Procon Developments (Australia) Pty Ltd v Hi-Cal Bricklaying [2025] QSC 67

Sian Keast  |  Allie Flack  |  Jack Gibney

Key takeouts

• For payment claims to withstand scrutiny they must be connected to a valid reference date. Where a reference date is not expressly set by a contract, the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) provides the last day of each month, or where a contract has been terminated, the termination date is the valid reference date. Parties who purport to terminate a contract or are subject to repudiatory conduct should be mindful of this.

• An adjudicator will risk having their decision declared void if they unilaterally make a decision, without giving the parties an opportunity to make submissions on the issue in question.  In this matter, a material denial of procedural fairness arose when an adjudicator determined that a reference date fell on a particular date, contrary to the submissions made by both parties.

Facts

Procon Developments (Australia) Pty Ltd (Procon) was the head contractor for the construction of a service station and car wash. In May 2024, Procon subcontracted Hi-Cal Bricklaying (Hi-Cal) to underake blockwork required for the project (Subcontract).

On 11 June 2024, Procon purported to terminate the Subcontract asserting that Hi-Cal had abandoned the works.  Hi-Cal disputed Procon’s termination of the Subcontract, alleging that the Subcontract was not terminated until 2 July 2024, when it accepted Procon’s repudiation of the Subcontract.

Between June and August 2024, Hi-Cal sent a number of payment claims to Procon, which Procon refused to pay.  The reason cited by Procon for withholding payment was that it had to engage alternative contractors to complete the works it said had been abandoned.

In September 2024, Hi-Cal lodged an adjudication application under the BIF Act.  In October 2022, the adjudicator delivered his decision, finding that Procon was to pay Hi-Cal $13,692.25 (Adjudication Decision).

Procon applied to the Supreme Court of Queensland seeking a declaration that the Adjudication Decision was void for want of jurisdiction on two grounds, being that the adjudicator:

1. did not have jurisdiction because there was no reference date for the payment claim; and
2. failed to observe the principles of natural justice by failing to provide the parties an opportunity to be heard in relation to the reference date.

Hi-Cal also made submissions challenging the Adjudication Decision arguing that the adjudicator’s denial of part of its claim based on a lack of a written variation order was wrong as a written variation order was in fact included in its adjudication submissions. Hi-Cal contended that the adjudicator failed to afford natural justice in not seeking further submissions about the perceived lack of this material before reaching an adverse conclusion.

Decision

Chief Justice Bowskill found that the Adjudication Decision was invalid and ordered that it be set aside on the ground that the adjudicator denied the parties procedural fairness.

Was there a valid reference date?

Section 70 of the BIF Act stipulates that a claimant’s right to a process payment arises on and from each reference date under the contract.   Section 67 of the BIF Act provides that if a contract does not specify a reference date, the reference date is taken to be the last day of the month in which the construction work is carried out, or if a contract is terminated, the termination date becomes the final reference date.

The Subcontract did not provide for a reference date occurring beyond termination.   Proton and Hi-Cal both argued that the final reference date was the date each party sought to terminate the contract (i.e. Procon on 11 June 2024 and Hi-Cal on 2 July 2024).

The court rejected Procon’s argument that it had lawfully terminated the Contract in June and did not accept that Hi-Cal had abandoned the works. The court found that the termination occurred on 2 July 2024, when Hi-Cal accepted Procon’s repudiation, thereby crystalising the final reference date.

In the Adjudication Decision, the adjudicator found that the final reference date was 31 July 2024 on the basis that this was the last day of the month that work occurred, rather than the date of termination. Both Procon and Hi-Cal agreed that 31 July 2024 was not the correct reference date and neither party made submissions to that effect.  

The court found that the correct reference date was 2 July 2024, which was a valid reference date for the payment claim considered in the adjudication.  Although the adjudicator was wrong in determining the reference date was 31 July 2024, the Adjudication Decision was not affected by jurisdictional error for this reason.  It could only be a jurisdictional error if there’re was no reference date available for the payment claim.

Did the adjudicator deny the parties procedural fairness?

The court found that the adjudicator denied the parties procedural fairness by unilaterally determining an alternative reference date not advanced by either party, without giving the parties an opportunity to make submissions on the issue.  Bowskill CJ found this was a material denial of procedural fairness and a decision made in circumstances where there had been a material denial of procedural fairness was invalid and must be set aside.

In making this finding, the court determined that it had the power to remit the matter back to the Adjudication Registrar to enable a decision to be made on the adjudication application. Her Honour concluded that such a course of conduct was appropriate in this case because the effect of setting aside the decision meant there was no decision, meaning that the adjudication application had not been dealt with. With respect to the time provisions under the BIF Act, the court concluded that they could be accommodated by an order that the application be remitted to the Adjudication Register, as though the application were received on the date the Adjudication Registrar is notified of the order, with all subsequent time frames to be calculated by reference to that date. The court also ordered that the matter should be referred to a different adjudicator.