An Adjudicator’s Insight – Claimant Pitfalls at Adjudication

Commercial, Construction

Adjudication under state security of payment legislation is designed to be a quick and cost-effective way of resolving payment disputes.  However, it can be an overwhelming process for the unwary builder. Our Lou Stojanovski is an Adjudicator in NSW and VIC. In determining applications, we often see Claimants miss out on securing payment at adjudication for simple, avoidable mistakes. Some of the more common mistakes are explored below.

Claimants often fail to serve documents or lodge applications within the time required under the relevant Act. There are strict timeframes to comply with and these vary from state to state. If you are unsure, get legal advice.

Not providing a full copy of the Contract including any schedules of rates is another common pitfall. If there is no formal written contract, it can still be evidenced by:

  • quotes, emails, discussion notes, text messages etc regarding the project; or
  • evidence of prior payments by the Respondent.

Include whatever evidence you can to establish there is an agreement between the parties.

A significant hurdle at adjudication which Claimants often stumble on is failing to provide evidence that:

  1. works / goods/services for which payment is claimed have been performed or supplied; or
  2. all contractual requirements have been met – i.e. have all documents, certificates, warranties required under the contract been given?

Applications should (where possible) include:

  • photos of works performed. If possible, outline/highlight on the photos what the Adjudicator is meant to be looking at in the photos.
  • witness statements / statutory declaration by key persons with on-site knowledge.
  • copies of site diaries / delivery dockets – anything that evidences works have been performed or goods/services supplied and when.
  • if payment is subject to a contractor/subcontractor giving certificates, warranties, or other documents, include evidence (emails/letters/diary notes) that they have been given. This makes it harder for the Respondent to say you haven’t met your contractual obligation

Another common pitfall is failing to substantiate the value of the works performed and being claimed for. Applications should (where possible) include copies of any invoices/quotes or schedules or rates agreed between the parties.

Applications should also include measurements, time sheets, day dockets and subcontractor invoices to prove the value of works being claimed.

TOP TIPS RECAP

For the greatest chance of succeeding at Adjudication, it’s important to:

  • Establish you have complied with the timeframes under the Act
  • Establish there is a Contract;
  • Provide evidence that the works have been completed;
  • Provide evidence of the value of the works; and
  • Get legal advice if you’re uncertain about timeframes, rights, and procedures.

Our Keystone experts can guide Claimants through the adjudication process and help put their best foot forward at Adjudication.

 

AN ADJUDICATOR’S INSIGHT – RESPONDENT PITFALLS AT ADJUDICATION

Our Lou Stojanovski is an Adjudicator in NSW and VIC. In determining applications, we often see Respondents make simple, avoidable mistakes. Some of the more common mistakes are explored below.

Payment schedules (a written response to a payment claim) can be problematic for respondents at adjudication.

Time for Service

Strict time frames apply to the service of a payment schedule on claimants, which vary from state to state. Too often, Respondents either fail to serve a payment schedule within the required time, or at all. This has significant consequences, as either scenario can prevent a Respondent from later serving an adjudication response (defending an adjudication application). In that case, the Adjudicator only has the Claimant’s version of events to go on.

Content of Payment Schedules

The most important consideration when preparing a payment schedule is to list and set out all reasons for withholding payment as a Respondent is only allowed to rely on the reasons for withholding payment set out in the payment schedule.

To preserve your right to respond to a claim at Adjudication, it’s important to make sure the payment schedule:

  • is served within time;
  • schedules an amount you are proposing to pay; and
  • if the scheduled amount is less than the amount of the claim, includes all reasons for withholding payment.

Respondents often try to set-off payment claims at adjudication by claiming defect rectification costs.

If you wish to do so, common mistakes are:

  1. not providing evidence substantiating the defect. Expert Reports are the best evidence and otherwise there should be clear reference to applicable standards and photographs provided as to the state of the works; and
  2. not substantiating the deduction sought is reasonable. It is imperative to provide details of how the defect rectification costs have been valued. Again, expert evidence is best and otherwise evidence could include quotations or invoices from other contractors to perform the required rectification works.

TOP TIPS RECAP

For the greatest chance of succeeding at Adjudication, you should:

  • know key timeframes for responding under the Act;
  • serve all documents within the required time;
  • ensure any payment schedule adequately sets out all reasons for withholding payment;
  • if raising a set-off claim for defects, provide the adjudicator with evidence substantiating the works are defective and how the rectification works have been calculated and valued; and
  • get legal advice if you’re unsure about timeframes, procedures, rights, or obligations under the Act.

Our Keystone experts can guide Respondents through the adjudication process and help respond to Adjudication Applications when required.

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