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The importance of reference dates in valid payment claims

Construction Law News | June 2017

Regal Consulting Services Pty Ltd v All Seasons Air Pty Ltd [2017] NSWSC 613

In March we covered a case where the absence of a "reference date" in the contract resulted in a finding against the plaintiff claimant. A “reference date” under s.8(2) of the Building & Construction Industry Security of Payments Act NSW is a date determined by or in accordance with the contract as at which the date that a progress claim may be made, or if there is no such date in the contract, it’s the last of the named month in which the construction work was first carried out and the last date of each subsequent named month.

The Supreme Court in this recent case found in favour of the plaintiff, Regal Consulting Services Pty Ltd (“Regal”) in relation to the “reference dates” for payment claims under a construction contract.

On 8 July 2015 Regal entered into a subcontract with All Seasons Air Pty Ltd (“All Seasons”) for construction works. Under this contract, progress claims were able to be served on the 20th day of each month. The contract also provided that payment claims made prior to the 20th day of any month “shall be deemed to have been made on the date for making that claim”.

On 12 July 2016 All Seasons served a progress claim on Regal; Regal served All Seasons with a payment schedule disputing payment for the entire payment claim. Regal’s position in their payment schedule was that there was no suitable reference date in All Seasons’ payment claim because they had already served a payment claim for the reference date on 20 June 2016, and the next reference date on 20 July 2016 had not yet accrued.

All Seasons' payment claim was referred to an adjudicator who concluded that she had jurisdiction to deal with the dispute and that the adjudicated amount was the claimed amount. All Seasons obtained an adjudication certificate which they filed in the local court to obtain a judgment debt for the amount claimed.

Regal then brought proceedings in the Supreme Court against All Seasons and the adjudicator. Regal disputed that they owed the amount claimed and also disputed that the adjudicator had jurisdiction to deal with the dispute, due to the lack of an available reference date to support the payment claim.

The main issues for the court to determine in this case were:

  1. Whether All Seasons was entitled to a progress payment for their 12 July 2016 payment claim, in circumstances where a claim for 20 June 2016 had already been made and where the next reference date (20 July 2016) had not accrued;
  2. As Regal did not commence the Supreme Court proceedings within 3 months of the date of the adjudicator’s decision, the Court had to determine whether Regal required leave to bring these proceedings; and
  3. If the Court found that Regal did require leave to bring the proceedings, should this leave be granted to them.

The Court found that there was no available reference date supporting the progress claim, and found in Regal’s favour.

This case is a fresh reminder for people in the building and construction industry that the reference date for issuing a payment claim under a contract must be clearly expressed and not leave any room for confusion or other interpretation which may develop into expensive and time-wasting litigation.

The reference date is critical to ensure that the payment claim is valid.

Forum Law can advise and assist builders and subcontractors with all aspects of building and construction law. We provide an obligation-free 30-minute phone chat on (02) 9560 3388 or you can visit us in the Italian Forum in the inner west Sydney suburb of Leichhardt.

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