PPK Willoughby v Eighty Eight Construction; Valuing the works

A benefit of the claimant contractor in Adjudication is that the adjudicator is not bound by what has been certified by the Superintendent when valuing the works.  However, in PPK Willoughby v Eighty Eight Construction [2014] NSWSC 760 in the NSW Supreme Court, the adjudicator adopted an amount certified by the Superintendent in favour of the claimant.

The certification procedure involved meetings and walk-arounds and discussions including with a neutral third party QS appointed by the project financier.  The adjudicator had adopted the certification because ‘that [valuation] process has involved multiple highly experienced construction specialists meeting and agreeing the value.  I see no basis for me undertaking a further valuation.  If … the value has been agreed by the parties tasked to make the assessment, there is no reason for me to displace that.’

The Respondent principal challenged the determination on the basis the adjudicator had failed to perform his statutory obligation, as he had done no more than adopt the certification under the Contract.  However, the Court found the adjudicator had not erred because in this case the value was not actually in dispute; the respondent instead only sought in the adjudication to apply setoffs for defects (which the adjudicator found could not be setoff as they had occurred at the wrong time).

In those circumstances, and where the adjudicator identified the crux of the dispute being about the amounts that could be setoff, it was ok for him to accept the valuation that had already been done under the contract.

As a side issue the judge also held that while each contract will have its own context, the expression ‘business day’ in a contract when undefined should not be equated with ‘working day’ because ‘the commercial activities of building contractors and their subcontractors are not confined to work carried out on site. There are essential head office and other functions which are performed whether or not work is being performed on any particular site.’

You can read the judgment in full here.

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