Australia, the problem is still real….

November 06, 2015 by Amanda Ismail

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In August we did a Blog about a few payment claim disputes, since then there have been another four – and these are just the articles that made the press! Payment claim and contract issues are still a huge problem in our construction industry.

Need some more proof?

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Here are four more news articles that have appeared over the past few months related to payment claim and contract disputes. Now we’re not saying that using Progressclaim.com would have stopped every dispute, but we’re very confident it would have reduced risk, reduced stress and reduced the need for litigation or legal proceedings. How? Read on and you’ll find out…..


BRB Modular Pty Ltd v AWX Construction Pty Ltd

 

Construction contracts often require contractors to sign a statutory declaration affirming that all subcontractors have been paid. In a recent Queensland Supreme Court decision, it was found that non-compliance with the statutory declaration condition did not restrict AWX Constructions statutory right to make a payment claim.

 

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BRB Modular Pty Ltd engaged AWX Constructions Pty Ltd as a subcontractor to construct a camp and accommodation village at an LNG processing facility. The contract entitled the AWX to make a progress claim on the 28th day of each month, subject to compliance of a precondition that, to the best of AWX’s knowledge, all subcontractors it had engaged had been paid.

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On 28 January 2015, AWX delivered a payment claim together with a statutory declaration form, stating that all subcontractors had been paid ‘other than those owed variations, payable by the head contractor’.

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The Result:

BRB Modular contended that no reference date had arisen and AWX’s had been non-compliant with the contractual precondition. The matter proceeded to adjudication. The adjudicator determined that the contract provided for the working out of a reference date and  the contractual precondition did not affect a reference date from arising.

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Read more: http://bit.ly/BRBvrsAWX

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PG-_SubContract-Phone_HD_3GEditors Note: Where Progressclaim.com can help here is that we make managing variations super simple. Variations are clearly noted as separate line items, on every claim, that the headcontractor can immediately assess. We’re not saying we can stop every contractual dispute from occurring, but at least with Progressclaim.com the subcontractor can easily do variations at the end of the day, on-site, on their mobile with just a few clicks. They can be supported with photographic evidence on any device, hit submit and it’s in the headcontractors inbox.

 
Too complex to get it right: Laing O’Rourke Australia Construction Pty Ltd v Samsung C&T Corporation

 

Samsung subcontracted Laing O’Rourke to undertake the Port Landside SMP and E&I Works at the Roy Hill project. In January 2015 Laing O’Rourke issued a progress claim under the subcontract. Samsung then exercised its contractual entitlement to terminate the subcontract for convenience resulting in a dispute.

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The parties signed an “Interim Deed” which required Samsung to pay Laing O’Rourke termination payments including an “on account” amount of $45 million. Samsung paid that amount.

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In February 2015 Laing O’Rourke issued a second claim in respect of works it had performed prior to Samsung’s termination of the subcontract. Samsung did not pay and Laing O’Rourke applied for adjudication of both the January progress claim and the February claim. The adjudicator determined both applications in favour of Laing O’Rourke, requiring Samsung to pay Laing O’Rourke a combined (additional) amount of about $44.1 million.

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Read more: http://bit.ly/LaingORourkeVSSamsung

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PG-_SubContract-Phone_HD_3GEditors Note: It is critical to pay proper attention to contractual terms when undertaking a project.  As seen here, it can be extremely costly to one or all parties involved. Evidence, in the form of documents or photos, to support why your payment claim should be approved can simply be attached when submitting a claim with Progressclaim.com.

 


The sanctity of the architect’s certificate: Cirocco Constructions Pty Ltd v Clarke

 

In 2012, Clarke engaged builder, Cirocco Constructions Pty Ltd, to build a new residence and renovate an old church hall for $2.117 million.

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Under the Contract, the architect issued:

  • on 3 September 2014, progress certificate 11 for $58,875 ($52,925 was for the return of security);
  • on 3 November 2014, progress certificate 12 for $99,484.79; and
  • on 1 December 2014, the certificate of practical completion, which occurred on 31 July 2014.

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Clarke had previously paid all progress certificates in full, but rejected these two certificates because the work was not undertaken in a proper and workmanlike manner and defects remained unremedied. However, Clarke did not dispute the certificate within 20 working days, as the Contract required. Cirocco then sought summary judgment.

The Judge found that Cirocco was entitled to the certified payments, which would not be subject to any set off, regardless of whether Clarke had issued a notice of dispute.

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Read More: http://bit.ly/CiroccoVsClarke

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Editors Note: With Progressclaim.com you can set up automated email reminders to ensure claims are submitted and assessed on time as per your contract and the Security Of Payment Act.

 

 


New South Wales Netball Association Ltd v Probuild Construction (Aust) Pty Ltd

 

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Probuild agreed to construct a Netball Centre of Excellence at Sydney Olympic Park for the New South Wales Netball Association. Probuild made a payment claim (payment claim 24) for about $10,000,000. Netball NSW contended this payment claim was invalid (as it was the second payment claim in relation to a reference date), but an attempt to restrain the adjudication process failed.

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Costs in responding to an invalid payment claim are unlikely to be recoverable. The delivery of an invalid payment claim is also unlikely to amount to misleading conduct. By way of comparison, it was agreed that Netball NSW’s costs in responding to a ~$10,000,000 payment claim were $99,563.80.

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Read More: http://bit.ly/NSWnetballVsProbuild

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Editors Note: Netball NSW spent close to $100,000 in adjudication fees! This is exactly the costs that Progressclaim.com aims to reduce. $100,000 is a lot of money that can be better spent on the project itself, rather than in a court! 

 

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"What used to take me two days, now takes me two hours. Because Progressclaim.com is online, adminstration of the monthly payment claim cycle is less time consuming and much easier to manage. No more processing everything on a spreadsheet prone to error, and the assessment can be carried out at the touch of a button."

PAUL LINKE

Contract Administrator, BUILT

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