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 unliquidated claim, that the 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.
Otherwise to the extent that the construction contract provides for recourse to security for unliquidated claims upon written notice, provided that the 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 is silent as to the requirement of written notice, no notice at all is required for recourse on the basis of unliquidated claims.
Alternatively, for parties seeking recourse to security in respect of a liquidated claim, 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.
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 unliquidated claim, that the 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.
Otherwise to the extent that the construction contract provides for recourse to security for unliquidated claims upon written notice, provided that the 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 is silent as to the requirement of written notice, no notice at all is required for recourse on the basis of unliquidated claims.
Alternatively, for parties seeking recourse to security in respect of a liquidated claim, 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.
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