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In brief - Parties cannot assert the invalidity of a document to later rely on its validity to their advantage

The Queensland Supreme Court has found that a construction company which asserted the invalidity of a notice of claim of charge to eradicate a subcontractor's charge under the Subcontractors' Charges Act could not then assert the validity of the same document to eradicate a payment claim under the Building and Construction Industry Payments Act.

Two documents both satisfy requirements of payment schedule under BCIPA

On 26 August 2013, the Queensland Supreme Court handed down its decision in McConnell Dowell Constructors (Aust) Pty Ltd v Heavy Plant Leasing Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) & Ors [2013] QSC 223, dealing with the interplay between the Subcontractors’ Charges Act 1974 (SCA) and the Building and Construction Industry Payments Act 2004 (BCIPA), as well as the issuing of two separate documents both satisfying the requirements of a payment schedule under the BCIPA.

Adjudicator finds in favour of equipment leasing company

McConnell Dowell received a notice of claim of charge under the SCA and wrote to Heavy Plant Leasing (HPL) to advise that the notice of claim of charge was invalid for various reasons. HPL replied to McConnell Dowell accepting that the notice was invalid and was of no legal force or effect. HPL did not issue the relevant notice of withdrawal of charge form under the SCA.

HPL then issued a payment claim under the BCIPA. McConnell Dowell sent HPL a letter two days later (6 March 2013) attaching a payment certificate with some reasons for non-payment. McConnell Dowell then subsequently sent HPL a payment schedule on 8 March 2013, setting out detailed reasons for non-payment.

The adjudicator found in favour of HPL (for approximately $27 million) and in doing so, concluded that the 6 March 2013 letter was the payment schedule for the purposes of the BCIPA.

Construction company applies to Supreme Court to set aside adjudication determination

McConnell Dowell applied to the Supreme Court to set aside the decision on two grounds.

The first was that the notice of claim of charge was not validly withdrawn using the correct form under the SCA, and was therefore still valid, preventing the making of a payment claim pursuant to section 4 of the BCIPA.

The second was that the adjudicator erred in finding that the 6 March 2013 letter was the payment schedule and in ignoring the 8 March 2013 payment schedule.

Failure to withdraw first notice of claim did not alter concession as to its lack of legal effect

Justice Boddice held that the first ground relied upon by McConnell Dowell must fail. His Honour said that failure to withdraw the notice of claim of charge using the appropriate form did not alter the fact that the notice of claim of charge was withdrawn by an unequivocal concession that it was of no legal force or effect.

Justice Boddice said to conclude otherwise would put form over substance.

He said that if he was wrong in finding as such, he would exercise his discretion to refuse to use his supervisory jurisdiction to set aside the decision in the circumstances, particularly where McConnell Dowell relied on the invalidity of the notice of claim of charge to eradicate the subcontractors’ charge under the SCA, then relied on the validity of the notice of claim of charge to eradicate the payment claim under the BCIPA.

The Judge did not make a finding as to whether McConnell Dowell's conduct amounted to approbation and reprobation (i.e. accepting that something is valid to obtain a particular advantage while rejecting its validity to obtain another advantage).

Adjudicator erred in finding first notice of claim to be the payment schedule

Justice Boddice did set aside the decision on the second ground. He concluded that the adjudicator erred in finding that the 6 March 2013 correspondence was the payment schedule for the purpose of the BCIPA and that the adjudicator ignored the 8 March 2013 payment schedule as a result.

His Honour held that whilst the 6 March 2013 correspondence satisfied all of the requirements of a payment schedule, it was not named as such and did not purport to be a payment schedule. The 8 March 2013 correspondence expressly purported to be a payment schedule and contained significantly more detail than the 6 March 2013 correspondence.

Court unimpressed by attempts to assert validity of document already agreed to have no legal force

This decision demonstrates three important points of law relevant to those in the construction industry.

• A failure to issue the formal notice of withdrawal of charge under the SCA will not prevent a notice of claim of charge from being withdrawn if the party issuing the charge has unequivocally conceded that the charge is of no legal force or effect.

• Asserting the invalidity of a document to rely upon its validity later to your advantage will not be looked upon kindly by the Supreme Court.

• Issuing more than one document satisfying the requirements of a payment schedule within the relevant time period will not invalidate a document expressly purporting to be a payment schedule also issued within the relevant time period.

This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal advice. Please seek your own legal advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.​

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