McCarthy v State of Queensland [2013] QCA 268

McCarthy v State of Queensland [2013] QCA 268

Courts support builder’s claim in the absence of payment schedule

The Court of Appeal recently gave summary judgement for $272,987 together with interest and costs in McCarthy v State of Queensland [2013] QCA 268, demonstrating its willingness to support builders and contractors in payment claims where the respondent does not provide or adhere to a payment schedule.

The facts of the case:

On 20 September 2013 the Court of Appeal allowed a builder’s appeal, and gave summary judgement for $272,987 together with interest and costs.

McCarthy (“the builder”) made payment claim number 17 on 19 September 2012 and it included a claim for work in relation to “under measured” bill of quantities. The respondent did not serve a payment schedule and the builder applied for summary judgement in the District Court.

In the District Court, the learned judge declined to give summary judgement in accordance with section 19 of the Building and Construction Industry Payments Act 2004 (“BCIPA”) on the grounds that the plaintiff ought to be put to strict proof of their claim, including demonstrating that the work claimed was not the subject of work previously claimed.

However Muir JA, in the leading judgement, held at paragraph [19] that section 19 of BCIPA gives the claimant a prima facie right to judgement for the unpaid amount of its claim if no payment schedule was served and payment was not made by the due date for payment. His Honour reiterated that section 19 (4)(b) prevents a respondent being able to rely on a counterclaim or any defence in relation to matters arising under the construction contract.

With respect, it is refreshing that our Court of Appeal took the step of granting summary judgement there and then because, in His Honour’s words at paragraph [21], “Plainly, denying the applicant contractor the remedy to which he is prima facie entitled under the Act in respect of a substantial sum of money would constitute a substantial injustice.

Lessons for participants in the building industry

1. Claimants should become more prepared to go to Court seeking summary judgement in cases where they have not received a payment schedule and payment was not received by the due date;

2. Respondents should be ever more diligent in ensuring that they put in a payment schedule, and paying whatever it says is due within time to avoid the prospect of having to defend a summary judgement originating application, where it cannot counterclaim nor can it rely upon defences under the contract.

Contact Lenz Moreton on telephone (07) 3220 0299 to discuss any of the issues arising out of this case.