PDF DOWNLOADThe general principle applied in Queensland to date has been that reference dates under the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA), which gives claimants a statutory right to claim progress payments, continue to arise after termination of the contract unless the contract provides otherwise. That is, reference dates continue to arise as per the contract scheme for progress payments, for 12 months after work was last carried out or goods and services were last supplied, or longer if the contract so provides. This is the position in New South Wales as a result of Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421.
However, in Walton Construction (Qld) Pty Ltd v Corrosion Control Technology Pty Ltd & Ors [2011] QSC 67 (Walton), the Supreme Court held that a common provision in construction contracts is to be interpreted as meaning that no reference dates arise after termination of the contract. The relevant provision was clause 44.10 of AS 2545-1993, which provides that:
“the rights and liabilities of the parties shall be the same as they would be at common law had the defaulting party repudiated the Subcontract and the other party had elected to treat the Subcontract as at an end and recover damages.”
This same clause is also contained in AS 2124-1992, and a similar provision forms clause 39.10 of AS 4000-1997 and AS4901-1998.
The effect of the above clause, or a similarly worded clause, was held in Walton to have the effect that the accrual of reference dates cease after termination of the contract.
Will we all be terminating?
The consequence of Walton is that claimants who enter into contracts that contain the above type of clause, and who do not have a previously accrued reference date at their disposal, may not be able to rely on BCIPA and may instead have to enforce their rights at common law.
Subcontractors may need to rethink postponing their more ambit claims (e.g. delay claims) until the end of the project, since contractors now have an added incentive to terminate the contract to avoid adjudications under BCIPA for those claims.
Author
Kirsty Smith, Lawyer
Key Contacts
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Stephen Pyman, Partner
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Troy Lewis, Partner
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