In RHG Construction Fitout and Maintenance Pty Ltd v Kangaroo Point Developments MP Property Pty Ltd [2021] QCA 117, the Court of Appeal confirmed that a contract deeming provision had the effect that a superintendent’s certificate is a payment schedule under the Queensland security of payment legislation.
Background
The dispute related to the construction of a development in Kangaroo Point. The contract between the contractor and the developer included the AS4902-2000 general conditions. Clause 37.2 provided for the superintendent to issue payment schedules and stated that the superintendent’s payment schedules were issued as “the agent of the Principal” and would “constitute a payment schedule for the purposes of the Security of Payment Act.”
On 27 July 2020, the contractor served a payment claim under the Building Industry Fairness (Security of Payment) Act 2017 (Act) claiming $2,013,528.98. On 6 August 2020, the developer sent a letter to the contractor stating the superintendent’s payment schedule would not be a payment schedule for the purposes of the Act and that the developer would issue a payment schedule.
The Superintendent then issued a payment schedule, as usual. The developer issued its own payment schedule a week later.
The contractor made an adjudication application under the Act. Both the contractor and the adjudicator relied on the superintendent’s payment schedule as the payment schedule under the Act. The adjudicator determined that the contractor was entitled to $788,439.54.
Supreme Court decision
The developer started proceedings in the Queensland Supreme Court to overturn the determination.
Originally, the Court decided that:
- the Superintendent’s schedule was not a payment schedule for the purposes of the Act because it did not state the amount of the payment, if any, that the principal proposed to make, as required by section 69(b) of the Act. Rather, it only stated the superintendent’s opinion as to the amount payable; and
- the adjudicator had relied on the wrong payment schedule, and therefore the determination was void.
Appeal
The contractor appealed.
The Court of Appeal decided the superintendent’s schedule was a payment schedule for the purposes of the Act and therefore the adjudicator’s determination was valid.
Specifically, the Court of Appeal decided that:
- the superintendent’s schedule, when read with clause 37.2, meant that the amount stated in the schedule was the amount the developer proposed to pay. Therefore, section 69(b) of the Act was satisfied;
- clause 37.2 did not contravene the prohibition on contracting out of the Act, which is set out in section 200 of the Act; and
- the argument (raised by the developer) that the superintendent’s authority to issue the payment schedule had been revoked by the letter the developer sent to the contractor had no merit. Nothing in the contract provided for the revocation of the superintendent’s authority and clause 37.2 bound the developer to accept the superintendent’s agency.
- Takeaway
This case confirms that properly drafted deeming clauses will be effective at making a superintendent’s schedule a payment schedule for the purpose of the Act.
- This provides certainty to both contractors and principals. The existence of more than one possible payment schedule, triggering different timeframes under the Act, could cause difficulty for the contractor in knowing which schedule to respond to and when to make an adjudication application. The certainty that deeming provisions will be effective also provides peace of mind to parties higher in the contractual chain, given the severe consequences for failing to issue a payment schedule under the Act.
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