Krongold Constructions (Aust) Pty Ltd v SR & RS Wales Pty Ltd [2016] VSC 94

Nature and extent of details required to be included in a valid payment claim under the Building & Construction Industry Security of Payment Act 2002 (Vic) Act (the Act), and the assessment process required to be undertaken by an Adjudicator to determine the value of claims to avoid jurisdictional error

Background

The plaintiff / head contractor (Krongold) alleged, inter alia, that the Adjudicator erred in finding that its subcontractor’s (Wales) payment claim complied with the basic and essential requirements of s. 14 of the Act because the construction work was not sufficiently identified.

Krongold further alleged, inter alia, that the Adjudicator fell into error in not undertaking an appropriate assessment of the claims and that as a consequence, the adjudication determination did not comply with ss. 11, 22 and 23 of the Act and the Adjudicator therefore fell into jurisdictional error.

Judgment

The Court affirmed the criteria set out in Gantley Pty v Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 (at [51]) (Gantley) in relation to the nature and extent of details required to be included in a valid payment claim under the Act (at [51]-[56]).

The Court found that the details in Wales’ payment claim were inadequate to comply with the basic and essential requirements of s. 14(2) of the Act.

His Honour noted that an adequate description of the work is also an important element in informing the adjudicator of the claim and facilitating the proper administration of the adjudication process under the Act (at [56]).

The Court also found that the Adjudicator had fallen into jurisdictional error by reason of failing to undertake any meaningful valuation process of the claim and simply adopted the amount claimed by Wales. His Honour noted that this was no doubt engendered by the lack of definition of work in the payment claim itself (at [64]-[65]).

The Court relied upon its earlier decision in SSC Plenty Road v Construction Engineering (Aust) Pty Ltd [2015] VSC 631 (at [135]) (SSC) where it found that to avoid jurisdictional error an Adjudicator must undertake some process of assessment and cannot merely adopt the amount claimed by the claimant.

Conclusion

The nature and extent of details required to be included in a valid payment claim under the Act remains as prescribed inGantley.

A valid adjudication determination must disclose a process of assessment of the value of the claim and not simply adopt the amount claimed. SSC affirmed.