Our construction litigation team including Tony Mylne and Andrew Lambros has successfully resisted two payment claims from a contractor seeking unjustifiable claims for delay, payment for contract works and variations. The claimant was directed to pay the full costs of adjudication. The following is a note regarding the latest of these matters.
The contractor sought $5 million as part of a claim for contract works and delay costs. The delay claim was said to have been supported by notices of delay which were claimed to have been served upon the superintendent.
The contract works detailed in the payment claim were said to have been completed in a general sense but only relied upon the same description of that work said to have been completed in the previous month, using a percentage complete to arrive at a figure claimed.
Our client respondent contested that three of the four notices of delay had been delivered or served on the superintendent undermining any claim for delay. Our client also suggested that the payment claim was invalid as it was not sufficiently detailed in terms of s 68(1) Building Industry Fairness (Security of Payment) Act "BIF" as the payment claim did not identify the construction work to which the progress claim related.
The claimants, on being asked for further submissions did not contest the facts surrounding the non-delivery of notices of delay.
Not having been served with notices the principal respondent argued he had no notice of the delay claims and was therefore even more dependent upon the form of the payment claim to inform him of the true nature of the claim.
It was clear that the payment schedule misconceived the true components of the payment claim as was clear on receipt of the adjudication application. The respondent was led into that error by the lack of detail within the payment claim. The Payment schedule itself only dealt with one of the extension of time claims which was the only extension of time claim that the respondent had notice (understandably).
The parties had made long submissions about the various lines of authority on the sufficiency of payment claims and in the end the adjudicator was convinced that the comprehensibility of the payment claim was key, taking into account the surrounding facts that a respondent might know or be expected to know concerning the claims. Importantly, the adjudicator agreed with much of the matters outlined in KDV Sport Pty Ltd v Muggeridge Constructions Pty Ltd a decision of the Queensland Supreme Court where that court took account of the method of claiming a percentage of works completed. As the Adjudicator set out :-
"105. The Payment claim must at least be reasonably comprehensible and permit the respondent to respond within the timeframe permitted under the Act in that it must reasonably purport to identify the works done which is the subject of the payment claim.
- I accept the respondent's submissions in that the brief description of contract works in respect of what was carried out in the month the subject of the progress claim, where such description was given, did not provide sufficient detail as to what work was undertaken rather it was a broad range description and not broken down into any particulars at all.
- The three redlines for the EOT's on a one-page construction program consisting of 84 separate line item claims that formed part of the progress claim and the consequent delay costs, being a one-page schedule of daily rates which the claimant applied to the whole claimed time for EOT's did not provide sufficiently detailed particulars of either the EOT's or the amount claimed for the consequent delay costs flowing from those EOT's."
Critically, while various iterations of the payment claims had been dealt with by the superintendent (with some difficulty), the adjudicator was prepared to accept the argument that the payment claim was deficient and invalid on the basis that it was, to some extent, not comprehensible.
With respect to the extension of time claims, on the face of the material, it was clear that the respondent did misapprehend the basis of the payment claim and with good reason, since it had not previously received the extension of time notices relied upon. The first real detail of the claim was only received on receipt of the adjudication application. The program that accompanied the claim was too difficult to decipher and without notices of extensions of time were similarly not comprehensible.
The adjudicator further accepted that invalidity of the claim in these respects meant the balance of any claims were also affected with the adjudicator finding he had no jurisdiction in the circumstances. While such matters are remedied by s 101(4) of BIF should there be a review by a court of the adjudication decision, no such remedy (partial invalidity) is available before an adjudicator.
- Faced with a quick turnaround between payment claim and payment schedule a respondent should not ignore jurisdictional arguments concerning validity of the payment claim itself.
- These issues should still be reviewed on receipt of an adjudication application as jurisdictional issues can still be raised despite them not being raised in any payment schedule.
- While usually it is not difficult to comply with the requirements of the Act a description of the works completed since the last payment claim needs to be critically reviewed especially when reference dates may be at a premium towards the end of a contract.
- Should contractual notices be relied upon, proof of delivery can very often be critical. While delivery is conservative and is no doubt time-consuming and inconvenient, it will bring about a certain result. Otherwise the provisions of the contract should be reviewed to take advantage of any mode of acceptable delivery and deemed delivery of notices.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.