This was an application for declaratory relief to establish that the payment claim issued by United Group Infrastructure Pty Ltd dated 14 November 2005 was not a payment claim that is subject to the regime for assessment and adjudication established by the Building and Construction Industry Payments Act 2004.
Pioneer Sugar Mills Pty Ltd alleged that the contract between United and Pioneer was entered into prior to the 1 October 2004, the material date for the operation of the BCIPA.
Pioneer and United had entered into a written contract on the 15 March 2004 for the upgrade of a sugar mill for a renewable electricity generation facility. Subsequently Pioneer and United entered into variation agreement for additional works on 14 October 2004 i.e. two weeks after the material date for the BCIPA.
United contended that the variation was construction work to which the BCIPA applied on the basis that the variation agreement was a construction contract within the meaning of the BCIPA. In addition, United argued that variation agreement evinced an intention on the part of the parties to abandon or rescind the original agreement, substituting in its place, the variation with effect from the agreed variation date i.e. 14 October 2004.
Reference
Justice Byrne was of the opinion that BCIPA did not treat each variation, including variations that answer a literal interpretation of "construction work", as a separate construction contract to which BCIPA was to apply. In addition the BCIPA contained obligations regarding the date upon which a progress payment under a construction contract becomes payable. It was unlikely that the Queensland legislators would have intended that different regimes for payment dates might apply to obligations with respect to payment under the principal contract on the one hand and a variation which did not expressly provide for a date for payment on the other. Therefore the BCIPA required an interpretation which would restrict it to the principal contract and not to mere variations of it, even where the nature of the variations was such that they would fall within a literal interpretation of the expression "construction contract".
Although the October variation involved a substantial expansion of the scope of the works to be performed by United with several other significant alterations, the proper conclusion from the way in which the parties set about putting together the restated contract was that the consolidation was created for convenience, not with an intention to extinguish and replace the earlier agreement with an entirely new consensus. Therefore Pioneer was entitled to declaratory relief that United's progress claim was not a claim to which the BCIPA applied.
*Full case details
Pioneer Sugar Mills Pty Ltd vs United Group Infrastructure Pty Ltd [2005] QSC 354, 25 November 2005, Queensland Supreme Court, Australia, Byrne J
Contact Fenwick Elliott on 020 7421 1986 or NGould@fenwickelliott.co.uk
Postscript
The BCIPA contains similar definitions of "construction contract" and "construction works" to Section 104(1) and Section 105(1) of the Construction Act. However, the disputes that can be referred under the BCIPA are much narrower than the Construction Act as the parties can only adjudicate in relation to payment claims. Unlike the position taken in Earls Terrace Properties Ltd vs Waterloo Investments Ltd by judge Seymour that it was possible to comprehend that a variation to a construction contract made before the relevant provisions came into force could amount to a construction contract and therefore bring the entirety of the varied agreement within the scope of the Construction Act, Justice Byrne was of the opinion that the Queensland BCIPA ought to be interpreted in a way to restrict it to the original contract.
