4 December 2014
This interesting case concerned the interaction between statutory entitlements granted under BCIPA and the specific contractual terms agreed upon by parties to a construction contract. Pursuant to the BCIPA, a person who has undertaken construction work is entitled to progress payments, and these become payable from a “reference date”, BCIPA s 12; the reference date being either the “date stated in, or worked out under, the contract” (emphasis added) or, if not provided for, the last day of the month in which the work was carried out. BCIPA Sch 2.
The dispute arose following the applicant’s, Lean Field Developments’ (“Lean Field”), failure to pay the first respondent’s, E & I Global Solutions’ (“E & I”), claimed progress payment. Lean Field had engaged the services of E & I to supply services relating to high voltage and fibre optic cables. . Pursuant to this agreement, E & I was required to submit a draft claim for payment on a specified date each month (cl 33.7(a)), and, fourteen days later, submit a Payment Claim (cl 33.8(a)) – for the purposes of the BCIPA this later date was to be the “reference date”. . This process, however, was not followed and E & I issued a number of invoices for progress payment without first providing a draft payment claim – these invoices were paid without complaint. –. In March 2014, E & I issued an invoice which Lean Field disputed, and, before the adjudicator, argued that it was invalid of the basis that E & I failed to comply with cll 33.7 and 33.8 by delivering a draft payment claim. It was alleged that the consequence was that a “reference date” could not arise. The adjudicator rejected Lean Field’s argument. Lean Field sought to quash the adjudicator’s decision. The Court addressed three questions, namely:
(1) Did cl 33.8 provide how the “reference date” was to be worked out?
(2) If so, were cll 33.7 and 33.8 “of no effect in respect of [E & I’s] statutory entitlement to a progress payment because of s 99 of the Act;” and
(3) Was Lean Field precluded on the grounds of waiver or estoppel from relying on non-compliance with cll 33.7 and 33.8?
The Court first addressed the question of whether cl 33.8 provided how the reference date was to be “worked out”, specifically whether the statutory definition allowed a “reference date” to be “worked out” by reference to post-formation conduct, rather than by application of the terms of the contact alone. –. Looking to the ordinary meaning of “worked out” – “a process of calculation”, , the Court concluded that there was nothing in the Act which precluded the application of this definition,  and thus a reference date could be “worked out” using a contractual formula which utilised a post-formation fact, including one dependent upon the conduct of a contractual party as a pre-requisite for the determination of a reference date. –. The Court considered, however, that in order to preserve the Act’s objective to provide a statutory entitlement to a progress payment, that s 12 of the Act provides there were limits on the validity of contractual provisions which regulate when a reference date will arise. These limits are expressly articulated in s 99 which operates to void provisions of a relevant agreement which are contrary to the BCIPA, and thereby invalidates those contractual conditions which would “prevent or inordinately delay” a reference date from arising. , ; see also –. Given this conclusion, the Court then addressed whether the requirements of cll 33.7 and 33.8 operated to “prevent or inordinately delay” a reference date from arising and as such were invalidated by the application of s 99. Though “contractual provisions captured by the unambiguous terms of the definition of “reference date” can qualify the statutory entitlement to a progress payment,” , see John Holland v Coastal Dredging, the Court concluded that cll 33.7 and 33.8 were not captured by this definition as the requirement to submit a draft payment claim was held to lack utility in making a payment claim under the BCIPA and being paid upon that claim and thus was an “impermissible constraint” on the right to claim for payment. –. On this basis the Court held the cll 33.7 and 33.8 were ineffective by reason of s 99 of the BCIPA. , see also –.
Though unnecessary given its previous conclusion, the Court briefly considered whether Lean Field had waived or was estopped from insisting upon compliance with cll 33.7 and 33.8 given its previous conduct. . On the evidence before it, the Court concluded that Lean Field’s conduct had not amounted to an election between inconsistent rights, nor was it such as to represent to E & I that a different relationship existed between the parties, –, and thus held that neither waiver nor estoppel had been established. .
For the aforementioned reasons the Court held that the adjudicator’s decision was not affected by jurisdictional error and dismissed Lean Field’s application. –.