Many contracts require contractors to provide statutory declarations or other specified documents before, or at the time of, issuing a progress claim.

A recent decision of the Supreme Court of Queensland considered whether these conditions are allowed under the Building and Construction Industry Payments Act 2004 (Qld) (“the Act”) as they seek to limit or modify the legal right to issue payment claims.

For those in the construction industry, it is important to be aware of your rights and obligations under construction contracts, including whether or not certain conditions are unenforceable under the Act. The case of BRB Modular Pty Ltd v AWX Constructions Pty Ltd [2015] QSC 218 sets out some important findings with regards to contractors’ rights to make payment claims under the Act.

Facts

AWX Constructions Pty Ltd (AWX) was engaged by BRB Modular Pty Ltd (BRB) to construct a camp and accommodation village. The contract allowed AWX to make a progress claim on the 28th of each month, subject to a number of conditions, including that AWX was required to sign a statutory declaration stating that, to the best of its knowledge, all subcontractors had been paid. 

AWX signed a statutory declaration, however amended the contract statutory declaration form by inserting the following words “other than those owed variations, payable to the head contractor”. The progress claim was then refused by BRB as the condition in the construction contract had not been complied with (i.e. that a statutory declaration in the original form was not provided with the claim).

Ultimately, the Court determined that the requirement for AWX to sign a statutory declaration before it could make a progress claim was void. The decision focussed on the objectives of the Act and whether or not the condition facilitated those objectives.

Why was the condition void?

The Court noted that the objectives of the Act are to facilitate cashflow to contractors, which allows contractors in turn, to pass on that cashflow to its creditors, including subcontractors.

Importantly, the Court also noted that the condition to provide a statutory declaration does not advance the purpose of the Act and is in fact, inconsistent, with the purposes of the Act.

Contractors who work in New South Wales should be aware that the equivalent New South Wales Act actually specifically requires a progress claim to be accompanied by a declaration stating that all subcontractors have been paid all amounts due and owing in relation to the construction work.

Why is this relevant?

It is important that you review any conditions relating to the right to issue a progress claim and seek advice if you believe they are restricting your rights under the Act. If such a condition in a contract is inconsistent with the objectives of the Act, it may be void. 

Whether or not a condition is void will depend on the specific term itself. However, the primary test will be whether or not the condition does anything to advance the purpose of the Act.

In any event, it makes good commercial sense to comply with all contractual terms (where possible) so that any potential argument, such as the one that AWX experienced, can be avoided.

That said, never sign something that is not correct and remember that signing a false  Statutory Declaration is a criminal offence.