In the case of Leighton v Arogen [2012] NSWSC 1323, Arogen was subcontracted by Leighton to supply horizontal directional drilling services.
Arogen delivered a payment claim to Leighton in excess of $6.2 million. Leighton disputed this amount and therefore Arogen filed an adjudication application seeking to obtain a determination that Leighton owed it $6.2million. Pursuant to s 20(2B) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the “Act”), a Respondent’s adjudication response cannot include any reasons for withholding payment unless those reasons have already been included in the payment schedule.
Arogen claimed that Leighton’s payment schedule did not include calculations relating to its assessment of the value of the work. Leighton’s response stated that Arogen’s adjudication application significantly changed the basis of the claims from those which had been previously advanced in the payment claim. The basis of this contention was that Arogen had not previously made any submissions relating to inclement weather. The adjudicator found in favour of Arogen and refused to have consideration to Leighton’s calculations of the value of work. Leighton appealed to the Supreme Court of New South Wales, where McDougall J quashed the adjudication determination on the basis that the adjudicator had:
- considered claims in an adjudication application which were significantly different from those specified in the payment schedule;
- failed to consider the reasons advanced by Leighton in answer to Arogen’s changed claims; and
- failed to give any reasons for accepting Arogen’s calculation of the works as opposed to Leighton’s.
Tips
- Before serving a Payment Claim and Schedule, make sure there is nothing else you may wish to argue should the matter proceed to adjudication.
- Ensure your Adjudication Application is based on the same contents as your Payment Claim.
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This article is not legal advice and should not be relied upon as legal advice. All articles found on this website are intended to provide informative information, nevertheless, in many instances legislation and case law has been simplified and/or paraphrased. If you would like personal legal advice based on your current circumstances, you should contact MurdockCheng Legal Practice for a free consultation.