Key Takeaways

1. In determining whether the adjudicator’s decision should be found to be void for want of jurisdiction, the Court followed the decision of Hodgson JA in Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421, where a distinction was drawn between:

              (a) the requirements in s 13(1) of the Building and Construction Industry Security of Payment Act 1999                          (NSW) (SOP Act) (which is substantially similar to s 75(1) of the Building Industry Fairness                                             Security of Payment Act 2017 (Qld) (BIF Act)), which the Court found is a “basic and essential                                       requirement” necessary for the existence of an adjudicator’s determination; and

              (b) section 13(2) of the SOP Act which it was said contained “more detailed requirements” as to the                                content of payment claims. Section 13(2)(a) of the SOP Act is the requirement that the payment claim                      “must identify the construction work (or related goods and services) to which the progress payment                         relates”, which is in similar terms to section 68(1)(a) of the BIF Act.

2. An adjudicator’s decision will not necessarily be found to be void for want of jurisdiction just because the adjudicator made an erroneous decision in relation to the “more detailed requirements” such as the requirement that the payment claim identifies the construction work or related goods and services to which the progress payment relates, as was the subject of this case.
3. When deciding whether work has been sufficiently identified in the payment claim, the background of each of the parties derived from their past dealings and exchanges of documentation is to be taken into account. In other words, the adjudicator can look beyond the actual documents that formed part of the payment claim or were delivered with the payment claim. Notwithstanding this, to avoid the argument that the work is not sufficiently identified, the preferred approach is still to ensure that the payment claim as delivered to the respondent contains sufficient detail and supporting material to identify the work.
4. Where a payment claim contains some items that do not meet the requirements of section 68(1)(a) of the BIF Act in that they are found not to sufficiently identify the construction work or related goods and services to which the progress payment relates, that will not necessarily mean that the payment claim is not a valid payment claim. Following the decision in E Home Construction Pty Ltd GCB Constructions Pty Ltd [2020] QSC 291, the relevant exercise is to consider the entirety of the payment claim to form a view as to whether it can still be characterised as a payment claim. Where the majority of the payment claim is for things that can be claimed in a valid payment claim, the payment claim could still be characterised as a valid payment claim.
5. Percentage claims carry risk to the claimant and great care should be taken when making claims based on the percentage of work completed, to ensure that the work is sufficiently identified in the payment claim. Whilst this decision did find that one of the percentage claims which was made from a zero base did sufficiently identify the construction work, each percentage claim is considered based on the particular facts.

Relevant Facts

Bridgeman Agencies Pty Ltd (Applicant) and SE QLD Plumbing & Drainage Pty (First Respondent) were parties to a subcontract agreement under which the First Respondent was to perform hydraulic services for a project for which the Applicant was head contractor.

For the four progress claims that had been issued, the First Respondent included worksheets setting out breakdowns of the different items of work that had been completed along with percentages and dollar amounts being claimed (among other information).

The relevant progress claim the subject of this dispute was the fourth progress claim issued by the First Respondent, which claimed payment for two (2) items owing under the subcontract and seven (7) variation items.

For the two (2) items claimed which were not variations, it was noted that the subcontract agreement contained a description of the work for these items.

For the variation items, prior to issuing the progress claim and on various different dates the First Respondent had emailed the Applicant a worksheet for each of the variations describing the nature of the works and how the total amount for the relevant variation was calculated.

The adjudicator made a decision in favour of the First Respondent in the sum of $103,509.44.

Issues

The Applicant applied to the Court for an order that the adjudication decision be set aside or declared void for want of jurisdiction.

This was based on the argument that the payment claim was not a “payment claim” within the meaning of the BIF Act because it did not “identify the construction work or related goods and services to which the progress payment related”. This was because:

• it did not within itself identify the construction work;
• if the Court was permitted to look for the identification of the work in the previously exchanged documents, the use of percentages meant that the work was not identified.

The Supreme Court’s Decision

The Court noted that it is a settled principle that in deciding whether work has been sufficiently identified, the background of each of the parties derived from their past dealings and exchanges of documentation is to be taken into account. The relevant consideration is whether the content of the payment claim is sufficiently meaningful to enable the parties themselves to understand what work the claim relates to.

The Court found that having regard to the shorthand identification of the work in items 11 and 12 of the payment claim and the previous correspondence exchanged between the parties and other correspondence included with the payment claim for the seven items claimed for variations, that the payment claim contained sufficiently meaningful words to be understood as a reference to identified work.

It was then necessary to consider the second argument i.e. whether the payment claim’s use of percentages meant that the work had not been identified.

The Court found that of the nine (9) items being claimed in the payment claim, for five (5) of them the use of a percentage figure was not sufficient to identify the particular work the subject of the claim. For these five (5) items, the percentages for various different values and were not from a zero base.

The Court found that four (4) items were sufficiently identified. Of those items one (1) was from a zero base (and it was noted that this was discrete work) and the other three (3) were a claim for 100% of the work.

Having now decided that five (5) of the nine (9) line items in the payment claim did not sufficiently identify the construction work for the purposes of the BIF Act, the Court then considered whether the payment claim was valid and whether adjudicator’s decision should be declared void for want of jurisdiction.

In considering the entirety of the payment claim, the Court held that the two biggest value claim items, being items 27 and 28 did sufficiently identify the work. When the value of these items was added to the value of the other items that sufficiently identified the construction work, the total was $161,226.35. Of the $178,034.42 claimed in the payment claim, four items totalling $161,226.35 of that amount were sufficiently identified.

The high value of the work that was sufficiently identified appeared to be the factor that led to the Court’s decision that the payment claim was appropriately charactered as a valid payment claim and that no jurisdictional error had occurred.