GCB Constructions Pty Ltd v SEQ Formwork Pty Ltd & Ors

The applicant was the head contractor on a construction site for two residential towers in Southport. There was uncontradicted evidence that the applicant had orally requested the respondent, a formwork contractor, perform work on and supply material to the site. But the parties had not reached a concluded agreement as to the terms of any subcontract. Upon the applicant’s refusal to pay the respondent’s payment claim, the respondent referred the matter to adjudication. The adjudicator found that the arrangement between the applicant and the respondent constituted a construction contract or an “other arrangement” within the meaning of s 64 Building Industry Fairness (Security of Payment) Act 2017 such that the respondent was entitled to payment. The applicant successfully appealed the adjudicator’s decision on the basis that there was no “construction contract” and no “other arrangement” because, amongst other reasons, there was not a bilateral, concluded state of affairs reached between the parties.

Burns J

11 April 2023

The applicant (GCB) asked the respondent (SEQ) to carry out “capping beam works” on 14 March 2021. The request was made orally during a conversation between representatives of GCB and SEQ. [10]. GCB performed the “capping beam works” and then remained on site to perform certain other work before any formal subcontract agreement was executed. [16]–[17].

SEQ issued a payment claim for work done and for the supply of material pursuant to the Building Industry Fairness (Security of Payment) Act 2017 (“the Act”). The respondent referred the matter to adjudication upon the applicant’s refusal to pay the claim. [6]–[8]. The adjudicator delivered an award in SEQ’s favour on the basis there was a “construction contract” or an “other arrangement” within the meaning of the Act.

GCB challenged the adjudicator’s decision.

His Honour held that there was no “other arrangement” because all that had occurred was that the applicant requested during a conversation that the respondent remain on site to undertake work and supply materials, which occurred. [17]. However, that series of events is not sufficient to amount to an “other arrangement” within the definition of “construction contract”. His Honour found that:

“… there must at least be a ‘concluded state of affairs, which is bilateral’. There must also be a sufficient degree of mutuality to serve the purposes for which the arrangement is required under the Act including, of particular resonance in this case, enough settled detail to enable the work and/or materials to be claimed with precision and then valued to the same standard”. [18].

Crucially, the material before the adjudicator could not justify the conclusion that there was an “other arrangement” or a “construction contract” because:

1)The bulk of the respondent’s payment claim concerned the supply of material, but nothing had been agreed as between the parties as concerning the supply of, or payment for, that material during the relevant conversation. [20].

2)The conversation was confined to the undertaking of specific work and did not extend to other works that were later performed by the respondent. [21].

3)The additional works performed by the respondent were not performed pursuant to any agreement (or arrangement) with the applicant. [22].

4)There was no specification of the rates to be charged for labour. [21]

5)Nothing was agreed during the relevant conversation about the time for performance of any of the work, the making of claims, the time for payment, retention money or the transfer of ownership of formwork. [24].

In those circumstances, the adjudicator’s jurisdiction was not enlivened and the decision was declared void and of no effect. [25], [28].

S Parvez of Counsel