Case Study

Galaxy Developments Pty Ltd v The Civil Contractors (Aus) Pty Ltd trading as CCA Winslow – Decision of the Queensland Supreme Court 30 March 

Bennett & Philp Director Tony Mylne summarises the most recent case in Queensland in Security of payment dealing with:

1. What should an applicant do if the adjudicator does not comply with timing requirements; and
2. Unlicenced building work and its catastrophic effect, even if only a small proportion of contracted works.

Two facets of this decision are worth review:  

1. It was alleged by the applicant that any decision made by the adjudicator was void as it was made outside the time requirement under the Building Industry Fairness (Security of Payment) Act (BIF). The consequences if the decision was void was that there was no enforceable adjudication decision following a $1.3 million decision in favour of the respondent (CCA);
2. It was further alleged that certain bus shelter works and seating additional to roadworks were completed by the contractor while not having a license as was required. As such under section 42 of the QBCC Act contractors undertaking unlicensed works could not recover any amount for remuneration other than under the terms of that Act and more particularly could not pursue an adjudication application under BIF.

Facts & Issues – Late Decision 

The fact that the adjudicator delivered a decision outside the time limits required by the Act was uncontested. The question here was whether the Act should have been interpreted in such a way as to water down what might otherwise be seen as quite mandatory provisions. The respondents here argued that the clear objectives of the Act should effectively trump an interpretation that was strict in nature.

The applicant argued that the clear meaning and unqualified time limits mean as they suggest that decisions need to be made within the specified time and if they are not it is a matter that goes to the jurisdiction of the adjudicator and a court should declare any such decision void. Given the use of the word “must” in section 85 (1), the applicant argued there could be no clearer circumstance, and there was no required uncertainty to look beyond the clear meaning of the text.

Decision & Takeaways – Late Decision 

Not surprisingly, the Court determined that the clear textual meaning should prevail regardless of the underlying objects of the Act and “must” really does mean “must”. This decision was for a significant sum and no doubt the adjudicator issued a considerable account for his services in determining what was a void decision as he didn’t comply with the basic requirements of delivering the decision on time. The adjudicator was denied any fees for services and an order was made accordingly as the adjudicator was determined not to have acted in good faith as required.

The remedy for an applicant faced with these circumstances is that he could either within five business days of the period ending when the adjudicator should have given his decision, request the registrar to refer the application to another adjudicator or make a new application. These are remedies under section 94, and while timing is tight, as are all time limits under the Act, this was crucial to the decision being made in favour of the applicants. The point made by the Court is that the applicant for adjudication was not left without a remedy.

Facts & Issues – Unlicensed Contracting 

While it was strictly unnecessary for the Court to determine the issues of licensing (as it had already determined the matter on the lack of timely decision issue), her Honour was no doubt compelled, if for no other reason but to again underline the possible injustice to contractors for the small error that occurred in this instance.

The respondent had a landscape licence only, and it was contended that a minor part of the works undertaken were outside the bounds of that licence, and consequently, under the authority of a multitude of cases, the respondent was unable to make an adjudication application, and any application decided would have been beyond jurisdiction and as such void.

The works undertaken included the construction of roadworks, clearing and earthworks at Foxwell Road Coomera. Importantly part of the works included fixing of a simple garden seat to new concrete paving as well as erecting a prefabricated metal shelter with a bench seat on the concrete footpath. There was also an associated structure, a bike rack, at the side of the bus shelter. The value of these works compared to the total contract was minuscule.

Much discussion took place as to whether these minor works fell within the various exemptions that apply under the QBCC Act and whether indeed the landscaping licence covered any of these structures. 

Considerable time was spent on some exemptions rather than others because of their complexity concerning the age of the particular Road and whether or not that Road fell within certain exceptions under the Act.  Most of these discussions are very technical in terms of legal interpretation of the exceptions. They are not useful to cover in such an article other than to say that more often than not these exceptions are determined by very fine lines and that there can be reasonable differences of opinion concerning the applicability or otherwise of the exceptions when compared to the work carried out.

Result & Takeaway is Unlicensed Building Work 

In the end result, the Court determined on purely statutory interpretation grounds that while Foxwell Road may have been a dedicated Road, the structures upon the footpath did not form part of that dedicated Road such that it did not fall within that exception. While the bus shelter wasn’t determined to be building work, because of how the definitions work, the garden seat separate to the shelter and bike rack were not covered by the exceptions in the definition of building work. 

As a consequence, the work was undertaken by an unlicensed contractor with the result that the contractor was unable to make an adjudication application and was restricted to its rights on a quantum meruit style claim under section 42 of the QBCC Act.

As is clear from above and from previous articles I have written on the subject the definitions are fine and sometimes complex as to what is and what is not building work and what is covered by a particular licence and what is not. Her Honour emphasized, 

 ‘… my conclusion is a result of stochastic and illogical provisions in the schedules of the QBCC regulations and produces a result which, although it may be correct in law, is absurd in reality: the first respondent was licensed to demolish move and reassemble a prefabricated bus shelter but was not licensed to carry out the same actions in relation to the much simpler structures of a freestanding bus seat and bike rack. Again, focusing only on the licensing issues, the result is not that the first respondent cannot be paid for those very small items of work, but that the first respondent cannot be paid for work under a contract worth $1.3 million. I invite the renewed attention of the Legislature the need for establishing a rational and fair law in relation to recovery of payments under contracts to perform building works.’ 

Contractors proceed at their peril by not having some regard to the works in the scope of work and whether they are licensed for each part of it.

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).