BIF ACT SERIES – CHAPTER 3 PROGRESS PAYMENTS – BACK TO BASICS ADJUDICATION – #7

Welcome to the new year and the roaring twenties, 21^st century style. This edition marks round 7 in our series of articles discussing the basics of adjudication under the Building Industry Fairness (Security of Payment) Act 2017 (“BIF Act”). This instalment comprises Part 2 of the all-important topic of adjudication applications. Part 1 of our instalment detailed the statutory requirements for a valid adjudication application and some tricks of the trade to ensure claimants complete the adjudication application form correctly. Most importantly, we identified how critical it is to identify the correct entities in the adjudication application, that is, the correct name and ABN of the claimant and the respondent. Identifying the wrong entity can be fatal to an application, costing the claimant not only time and money, but may also result in the claimant losing their rights to pursue that claim under the BIF Act.  

If there is only one thing claimants take away from this article, we hope it is this: Plead your case. We have said this before and we will say it again, there is no presumption in favour of claimants in an adjudication. If a claimant fails to provide evidence to satisfy the adjudicator the amount claimed is rightfully owed, the adjudication application may be unsuccessful. It is not sufficient for the claimant to merely refer to the payment claim and claim his or her entitlement. If you do this, you are setting yourself up for failure. You must plead your case and plead it well. This instalment will provide some guidance to claimants on what to include (and what not to include) in their adjudication application.

So far, the articles in our ‘Back to Basics’ serieshave covered the following:

• #1– What is a construction contract, whatis a payment claim and whatis a payment schedule;
• #2– What is a business day, whatis effective service of documents;
• #3– What is a reference date;
• #4– Key timeframes under the BIF Act foran adjudication application and adjudication response;
• #5– What is the due date for payment;and
• #6-  adjudication applications Part 1.

If you have missed any of the above, or areinterested in any of the other current changes facing the constructionindustry, you can view our recent articles here.

As always, those words that appear in italics inthese articles have special meaning. In most cases they will be words orphrases that are specifically defined in the BIF Act.

Content of Adjudication Application

For adjudicationapplications relating to payment claimsfor progress payments of not more than $25,000 there are limitations on the submissionsand accompanying documents which can be filed in support. For adjudication applications relating to aprogress claim of more than $25,000, there are currently no limitations on whatcan be included in the application.

If the paymentclaim is not more than $25,000, submissions cannot exceed 10 pages intotal. Unfortunately, this does not mean one can simply reduce the font size andmargins to squeeze it all in. The legislature was pretty switched on indrafting the Building Industry Fairness(Security of Payment) Regulation 2018 (“BIF Regulation”) andmandates margins of at least 2.54 cm and a font size of at least 10 point. The BIF Regulation also limits the accompanyingdocuments to a copy of:

1. The paymentclaim to which the adjudicationapplication relates;
2. The constructioncontract to which the payment claimrelates;
3. The paymentschedule given in response to the paymentclaim (if any);
4. The supporting documents given to the otherparty with the payment claim or payment schedule (if any);
5. Documents relating to the construction contract (if any);
6. An expert report about a matter to which the payment claim relates (if any); and
7. A statutory declaration about a matter to whichthe payment claim relates.

The statutory declaration shouldbe provided by a person involved in the project detailing and annexing allrelevant communications, purchase orders and documentation to assist with theclaim. The proof is in the pudding. It is a common mistake of claimants to think all that needs to bedone is to file the adjudicationapplication together with a copy of the relevant documentation. We see thisespecially in cases where no paymentschedule has been served. For some reason, claimants in this situation often have a false sense of securityand fail to properly evidence their claim. Here’s some free advice, if you dothat, you will more than likely not succeed in your application.

Evidence is Key

To be successful, you mustprove your case. Your entitlement to payment and the amount of the payment.

As we discussed above, you mayinclude in your application a statutory declaration in support. A statutorydeclaration is simply a sworn statement declaring certain facts to be true. Itis the claimant’s job in thisstatement to provide sufficient evidence to prove to the adjudicator that the amount claimed is owing to them for construction work carried out or for related goods and services supplied.

Evidence should be succinct and to the point. As detailed in our previous article, an adjudicator has limited time in which to make their decision. A lot of adjudicators also have other jobs to attend to as well as deciding on the adjudication.

Submissions should be coherent and in some sort of logical order. So that the adjudicator understands the history to the adjudication application, it is prudent to provide a background to the project. If the adjudication application concerns a number of variations and extension of time claims, sometimes a comprehensive background detailing the parties conduct throughout the project may be beneficial in proving a certain course of conduct. For example, if the respondent is now denying variations on the basis that the claimant had not given the appropriate notices under the contract, despite the respondent’s previous words or conduct had communicated that strict compliance with the notice requirements in the contract was not necessary, it may be possible to argue the respondent has waived those contractual requirements or is estopped from denying the acceptance of the variations without compliance with the notice provisions in the contract. In such circumstances it would be advantageous to include evidence of the past conduct of the respondent in this respect to show the respondent had previously directed and approved numerous variations without compliance with the notice provisions in the contract.

There is no need to make thecontent of your application complex, this will not make you look any moreentitled to the claimed amount. Providingan adjudicator a detailed, succinct andcoherent application may even subconsciously enhance their view of theapplication. Further, it does not help your case to make submissions that arederogatory or contain personal attacks on the character of individuals. Suchsubmissions are generally irrelevant and do nothing to support a claim ofentitlement or value.

Payment Schedule as Guideline

Using the payment schedule as a guideline will assist in what you need toprove to the adjudicator. For example:

1. For a claim of defective work, put evidencebefore the adjudicator which refutes thisclaim. This can be done by obtaining an expert report or providing statementsfrom persons who were involved in that part of the project. Any photographstaken detailing the quality of the works should also be included in thedeclaration;
2. If the respondentcontends the work claimed in the payment claimhas not been carried out,  provideevidence of the works being performed prior to  the reference date the subject of the payment claim. Once again, statementsfrom persons who were involved in that deliverable will be key in convincingthe adjudicator of the claim;
3.  If the value of the works claimed is inquestion, that is, the respondent isalleging the claimant has overpricedthe construction work claimed or the related goods and services supplied, evidenceof the quantity of the work carried out and the value of the works provided forin the contract should suffice however, a report from a quantity surveyor or anexperienced contractor in the relevant field may assist in supporting the claim.

Do not ignore an allegation madein the payment schedule just becauseyou don’t agree with it, no matter how bizarre it seems. As well as proving theclaim, a claimant must also refuteall allegations made by a respondent.The adjudicator is unable to considerevidence not put before them; therefore, where the claimant fails to rebut an allegation, there is a greater chance therespondent will succeed on the issue. 

Submissions as well as Statutory Declaration

Just because a statutorydeclaration has been filed detailing the claimant’sentitlement to the claimed amount,this does not mean the claimant shouldnot also be making submissions.

Whilst submissions are usually drafted on legal issues and contract interpretation points to be considered by the adjudicator, this does not mean if a lawyer is not engaged to act, a claimant cannot and should not file submissions. Submissions are ultimately a written summary of the case, including reference to particular clauses in the contract that may be of relevance, or associated documents proving a point. Using our example above, submissions detailing the history of the respondent’s waiver of compliance with contract terms may be beneficial in proving entitlement to a variation. Reference to evidence contained in the statutory declaration will be of great assistance here. If there is email correspondence from the respondent saying “just go ahead with the work, we will approve it later”, include it.

Limit your Submissions

Submissions should be limited tothe issues before the adjudicator,there is no reason to include submissions about the respondent’s personal affairs, any derogatory comments or detailsof previous disputes between the respondentand other contractors in an attempt to prove a course of conduct. Commentsof this nature will not and cannot be considered by the adjudicator and may ultimately cost a claimant a considerable amount of money if words are wasted onirrelevant information (especially if your submissions are limited as they arein claimed not more than $25,000).

For large complex claims consisting of numerous variations or extension of time claims, it may be beneficial to prepare a schedule for the adjudicator’s consideration that is easy to comprehend and details the claimed amount, the disputed amount and any amount not disputed. A timeline detailing the history of the project and highlighting milestone events may also be useful. Anything a claimant can do to assist an adjudicator should be done.

Key Takeaways:

1. Plead your case.
2. Quantify your claim.
3. It is imperative claimants ensurethe submissions include all relevant facts and information. We recommend if a claimant is unsure if a certain bit ofinformation is relevant, include it. Always err on the side of caution.
4. Set out in logical order with logical reasons why the claimant is entitled to receive theamount claimed.
5. Do not include irrelevant and illogical arguments that are notsupported by the evidence. These will not support your case.
6. File a statutory declaration and submissions in support ofyour adjudication application.Submissions will assist in providing opinion in support of your claim.

Staytuned, coming up next is adjudicationresponses.

Whether you require assistance with a payment claim and adjudication application, a payment schedule and adjudication response, other forms of dispute resolution including litigation, or the drafting of your own contracts to better protect you, Active Law are well placed to help to achieve your best position possible. To make or defend a claim under the BIF Act, or for any matter requiring expertise in construction law, we are only a phone call away.

Disclaimer - Reliance on Content
The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.