Introduction
Decisions where section 67P of the QBCC Act is considered are rare.
However, there has been another decision which reinforces the power and importance of this little known provision.
The decision is Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd (No 3) [2018] QSC 60 (26 March 2018)
This case specifically considered the issue of 67P interest, some of the elements of how it is to be calculated and where it is applicable.
The details
Specific points made in this decision are:
- Interest is not payable on the GST component of a claim.(paragraph 113);
- His Honour referred to the explanatory notes to the 1999 amendment bill which contained the statement
The penalty rate is set at the 90-day bill rate published by the Reserve Bank, plus 10 per cent, calculated daily.
(paragraph 138); - His Honour did not adversely comment on the proposition that interest should be calculated daily or indicate that the terms of section 67P itself did not support that proposition;
- A Claimant cannot claim both the interest under the contract and 67P interest.(paragraph 141);
- Where there has been a part payment interest is payable on the unpaid portion from the date it should have been paid.(paragraph 155);
- Interest starts on the day it is due.(paragraph 164);
- Interest ceases on the day it is paid.(paragraph 164);
- The Claimant is entitled to interest until payment is made.(paragraph 170);
- The correct order to award a claimant interest is
Interest on $[SUM OF MONEY] pursuant to section 67P of the Queensland Building and Construction Commission Act 1991.
Conclusions arising out of this decision are:
- Sections 58 and 59 of the Civil Proceedings Act 2011 do not supplant the interest payable pursuant to section 67P when the adjudication decision is converted to a judgment;
- The practice of adjudicators setting a single interest rate being 10% plus the 90 day bank bill rate as at the date the money is not the correct way to award 67P interest because because it does not accord with the fact that the interest is to be calculated daily; and
- Therefore there must a calculation for each day which implies that the specific rate for each day should be used for the purposes of the calculation.
How much?
For those who are curious as to how much interest was actually paid, we do not publish information entered into the system without consent (which has not been sought).
However, as an example, if it is assumed that the defendant paid the amounts due on the 21st day after the date of judgment, the following table sets out the relevant calculations.
| Claim | Amount | 67P Interest |
|---|---|---|
| Earthworks Claim | $1,549,509.00 | $1,416,812.35 |
| Piling Claim | $262,575.00 | $240,088.64 |
| Bebo Arch Claim | $822,479.75 | $752,044.34 |
| Environmental Management Claim | $69,746.05 | $63,773.15 |
| Geolon 600 Claim | $219,018.00 | $200,261.77 |
| Total | $2,923,327.8 | $2,672,980.25 |
That is almost a doubling of the amount payable to the claimant.
If we make the same assumptions and use the rates in the court's interest calculator which is based on sections 58 and 59 of the Civil Proceedings Act 2011:
| Claim | Amount | Pre-Judgment | Post-Judgment |
|---|---|---|---|
| Earthworks Claim | $1,549,509.00 | $513,465.92 | $7,323.02 |
| Piling Claim | $262,575.00 | $86,938.40 | $1,240.94 |
| Bebo Arch Claim | $822,479.75 | $272,322.52 | $3,887.06 |
| Environmental Management Claim | $69,746.05 | $23,092.88 | $329.62 |
| Geolon 600 Claim | $219,018.00 | $72,516.71 | $1,035.09 |
| Sub-Total | $968,336.43 | $13,815.73 | |
| Total interest | $982,152.16 |
That is only 36% of the amount recoverable under section 67P.
Conclusion
Now that many of the artificial constraints are being removed from this form of interest it is a potent incentive to pay on time.