In a recent decision in Ku-Ring-Gai Council v Ichor Constructions Pty Ltd [2014] NSWSC 1534, the New South Wales Supreme Court has addressed whether an adjudication application for delay damages was an abuse of process of the Building and Construction Industry Security of Payment Act 1999 (NSW) (BCISP Act), in circumstances where the first adjudicator was unable to assess the claimant's delay damages. Ku-Ring-Gai Council (Council) applied to the Court seeking a declaration that a second adjudication application, made by Ichor Constructions Pty Ltd (Ichor), constituted an abuse of process and was void. Council also sought orders to restrain the second adjudication from proceeding.

Background

Ichor was contracted by Council to construct West Pymble Pool for a lump sum amount. Ichor served on Council a payment claim under the BCISP Act, which included a claim for delay damages.

Council served a payment schedule in respect of Ichor's payment claim. Council did not schedule any allowance in the payment schedule for the delay damages claimed by Ichor.

The first adjudication application

Ichor made an adjudication application in respect of its payment claim. In support of the claim for delay damages, Ichor submitted a programming report on which it placed considerable reliance.

The adjudicator considered the delay damages claim and the report relied upon by Ichor. The adjudicator determined that, on the material available, the claim suffered from serious shortcomings and that the report was 'not accurate'. The report did not consider what actions were taken by Ichor to prevent or mitigate the delay. The report also contained other inaccuracies relating to allowances made for inclement weather and incorrect assessments of time for requests for information allowed under the contract.

The adjudicator determined that the true extent of the delay damages could not be concluded on the information provided in the report. As a result, the adjudicator chose not to make an assessment of the delay damages and expressly noted that a final determination had not been reached in respect of the delay damages claim.

The second adjudication application

Ichor proceeded to again pursue the claim for delay damages that could not be assessed in the initial application and served a second adjudication application on Council. In that application, Ichor submitted an additional report that addressed the shortcomings of the report relied upon in the first adjudication application.

Decision

Because the first adjudicator chose not to assess delay damages, Justice Stevenson determined that an issue estoppel could not arise in the circumstances.

However, although Justice Stevenson observed that a mere repetition of a claim does not necessarily amount to an abuse of process, Ichor had failed to submit sufficient evidence to make out the claim for delay damages in the first adjudication and had effectively used the first adjudication application as an advice on its evidence. Ichor had then sought to make the same case for delay damages, which would require Council to meet the claim for a second time.

The Court made orders in favour of Council restraining the second adjudication application from proceeding because it was an abuse of process.

Implications

Adjudicators are typically alive to the notion of issue estoppel and often seek to preserve a claimant's right to re-agitate an identical claim by expressly 'not deciding' a claim. The decision of the Supreme Court places importance on the reasons why that claim is not decided. If it is because of a failure of the claimant to properly put its case when it has the opportunity to do so, a subsequent repetition of that claim is likely to found an abuse of process.

Claimants in adjudications should take heed of this decision. It emphasises the importance of preparing and presenting reasoned and comprehensive reports (and other supporting evidence) in adjudications at the first attempt.

Respondents should also be aware of this principle in responding to repetitious payment claims