Macrossans Lawyers Brisbane law firm

Building and Construction Industry Payments Act

This Focus summarises several developments that affect the Building and Construction Industry Payments Act (BCIPA), which aims to facilitate prompt resolution of account disputes.

Reversal of adjudications

A decision by the New South Wales (NSW) Supreme Court - John Holland -v- RTA - in September 2006 found that a final determination by a superintendent could effectively reverse the result of a prior determination of an adjudicator.

Brief facts

This case is one of a number between the RTA and its contractor, John Holland, surrounding the NSW Building and Construction Industry Security of Payment Act 1999 (BCISPA). There had been three separate determinations by an adjudicator in favour of John Holland in respect of associated road and bridge works.

The RTA disagreed with each adjudication decision. The RTA contract provided that on practical completion there would be an obligation by the principal to release an amount which in its opinion was just and equitable. There were also provisions for the contractor to lodge the final statement and the superintendent to issue the final payment certifi cate/schedule setting out the positions of the parties. For example, if John Holland owed the RTA funds, the contract entitled RTA to retain the security until John Holland paid the amount determined by the superintendent.

Decision

Contractual mechanisms to protect a paying party are usually voided by s34 of the BCISPA and s99 of Queensland's BCIPA. Both sections seek to void any provision which purports to exclude, modify or restrict the effect of the Act or attempts to deter a person from taking action under the Act.

The NSW Supreme Court had to determine whether the provisions of the RTA's contract were void under s34 and whether the RTA acted reasonably and in good faith.

When considering the BCISPA, the court confirmed that the Act:

• Does not finally determine matters
• Recognises that adjudicators can be in error
• That a final determination can reverse a previous adjudication.

This supported the RTA's claim that a fi nal determination could be made by a superintendent, pursuant to the provisions in the contract, and that this determination did not exclude, modify or restrict the Act.

This decision means that superintendents may step in and reverse the decisions of adjudicators if there are provisions available under the contract. However, careful drafting of provisions would be needed. Any provision other than a fi nal one in the usual form or in the form outlined in this case, may push the boundaries and breach the sections of the various Acts. Queensland's BCIPA provisions are a little wider than in NSW, but it remains to be seen if this precedent can be applied.
Unlicensed builders and the BCIPA.

Late last year, the Court of Appeal in Queensland heard the matter of Cant Contracting Pty Ltd -v- Casella & Anor, and ruled that builders must be licensed to recover any payments under the BCIPA. This decision overruled a previous decision of the Chief Justice, who held that unlicensed builders were not restricted from recovery under the BCIPA. His reasoning related to the NSW case Brodyn Pty Ltd -v-Davenport, where after the NSW Court of Appeal reviewed the provisions of the Home Building Act 1999 (NSW), it allowed an unlicensed builder to recover under the NSW equivalent legislation (BCISPA).

The Queensland Court of Appeal decision aligns the BCIPA with decisions made based on the Queensland Building Services Authority Act 1991. It was argued that it could hardly be fair, even on an interim basis, that an unlicensed contractor can recover funds under the BCIPA, when the Queensland Building Services Authority Act 1991 limits them from operating in the first place - and hence being unable to recover any funds except on a very limited basis.

Emminent senior counsel have argued the case quite extensively and this subject could now be taken as settled law in Queensland. The first rule now for respondents to claims under the BCIPA is to search the licensing status of any claimant through the Building Services Authority site (www.bsa.qld.gov.au).

Counter-claims under other Acts.

While the provisions in the BCIPA disallow any defence, a NSW case has identifi ed a means for recipients of BCIPA claims to challenge claims using the Commonwealth Trade Practices Act.
In Bitannia Pty Ltd -v- Parkline Constructions Pty Ltd, the NSW Court of Appeal found if the manner in which the claim was served involved alleged misleading and deceptive conduct, the respondent could use this conduct as a defence by way of a counter-claim using s52 of the Commonwealth Trade Practices Act, which would make the payment claim ineffective.

While this decision is limited to situations involving misleading and deceptive conduct, it opens up the opportunity for respondents to use other claims under this Act.

If you would like further information please contact Tony Mylne, Partner on 07 3292 9715 or email This Email address is being protected from spam bots, you need JavaScript enabled to view it