BuildLaw Issue 29 September 2017 | Page 25

the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act), to recover monies it said were due under the Subcontract. Relevantly, a large component of the Payment Claim was in respect of variations that DDI said Probuild directed it to undertake after the Date for Practical Completion.
In opposition, pursuant to s14 of the SOP Act, Probuild provided DDI with a payment schedule which scheduled an amount of AU$nil by reason of a set-off for liquidated damages in the amount of AU$2,328,998, based on DDI’s failure to complete the work by the Date for Practical Completion.
Adjudication
On 15 October 2015, DDI made an application for adjudication of its Payment Claim pursuant to s17 of the SOP Act, asserting that it was Probuild that instructed it to depart from the Subcontract construction program and that Probuild was clearly aware of the delays by reason of the revised construction programs that it issued. To this end, DDI argued that Probuild’s liquidated damages claim was unreasonable and merely an “invention of convenience”.
The adjudicator dismissed Probuild’s claim for liquidated damages, noting that 80% of the contract variations being directed by Probuild and submitted for approval by DDI came after the Date for Practical Completion. Accordingly, it was determined that it would be “totally inconsistent and unreasonable” for Probuild to be directing DDI to perform significant additional work under the Subcontract after the intended Date for Practical Completion and then claim for liquidated damages against DDI after it had followed Probuild’s express directions. In reaching this decision, the adjudicator explained that whilst there may have been some DDI-caused delays, he was not satisfied that Probuild was entitled to a liquidated damages claim for the total 144 days. Accordingly, the adjudicator determined
that Probuild was liable to DDI for payment of an amount of AU$475,716.20 (including GST), plus interest.
Primary Judgment
On 10 December 2015, Probuild commenced proceedings in the Equity Division of the Supreme Court of NSW seeking an order to quash the adjudicator’s purported determination on the basis that the determination had been infected by a denial of natural justice, namely, procedural fairness. Specifically, Probuild contended that the adjudicator had rejected its liquidated damages claim on bases which neither party had contended for, and which the adjudicator had not notified the parties of. To this end, Probuild asserted that, had the adjudicator intended to so act, he should have invited the parties to make further submissions pursuant to s21(4) of the SOP Act.
The primary judge dismissed Probuild’s summons, stating that there had been no denial of procedural fairness and that the adjudicator had dealt with Probuild’s argument “as made”.