Denbrook Constructions Pty Ltd v CBO Developments Pty Ltd [2022] QDC 184

Sarah Ferrett | Alexandria Hammerton | Renee Shike

Key takeout

This case is a reminder that a valid payment claim under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) must identify the work to which the claim relates.  General references to work completed to date are insufficient.

Claimants must explain the work to which any amounts relate and include any documents they seek to rely on, including previous payment claims and are reminded that claims which may fall foul of those requirements might be severed from amounts claimed under section 100 of the BIF Act.

Facts

CBO Developments Pty Ltd (CBO) engaged Denbrook Constructions Pty Ltd (Denbrook) to perform construction management work to construct three single-floor apartments at Sovereign Shores. During the performance of the contract, Denbrook submitted 25 payment claims in the same form, which were all valid under the BIF Act. However, in its final payment claim (claim 26), Denbrook used a different form that did not set out the works to which the payments related.  CBO delivered a payment schedule response, approving some lines of payment and rejecting others. However, it was provided outside of the time required under the BIF Act.  On this basis, Denbrook sought judgment against CBO for the full amount claimed in claim 26 under section 100 of the BIF Act.

CBO did not dispute that its payment schedule was delivered outside of the required time, but defended the claim on the basis that the final payment claim did not sufficiently identify the construction work or related goods and services to which it related, and was therefore an invalid under section 68(1)(a) of the BIF Act. In determining the validity of claim 26, the court considered whether a reasonable recipient in the position of CBO would understand the work to which the claim related such that it could make its own assessment.

Decision

The court dismissed the Denbrook’s claim and found that claim 26 was invalid because a reasonable recipient could not have identified the work to which it related.

There were two relevant categories of payment:

Cost of Works

A reasonable recipient in the position of CBO would have assumed the Cost of Works claim in claim 26 was a reference to the total contract sum identified under claim 25.  However, the court rejected the proposition that the assumption meant that claim 26 identified the work. Documents relied upon to sustain a payment claim must be included in the claim. It is not up to the recipient to sort through previous payment claims to ascertain work to which a new payment claim relates. As claim 26 did not incorporate claim 25 by reference and it was not included in the claim, the works were not sufficiently identified.

Construction Manager’s Margin

Claim 26 did not identify any work to which the claim for the Construction Manager’s Margin related.  It is well established that a margin is added to the cost of works by way of profit, but claim 26 did not identify the work to which the margin applied.