Security of Payment Masterclass - Kreisson · Part 2:Overview of SOPA Landscape Security of Payment...

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Security of Payment Masterclass

David Glinatsis

Solicitor Director

18 October 2015

Part 1: Introduction

Part 2: Overview

Part 3: Key amendments

Part 4: How SOPA works

Part 5: Key Issues


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The next slide is a live poll.

Please open your Poll Everywhere App.

Understanding the issues

Relationship between Act and Contract

A lesson from Walters Construction


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Correcting Misnomers and Myths

“Security” is a misnomer - no guaranteed outcome

“Adjudication” is a misleading term

Although not final, a result under SOPL could become final by design or default

SOPL is more than just about “cash flow”

its about risk management and Contract administration

Dispute resolution

spotlights on your business practices


Correcting Misnomers and Myths

Substance and merit is just as important as process.

SOPL creates opportunity but will also create challenge and risk

SOPL can re configure existing contractual risk profiles

Not always cheap; not always rapid especially if there are challenges to

determinations

“Rough justice” and not always “fair”

Not a neutral process. SOPL can hurt relationships

Part 2: Overview

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Part 2: Overview of SOPA Landscape

Security of Payment Problem

“…..consistent failure in the building and construction industry to ensure

that participants are paid in full and on time for the work they have done,

even though they have a contractual right to be paid”

(source: Commonwealth Government 2002).

Part 1: Overview of the SOPA Landscape

Purpose of SOPA

“As construction contracts in New South Wales have been “notorious” for their

extremely tight profit margins… it is essential for the financial survival of many

contractors and subcontractors that payment for services rendered be

promptly paid and not unreasonably withheld…..”

Justice McDougall

Supreme Court of New South Wales

Section 3: Object of Act

(1) To recover, progress payments

(2) statutory entitlement to such a payment

(3) the referral of disputed claims to an Adjudicator


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Statutory Payment Claim and Payment Schedule

Statutory Right

Paym

en

t D

isp

ute

Pay now

Contractual Rights

Paym

en

t D

isp

ute

Argue later

Contractual Payment mechanism –

Payment Claim and Payment Schedule

fast

Statutory Adjudication Arbitration or litigation

slo

w


What


• Variations

• Set offs

• Preconditions to valid payment claims

• Time bars

• Defects

• Other


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Owner

Engineer

Structural Engineer

Electrical Engineer

Building Surveyor Architect

Draftsperson

Head Contractor

Subcontractors

Sub-subcontractors

Suppliers

Ca

shfl

ow


East Coast Model:

Default system

Statutory rights

NSW model under review

West Coast Model

WA 2005 NT 2005

West Coast Model:

Evaluative

Based on contractual rights

WA model under review

Statutory Adjudication Regime – Australia

East Coast Model

QLD 2004 SA 2011

ACT 2010

VIC 2003NSW 1999


Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

Step 1

Step 2

Step 3

Step 4

Step 5


35

days

NSW

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Time frames

Tight deadlines

Delays are disastrous

Need for good administration


Key elements of the Act

Statutory right to “cash flow”; pay now argue later regime

Dual track and theoretically runs in parallel to the Act but there are

inescapable points of convergence between the Act and Contract

On account resolutions

Rough and tumble “high pressure cooker environment” with high risks

Rough justice


Adjudication

Dispute Resolution Continuum


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2000 2003 2004 2011 2014 2015

NSW legislation commences

Brodyn Pty Ltd (t/as Time Cost & Quality) v

Davenport [2004] NSWCA 394

commencement of 2014

amendments on 21 April

2014; SOCLA Report

The Cole Royal Commission into the

Building and Construction Industry

Commencement of 2010 Amendments for

Withholding Requests

• Commencement of Retention Trust

Regulations on 1 May 2015

• Consultation Survey by Department

of Fair Trading – survey closed on

28 Sep 2015; Submissions closed

26 February 2016

• Commitment by NSW Government

to review the Act –

• Senate inquiry into insolvency into

Construction Industry.


Some Statistics 2014/15: Claimed Amount

NSW Finance and Service Annual Adjudication Report 2014/15



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Some Statistics 2014 : Claimed versus Adjudicated Amounts

Total value of claimed amounts:

$122,064,731

Total value of adjudicated amounts:

$54,204,209

NSW Finance and Service Annual Adjudication Activity Report 2014/15


2014/15 Statistics: Application by Claim Type



2014/15 Statistics: Application by Respondent Type



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Some Problems with the Australian SOPA




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Some Problems with the Australian SOPA


Part 3: Key Amendments

1. No endorsement required for payment claim: s13(2)

2. Head Contractors to serve supporting statements with payment claims: s13(7)-

(9)

3. Due dates for payment have been changed: s11

by Principal (15 days or less per Contract)

by Head Contractor or subcontractor (30 days or less as per Contract)

4. Retention Trusts

Amendments to the legislation – 21 April 2014

Part 3: Amendments to SOPA

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Amendment No 1 - Removal of Magic Words

This is a payment claim made pursuant to the Building & Construction Industry

Security of Payment Act 1999 (NSW).


Justice McDougall (Kitchen Xchange):

Removal of magic words is “unwise.”

Is Justice McDougall is correct?

1. New Risk Profile

2. Act may be triggered inadvertently

3. Consequences of not serving payment schedule (s15(2))

4. May inadvertently exhaust reference date (s13(5))

5. Confusion with different regimes - is a variation or purchase claim a payment claim

6. Keep words or not?


First Case Post-Amendment

Section 13(7)

A head contractor must not serve a payment claim on

the principal unless the claim is accompanied by a supporting

statement that indicates that it relates to that payment claim.

Maximum penalty: 200 penalty units

Amendment No 2 - Supporting Statements


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Principal

Subcontractor Subcontractor Subcontractor

Head Contractor

Main contract


Stakeholders: s13(7) – (9)

Supporting Statement

Payment

2

1



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A supporting statement must accompany a head contractor’s payment claim to a principal. It declares that all subcontractors have been paid the amounts due for the construction work concerned.

Are supporting statements effective in ensuring subcontractors are paid on time?

a) Yes - 11.44%

b) Often - 11.17%

c) Sometimes- 22.89%

d) No - 53.14%

Previous Poll Results

Kitchen Xchange v Formacon

Facts:

2014 Contract ; 3 Payment Claims; 1 Reference Date

No Supporting Statements

1 Payment Claim withdrawn

Court Held:

Payment Claim can be withdrawn by consent

Payment Claim not validly served because no Supporting Statement

Case Law

Case Law

Facts DecisionJune 2015 Contract Statutory declaration with PC1 not a

supporting statement

2 PC’s with 2 separate reference dates; payment Certificate issued for PC 1

No supporting statement was served with payment claim 2

Contract required a Statutory Declaration with PC

Claims not served in accordance with s13(7)

Stat decl with payment claim1 and no supporting statement; No stat dec or supporting statement with PC 2

Request for summary judgment refused

Supporting Statements must be served with a Payment Claim and in the correct form:

Duffy Kennedy Pty Limited v Lainson Holdings Pty Limited [2016 NSWSC 371

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Second 2014 Amendment: Supporting Statements New Offences

Service of Payment Claim without


Statement is False or Misleading

$22,000 Fine

$22,000 or 3 months imprisonment


Principal

Subcontractor Subcontractor Subcontractor

Head Contractor

Main contract

Amendment 3:Stakeholders: s13(7) – (9)


15 day payment

30 day payment

There is no head contractor when the principal contracts directly with subcontractors


Amendment No 4 - Retention Trust Account

12A Trust account requirements for retention money

(1) The regulations may make provision for or with respect to requiring retention money to be held in trust

for the subcontractor entitled to the money and requiring the head contractor who holds retention

money to pay the money into a trust account (a "retention money trust account" ) established and

operated in accordance with the regulations.

.....

(5) "retention money" means money retained by a head contractor out of money payable by the head

contractor to a subcontractor under a construction contract, as security for the performance of obligations

of the subcontractor under the contract.


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2014 Amendments Implications for Head Contractors

Amend subcontract to align with payment times under the Act.

Establish claim processes to ensure receipt of payment.

Comply with retention trust provisions for projects in excess of $20m

Make sure subcontractors have been paid before submitting supporting Statement.

Contract administrators to identify payment claim, informal or otherwise.

Ensure payment schedules are issued.

Up stream - documents may need to state that they are not payment claims under

the Act.


Questions

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Part 4: How SOPA Works

Part 4: How SOPA works?

When can you not use SOPA?

Act still applies to Subcontractors

Special Exceptions

If person “resides” in premises


When can you use SOPA?

Related Goods and Services

Contract be written or verbal

Construction Works

Any Construction Contract

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Which side of the fence?

Contractor/

Subcontractor/

Consultant/

Supplier

Contractor/

Principal

Claimant Respondent


The Players

The Claimant

Respondent

The ANA

The Adjudicator

Part 4: How SOPA works and risks

The Documents

Payment Claim

Payment Schedule

Adjudication Application

Adjudication Response

Determination

Certificate

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Valid Payment Claim

Claimant must be a party to a construction

contract

Must be Construction

Contract work

or related goods and

services

Must be entitled to make a

progress claim

[Reference date]

PAYMENT CLAIM

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

Step 1: The Payment Claim

Section 8 - Reference Date Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement


Section 8(1):

On and from each reference date under a construction contract, a person:

a. who has undertaken to carry out construction work under the contract, orb. who has undertaken to supply related goods and services under the contract,

is entitled to a progress payment

Section 8

Reference Date

Contractual date for Progress Payment

If contract silent, last day of

month

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement


Typical Contract clause

The Sub-contractor shall deliver to the Builder’s Representative claims for payment in the

form of a progress claim before, or on, the date stated in Item 7 (The Reference Date).

Item 7 24th Day of the Month

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Reference Date

Contractual date for Progress Payment

If contract silent, last day of month

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement


Some key points• One claim under the Act for each reference date• Claim can only be served within 12 months after works were last carried out• Payment Claim may still be valid if no new work since last reference date [Broadview decision]• A payment claim may not be valid if issued after termination of a contract [Patrick Stevedores

decision]• Act entitles parties to limit reference dates in contracts• The existence of reference date is not currently jurisdictional (Lawrence Constructions)

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

Case Law

Lawrence Construction Pty limited v Southern Han Breakfast Point Pty Limited [2015 NSWCA 288

Facts Decision

Contract for apartment block construction January 2013

reference date to support a payment claim is not a jurisdictional fact

Payment claim issued after Builder purports to terminate because of Owner repudiation

Reference date is not an essential pre-condition for the making of a valid payment claim

• 28 Oct 2014 – termination of contract• Dec 2014 – Service of Payment Claim• Payment Claim from last reference date

8 October 2014 to date of Termination

Determination in favour of Builder Challenge to determination on grounds that there was no reference date

Special Leave granted for appeal to High Court against decision

Must an Adjudicator always get the issue of whether there is a reference

date correct?

Are preconditions to reference dates arising under the Act valid ?

Case Law

Hutchinson Pty Ltd v Glavcom Pty Ltd [2016] NSWSC 126

Facts Decision

sub-contract for design, fabrication and installation of joinery at “Pacific Bondi Beach”

Court upheld the Determination

Cl 37 required certain declarations as a precondition to a reference date arising

Clause 37 was void by the no contracting out provisions in section 34 of the Act

Subcontractor submitted statutorydeclaration

Claimant has a right under section 8 to receive a progress payment

Determination in favour of subcontractor

Builder challenged Determination – false stat declaration and that subcontractor had fraudulently failed to comply with clause 37

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Must identify construction work

or related goods and services

Must indicate the claimed amount

Contracts entered into prior to 21 April 2014 must state that it is made under the Act

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

Contracts entered after 21 April 2014 DO NOT need to state that it is made under the Act


Can include earlier claims

Only one Payment Claim per reference date

Must be made within 12 months of last work

Must be served

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement


Name of Respondent

is wrong

No description

of works

Claim is too early

Amount claimed not

specified

Prior to 22 April 2014 No use of “magic”

words

Claim not served

correctly

Common problems with Payment Claims

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

No Supporting Statement

Not Properly Substantiate

d


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No Question T/F

1 The date on and from which a claimant can make a

payment claim is called the reference date?

2 If the construction contract does not provide a date for

making a payment claim, the reference date is the last

business day of the month?

3 Only one payment claim can be made in respect of the

one reference date.

4 The payment claim must be addressed and provided to

the party who is or may be liable under the construction

contract to pay the claimant.

6 The time for making a payment claim and the time of

making payment of a claim are two different matters?

True or False


TABLE 1

A

Nature of Claim

B

What Type of issues and evidence would

you need consider and collate to

substantiate the claim?

TABLE 2

In the Table below list some of the different types of claims that may be made by a claimant in a Payment claim and the steps that would be required to prepare those claims?


Is the reply to the Payment Claim

Is required if the Payment Claim is disputed

Total claim is automatically payable if no Payment Schedule

Must be served within 10 Business days of Payment Claim

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

Step 2: The Payment Schedule

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PAYMENT SCHEDULE

must identify the

Payment Claim to

which it relates

must identify the

amount that will be

paid

must indicate the

reasons if monies are

being withheld

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

SOPA Risks

RISK 2

“If the Respondent does not state its case withthe requisite degree of precision andparticularity, it may not be able to rely on theissue in its Adjudication Response (s20(2B)). Ifthe issue has not been adequately raised in itsPayment Schedule then it cannot complain ifthe adjudicator does not consider it…”

Justice McDougall at page 11 of paper “TheBuilding and Construction Industry Security ofPayment Act 1999” (September 2004)

RISK 1 – failing to provide a payment schedule in

time


Use proper reasons

State all reasons

Details of reasons need to be sufficient

Essential Requirements

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement


Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

Examples of inadequate reasons

“Direct costs incurred by builder due to contractor damage and negligence.

Retention still to be paid at a later date and has not been assessed in this

schedule

“Damages for defects.”

“Works are incomplete”

The claim is “rejected”.

The Respondent “again” refutes all the claims


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Set offs – generally

Typical set off clause:

“The Builder may deduct from moneys due to the Sub-contractor any money

due from the Sub-contractor to the Builder and if those moneys are insufficient,

the Builder may have recourse to Retention moneys under Clause 5 of this

Subcontract and, if they are insufficient, to any security under this Subcontract

and any balance owing shall be a debt due and payable to the Builder and

may be adjusted against any payment drawn including moneys owed to another

Subcontract related to a different Project for the Builder.”

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement


Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

How much information should be put in a Payment Schedule?:

“There is a need for “precision and particularity… to a degree reasonably

sufficient to apprise the parties of the real issues in dispute..”

Palmer J

Multiplex Constructions Pty Ltd –v- Luikens


Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

Some Tips - Lessons from some of the NSW cases

1. set out all its reasons for withholding payment in its Payment

Schedule.

2. use proper reasons. Do not simply use the word ‘rejected’.

3. include a full explanation of the reasons why monies are being

withheld.

4. include any arguments that the Payment Claim is invalid on the

basis that the Adjudicator lacks jurisdiction.

5. Documents which look as though they form part of a Payment

Schedule should be clearly identified as forming part of the

Payment Schedule.


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Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

Some Tips - Lessons from some of the NSW cases

1. Reasons for withholding payment of a claim be indicated with sufficient

particularity to enable the claimant to understand at least, in broad

outline, what is at issue between it and the respondent set out all its

reasons for withholding payment in its Payment Schedule.

2. Issue proper Notices under the Contract to establish back charge

3. Serve evidence and documents in support of reasons


Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

Workshop

A

Nature of Claim

[repeat column A of Table 2 above]

B

What type of reasons could be given to withhold payment in relation to the claim?

C

What type of evidence and documents would need to be collated to substantiate the reasons for withholding payment claim?

TABLE 3


Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

Claimant’s options where the Payment Schedule is less than the claimed amount [NSW]:

Payment

Claim

PAYMENT SCHEDULE

Less than amount claimed

OPTION 1 – claimant accepts scheduled amount

OPTION 2 – claimants proceeds to Adjudication Max10 bd

Max10 bd


Understanding Construction Law 2016

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Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

Claimant’s options where no Payment Schedule claimed amount not paid in full [NSW]

Payment

Claim

No

PAYMENT SCHEDULE

Max10 bd

Due Date for

payment and claimed amount not paid in full

OPTION 2: Notice of

Intention to Apply for

Adjudication

2nd chance Payment Schedule

AdjudicationMax20 bd

Max5 bd

Max10 bd

Option 1 – pursue summary judgment


Understanding Construction Law 2016

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

• A Subcontractor makes a claim under the Act against the Contractor for $25,000

for rendering work.

• The Contractor fails to provide a payment schedule.

• The subcontractor obtains a judgment from the Court for the $25,000 by reason of

the Contractor’s failure to provide a payment schedule.

• Before paying the judgment, the render starts to crack and separate from the wall.

• The costs to rectify the render is more than the amount of the judgment

• The owner refuses to pay the Contractor because of the rendering defect and

deducts the sum of $35,000 from the Contractor’s contract price by way of a back

charge for the costs of repair to the render.


Workshop – Problem 1

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

• The Subcontractor claimed 6 variations involving plasterboard sheeting and setting work

against the Contractor.

• The claims for the variations totaling $167,000 (incl GST).

• The Scheduled amount in the payment schedule issued by the Contractor was Nil.

• The Special conditions states: “Any variations to works must be approved in writing by the

Project Manager…..prior to commencement.”

• The Contractor argued in the Adjudication Response that the variations were not approved

in writing and were rejected. The Contractor, however, agreed to pay some of the amounts

while providing evidence of written approval.

The reasons provided by the Contractor for rejecting the variations included:

a) Not proper variations

b) Pending approval of time sheets

c) Claim is excessive

Step 2: The Payment ScheduleWorkshop – Problem 2

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Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

• Subcontractor enters into a subcontract with the Contractor and served a payment claim on 31 March 2016 for $70,000. The subcontract was not in writing.

• There was no payment schedule provided by the Contractor.

• The Subcontractor served a section 17(2) notice of intention to apply for adjudication on 12 May 2016.

• There was no payment schedule issued within the five business days referred to in the Notice and the Subcontractor lodged an Adjudication Application on 21 May 2016.


a)What options were available to the Subcontractor on the failure of the Contractor to lodge a payment schedule?b) What is the last date on which the Subcontractor could issue the section 17(2) notice?c) What is the Contractor’s legal position?


Workshop problem 3 - Establishing last date to lodge Adjudication Application if no payment schedule

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

Step 3: Payment Schedule

29 February 2016 Service of Payment Claim – last business day of the month

25 March 2016 Good Friday Public holiday ‐ Time does not run

28 March 2016 Easter Monday ‐ Public Holiday Time does not run

13 April 2016 Due date for payment 30 business days after 29 February 2016 allowing for Easter (2 business days)

25 April 2016 Anzac day – time does not run

12 May 2016 Last date for lodging s17(2) notice; due date + 20 business days (allowing for Anzac Day

2 May 2016 Assume section 17(2) Notice served on 2 May 2016

9 May 2016 Expiration of 5 date of section 17(2)(b) Notice; 2 May 2016+ 5 business days

23 May 2016 Last date to lodge Adjudication Application; 9 May 2016+10 business days

30 business days

20 days

If Claimant opts to proceed to Adjudication

ADJUDICATION APPLICATIONPayment Claim

Payment Schedule

Adjudication

Determination

Enforcement

NSW

Must be in writing

Must be lodged with ANA within 10 business days after

receiving the Payment Schedule

Step 3: The Adjudication Application

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ADJUDICATION RESPONSE

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

NSW

Short response period of 5 business days or

2 business days after notice of adjudicators

acceptance

Section 20(2B) restriction


Payment Schedule

Reasons

Adjudication Response

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

NSW

Section 20(2B) of the Act states:

Respondent cannot include in the Adjudication Response

any reasons for withholding payment unless those reasons

have already been included in the Payment Schedule

provided to the claimant…


Inadequate reasons in Payment Schedule

Locked out from raising new reasons in

Adjudication Response in NSW

Common Problems

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement


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If a subcontractor has made a claim and not received full payment by the due date, the next step is adjudication.

Is the adjudication process an effective way to settle most disputes over payment?

a) Yes - 24.52%

b) Often - 12.53%

c) Sometimes - 34.34%

d) No - 27.25%

Previous Poll Results

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DETERMINATION

The Act

The Construction

Contract

The Payment Claim

and Payment Schedule

Submissions of Parties

(& inspections)

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement

Step 4: The Determination

NSW, QLD and VIC

How much?

Date payable?

Interest?

Must be in writing

Must set out reasons

Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement


Payment Claim

Payment Schedule

Adjudication

Determination

Enforcement


A claimant has been successful at Adjudication and has received a determination against the Contractor in the sum of $233,700.

What steps does a claimant need to take to convert that Determination into money?


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Some recent cases

Which document is the payment claim?

Case Law

The New South Wales Netball Association Ltd v Probuild Construction (Aust) Pty Ltd [2015] NSWSC 1339

Facts• Contract for construction of a netball centre of

excellence April 2013

• 2 payment claims issued under same reference date (PC 23 & 24)

• Payment schedule issued by Netball with Nil assessment on the basis, with reason including Payment Claim was invalid due to Payment Claim 23 being a valid payment claim

• 1st payment claim 23 payment schedule issued anassessment of Nil on the basis Netball contended:

service was invalid as it was not served by required method; and

• it was served under cover of a document stating it was a draft.

• Netball first sought in court to have the adjudicator stayedfrom determining Payment Claim 24 on the basis it wasnot valid

• The court did not stay the adjudication but stayed anyenforcement of the determination

• 2nd payment claim 24 issued under same reference date for greater amount and included the amount in Payment claim 23

• It went to adjudication, Probuild had claimed around $10 million, the adjudicator determined an amount to Probuildof around $124k

Which document is the payment claim?

Case Law

The New South Wales Netball Association Ltd v Probuild Construction (Aust) Pty Ltd [2015] NSWSC 1339

Decision

• Normally the about face by both parties would see the matter dismissed however he must take into account whether the adjudication was valid

• Payment Claim 23 was valid and it was not a draft

• Payment Claim 24 was not valid as it was under the same reference date as payment claim 23;

• The Determination is a nullity

• Each party to bear their own costs

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Challenger to pay Adjudicated Sum into Court before matter proceeds

Case Law

Nazero Group Pty Ltd v Top Quality Constructions [2015] NSWSC 232

• The Supreme Court has confirmed usual practice that the challenger of an Adjudicators decisions will be required to pay the adjudicated amount to Court before the matter proceeds

Section 25(4) of the Act provides:If the respondent commences proceedings to have the judgment set aside, the respondent:……..(b) is required to pay into the court as security the unpaid portion of the adjudicated amount pending the final determination of those proceedings

• The proceedings were not to have a judgment set aside so the court found this section did not apply however it found that the court did have the discretion to make orders for payment into the court pending a final determination and in accordance with the intention of the Act did make such order:

• “The policy of the Act is not served by removing Top Quality’s protection pending determination of Nazero’s challenge even though s 25(4)(b) of the Act does not apply in terms.”

Judicial review is available to squash adjudicators determination for a non-jurisdictional error of law on the face of the record.

Case Law

Pro Build Constructions (AUST) Pty Limited v Shades Systems Pty Limited [2016 NSWSC 770

Facts Decision

Shade Systems issued a payment claim including retention money

There was no denial of procedural fairness as the adjudicator was entitled to assess the claim

payment schedule with Nil assessment due to liquidated damages

The court was entitled to determine non-jurisdictional errors on the face of the record

Shade Systems lodged an adjudication application with retention money deducted

The determination was quashed.

Probuild lodged Adjudication Response arguing NIL due to liquidated damages

“A fair reading of the Adjudicator’s reasons indicates that he assumed, wrongly, that the onus was on Probuild to demonstrate that the failure to achieve practical completion by the date for practical completion was caused by default on the part of Shade Systems. That was an error of law and it appears on the face of the record of the proceedings leading to the Determination.”

Adjudicator determined revised sum more than claim and took into account retention money

Key Issues

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Patrick Stevedores Operations No. 2 Pty Ltd v McConnell Dowell Pty

Ltd [2014] NSWSC

In December 2015 a Discussion Paper was released by the NSW Government calling for responses

to various questions about the security of payment law and its operation;

5 key areas are outlined in the Discussion Paper:

Application and enforcement;

Progress payments;

Adjudication of disputes

Uniform application of the legislation to all disputes

Supporting statements and retention money trust account

Potential - Further Changes


Ltd [2014] NSWSC

What are key subcontract clauses?

reference date

set off:

Security and Retention Monies

Liquidated damages

rectification of defects [see section 10 of the SOPA]

Claims and Payment

• condition precedent – return of signed contract;

• condition precedent – statutory declarations

• set off

take out of works

Key Issue – Relevant Contract Terms


Ltd [2014] NSWSC

Should all risks be managed?

How to minimise the risks?

Cultural change

Upskilling

Contract Administration

Security of Payment

Dispute resolution

Key Issue – Managing Risks

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Questions

Thank You!

DavidGlinatsisDirector/[email protected]

[email protected]

Phone: (02)8239‐6500

[email protected]

[email protected]

This communication is sent by Kreisson Legal Pty Limited (ACN 113 986 824). This communication has been prepared for the general information of clients and professional associates of Kreisson Legal. You should not

rely on the contents. It is not legal advice and should not be regarded as a substitute for legal advice. The contents may contain copyright.

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