Issuing payment claims – timing and recent developments
In this Update we look at timing considerations when deciding to issue a payment claim.
A pre-condition to a valid payment claim issued under the Security of Payment legislation is that it must be issued at a time when a right to issue has arisen.
The issue of timing is surprisingly complex and, given that a failure to satisfy this pre-condition can result in an adjudicator dismissing the claim without any assessment of the substantive merits, we have prepared this update to provide some clarity on the question of timing, and in doing so have referenced and described some key relevant recent cases.
The right to fix defective work
In Update 1509 we examine the balancing act between the builder’s right to rectify its defective work and the owner’s right to insist on the rectification work being done in a particular way. In general, when defective work is found on a completed build, the builder has a right to go back and rectify.
However, this is a right that can be lost by the builder’s conduct, such as a persistent refusal to admit the scale of the problem. Equally, owners can jeopardise their right to claim compensation for work done by others if they unreasonably insist on unnecessary work.
The NSW Supreme Court has recently set out the guiding principles that inform the decisions to be made by parties in this situation.
Set-off won’t stop enforcement
Although the NT security of payment Act is largely modelled on WA’s Construction Contracts Act and operates identically in many respects, there are a number of notable differences. One of them is that under the NT Act there is a straight forward right to enforce an adjudication determination as a judgment debt, whereas under the […]
Service of SOP documents by email finally given firm blessing
It goes without saying that communication by email is fundamental and ubiquitous to commercial life today. The value of email when dealing with the short timeframes prescribed by security of payment legislation is obvious. However, users of the adjudication system are often advised out of a prudent abundance of caution to serve documents such as […]
Existence of reference date not jurisdictional in NSW
In Lewence Construction Pty Ltd v Southern Han Breakfast Point Pty Ltd [2015] NSWCA 288, handed down last Friday 25 September 2015, the Supreme Court of NSW Court of Appeal unanimously held that the question of whether a ‘reference date’ has occurred – which gives rise to an entitlement to a progress payment under security […]
Preferential Payment Claims
Introduction When a head contractor goes into liquidation, the subcontractors (“creditors”) are usually owed substantial debts. In most cases, debts owed at liquidation are not fully paid. Creditors might receive a small dividend from the liquidator years later. Adding insult to injury, months or even years after the liquidation date, creditors might receive a letter […]
“One shot” to adjudicate
Adjudication of payment disputes has become commonplace under the Security of Payment legislation now in force across Australia. Sometimes contractors make an error when applying for adjudication and realise that the adjudication will end badly if they continue. In those circumstances, what does the contractor do? Should the contractor withdraw the application or restart the whole process?
A recent decision of the Court of Appeal of the Northern Territory makes clear the position under the Act as it applies to the Territory.
Statutory declarations and payment claims
Introduction The commercial construction industry is familiar with the contractual requirement to provide a statutory declaration with progress claims. Most construction contracts require contractors to certify they have paid all the money due to their subcontractors and suppliers in relation to the work they are claiming for before they are entitled to the progress claim. […]
Buying from an owner builder
This Update examines the liability of owner builders when they sell their residence following substantial renovations. This decision from the NSW Court of Appeal may be of particular interest given the current popularity of reality TV shows about home renovations. In this case the purchasers of the renovated property suffered massive losses due to substantial hidden defects. Although the purchasers were initially awarded over $1 million at trial, ultimately they were unable to recover any funds. Read on to find out more.
Terminating the engagement
A recent NSW Supreme Court decision in Southern Han Breakfast Point Pty Limited v Lewence Construction Pty Limited [2015] NSWSC 502 examines whether an adjudicator has the power to make a determination that the builder is owed a further progress payment under the AS4000-1997 contract after the work has been taken out of its hands.
This decision is likely to have persuasive influence in SA and other States that mirror the NSW legislation and may provide a strategic advantage to principals.
