Welcome to the new year and the roaring twenties, 21st 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’ series have covered the following:
- #1 – What is a construction contract, what is a payment claim and what is a payment schedule;
- #2 – What is a business day, what is effective service of documents;
- #3 – What is a reference date;
- #4 – Key timeframes under the BIF Act for an 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 are interested in any of the other current changes facing the construction industry, you can view our recent articles here.
As always, those words that appear in italics in these articles have special meaning. In most cases they will be words or phrases that are specifically defined in the BIF Act.
Content of Adjudication Application
For adjudication applications relating to payment claims for progress payments of not more than $25,000 there are limitations on the submissions and accompanying documents which can be filed in support. For adjudication applications relating to a progress claim of more than $25,000, there are currently no limitations on what can be included in the application.
If the payment claim is not more than $25,000, submissions cannot exceed 10 pages in total. Unfortunately, this does not mean one can simply reduce the font size and margins to squeeze it all in. The legislature was pretty switched on in drafting the Building Industry Fairness (Security of Payment) Regulation 2018 (“BIF Regulation”) and mandates margins of at least 2.54 cm and a font size of at least 10 point. The BIF Regulation also limits the accompanying documents to a copy of:
- The payment claim to which the adjudication application relates;
- The construction contract to which the payment claim relates;
- The payment schedule given in response to the payment claim (if any);
- The supporting documents given to the other party with the payment claim or payment schedule (if any);
- Documents relating to the construction contract (if any);
- An expert report about a matter to which the payment claim relates (if any); and
- A statutory declaration about a matter to which the payment claim relates.
The statutory declaration should be provided by a person involved in the project detailing and annexing all relevant communications, purchase orders and documentation to assist with the claim. The proof is in the pudding. It is a common mistake of claimants to think all that needs to be done is to file the adjudication application together with a copy of the relevant documentation. We see this especially in cases where no payment schedule has been served. For some reason, claimants in this situation often have a false sense of security and fail to properly evidence their claim. Here’s some free advice, if you do that, you will more than likely not succeed in your application.
Evidence is Key
To be successful, you must prove your case. Your entitlement to payment and the amount of the payment.
As we discussed above, you may include in your application a statutory declaration in support. A statutory declaration is simply a sworn statement declaring certain facts to be true. It is the claimant’s job in this statement 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 the content of your application complex, this will not make you look any more entitled to the claimed amount. Providing an adjudicator a detailed, succinct and coherent application may even subconsciously enhance their view of the application. Further, it does not help your case to make submissions that are derogatory or contain personal attacks on the character of individuals. Such submissions are generally irrelevant and do nothing to support a claim of entitlement or value.
Payment Schedule as Guideline
Using the payment schedule as a guideline will assist in what you need to prove to the adjudicator. For example:
- For a claim of defective work, put evidence before the adjudicator which refutes this claim. This can be done by obtaining an expert report or providing statements from persons who were involved in that part of the project. Any photographs taken detailing the quality of the works should also be included in the declaration;
- If the respondent contends the work claimed in the payment claim has not been carried out, provide evidence of the works being performed prior to the reference date the subject of the payment claim. Once again, statements from persons who were involved in that deliverable will be key in convincing the adjudicator of the claim;
- If the value of the works claimed is in question, that is, the respondent is alleging the claimant has overpriced the construction work claimed or the related goods and services supplied, evidence of the quantity of the work carried out and the value of the works provided for in the contract should suffice however, a report from a quantity surveyor or an experienced contractor in the relevant field may assist in supporting the claim.
Do not ignore an allegation made in the payment schedule just because you don’t agree with it, no matter how bizarre it seems. As well as proving the claim, a claimant must also refute all allegations made by a respondent. The adjudicator is unable to consider evidence not put before them; therefore, where the claimant fails to rebut an allegation, there is a greater chance the respondent will succeed on the issue.
Submissions as well as Statutory Declaration
Just because a statutory declaration has been filed detailing the claimant’s entitlement to the claimed amount, this does not mean the claimant should not 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 to the issues before the adjudicator, there is no reason to include submissions about the respondent’s personal affairs, any derogatory comments or details of previous disputes between the respondent and other contractors in an attempt to prove a course of conduct. Comments of 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 on irrelevant information (especially if your submissions are limited as they are in 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.
- Plead your case.
- Quantify your claim.
- It is imperative claimants ensure the submissions include all relevant facts and information. We recommend if a claimant is unsure if a certain bit of information is relevant, include it. Always err on the side of caution.
- Set out in logical order with logical reasons why the claimant is entitled to receive the amount claimed.
- Do not include irrelevant and illogical arguments that are not supported by the evidence. These will not support your case.
- File a statutory declaration and submissions in support of your adjudication application. Submissions will assist in providing opinion in support of your claim.
Stay tuned, coming up next is adjudication responses.
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.