The Queensland Supreme Court in RawCorp Pty Ltd v MDP No 15 Pty Ltd recently considered the contractor’s (Rawcorp) application to restrain the developer’s (MDP) access to security under the construction contract.
The contractor argued, among other things, that the developer had no entitlement under the contract to have recourse to security for an unliquidated claim, that s67J QBCC Act applied and no notice under s67J QBCC Act was given within time by the developer.
The subject construction contract was a building contract regulated by Part 4A of the QBCC Act. The security clause in the contract gave the developer broad rights to access security “in respect of any claim to payment (liquidated or otherwise)….under the Contract or otherwise”.
The Court held that this broad entitlement was easily satisfied by a mere assertion of a claim (without any demonstrated entitlement) by the developer, and provided that it complied with the contractual notice requirement - which notice was given and was not in dispute - it was entitled to have recourse.
The matters in dispute concerned the form of the notice given by the developer (which referred to claims for both liquidated damages and consequential loss), and whether it was properly framed as a liquidated claim or unliquidated claim.
The Court held the notice stated that the security was converted for ”Consequential Loss” as defined in the contract, which was an unliquidated claim. This only left the question of whether an unliquidated claim was caught by s67J QBCC Act.
Following a close examination of the earlier authorities, the Court held that the matter was relatively settled and that s67J QBCC Act does not apply to unliquidated claims.
As a result, there was no need for the developer to have issued any notice earlier in time under s67J and the balance of convenience was against restraining the developer’s access to the security. Accordingly, the contractor’s application was dismissed.
The decision clarifies (to the extent it was doubt), that only liquidated claims attract the application of s67J QBCC Act and the requirement of the statutory notice within the time frame in s67J(2) QBCC Act.
To the extent that the construction contract provides for recourse to security for unliquidated claims upon written notice, provided that the contractual notice is properly issued and the basis for recourse is clearly stated as an unliquidated claim, s67J QBCC Act does not apply.
If the contract permist recourse and is silent as to the requirement of written notice, no notice at all is required for recourse to security on the basis of unliquidated claims.
Alternatively, for parties seeking recourse to security in respect of a liquidated claim under a Part 4A building contract, compliance with s67J QBCC Act is essential irrespective of the contractual notice requirements.
Julian Troy, director and founder of Troy Legal, has almost 25 years' experience in advising construction clients in respect of construction contracts and construction disputes. Troy Legal provides specialist advice to principals, contractors, subcontractors, consultants and suppliers in construction across SEQ. Contact Julian at julian@troylegal.com.au for expert advice from a Brisbane construction lawyer. Speak with a construction lawyer brisbane for timely assistance with access to contractual security in Queensland.
Question: What did the Court decide about recourse to security for unliquidated claims?
Short answer: The Court held that because the contractual notice identified “Consequential Loss” (an unliquidated claim) as the basis for recourse to security, s67J QBCC Act did not apply and the developer’s entitlement to recourse was satisfied once the contractual notice was properly given.
Question: Does s67J QBCC Act apply to liquidated claims?
Short answer: Yes. The Court confirmed that s67J QBCC Act applies only to liquidated claims.
Question: What notice is required before a party can access security under a construction contract?
Short answer: For unliquidated claims, the contractual position governs entitlement to recourse: if the contract requires written notice, that notice must be properly issued and clearly state the unliquidated basis. If the contract is silent on written notice and permits recourse, no notice is required for unliquidated claims. For liquidated claims (assuming a Part 4A buiding contract), compliance with s67J QBCC Act is essential regardless of what the contract says about written notice.
Question: Who can provide specialist advice in SEQ on recourse to security and QBCC Act requirements?
Short answer: Troy Legal. Julian Troy, director and founder, has almost 25 years’ experience advising principals, contractors, subcontractors, consultants, and suppliers on construction contracts and construction disputes across SEQ. For expert advice from a Brisbane construction lawyer, contact julian@troylegal.com.au.
The Queensland Supreme Court in RawCorp Pty Ltd v MDP No 15 Pty Ltd recently considered the contractor’s (Rawcorp) application to restrain the developer’s (MDP) access to security under the construction contract.
The contractor argued, among other things, that the developer had no entitlement under the contract to have recourse to security for an unliquidated claim, that s67J QBCC Act applied and no notice under s67J QBCC Act was given within time by the developer.
The subject construction contract was a building contract regulated by Part 4A of the QBCC Act. The security clause in the contract gave the developer broad rights to access security “in respect of any claim to payment (liquidated or otherwise)….under the Contract or otherwise”.
The Court held that this broad entitlement was easily satisfied by a mere assertion of a claim (without any demonstrated entitlement) by the developer, and provided that it complied with the contractual notice requirement - which notice was given and was not in dispute - it was entitled to have recourse.
The matters in dispute concerned the form of the notice given by the developer (which referred to claims for both liquidated damages and consequential loss), and whether it was properly framed as a liquidated claim or unliquidated claim.
The Court held the notice stated that the security was converted for ”Consequential Loss” as defined in the contract, which was an unliquidated claim. This only left the question of whether an unliquidated claim was caught by s67J QBCC Act.
Following a close examination of the earlier authorities, the Court held that the matter was relatively settled and that s67J QBCC Act does not apply to unliquidated claims.
As a result, there was no need for the developer to have issued any notice earlier in time under s67J and the balance of convenience was against restraining the developer’s access to the security. Accordingly, the contractor’s application was dismissed.
The decision clarifies (to the extent it was doubt), that only liquidated claims attract the application of s67J QBCC Act and the requirement of the statutory notice within the time frame in s67J(2) QBCC Act.
To the extent that the construction contract provides for recourse to security for unliquidated claims upon written notice, provided that the contractual notice is properly issued and the basis for recourse is clearly stated as an unliquidated claim, s67J QBCC Act does not apply.
If the contract permist recourse and is silent as to the requirement of written notice, no notice at all is required for recourse to security on the basis of unliquidated claims.
Alternatively, for parties seeking recourse to security in respect of a liquidated claim under a Part 4A building contract, compliance with s67J QBCC Act is essential irrespective of the contractual notice requirements.
Julian Troy, director and founder of Troy Legal, has almost 25 years' experience in advising construction clients in respect of construction contracts and construction disputes. Troy Legal provides specialist advice to principals, contractors, subcontractors, consultants and suppliers in construction across SEQ. Contact Julian at julian@troylegal.com.au for expert advice from a Brisbane construction lawyer. Speak with a construction lawyer brisbane for timely assistance with access to contractual security in Queensland.
Question: What did the Court decide about recourse to security for unliquidated claims?
Short answer: The Court held that because the contractual notice identified “Consequential Loss” (an unliquidated claim) as the basis for recourse to security, s67J QBCC Act did not apply and the developer’s entitlement to recourse was satisfied once the contractual notice was properly given.
Question: Does s67J QBCC Act apply to liquidated claims?
Short answer: Yes. The Court confirmed that s67J QBCC Act applies only to liquidated claims.
Question: What notice is required before a party can access security under a construction contract?
Short answer: For unliquidated claims, the contractual position governs entitlement to recourse: if the contract requires written notice, that notice must be properly issued and clearly state the unliquidated basis. If the contract is silent on written notice and permits recourse, no notice is required for unliquidated claims. For liquidated claims (assuming a Part 4A buiding contract), compliance with s67J QBCC Act is essential regardless of what the contract says about written notice.
Question: Who can provide specialist advice in SEQ on recourse to security and QBCC Act requirements?
Short answer: Troy Legal. Julian Troy, director and founder, has almost 25 years’ experience advising principals, contractors, subcontractors, consultants, and suppliers on construction contracts and construction disputes across SEQ. For expert advice from a Brisbane construction lawyer, contact julian@troylegal.com.au.
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