The recent Supreme Court of NSW decision by Ball J in Fairfield City Council v Abergeldie Contractors Pty Ltd1 (Abergeldie), provides another demonstration of how issues with reference dates2 can provide potent grounds for challenging determinations under the Building and Construction Industry Security of Payment Act 1999 (Act).
- The contract was based on an amended version of the widely used AS4000-1997 general conditions (Contract) and included:
- clause 37.1, providing that a progress claim may be made on the 28th of each month for “Works under the Contract” done to the 28th day of that month,
- a clause 44 providing that for the purpose of section 8(2) of the Act3, only one payment claim could be made immediately after practical completion on "the first date for a progress claim arising immediately after practical completion (as determined under subclause 37.1)"4.
- On 16 September 2016 the Contractor issued a notice stating its opinion that practical completion had been achieved as at 16 September 2016 and requesting that the Superintendent certify practical completion.
- On 28 October 2016, the Contractor issued its payment claim 15, but apparently did not pursue it further under the Act.
- On 25 November 2016, the Contractor issued payment claim 16 (Payment Claim) being substantially the same as payment claim 15.
- Later on 25 November 2016, the Superintendent issued a notice to the Contractor which purported to certify that practical completion had occurred 16 September 2016.
- The Principal, Fairfield City Council, issued a payment schedule with a scheduled amount of $Nil. One of the grounds set out in that schedule was that the Payment Claim lacked an available reference date, as the Contract permitted only one payment claim immediately following practical completion and that reference date had already been exhausted by payment claim 15.
- The Contractor then lodged an adjudication application in respect of the Payment Claim, which was determined substantially in its favour (AU$1.286 million).
In its challenge to the adjudication determination, the Council relied upon an interpretation of the term "practical completion" in clause 44 of the Contract as being 16 September 2016, the date certified by the Superintendent (as opposed to the date the Superintendent’s certification issued). It argued that this meant that the only reference date occurring after that date had been used by payment claim 15.
Opposing this, the Contractor argued that the Payment Claim was made in respect of an available reference date, because ‘practical completion’ (for the purpose of clause 44) did not occur until the date that the Superintendent issued its certificate of practical completion, i.e. on 25 November 2016.
Ball J rejected the Contractor’s contentions, finding that clause 44 was intended to operate by reference to the "objective fact" of practical completion, and not by the mechanisms contained in the contract to facilitate proof of practical completion. His Honour dismissed an argument that this ‘objective’ interpretation would, in the context of delay (such as occurred in this case) or failure by the Superintendent to certify practical completion, result in uncertainty as to the occurrence of reference dates. His Honour observed that all that a contractor needed to do to overcome such uncertainty was to ensure that the payment claim submitted following completion of the work covered all remaining work performed.
In December 2016 The High Court confirmed the potency of express contractual reference dates5. The importance of such express provision is again highlighted by the outcome in Abergeldie. Relying on a reference date that a court later finds does not exist is an error that an adjudicator is not entitled to make. The need for vigilance in compliance with contractual timing requirements for payment claims is clearly central to a sustainable claim under the Act.