07 December 2021
#Government, #Construction, Infrastructure & Projects
With Government departments relying on external consultants to superintend construction contracts, it is important to understand how the Government can be bound by the actions of its consultant under the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act).
The Government entity that has entered a contract for construction work in Queensland, upon receiving a claim for a progress payment from a contractor under the BIF Act, is required to respond with a payment schedule, setting out the amount that the Government entity intends to pay, and if it is less than the amount claimed, the reasons for why it is less.
This obligation to provide a payment schedule is often outsourced to an appointed superintendent on a project. The construction contract, which the payment schedule is issued under, often includes a provision that deems the superintendent’s payment certificate to be the principal’s payment schedule for the purposes of the BIF Act. This is usually for the protection of the principal so that it is not exposed to the risks of not submitting a payment schedule under the BIF Act.
That said, there can be circumstances where the principal to the contract wishes to issue their own payment schedule under the BIF Act, be it that the principal does not agree with the position taken by the superintendent or to ensure that all reasons for withholding payment are covered in the payment schedule so that it is not barred from raising those reasons in an adjudication response under the BIF Act.
If this is the case, what happens when the superintendent and principal both issue a payment schedule?
In the case of RHG Construction Fitout and Maintenance Pty Ltd v Kangaroo Point Developments  QCA 117, it was held by the Queensland Court of Appeal that where the contract deems that the superintendent’s payment certificate is the principal’s payment schedule for the purposes of the BIF Act, and the contract provides no authority or power to the principal to withdraw that agency under the contract, the superintendent’s payment certificate will be the payment schedule. This will be the case even if the principal issues their own payment schedule first and within the time allowed by the BIF Act, and advises the contractor in advance that its payment schedule (and not the superintendent’s payment certificate) will be the payment schedule for the purpose of the BIF Act. This can leave the principal exposed if the consultant fails to complete and issue a payment certificate with due care and skill, identifying all reasons for withholding payment. It also can leave the principal exposed if the principal disagrees with the superintendent’s certification of particular items claimed.
The simplest way to avoid this vulnerability is to simply amend the contract to give the government principal the power to revoke the superintendent’s authority to issue a payment schedule for the purposes of the BIF Act.
Author: Kirsty Smith
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