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Walton Construction (Qld) Pty Ltd v Robert Salce [2008] QSC 235
A subcontractor entered into an “arrangement” with a builder to complete work it was contracted to do by a contractor. For completing the work, the builder guaranteed to pay the subcontractor any monies owed to it by the contractor if the contractor could not pay them. An adjudicator awarded a substantial sum to the subcontractor, and the builder challenged the adjudicators’ decision on the basis that the adjudicator had no jurisdiction and the decision was void.
The Court found on the facts that this ‘arrangement’ constituted a construction contract as defined by the Building and Construction Industry Payments Act (BCIPA). However, pursuant to section 3(c)(ii), the BCIPA did not apply to a construction contract which contained provisions under which a party undertakes to guarantee a payment of an amount owing or repayment of an amount lent.
The Court determined that the BCIPA was excluded and the adjudicators decision was void.
Although parties may enter into a ‘construction contract’ as defined by the BCIPA, it will be excluded where the construction contract includes a guarantee by one party to the payment of a sum owing by another. |