Adhering to Obligations in Payment Schedules

The recent Queensland Court of Appeal decision of Allencon Pty Ltd v Palmgrove Holdings Pty Ltd trading as Carruthers Contracting [2023] QCA 6, highlights for all parties to carefully consider their obligations when issuing a payment schedule within the stipulated time period. Failure to do so would result in judgment in the full amount of a payment claim.

In this case, Allencon Pty Ltd (Allencon) entered into a subcontract with Palmgrove Holdings Pty Ltd trading as Carruthers Contracting (Palmgrove) in 2021 to carry out certain construction roadworks as part for the lump sum of $2.08 million (Subcontract).

Allencon submitted a payment claim in an amount of $955,079.48 on 24 December 2021 (Payment Claim).

In Queensland, section 76 of Building Industry Fairness (Security of Payment) Act 2017 (Qld) (Act) provides parties who do not intend to pay the full claimed amount by the due date, must give the claimant a payment schedule by the earlier of:

1. 15 business days after receipt of payment claim; and
2. the time stated under the contract.

Further, the conditions of the Subcontract included a term to the effect that payment schedules were required to be given by Palmgrove within 21 calendar days of receipt of the claim.

In the present case, 21 calendar days were less than 15 business days under the contract because under the Act a business day excluded weekends, public holidays, and the days from 22 December to 10 January.

On 28 January 2022, Palmgrove issued a payment schedule, which was within the 15 business days of receiving the payment claim as defined by the Act, but not within 21 calendar days under the contract.

The Court of Appeal held that the payment schedule was not served within time, because it was not served within 21 days specified in the contract.

This case confirms that parties should carefully consider differences between the time for service of payment schedules provided for in a construction contract and the time for serve of payment schedules under the Act.