The days have aligned: Queensland Court of Appeal confirms the prescribed period for issuing a payment schedule in response to a payment claim

9 February 2023
Paul Calvert, Partner, Brisbane Jim Demack, Chairman, Brisbane

Key takeaways

The recent decision by the Queensland Court of Appeal in Allencon Pty Ltd v Palmgrove Holdings Pty Ltd trading as Carruthers Contracting[1] is a pertinent reminder to parties to a building and construction contract to carefully check:

  • whether a timeframe under a contract refers to ‘day’, ‘working day’, ‘business day’, or similar – and how that time period is defined; and
  • if you are involved in an adjudication, whether the definition of ‘day’, ‘working day’, ‘business day’ or similar contained in the payment clauses in your construction contract aligns with the definition of ‘business day’ under the security of payment regime.

Case summary

Queensland’s security of payment regime, the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act), requires a payment schedule to be given in response to a payment claim within whichever of the following periods ends first:

  • the period prescribed under the construction contract;[2] or
  • 15 business days after the payment claim is given to the respondent.[3]

The BIF Act defines a ‘business day’ to exclude a Saturday, Sunday, public holiday, special holiday or bank holiday.

The statutory definition of ‘business day’ also specifically excludes a period which runs from 22 December to 10 January (inclusive). This period was introduced to manage the common tactic that had arisen of adjudication applications being made just prior to Christmas shutdowns to try to catch out respondents.

In this case, Allencon submitted a payment claim on 24 December 2021, and the Court of Appeal was asked to determine the date when the payment schedule should have been issued in accordance with the BIF Act.

Allencon’s position was that because the subcontract required that the payment certificate must be issued within 21 calendar days, then the payment schedule was due on or by 14 January 2022.

Carruthers contended that the subcontract did not provide a period within which the payment schedule was required to be given, and consequently the later time for submitting a payment claim under the BIF Act applied, allowing the blackout period to be taken into account. On this interpretation, the schedule was not due to be issued until 31 January 2022. Carruthers issued a payment schedule on 28 January 2022.

The original judgment found in Carruthers’ favour but used different reasoning from the argument made by Carruthers.

However, on appeal, it was determined that because the period of 21 calendar days was set out in the subcontract to deliver a payment certificate, this was the first period to end under the subcontract and, under the BIF Act, this meant that the time for Carruthers to submit a payment schedule expired on 14 January 2022.

Unfortunately for Carruthers, on this reasoning it meant that it had failed to submit a payment schedule within the time required by the BIF Act, and there was therefore a statutory debt owed to Allencon for all of the unpaid amount of the payment claim.

This decision confirms that parties must act conservatively when calculating the time period for submitting a payment schedule. Where the time period prescribed under a construction contract is less than the 15 business days permitted by the BIF Act, then the earlier time period prescribed under the contract should be used in calculating when a payment schedule should be issued.

All parties to a construction contract should review their contracts and confirm that they clearly understand where the definitions of ‘day’, ‘calendar day’ and ‘business day’ are used. This is clearly important when responding within time to payment claims, but it is also crucial for determining when notices should be issued or responded to, in particular where the contract contains time bars.

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Authored by:

Natalie McNeill, Solicitor
Paul Calvert, Partner
Jim Demack, Partner

[1] Allencon Pty Ltd v Palmgrove Holdings Pty Ltd t/as Carruthers Contracting [2023] QCA 6.

[2] Section 76(1)(a) of the BIF Act.

[3] Section 76(1)(b) of the BIF Act.

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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