The Queensland Supreme Court has provided an important clarification of what restrictions can be put by a builder in a contract on your right to deliver a Payment Claim under the BCIPA.
As readers will be aware, the BCIPA creates a statutory right to deliver a Payment Claim on the Reference Date under the contract.
Where a contract provides an entitlement to a contractor to deliver a Progress Claim on a certain date, that date is the reference date.
Most contracts provide that a Progress Claim can be delivered on a certain day each month, for example the 25th day of the month. In such a contract the 25th day of the month is the reference date.
Since the introduction of the BCIPA a common tactic by builders has been to put a clause in the contract which says that you are entitled to make a Progress Claim on a particular date but that it has to be accompanied by various documents including for example a Statutory Declaration and that if you do not do so the Payment Claim is invalid.
It is now clearly established that such provisions do not deprive you of your statutory right to deliver a Payment Claim.
This recent decision confirms that law but deals with a different type of contractual clause which said that before the contractor could deliver the Payment Claim, they had to deliver a draft Payment Claim and within 14 days of receiving the draft Payment Claim the builder could issue a preliminary assessment of the claim. Only then could the contractor deliver a Payment Claim.
The Court noted that the draft Payment Claim was to include work performed up to the date of the draft Payment Claim. But the actual Payment Claim was to include work performed up until the date of that claim meaning that the two documents in fact had different work in them. Furthermore, the Court noted that the builder did not have to pay the amount of the preliminary assessment!
The builder’s lawyer said that if an invalid draft Payment Claim was delivered then the contractor did not lose the right to put in a Payment Claim. The Judge observed that if that is the case then the whole procedure was a waste of time.
Taking all these facts together the Court held that the procedure had little, if any, usefulness and that in the circumstances it was invalid as a breach of the Act.
The Court accepted that a “draft” Payment Claim procedure might be valid if for example it said the contractor had to provide a basic document which estimated what work would have been done by the time of the date for a progress claim and its expected value.
Provisions like that held invalid by the Judge are quite common. What this decision means is that if you have signed a contract containing one of these clauses, your date for a progress claim