Sarah Ferrett | Tom Kearney | Isobel Carmody
The Queensland Court of Appeal has indicated that jurisdictional arguments must be raised in the payment schedule to be adjudicated upon.
This is an appeal of an application for judgment under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act). The Court of Appeal stated in obiter that:
- a payment claim made in good faith and purporting to be made under one construction contract will not be invalid simply because at a later time (during an adjudication or otherwise), it is determined that part of the claim was, in fact, a claim under a different construction contract; and
- an allegation that the work claimed has been misdescribed in a payment claim (ie where that work relates to a different construction contract to the one the payment claim is being made under) needs to be raised in a payment schedule and cannot be argued in an adjudication response for the first time.
This decision originally concerned a claim regarding the wet hire of a crane, which Bothar argued was a second and separate contract. The original decision of the Queensland Supreme Court was in Ausipile Pty Ltd v Bothar Boring and Tunnelling (Australia) Pty Ltd  QSC 39 – see our review of that decision here.
At first instance the application for judgment under the BIF Act was dismissed because:
- where a payment claim concerns more than one contract, that will be fatal to its validity under the BIF Act;
- Ausipile had included in its payment claim a claim for wet cranage, which it described as a variation of the subcontract between the parties;
- the claim for wet cranage was not a variation to the subcontract, but rather a separate contract;
- the payment claim contained claims under two separate contracts, which meant the payment claim was invalid under the BIF Act.
Ausipile appealed the decision.
Decision of the Court of Appeal
Were there two contracts or one varied one?
The appeal was allowed as the Court of Appeal considered that the wet hire of the crane was not a separate contract between the parties. It was really a variation to the written subcontract.
Accordingly, the payment claim was not invalid for referring to more than one construction contract.
In obiter – validity of the payment claim
The Court of Appeal considered that an argument as to the validity of a payment claim for the purposes of the BIF Act, on the basis that it dealt with work under more than one construction contract should be raised in the payment schedule.
The Court of Appeal suggested that a respondent cannot simply sit by and raise this point later. If it is not put in a payment schedule and that such an argument ‘is a matter for adjudication after having been raised in a payment schedule‘. A payment claim which ‘purports to be made under one contract is not rendered invalid simply because at a later time (whether during adjudication or otherwise) it is determined that part of the claim was, in fact, a claim under a different contract‘.
It is unclear how these comments might interact with the general position that, notwithstanding limitations in the BIF Act on raising new reasons in an adjudication response, jurisdictional arguments may be raised for the first time in an adjudication response even if they have not been raised in a prior payment schedule. For example, National Management Group Pty Ltd v Biriel Industries Pty Ltd  QSC 219, . Also for analogous legislation in New South Wales, see Acciona Infrastructure Pty Ltd v Holcim (Australia) Pty Ltd  NSWSC 1330, .
The Court of Appeal’s judgment does not include express consideration of the cases that are authority for that proposition.
The NSW Supreme Court has now rejected the obiter see our case update on Ventia Australia Pty Ltd v BSA Advanced Property Solutions (Fire) Pty Ltd  NSWSC 1534 here.