St Hilliers Property Pty Ltd v Pronto Solar Innovations Pty Ltd

In this matter, Daubney J dealt with an application to cancel claims of charge made under the Subcontractors’ Charges Act 1974. The claims of charge were made to secure amounts alleged to be payable under construction contracts. However, the subcontractor respondents did not hold any form of licence to perform building work under the Queensland Building and Construction Commission Act 1991 which meant that, pursuant to s 42, they were not entitled to monetary or other consideration for the work. Daubney J held that the effect of this was that there were no payments due under the subcontracts which could be secured by a charge. His Honour also held that the respondents could not raise an estoppel to prevent the applicant from relying on s 42.

Daubney J

27 July 2018

The applicant, St Hilliers Property Pty Ltd, was the lead contractor for the construction of certain solar farms in central Queensland. [1]. The respondents, Pronto Solar Innovations Pty Ltd and Pronto Projects Pty Ltd, were subcontractors with St Hilliers, contracted to do piling works. [2]. Neither of the respondents had a licence to perform any building work under the Queensland Building and Construction Commission Act 1991 (“QBCCA”). [4].

In December 2017, the respondents served payment claims purportedly made under s 17 of the Building and Construction Industry Payments Act 2004 (“BCIPA”) on St Hilliers. [5]. The respondents subsequently served on St Hilliers a Form 1 Notice of Claim of Charge and a Form 2 Notice to Contractor under the Subcontractors’ Charges Act 1974. [6].

The respondents commenced proceedings by way of claim and statement of claim seeking orders for the payments of the claims. [10]. St Hilliers subsequently commenced the applications the subject of these proceedings, seeking the cancellation of the claims of charge under s 21 of the Subcontractors’ Charges Act and declarations that the claims under the BCIPA were invalid. [11].

Daubney J observed that as neither respondent held a licence under the QBCCA, if the work which was the subject of their claims was “building work” for the purposes of the QBCCA then s 42 was engaged. [15]. That section prohibits a person from carrying out building work unless the person holds an appropriate licence under the QBCCA. [15]. If work is undertaken in contravention of the section, then, by s 42(3), the person is not entitled to any monetary or other consideration for doing so. [15]. Although it was disputed whether the piling works were “building works” for the purposes of the Act, Daubney J concluded that the work under each subcontract was “building work”, and therefore that the prohibition in s 42(1) applied. [22]–[23].

It was not in issue that each subcontract was a “construction contract” as that term is used in BCIPA. [24]. The respondents had sought to argue that where work was done and claimed for under a “construction contract”, s 42 of the QBCCA did not apply. [26]. However, quoting Williams JA in Cant Contracting Pty Ltd v Casella [2007] 2 Qd R 13, Daubney J stated:

“Because s 42(3) … provides that an unlicensed contractor ‘is not entitled to any monetary or other consideration’ for doing work pursuant to the contract, such a contractor cannot be said to have an entitlement to progress payments pursuant to ss 7, 12 and 17 of the [BCIPA].” [26].

As for the subcontractors’ charges, Daubney J noted that s 5(2) of the Subcontractors’ Charges Act provides for a charge that “secures payment in accordance with the subcontract of all money that is payable … for work done by the subcontractor under the subcontract”. [28]. However, as his Honour explained:

“The ambit of the security provided by a charge under the SCA is delineated by s 5(2). By the operation of s 42(3) of the QBCCA, both Solar and Projects are disentitled from being paid monetary or other consideration for work done under the subcontracts. In those circumstances, there could be no payment in accordance with each subcontract which a charge under the [Subcontractors’ Charges Act] could secure.” [33].

The final argument advanced by the respondents was that the applicant was estopped from relying on s 42 of the QBCCA on the basis that it had represented that the respondents would not need a QBCC licence and that the applicant would be “signing off on the finished works” under its licence. [34]–[35]. Daubney J, however, held that the potential estoppels were not available to oust the operation of s 42, relying on Multiplex Constructions Pty Ltd v Rapid Contracting Pty Ltd (in liq) [1999] QCA 306. [38]. First, because s 42(3) precluded such a claim; and secondly, because such a claim would not fall within s 5(2) of the Subcontractors’ Charges Act “which, in terms, appears to be limited to securing payment of monies payable in accordance with a contract for work done under it; in other words a contractual claim”. [38].

In the result, his Honour made orders cancelling the charges and declared that the payment claims were invalid. [44].

J English