You better wait for your reference date: MKA Bowen Investments Pty Ltd v Carelli Constructions Pty Ltd

Since Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd & Ors (2010) 30 VR 141, the accepted position in Victoria was that a bona fide payment claim served prematurely could be valid under the Building and Construction Industry Security of Payment Act 2002 (Vic) (Act). However, this has been overturned in the recent decision in MKA Bowen Investments Pty Ltd v Carelli Constructions Pty Ltd [2019] VSC 436.

Claimants must now ensure that payment claims are only served on or after the relevant reference date under the contract, even if the relevant construction contract contains a clause deeming an early payment claim as effective from the next reference date, if they wish to engage the operation of Act.

The decision of Digby J that sections 9(1) and 14(1) of the Act did not permit the service of a payment claim prior to the relevant reference date followed the High Court of Australia’s reasoning in Southern Han Breakfast Point Pty Ltd (in Liquidation) v Lewence [2016] HCA 52 and the New South Wales Court of Appeal in All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289.

Digby J had particular regard to the words ‘on and from each reference date’ which appear in section 9(1)(a) of the Act. His Honour stated that: ‘given that the word “on” in the phrase “on and from each reference date” in section s 9 of the SoP Act clearly related to a particular date, in my view there is a strong reason to conclude the word “from” in the same phrase was intended by the legislature to refer to the period of time following that date’.

The key takeaway for our clients is to identify the reference date under the contract and employ systems that ensure that progress claims are only made after the reference date.