Allencon Pty Ltd v Palmgrove Holdings Pty Ltd [2022] QDC 90

Andrew Orford  |  Petrina MacPherson |  Eva Squire

Key takeout

Parties to a building or construction contract should ensure that any timeframes for payment in their contract comply with the requirements of the Building Industry Fairness (Security of Payment) Act (Qld) (BIFA).  In particular, the BIFA adopts a definition of ‘business day’ which reflects the industry shutdown period over the Christmas – New Year period.  A contract subject to the BIFA cannot create a payment regime that fails to take this into account by requiring payment in this ‘blackout period’.   

Facts

Allencon Pty Ltd (Allencon) entered into a subcontract with Palmgrove Holdings Pty Ltd (trading as Carruthers Contractors) as the Head Contractor (subcontract).  Under the subcontract, Allencon was required to submit claims for payment on the 24th day of each month.  The subcontract provided that Carruthers Contractors was then required to deliver a payment certificate within 21 days of receipt of the claim for payment.  Payments were then due 35 days after the payment claim or 14 days after the payment certificate, whichever was earlier. ‘Day’ was defined in the subcontract to mean calendar day.

Allencon delivered a payment claim on 24 December 2021.  Carruthers Contractors did not submit a payment certificate until 28 January 2022 and payment was made a few days later.  Based solely on the subcontract, the payment certificate should have been delivered on or before 14 January 2022 and paid on or before 28 January 2022.  

Allencon brought an application for summary judgment on that basis that the payment certificate had been issued out of time and Carruthers Contractors was thereby in default.

Carruther Contractors argued that it was not out of time due to the operation of the BIFA. Part 3 of BIFA provides a statutory scheme for making progress claims by the issuing of payment claims, including specific timelines.  Section 76 of the BIFA provides that a payment schedule must be given ‘within whichever of the following periods ends first’; the period worked out under the construction contract, or 15 business days after the payment claim was given. 

Crucially, the term ‘business day’ is defined in the BIFA to exclude a number of days over the Christmas- New Year ‘blackout period’.  Carruther Contractors argued that the earliest date that a payment schedule was required in respect of a payment claim made on 24 December 2021 was 28 January 2022 and that it had submitted its payment certificate on time.

Decision

Burnett DCJ found that the payment regime created under the subcontract was in conflict with the regime under BIFA.  This conflict had its roots in the differing definitions of the word ‘day’ – which was defined as a ‘calendar day’ under the subcontract and as ‘business day’ (including a blackout period for Christmas/New Year) under the BIFA. 

Section 200 of the BIFA operates to prohibit parties from contracting out of the requirements under the BIFA.  Burnett DCJ found that the calculation of time under the subcontract had the effect of limiting the operation of the BIFA.  In particular, the effect of the BIFA was to create a benchmark statutory regime incorporating a Christmas – New Year blackout period in accordance with general industry stand-down at that time. The payment regime under the subcontract was in conflict with this requirement, and offended s 200 of the BIFA.

On this basis, the earliest date available for the delivery of a payment schedule in response to a payment claim delivered on 24 December 2021 was 28 January 2022.  Allencon’s application for summary judgment was dismissed.