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Do false statutory declarations disentitle you to progress payment under the Security of Payment Act?

Introduction

Progress claims often require accompanying statutory declarations which confirm that moneys have been paid to subcontractors and suppliers in relation to work that is being claimed. In BRB Modular Pty Ltd v AWX Constructions Pty Ltd & Ors [2015] QSC 218 the Court considered whether a contractor will be able to obtain a progress claim where the statutory declaration was not in the specified form.

Facts

In this case, the two parties entered into a Contract where AWX Constructions Pty Ltd & Ors (‘AWX’) had to make a progress claim on the 28th of each month, subject to the conditions in the Contract. One such condition included the requirement to complete and sign a statutory declaration which included the following words:

To the best of my knowledge all sub-contractors and suppliers who have at any time been employed by [AWX] for work under the Subcontract have as at the date of this declaration been paid all moneys due and payable to them in respect of their employment in relation to that work.

AWX’s statutory declaration included the additional words:

other than those owed variations, payable by the head contractor.

Issue

On the basis of these additional words, BRB Modular Pty Ltd (‘BRB’) disputed the payment claim, arguing that because the statutory declaration was inconsistent with contractual requirements, no reference date arose under the contract, meaning that the payment claim was invalid.

The adjudicator disagreed and made a determination that BRB pay AWX the sum of $3.7 million.

Decision

AWX submitted that the requirements of the statutory declaration interfered with the objects and purpose of the Building and Construction Industry Payments Act 2004 (Qld) ('the Act'), which is to provide a method of prompt payment of an adjudicated amount.

The Court agreed and decided that withholding payment on the basis of an incorrectly formatted statutory declaration does not help contractors. Rather, the Court stated that contractors will be assisted by "a developer or head contractor paying a contractor a statutory progress payment to which it is entitled in the expectation that it will then pay its creditors". The Court decided that such adverse consequences outweighed the need for compliance with the prescribed form.

The Court then turned to section 99 of the Act, which states that a provision of a contract will be void if it excludes, modifies, restricts or changes the effect of the Act. On this basis, the requirement for statutory declarations was deemed void due to its attempt to modify or exclude the operation of the act and the Court upheld the adjudicator’s decision.

Take Away Point

Contractors who do not strictly comply with the contractual requirements for statutory declarations are not necessarily disentitled to a progress payment under the Act.  To this end, the court may deem contractual provisions, which prescribe the form of statutory declarations to be void and unenforceable.


Further information

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For more information on Security of Payment, contact our Principal Solicitor/Director:

Jessica Rippon
T: + 02 9239 3120
M: 0421 877 932
E: jrippon@constructionlegal.com.au


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