The NSW Supreme Court has examined the important issue of the 12 month limitation period for the service of payment claims under the Building and Construction Industry Security of Payment Act 1999 (the Act), in relation to the last date upon which construction work was carried out (or related goods and services supplied) on a particular project.
Sky General (Claimant) and Bauen (Respondent) entered into a sub contract whereby the Claimant would undertake painting work for the Respondent.
The Claimant served a payment claim under the Act, outside the 12 month period prescribed by section 13(4)(b). That is, more than 12 months after the construction work to which the claim related was last carried out.
The Adjudicator found that the payment claim was served within the 12 month period because it was made “within the twelve months of the end of the defects liability period…” and subsequently determined in favour of the Claimant, notwithstanding that none of the construction work was carried out within the 12 month period before the service of the payment claim.
The respondent filed an application with the Supreme Court seeking a declaration that the Adjudicator’s determination is void, or alternatively that it be quashed.
In the Supreme Court, the respondent argued that the calculation of whether works were carried out within the period of 12 months prior to the service of the payment was not a jurisdictional fact which the Adjudicator was bound to determine.
His Honour Sackar J found [at 63]:
“…[T]he adjudicator was distracted in my view by the defects liability period and miscalculated the relevant time frame for the purposes of the Act. It follows the adjudicator committed a jurisdictional error and the adjudications should be quashed.”
Claimants under the Act should ensure careful calculation of the last date upon which construction work is carried out (or related goods and services are supplied), because in the absence of actual work forming part of the claim being carried out, within 12 months of service of the payment claim, they may be out of time.
Similarly, respondents under the Act should ensure careful calculation of the last date upon which construction work is carried out (or related goods and services are supplied), and if they are calculated to be outside the 12 month period, this point must be raised in the payment schedule and adjudication response, notwithstanding that an adjudicator may not have the jurisdiction to determine an application brought founded on such a payment claim.
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