Preparing an adjudication application is usually a time consuming and resource intensive exercise. Little thought is often given to completion of the approved application form. However, claimants should not underestimate the importance of this step.
The recent Supreme Court decision in Kangaroo Point Developments MP Property Pty Ltd v RHG Construction Fitout and Maintenance Pty Ltd & Ors [2021] QSC 30 demonstrates why.
Facts
Kangaroo Point Developments (‘KPD’) entered a contract with RHG for the construction of a residential flat. RHG served a payment claim on KPD under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (‘BIFA’).
The contract’s superintendent responded with an assessment of what was due under the payment claim. That assessment stated: ‘Payment is recommended for the following amount: -$1,361,442 including GST’. Subsequently, solicitors for KPD issued correspondence that also responded to the payment claim (and stated that the superintendent’s assessment had not been KPD’s payment schedule).
RHG decided to have the payment dispute resolved by adjudication. It completed the approved adjudication application form, required under section 79(2)(a) of the BIFA. In the ‘Payment Schedule Details’ section of the form it referenced the superintendent’s assessment.
The dispute was referred to an adjudicator and an adjudication decision followed. KPD was dissatisfied with that decision and applied to the Court to have it declared void.
Findings
KPD argued that RHG had failed to make a valid adjudication application. The basis for this argument was that the statutory application form had failed to identify a compliant payment schedule.
Section 79(2) of the BIFA provides, inter alia, that an adjudication application must:
- be in the approved form; and
- identify the related payment claim and payment schedule (if any).
The Court found that the superintendent’s assessment was not a valid payment schedule. This was because it did not state ‘the amount of the payment if any, that the respondent propose[d] to make’ (as required by section 69 of the BIFA). The superintendent’s statement that ‘Payment is recommended for the following amount: -$1,361,442 including GST’ was not sufficient.
The correspondence later issued by KPD’s solicitors did constitute a valid payment schedule.
RHG’s adjudication application had therefore failed to identify the payment schedule to which it related. As a result, the Court held that RHG’s adjudication application was invalid. The resulting adjudication decision was declared void.
Lessons
This decision serves as an important reminder that adjudication applications will often fail on technical grounds if procedural requirements are not complied with.
Claimants must take particular care to strictly comply with section 79(2) when applying for adjudication of a payment claim. This includes ensuring that a valid approved application form is submitted.
Once a claimant submits its adjudication application, the application must be served on the respondent ‘as soon as possible’. This includes the approved application form. If the approved form is not served with the adjudication application material, it will be fatal.
If you require assistance with a construction dispute, please contact Tony Mylne or Adam Hempenstall today.
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