (‘Carruthers’), the respondent/defendant, as main contractor under contract. Carruthers made a part payment and issued a payment certificate in response to Allencon’s claim for payment but Allencon contend it was issued out of time and in default it is entitled to recover the full amount claimed in its claim.

Triable Issue

  1. [2]
    In my view there is plainly a triable issue concerning the subject matter of the claim for payment which cannot be resolved in a summary fashion.  That dispute will be resolved in accordance with the contractual provisions consistent with s 101 of the  Building Industry Fairness (Security of Payment) Act 2017 (Qld) (‘BIFA’).
  2. [3]
    However, Allencon claims for summary judgment for the unpaid portion of the claim for payment delivered by it upon Carruthers, which was not subject to response. It contends its entitlement is founded in the statutory regime provided by BIFA. 
  3. [4]
    There is no dispute that Allencon delivered a claim for payment described as “Progress Claim – Dec 2011/Practical Completion”[1] and that in response to that payment claim, Carruthers delivered a payment certificate described as “Progress Certificate No. 7”.  The contest in this instance revolves about the timing of Carruthers’ payment certificate and in turn which regime governed the giving of such notices and the rights that follow that determination. If the process governing Carruthers’ payment certificate was governed by the Subcontract, relevantly qualified by BIFA, then nothing further is owed by Carruthers to Allencon at this time.  Alternatively, if the issue of payment certificate was governed exclusively by BIFA, Allencon is entitled to summary judgment as claimed.

Relevant facts

  1. [5]
    The form of contract governing the sub-contract arrangement between Allencon and Carruthers is the AS2545 1993 Sub-Contract Conditions (‘the Subcontract’).  The Subcontract defined the Principal as Hometown Australia Sanderson Pty Ltd (Sanderson); the Main Contractor (Carruthers); and the Sub-Contactor (Allencon). 
  2. [6]
    The Subcontract was prepared internally by Carruthers.  Special Condition 42.13 dealing with the security of payment makes reference to the now repealed Building and Construction Industry Payments Act 2004 (Qld) (‘BCIPA’) and addressed the machinery provisions of that Act.  The BCIPA was repealed by the enactment of BIFA.  Section 206 of BIFA provides a reference on a document to BCIPA may, if context permits, be a reference to BIFA.
  3. [7]
    Allencon undertook works as required under the Subcontract between June and December 2021.  It submitted progress claims as provided for by Clause 42.1. The Subcontract provides that Allencon was required to submit a claim for payment on the twenty-fourth of each month.  Additionally, it provided for a process of certification of claims before their submission.  If that process was undertaken correctly, Carruthers would thereby be armed with that information necessary to address the matters required by it to prepare a valid payment schedule in accordance with the BIFA.  No issue arises here concerning the intermediate progress claim administration process.
  4. [8]
    On 24 December 2021, Allencon submitted its claim for payment to Carruthers claiming $955,079.  That claim included a sum outstanding from a preceding progress claim.  On 4 January 2022 Carruthers paid to Allencon the sum of $400,772.48.  That sum represented the balance due on an earlier progress claim.  Carruthers paid a further sum of $202,570.12 to Allencon on 1 March 2022 in respect of that part of the December claim for payment it accepted, leaving a balance outstanding of $351,734.58 (the current claim).
  5. [9]
    Carruthers provided its payment certificate on 28 January 2022.  In doing so it acknowledged payment of $400,772.48 being a discharge of the earlier progress claim, and allowed a sum of $202,572.12 in respect of the then extant claim.  The balance, namely $351,734.58, was subject to dispute for the reasons articulated in the payment certificate.
  6. [10]
    Allencon claims the payment certificate delivered by Carruthers was delivered late and not in accordance with the requirements of either of BIFA or the Subcontract.  It submits the consequence for such failure is that Carruthers became liable to pay the full amount claimed by the claim for payment on the due date (allowing for set-offs) in respect of the entire claim by operation of s 77 of the BIFA. It submits that by operation of the BIFA the payment schedule was out of time.
  7. [11]
    Carruthers contends that it has complied with the Subcontract by delivering a payment certificate on 28 January 2022.  It contends the payment certificate was delivered in accordance with the provisions of the Subcontract which are qualified by BIFA.
  8. [12]
    For reasons which follow, these regimes are in conflict.  If the statutory scheme prevails, Allencon is entitled to judgment.  If the contractual regime as qualified by BIFA prevails and Carruthers is not indebted, Allencon’s claim falls to be determined in accordance with the other disputes outstanding concerning the contract

The contract

  1. [13]
    Clause 42.1 of the contract addresses “payment claims, certificates, calculations, time for payment”.  It relevantly provides:

“At the times for payment claims stated in the annexure (the twenty-fourth of each month) … the Sub-contractor shall deliver to the Main Contractor’s Representative claims for payment… 

Within 21 days after receipt of a claim for payment, the Main Contractor’s Representative shall issue to the Main Contractor and to the Sub-contractor a payment certificate stating the payment which, in the opinion of the Main Contractor’s Representative is to be made by the Main Contractor to the Sub-contractor… 

…The Main Contractor’s Representative shall allow in any payment certificate issued pursuant to this Clause 42.1… amounts paid under the Sub-contract and amounts otherwise due from the Main Contractor to the Sub-contractor… arising out of or in connection with the Sub-contract including but not limited to any amount due to be credited under any other provisions of the Sub-contract.

Subject to the provisions of the Sub-contract… within 35 days after receipt by the Main Contractor’s Representative of a claim for payment or within 14 days of issue by the Main Contractor’s Representative of the … payment certificate, whichever is the earlier, the Main Contractor shall pay to the Sub-contractor…an amount not less than the amount shown in the certificate as due to the Sub-contractor… A payment made pursuant to this clause shall not prejudice the right of either party to dispute under Clause 47 whether the amount so paid is the amount properly due and payable…”.

  1. [14]
    Clause 2 of the Sub-contract defines “day” to mean calendar day. 
  2. [15]
    Although expressed in mandatory terms requiring both Allencon as Subcontractor to deliver a payment claim for payment and Carruthers as Main Contractor to deliver its payment certificate clause 42 contemplates default by each party. So although Allencon is correct in its submission that Carruthers failed to serve a payment certificate within 21 days of receipt of the claim for payment the clause still requires only that Carruthers pay on the set date “…to [Allencon] … an amount not less than the amount shown in the Certificate as due to [Allencon]” remembering the certificate is issued by the Main Contractor’s representative.  It is only if no payment certificate has been issued that Carruthers is due to pay the full amount of Allencon’s claim. That construction appears to be consistent with the terms of clause 42. It follows that if Carruthers as Main Contractor processes a claim for payment more quickly than the 21 days then the default date moves correspondingly forward; likewise if the Main contractor chooses to pay earlier it will bring forward the default date, but in the absence of any action by the Main Contractor then the default date remains 35 days after claim for payment. That is 21 days from date of receipt of the claim and 14 days for payment of the claim, subject to reductions based on the payment certificate. If the Main Contractor does nothing then it pays on the full claim as delivered.
  3. [16]
    Here Allencon delivered the claim for payment on 24 December. Based solely on the Subcontract Carruthers’ payment certificate should have been delivered on or before Friday 14 January and paid on or before Friday 28 January 2022. In fact it delivered its payment certificate on 28 January and paid sums it regarded as due a few days later. That late payment was in breach of clause 42.1 but apart from the contractual remedy in damages for the delayed payment which was subsequently remedied I don’t consider that matter material.
  4. [17]
    Payments pursuant to clause 42 are expressed to be “Subject to the provisions of the Subcontract…”. By operation of clause 42.13 the Subcontract is expressly subject to BIFA. BIFA itself provides its provisions cannot be excluded or limited.[2] It is this interface with BIFA which it is submitted creates tension which favours Carruthers in preference to Allencon in this context.
  5. [18]
    The contractual regime enjoys well-established significance. In Daysea Pty Ltd v Watpac Australia Pty Ltd [2001] QCA 49 at [21], Williams JA observed:

“As all of the cases I’ve just referred to establish, the consequences of issuing a certificate are serious.  The proprietor is bound to pay the amount of the certificate notwithstanding that the amount is provisional only and subsequently may be found to be incorrect.  Notwithstanding such considerations the proprietor must pay the amount specified in the certificate and take the chance that any excess can be recovered subsequently.  Similarly the contractor is not entitled to payment of anything more than the amount specified on the certificate though it may well be less than the progress claim made.  Even though it may ultimately be found that the contractor was entitled to more, the recovery of any such amount must await the determination of disputes at the end of the contract.”

  1. [19]
    With appropriate variation for differences between the specific contracts, the principle holds good in respect of the Subcontract. 

The BIFA scheme

  1. [20]
    BIFA provides in Part 3 of the Act for a statutory scheme for making progress claims by issuing of payment claims.  That regime includes specific timeframes for specified events.  Section 75(2)(a) of the BIFA provides that in respect of a payment claim, it must be given before the end of whichever period (of two specified periods) is the longer.  Relevantly here, “the period… worked out under the construction contract…”, or 15 business days (as defined) after the payment claim is given.  The response to a payment claim is addressed by delivery of a payment schedule. Section 76 provides the respondent to a payment claim must respond by giving the claimant a payment schedule:

“Within whichever of the following periods ends first:

  1. the period, if any, within which the respondent must give the payment schedule under the relevant construction contract; (or)
  2. fifteen business days after the payment claim is given to the respondent.”

The term “business day” is defined in Schedule 2 to the BIFA to mean,

“A business day does not include:

  1. a Saturday or Sunday; or
  2. a public holiday, special holiday or bank holiday in the place in which any relevant act is to be or may be done; or
  3. any day occurring within the following periods—
    1. (i)
      22-24 December;
    2. (ii)
      27-31 December;
    3. (iii)
      3-10 January.”
  1. [21]
    In this instance Allencon delivered its claim for payment on 24 December. Clause 42 of the Subcontract required the payment certificate be issued within 21 days after receipt of a claim for payment. However the provisions of BIFA required this occur “within whichever… period ends first”, being the contract period (14 January) or the BIFA period (31 January).
  2. [22]
    At the outset, in my view, it is necessary to determine whether or not the two regimes are materially different. Then, if so, which regime prevails.
  3. [23]
    BIFA provides for a payment claim, being a written document to have the following characteristics,
    1. It identifies the construction work;[3]
    2. It states the amount of the progress payment that the claimant claims is payable;
    3. It requests payment of the claimed amount;[4] and
    4. It includes the other information required by regulation.
  4. [24]
    Clause 42 requires the Subcontractor to deliver a “…claim for payment supported by evidence of the amount due to the Subcontractor and such information as the Main Contractor’s Representative may reasonably require”. The claim “shall include the value of the work carried out by the Subcontractor in the performance of the Subcontract to that time together with all amounts then due to the Subcontractor…”.
  5. [25]
    In this instance Allencon delivered to Carruthers by email on 24 December 2021 an instrument identified as “DEC/PC claim with associated invoice”. Its body identified the works undertaken, stated the amount of the progress payment it claimed, and requested payment.
  6. [26]
    In my view the “claim for payment” provided for by clause 42.1 was a “payment claim” within the meaning of BIFA.
  7. [27]
    Concerning the payment schedule, BIFA provides by s 68 that it be a written document and have the following characteristics;
    1. It identifies the payment claim to which is responds;
    2. It states the amount it propose to pay; and
    3. If the amount to be paid is less than the amount stated in the payment claim then it states why the amount is less.
  8. [28]
    Clause 42 requires that a “claim for payment” be addressed by a “payment certificate”. The certificate issued by the Main Contractor’s Representative shall state the payment which in its opinion is to be made, the calculations employed to arrive at the amount, and, if the amount is more or less than the amount claimed by the Subcontractor, the reasons for the difference. The certificate shall allow for amounts paid and amounts due.
  9. [29]
    The payment certificate that issued on 28 January 2022 (noted as “Progress Certificate No. 7”) was in writing; it was identified as a response to the Progress Claim “dated December 2021”; it stated the amount it proposed to pay; and it addressed the reasons for the amount proposed to be paid being less than the claimed amount.
  10. [30]
    In my view the payment certificate under the contract was a payment schedule as defined in BIFA.
  11. [31]
    The obligation of Carruthers under BIFA was to respond to Allencon’s payment claim by giving a “payment schedule within whichever of the [two] periods [ended] first”[5]. In this case the contract provided by clause 42.2 that “[w]ithin 21 days after receipt of a claim for payment… [it] shall issue to… [Allencon] a payment certificate…”, that was by 14 January 2022. The second date was that 15 business days after the payment claim was given , namely 28 January 2022.
  12. [32]
    For Allencon it is contended that the earlier of the two dates for delivery of a payment schedule was the date set by operation of Clause 42.1, namely 14 January 2022 and not 14 business days as provided by BIFA, namely 28 January 2022. Those dates were calculated by reference to the definitions of “day” provided for in the Subcontract.
  13. [33]
    Carruthers contend that that submission is incorrect and should be rejected.  It contends the Subcontract was qualified by BIFA should prevail. Adopting that regime and its definition of “business day”, the calculation of 15 business days within which the payment schedule was required to be given thereby commenced from Friday, 11 January 2022. Upon that basis the due date for the payment schedule was 28 January 2022 being the date it delivered its payment schedule (styled as a payment certificate).
  14. [34]
    It was submitted for Carruthers that the task was simply to determine what time, if any, is required by the subcontract for provision of a statutory payment schedule and then to see whether that time expires earlier than the 15 business days (as defined in the Act) after the payment claim is served. In essence, it submits the two regimes, that is the contractual regime and the statutory regime, are to be harmonised by reference to BIFA in order to determine that timeframe.  It was submitted that this approach accorded with authority including Tailored Projects Pty Ltd v Jedfire Pty Ltd [2009] 2 Qd R 171, 177-179; and, Thiess Pty Ltd v Lane cove Tunnel Nominee Company Pty Ltd [2008] NSWSC 729 (4 July 2008).
  15. [35]
    The Building and Construction Industry Payments Act (‘BCIPA’) stood up a regime for making claims outside the contractual regime. BIFA is a continuation of that regime which expressly recognises the contractual context. Addressing the BCIPA regime Douglas J in Tailored Projects Pty Ltd adopted the submission that:

“… two separate regimes are created; that is being the contractual regime on the one hand and the statutory regime on the other.  The requirements of the contractual regime are not as strict as the statutory regime and necessarily so given the drastic consequences of the failure to comply with the requirements of the Act being that the person claiming will be entitled to the payment of money to which they are not entitled in law or in fact.

It has been noted and with some degree of force that the statutory regime requires ‘strict compliance’ in order for a lability to arise…”.

  1. [36]
    A main purpose of BIFA relevantly provided for in s 3(2)(b) includes enlivening an entitlement to progress claims, whether or not the relevant contract makes provision for progress claims. The primacy of the contract is recognised for that purpose and procedurally BIFA materially mirrors the contractual process. 
  2. [37]
    The regime for claiming progress claims is provided for by Part 3.  It is informed by the underlying premise that there is in existence a construction contract which includes a reference date (or a means to calculate one),[6] a progress payment regime and in part, that the contract informs time for making a progress payment,[7] the response to a payment claim by payment schedule,[8] and a payment on a payment claim or payment schedule as the case may be.[9]
  3. [38]
    The preservation of contractual rights for all dispute resolution is also provided for despite rights following from and determinations made upon matters determined in accordance with BIFA.[10]
  4. [39]
    Likewise, the Subcontract seeks to harmonise its provisions with BIFA.  Part B incorporates into its terms clause 42.13 dealing with security of payments as governed by the statutory scheme. 
  5. [40]
    BIFA now recognises the primacy of the underlying contract in the context of progress claims.  It specifically addresses two regimes; one is statutory (BIFA) and the other contractual.  Importantly however, BIFA appears to provide a benchmark regime by operation of s 200 which relevantly provides:

200 Contracting out prohibited

  1. (1)
    the provisions of this Act have effect despite any provision to the contrary in any contract, agreement or arrangement.
  2. (2)
    A provision of a contract, agreement or arrangement is of no effect to the extent to which it—
    1. is contrary to this Act; or
    2. purports to exclude, limit or change the operation of this Act; or
    3. has the effect that excluding, limiting or changing the operation of this Act; or

…

  1. [41]
    In this case BIFA specifically defines the term “business day”.  The effect of BIFA is to create a “blackout period” over Christmas/New Year which accords with the general industry stand-down.  In accordance with the statutory regime, the earliest date that a payment schedule was required in respect of a payment claim delivered on the last date preceding the blackout, that is 24 December 2021, is 28 January 2022.  Noting that the blackout period extends to 10 January in any particular year and that upon the contractual regime that otherwise would have left Carruthers three business days to respond to the payment claim delivered, in effect, on Christmas Eve, it plainly had the effect of limiting the operation of BIFA which would ordinarily have provided a further 12 business days to prepare and deliver a payment schedule.
  2. [42]
    It follows, in my view, that the calculation of time under the contract had the effect of limiting the operation of BIFA. That matter has its root in the definitional conflict between the meaning of the word “day” as defined in each of the Subcontract and BIFA. The Subcontract definition of “day” means a calendar day whereas BIFA defines “day” to mean “business day”, a term which itself is subject to definition which in turn includes the blackout period..
  3. [43]
    The effect of Allencon’s proposed construction affording the Subcontract precedence would serve to limit the statutory intent prescribing for the calculation of times for the delivery of progress claims by ascribing to the Subcontract a timetable for attending to the delivery of a payment schedule, as provided for by the Subcontract, upon a timeframe that is less favourable than that provided for by BIFA and which thus limits or changes its operation. In my view that construction offends BIFA s 200 and accordingly to that extent is of no effect and must be read down insofar as it limits BIFA.
  4. [44]
    On that basis the earliest date available for the delivery of a payment schedule in response to a payment claim delivered on 24 December 2012 would have been 28 January 2022. That was the date upon which Carruthers’ payment schedule was delivered. It was delivered in time. All outstanding moneys have been paid.
  5. [45]
    The applicant’s application for summary judgment is dismissed.

Order

  1. Application dismissed.
  2. In default of application for other orders being made within 14 days the applicant pay the respondent’s costs of and incidental to the application to be assessed on the standard basis, such costs to be the respondent’s costs in the cause in any event.

Footnotes

[1]  Whilst described in part as a “Practical Completion” claim, it does not appear the requirements of cl 42.5 had been satisfied at the time of issue.

[2] BIFA s 200.

[3] The term is defined in s 65 but is not material to this analysis.

[4] Addressing the instrument as an invoice will satisfy this requirement: BIFA s 68(3).

[5] BIFA s 76(1).

[6] BIFA ss 67, 70, 71.

[7] BIFA s 75.

[8] BIFA s 76.

[9] Ibid.

[10] BIFA s.101

Close

Editorial Notes

  • Published Case Name:

    Allencon Pty Ltd v Palmgrove Holdings Pty Ltd

  • Shortened Case Name:

    Allencon Pty Ltd v Palmgrove Holdings Pty Ltd

  • MNC:

    [2022] QDC 90

  • Court:

    QDC

  • Judge(s):

    Burnett DCJ

  • Date:

    06 May 2022

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2022] QDC 9006 May 2022-
Notice of Appeal FiledFile Number: CA6456/2202 Jun 2022-
Appeal Determined (QCA)[2023] QCA 603 Feb 2023-

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Bloom v Lepre [2008] NSWSC 79
1 citation
Jump To
Cite 1 - [2008] NSWSC 79
Daysea P/L v Watpac Aust P/L [2001] QCA 49
2 citations
Jump To
Cite 1 - [2001] QCA 49
Cite 2 - [2001] QCA 49
Tailored Projects Pty Ltd v Jedfire Pty Ltd[2009] 2 Qd R 171; [2009] QSC 32
2 citations
Jump To
Cite 1 - [2009] 2 Qd R 171
Cite 2 - [2009] 2 Qd R 171
Thiess Pty Ltd v Lane Cove Tunnel Nominee Company Pty Ltd [2008] NSWSC 729
1 citation
Jump To
Cite 1 - [2008] NSWSC 729

Cases Citing

Case NameFull CitationFrequency
Allencon Pty Ltd v Palmgrove Holdings Pty Ltd(2023) 13 QR 258; [2023] QCA 67 citations
1

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