In EnerMech Pty Ltd v Acciona Infrastructure Projects Australia Pty Ltd & Ors [2024] NSWCA 162, the New South Wales Court of Appeal held that is not a precondition to the validity of a payment claim that the payment claim be a claim for “construction work”. This decision reverses the long-accepted position that a payment claim must be “construction work”, which precluded a claimant from recovering the proceeds of a wrongfully called upon bank guarantee or bond.
Decision of the NSW Court of Appeal
The Court of Appeal decided that a payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act), did not need to be construction work, in order to be valid and can include the proceeds of a wrongfully converted bank guarantee.
The Court of Appeal made this decision for a number of reasons. First, the SOP Act did not expressly provide that a payment claim must be “for” construction work.
Second, the proper interpretation of a payment claim was not a claim “for construction work”; it was a claim for money owing on account of construction work (or related goods and services).
The outcome of the appeal was that Acciona was ordered to pay EnerMech the adjudicated amount of $10,160,109.77, compromised of the converted bank guarantees plus interest and costs.
Key Takeaways
The key takeaway from this decision for claimants is that it is possible to recover the proceeds of a wrongfully called upon bank guarantee or bond provided that care is taken when preparing your payment claim. EnerMech framed its claim by deducting the amount of the bank guarantees against the previous payments made by Acciona in its payment claim.
This decision has paved the way for claimants to include claims for the proceeds of a bank guarantee or bond at adjudication. This should be a factor considered when deciding whether to have recourse to security held under the contract.
Global Claims in Adjudication
In an adjudication between Elevate Main Beach and McNab Construction, the contractor lodged an adjudication claim that included: VQ112 for $2, 288, 887.07 (ex GST) for additional resources and purchaser change directions.
For the Principal, CDI made submissions that the claim was a global damages claim:
- Involving a bundle of claims relating to a bundle of issues with no reasonable explanation of the EOT’s claimed whether they be qualifying, concurrent or compensable; and
- A global claim is, in effect, a damages claim for multiple breaches with no ability to apportion the loss to each underlying breach.
The adjudicator found that VQ112 “provides all the hallmarks of a global damages claim” and there was no jurisdiction to decide it.
Key Takeaways
An adjudicator can only determine an amount due “under the contract” – and has no jurisdiction to determine damages claims much as global delay claim (and perhaps some prolongation claims).
Key contacts:
