By Alice Newell, solicitor and Victoria Bortsova, solicitor
In the recent case of George Developments Ltd v Canam Construction Ltd the Court has held that contractors can claim the same or similar items in subsequent payment claims. The Court of Appeal held that a contractor could reference work done previously or the overall completion of work in cumulative style payment claims.
In this case, George Developments Ltd (‘George’) engaged Canam Construction Ltd (‘Canam’) to demolish a building and build apartments. The dispute centred around payment claim number 15 (‘PC-15’). George argued that PC-15 was not a valid payment claim under the Construction Contracts Act 2002 (‘CCA’) because it included amounts from previous periods, did not identify the work done in each period and it included amounts in respect of extension of time costs.
Ultimately, George argued that a contractor cannot ever re-present a previously declined or ignored claim, even if it wanted to resubmit the claim or support it with further information. The Court disagreed and found that PC-15 was a valid payment claim. This was on the basis that:
- a claim submitted by a contractor would be somewhat artificial if it had to only include work that in that particular month with no reference to any work previously done or for the overall completion; and
- it would be arbitrary to prevent a subcontractor from including amounts it may have overlooked in an earlier month in a payment claim or to prevent a late claim.
The Court also held that because s 17(1)(b) refers to “the value of the construction work carried out, or to be carried out, during that period”, (emphasis added) it does not mean that a payment claim can only refer to work carried out in that particular period. The interpretation favoured by George was too “formalistic” and would undercut Parliament’s intention for the CCA that cash flow be maintained. While Canam had failed to itemise the amounts from different periods this did not render the payment claim void.
- Payment claims are not solely limited to work carried out in the particular time period that is stated on the claim;
- the Courts will not permit a Principal to arbitrarily prevent a contractor from claiming amounts in subsequent payment claims;
- keep in mind that the CCA’s purpose is to facilitate regular and timely payments between parties to a construction contract.
Disclaimer: This article is not a substitute for specific professional advice on any matter. No warrant or guarantee whatsoever is given as to the accuracy of any information contained in the article, nor is any liability accepted for any actions taken based on this information.