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Coordinated Construction Co v JM Hargreaves & ORS

COORDINATED CONSTRUCTION CO V J M HARGREAVES & ORS

[2005] NSWSC 77

New South Wales Supreme Court – 22 February 2005

FACTS

Coordinated Construction Co (‘Coordinated’) entered into a construction contract with J M Hargreaves (‘Hargreaves’) whereby Hargreaves agreed to carry out certain work in connection with the redevelopment of the former Gazebo Hotel at Elizabeth Bay.

Hargreaves made a number of what it said were Payment Claims under the Building and Construction Industry Security of Payment Act 1999 (NSW) (‘the Act’) and proceeded to Adjudication. Coordinated submitted that each determination is void because the Adjudicated Amount included amounts not for construction and thus did not meet what Coordinated said were the“basic and essential requirements … for the existence of an adjudicator’s determination” under the Act as held in the case  of Brodyn v Davenport [2004] NSWCA 394.

ISSUE

Was the Adjudicator’s determination void because the Adjudicator determined that Hargreaves was entitled to be paid an amount for “delay damages” and “interest”?

FINDING

The Court found that the neither delay damages or interest were amounts payable “for” construction work done or undertaken to be done, or related goods or services provided or undertaken to be provided, pursuant to the construction contract.

In any event, the Court held that this would not void Adjudicator’s Determinations as an amount claimed “for” construction work is not a basic and essential requirement for the existence of an Adjudicator’s Determination.

QUOTE

McDougall J at paragraphs 49 and 50 stated:

[49] … I cannot see how a claim that is invalid because the amount claimed is not “for” construction work is different in principle to a claim that is invalid because it is grossly overvalued. In each case (and in the case of all the other possible defences to which I have referred) the adjudicator may determine the validity of the claim. That is simply a consequence of the exercise by the adjudicator in the particular case of the powers and duties entrusted to her or him by the Act.

[50] To put it another way, I think that the jurisdiction entrusted by the Act to adjudicators includes the power to determine whether (assuming it to be a relevant consideration) a particular amount claimed is “for” construction work. That is because, in essence, the adjudicator’s function is to determine, in respect of the payment claim that is the subject of the adjudication application, the issues raised in it and in the payment schedule. Those issues may include those referred to in para [45] above, and no doubt more. All those matters are “within jurisdiction”. They form part of, not preconditions to, the jurisdiction.

IMPACT

This case stands for the proposition that an Adjudicator’s Determination is not void because of the Adjudicated Amount includes an amount “for” construction work including delay damages and interest.

Beckhaus Civil v Brewarrina Shire Council

BECKHAUS CIVIL PTY LTD V BREWARRINA SHIRE COUNCIL [2002] NSWSC 960

Supreme Court of New South Wales – 18 October 2002

FACTS

Brewarrina Shire Council (‘the Council’) and Beckhaus Civil Pty Ltd (‘Beckhaus’) entered into a contract for the construction of levee banks around the town of Brewarrina. The banks were to be constructed in strategic positions around the town of Brewarrina to protect it from the flooding of the Barwon River.

Beckhaus served a Payment Claim on Brewarrina Shire Council, which consisted of a letter and a claim form. Beckhaus wrote to the Council advising that the work had reached practical completion and requested certification of that fact. Beckhaus, in the letter to Brewarrina, also referred to a claim form containing a statement that it was made ‘under the Building and Construction Industry Security of Payment Act 1999 (NSW)’ (‘the Act’).

The Superintendent refused Beckhaus’ request and advised that the failure to achieve practical completion amounted to a breach that disentitled Beckhaus from any further payment under the Contract. Accordingly, Beckhaus’ claim was valued at $Nil. The Superintendent’s assessment of Beckhaus’ claim was made out of time for the purposes of the Act.

Beckhaus then sought summary judgment in respect of the Payment Claim.

ISSUES

Whether the letter and claim form constituted a Payment Claim?

FINDING

The Court held that a Payment Claim can be made not only under the contract, but also the Act, as the act contemplates a dual system.

Further, a contractual right is not required to make a payment claim under the legislation.

The Court commented that looking at the letter and claim form together a reasonable recipient who must know the law and the provisions of the Act would conclude that the claim was ‘one’ under the contract and under the legislation.

Accordingly, a contractual progress claim and a Payment Claim under the Act can be made in the same document.

QUOTE

At paragraph 60 Justice Macready stated:

The Act obviously endeavours to cover a multitude of different contractual situations. It gives rights to progress claims when the contract is silent and gives remedies for non-payment. One thing the Act does not do is affect the parties’ existing contractual rights (see ss 3(1), 3(4)(a) and 32).

The parties cannot contract out of the Act (see s 34) and thus the Act contemplates a dual system. The framework of the Act is to create a statutory system alongside any contractual regime. It does not purport to create a statutory liability by altering the parties’ contractual regime. There is only a limited modification in s12 of some contractual provisions. Unfortunately, the Act uses language, when creating the statutory liabilities, which comes from the contractual sense. This causes confusion and hence the defendant’s submission that the words “person who is entitled to a progress payment under a construction contract” in s 13(1) refer to a contractual entitlement.

IMPACT

The Act contemplates a dual system which does not impact upon the underlying rights of the contractual parties unless there is a “paid when paid” or “paid if paid” clause (the Act says such a clause will have no effect) or there is an attempt to contract out of the Act.

Further, a contractual progress claim and a Payment Claim under the Act can be made in the same document.

This publication is intended to be a topical report on recent cases in the construction, development and engineering industries. This publication is not intended to be a substitute for professional advice, and no liability is accepted. This publication may be reproduced with full acknowledgement.

Jim Doyle

Tel.: 1800 888 783

jdoyle@doylesconstructionlawyers.com
www.doylesconstructionlawyers.com

Watpac Constructions v Austin Corp

Watpac Constructions v Austin Corp [2010] NSWSC 168 New South Wales Supreme Court 19 March 2010.

FACTS:

Austin Corp (“Austin”) was contracted by Watpac Constructions (“Watpac”) to undertake certain construction work including air-conditioning and mechanical services for a development in Camperdown.

Austin served various statutory payment claims, pursuant to the Building and Construction Industry Security of Payment Act (NSW) 1999, on Watpac. Particularly, in October 2009, Austin served a payment claim claiming an amount of $765,647.00 (ex GST) in respect of variations only. Watpac scheduled an amount of negative $790,813.25 (ex GST) on account of back charges.

In November 2009, Austin submitted this dispute to adjudication and this adjudicator determined the amount payable to Austin was $nil, because the adjudicator determined that Austin’s adjudication application was based on unjust enrichment.

In December 2009, Austin submitted a further payment claiming, comprising entirely of variations, and including the same variations claimed in the October 2009 payment claim and which had been dealt with in the November determination. Watpac scheduled a negative amount, and Austin submitted tha claim for adjudication.

ISSUES:

  1. Was the December 2009 payment claim, a valid payment claim for the purposes of the Act?
  2. Whether issue estoppel applied to prevent the claimant from submitting a further payment claim, which claims the same (in whole or part) of a previously determined payment claim?
  3. Whether the submission of the December 2009 payment claim amounted to an abuse of process, given the repetition of and inclusion of the variation claims from the October 2009 payment claim, particularly where these items had been determined by the adjudicator in the November 2009 determination?

FINDING & QUOTES:

  1. Any invalidity arising from resubmission [of the payment claim] extends only to the extent of resubmitting claim, only the resubmitted claims … would be invalid. [at 89 per McDougall J]
  2. it is open to Watpac to rely on the extended principle of issue estoppel. [at 110 per McDougal J]
  3. I would conclude, were it necessary to do so, that the reagitation of the claims for variations 1 to 8, in the December payment claim and January application, was an abuse of processes of the Act. [at 140 per McDougall J]

IMPACT:

Companies need to ensure that when an adjudication application is submitted that it contains all of the relevant claims, because once that application is determined, it would amount to an abuse of process to re-claim an amount which had previously been determined.

This publication is intended to be a topical report on recent cases in the construction, development and engineering industries. This publication is not intended to be a substitute for professional advice, and no liability is accepted. This publication may be reproduced with full acknowledgement.

jdoyle@doylesconstructionlawyers.com
www.doylesconstructionlawyers.com

Jim Doyle

1800 888 783