Common Adjudication Disputes

The following examples only apply to the current version of the SOP act (NSW only), if your contract was entered into before April 2014 some of the below examples may not apply.

Your payment claim does not have all the attachments (stat dec, programme or other requirements) required under the contract, therefore your claim is invalid and thus will not be paid until you resubmit it.

Even if the contract has such provision which would deem the claim invalid, it is important to remember that the contract cannot modify or overrule the Act. This means that as long as your claim complies with the Act, it will be valid.

You carried out a variation without getting an approval or the site foreman did not sign any time sheets, therefore, you will not be paid any money for the variation.

This one can be somewhat tricky to answer. It is important to correctly construe (interpret) your contract.  Generally, you are entitled to progress payments under the Act for the construction work carried out and normally it will extremely rare where a variation was carried out without any instructions. Therefore, depending on your circumstances you may be able to argue that the payment is due. Remember the contract cannot overrule the Act. However, the interpretation of the contractual provisions as well as the conduct of the parties are both of vital importance. Contrary to the common belief, you may be barred from making a payment claim for the variation in certain circumstances.

Liquidated damages are applied to my payment claim.

The respondent in most cases must prove that you are the sole cause of the delay and that the sum of liquidated damages is a genuine pre estimate of the respondent’s losses. Liquidated damages cannot be a penalty, that is, the Respondent must have suffered a loss. Just because you did not finish your contract works by the due date in the contract does not necessarily mean that the respondent suffered a loss and is entitled to liquidated damages.

Back charges are applied to my payment claim.

For defects. Now, just because the client does not like something, it does not necessarily mean that that work is defective. As long as the work is done in accordance with the contract, you should be able rebut any claims in relation to the defects. For example, just because you can see joints on a plasterboard wall, such on its own does not mean that the work is defective.

For damage caused. Firstly, it must be proven that you caused the damage. For example, just because the client can produce photos of the damaged area does not necessarily prove that you damaged it (usually there are lots of people on site). Secondly, the back charge must be done is accordance with the contract and must usually represent the actual loss caused and cannot be a penalty.

Outstanding defects.

Most contracts have retention provisions. One of the purposes of retention is to guarantee performance under the contract, which includes for defects rectification. If you have few minor defects then it is unlikely that the client has a right to withhold a payment for the entire progress amount, unless of course the value of the defects exceeds the claim + retention amounts. Again, the value of the alleged defects must be proven. What we find happens in a lot of cases is that respondents apply random and unjustified numbers to the alleged defects in an attempt to deny a payment.

Alternative materials or equipment used.

This can be a very complex issue. In general, just because you installed an alternative material or equipment does not necessarily mean you are not entitled to a payment for it.  It all comes down to the particulars of your situation and the contract.

I have claimed my retention but the client/builder will not pay as they did not get their retention back from the client.

Interpretation of the contract in this case is absolutely vital. There are few potential traps you might fall into. Firstly, the Act provides for 12 months period from last time you did any work or supplied related goods or services to make a payment claim or a period as stated in the contract, whichever is longer. Therefore, if you wait too long you might not be able to use the Act to recover your money. Secondly, the Act prohibits ‘pay when paid’ provisions, so if you are entitled to claim your retention under your contract, then it is irrelevant if the client/builder did not get theirs. It is extremely important to understand that your contract can not make the due date for payment dependent on another contract with a third party, so a provision which may read something like, ‘retention will be paid when we achieve our practical completion’ may not be enforceable, because the date when the client/builder achieve their practical completion may depend on their contract with the principal (i.e. a third party), that is a contract to which you are not a party to. Again, the contract cannot modify or overrule the Act.