In the recent decision of Panel Concepts Pty Ltd v Tomkins Commercial & Industrial Builders Pty Ltd [2021] QDC 322 (Panel Concepts), the District Court of Queensland found a payment claim was invalid because it failed to sufficiently identify the relevant construction work, as required by section 68(1)(a) of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act).
In Panel Concepts, Tomkins Commercial & Industrial Builders Pty Ltd (Tomkins) subcontracted Panel Concepts Pty Ltd (Panel) to fabricate and install tilt panels. Panel subsequently issued a progress claim in which it claimed $85,000 and described the relevant work as “claim for completion of tilt panels”.
Panel sought judgment of the amount claimed plus interest in the District Court pursuant to section 78 of the BIF Act, which provides a claimant with a right to apply to court for judgment of the amount claimed in a payment claim where the amount remains unpaid after the due date for payment.
In response to the application for judgment, Tomkins challenged the validity of the payment claim on the basis that the description of the work claimed, being a “claim for completion of tilt panels”, did not sufficiently identify the work. Tomkins argued the word “completion” was ambiguous, as it was unclear whether Panel was claiming for completion of the whole of the subcontract works or a portion of those works.
Panel argued that the description of work related to the completion of the fabrication of the tilt panels, which was sufficiently clear in the context of the “objective facts”, including that its previous two payment claims described the work claimed as “fabrication of tilt panels”.
In finding the payment claim was invalid, Judge Porter held:
The description, “claim for completion of tilt panels”, begs the question: completion of what? It was not the completion of the contract, because there was not a claim for the balance of the contract work, but beyond that, one is left really to guess what it means.
In other words, Judge Porter found that the lack of particularity in the word “completion” meant that the document failed to sufficiently identify the works claimed and was therefore invalid.
In determining whether the payment claim complied with section 68 of the BIF Act, Judge Porter adopted the principles set out by Brown J in KDV Sport Pty Ltd v Muggeridge Constructions Pty Ltd [2019] QSC 178 (KDV). In KDV, amongst other things, the court accepted the argument that “…providing the percentage of work carried out in total is insufficient to reasonably identify the construction work in respect of the claim”.
The effect of the decisions in Panel Concepts and KDV is that:
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- Queensland courts have moved towards a stricter approach when assessing whether a payment claim has sufficiently identified the construction work for the purposes of the BIF Act; and
- the template progress claims you have been using for years may not now be a valid payment claim under the BIF Act.
Practical impact and takeaway
Where a payment claim fails to include sufficient particularity of the works being claimed, the payment claim will be invalid. Where a payment claim is invalid (or arguably invalid), this increases the likelihood of challenges to the claim’s validity if the contractor or subcontractor proceeds to adjudication or applies to court for judgment. In the event of dispute, you will likely incur substantial and unnecessary legal costs attempting to demonstrate that the relevant document satisfies the technical requirements of the BIF Act. Should you fail to demonstrate this, you will likely be prevented from or at least delayed in obtaining progress payments for those works.
Panel Concepts serves as a timely reminder for claimants (i.e. contractors and subcontractors) to ensure that:
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- your pro-forma progress claims are up to date and contain sufficient detail to comply with section 68 of the BIF Act; and
- your contract administrators and project managers are aware of the importance of using non-ambiguous wording in payment claims to sufficiently identify the works being claimed to avoid any question over the recipient being “left to guess” about what is being claimed.
As a general rule, we recommend you include as much detail as possible with respect to the specific work being claimed. A basic trade breakdown which describes the trades, the amount claimed to date, the amount being claimed in the relevant claim and a percentage of the work carried out for the relevant trade, will likely now be considered insufficient. To the extent possible, you should include a further description of the specific works being claimed within each relevant trade and avoid any ambiguous wording.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader’s specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances, please contact one of the named individuals listed.
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