Recently, the Queensland Court of Appeal handed down its decision on the appeal of Gambaro Pty Ltd v Rohrig (Qld) Pty Ltd [2015] QSC 170.

Jennifer McVeigh (view my bio) and Ellen Bevan have analysed this decision:

Gambaro Pty Ltd v Rohrig (Qld) Pty Ltd; Rohrig (Qld) Pty Ltd v Gambaro Pty Ltd[2015] QCA 288

Significance

The mere fact that the adjudicated amount for a progress payment exceeds the amount certified by the superintendent for that progress payment will not be sufficient to mount a successful claim for restitution of an adjudicated amount.

Facts

Gambaro Pty Ltd (plaintiff) entered into a building contract with Rohrig (Qld) Pty Ltd (defendant) in September 2012 to construct a hotel and refurbish parts of a building. In May 2014, the defendant issued a payment claim under the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA), seeking payment of more than $2 million. In its payment schedule, the plaintiff acknowledged liability for only $57,593.08, and paid that amount.

The defendant made an adjudication application. The adjudicator determined that the plaintiff should pay the defendant $956,788.25. The plaintiff paid $913,014.23, and soon after commenced proceedings against the defendant for restitution of that amount. The plaintiff applied for summary judgment, and the defendant applied to have the plaintiff's statement of claim struck out. At first instance, each application was refused. Both parties appealed.

On appeal, the plaintiff argued that it was unjust for the defendant to retain so much of the adjudicated amount as exceeded the progress payment, simply because it exceeded the amount certified by the superintendent for that progress payment.

The defendant argued that, pending a final determination about a relevant contractual entitlement, a party to a contract could not prosecute its contractual rights in respect of a progress payment in a way that would override the statutory entitlement to a progress payment.

Decision

Fraser JA, with whom Morrison JJA and Boddice J agreed, gave the leading judgment in the appeal. The plaintiff's appeal was dismissed. The defendant's appeal was allowed and the plaintiff's statement of claim was struck out. The plaintiff was given leave to file an amended statement of claim.

In striking out the plaintiff's statement of claim, Fraser JA stated that:

'the plaintiff's claim must fail because it relies only upon contractual provisions concerning the amount of a progress payment to be paid on account of the contractual remuneration which do not detract from the statutory rights and liabilities created by Pt 2 and 3 of BCIPA, rather than upon contractual provisions which determine Gambaro's liability for and Rohrig's entitlement to the contractual remuneration on account of which the adjudicated amount of a progress payment was paid.'

In obiter, without considering the defendant's argument in detail, Fraser JA acknowledged the well settled position that, prior to the completion of a contract, a claimant could be ordered to make restitution of that part of an adjudication amount that exceeds the amount to which the claimant is contractually entitled to, but noted that was not the case pleaded by the defendant.