Ausipile Pty Ltd v Bothar Boring and Tunnelling (Australia) Pty Ltd  [2021] QSC 39

by Sarah Ferrett, Matt Hammond, Tia Shadford

Key takeouts

This decision confirms that a payment of claim must only deal with claims under one construction contract, otherwise it will be deemed invalid under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act).

Facts

Bothar Boring and Tunnelling (Australia) Pty Ltd (Bothar) entered into:

• a design and construct subcontract with Ausipile Pty Ltd (Auspile) for the design and construction of a secant pile launch shaft at Quota Park, Biggera Waters in Queensland; and
• an agreement for the wet hire of the Ausipile’s crawler crane in order for Bothar to complete additional works under the head contract.

As a result of issues which arose with the secant piles throughout the life of the project, Bothar held back either partial or complete payments to Ausipile under the subcontract in anticipation of significant defects which would require rectification in the future.  This left three of the six payment claims that Ausipile had issued to Bothar largely unpaid (specifically, Payment Claims 4, 5 and 6).

Relevantly, Bothar did not provide a valid payment schedule in response to Payment Claim 6 (which, in addition to the claim specific to that reference date, sought payment of the unpaid amounts claimed in Payment Claims 4 and 5).

In response, Ausipile filed an originating application against Bothar seeking judgment for the outstanding amounts under Payment Claims 4, 5 and 6, under section 78(2)(a) of the BIF Act.  Bothar advanced three defences in response to the application:

• Ausipile engaged in misleading and deceptive conduct by remaining silent after a conversation with a representative of Bothar indicating that, as a result of defective works, Bothar would not be assessing or paying future payment claims (and therefore not delivering payment schedules) which was followed up with a letter from Bothar confirming that, ‘as discussed’, further payment under the subcontract would be withheld;
• no valid warning was given by Ausipile when initiating proceedings under section 99 of the BIF Act; and
• Payment Claim 6 was not a valid payment claim within the meaning of the BIF Act as it contained claims in relation to two separate contracts

Decision

Wilson J dismissed the application for judgment on the basis that, while Bothar’s first and second defence failed, the third defence was successfully made out.  Her Honour stated that where a payment claim concerns more than one contract, that will be fatal to its validity under the BIF Act.

Her Honour rejected Ausipile’s submissions that:

• the crane hire agreement was a variation of the subcontract, instead determining that it constituted a second contract between the parties. Her Honour relied upon the reasoning in Matrix Projects (Qld) Pty Ltd v Luscombe Builders [2013] QSC 164 to support the finding that the crane hire was a separate contract to the subcontract.  Her Honour made her determination after taking into account ‘all of the circumstances’, including the fact that the crane was hired for separate and independent work under the head contract, the scope of works did not cover the underlying purpose of the hire, and the crane remained on site some 5 weeks after the subcontracted works were complete and Auspile demobilised from the site; and
  
• the issue of whether the payment claim related to one contract should have been deferred to an adjudication (which was ultimately not determined on the basis of the finding above).