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The Effect of a Previous Adjudication Determination

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Regular users of the Building and Construction Industry Security of Payment Act 1999 (“the Act” or “SOPA”) will be aware of the effect of section 22(4) of the Act. The practical effect of section 22(4) is that once a claim for Construction Work has been valued in an Adjudication Determination, there is little utility for a Claimant to include the same claim in a subsequent Payment Claim and Adjudication Application, because a subsequent Adjudicator will be bound to award the same value.

In recent years, it has been arguable that an Adjudicator could find that a Claimant was “not entitled” to be paid for a particular item of construction work without “valuing” the work for the purpose of section 22(4) of the Act.

A finding of “no entitlement” left the door open for a Claimant to improve the evidence in support of its claim and then include the same claim in a subsequent Payment Claim and Adjudication Application. This was because a subsequent Adjudicator was seemingly not bound to follow any previous finding of “value”, as a finding of “no entitlement” was not a finding of “value” for the purpose of section 22(4) of the Act.

The recent decisions of Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 and Urban Traders v Paul Michael [2009] NSWSC 1072 have both considered the application of section 22(4) of the Act, and have shed some light on the consequence of an Adjudicator determining the a Claimant is “not entitled” to be paid for particular work. 

Kreisson Legal hold the view that Claimants should prepare Payment Claims under the Act supported by detailed submissions and evidence. This gives Claimants the best opportunity to successfully recover claims through the Adjudication process.

It is dangerous for Claimants to approach Payment Claims and Adjudication Applications with a casual attitude, assuming that an Adjudicator’s finding of “no entitlement” in respect of a particular claim will result in the opportunity of preparing more substantial evidence and submissions on a later occasion.

It is becoming increasingly important for Claimants to get the SOPA process right the first time. The message being sent by the Courts is clear: Claimants have one opportunity to convince an Adjudicator to award the claims sought in a Payment Claim. Once the merits of a claim have been considered, the findings in relation to that claim, including a finding of “no entitlement” will generally be binding on any subsequent Adjudicator.

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