Summary of the application
HFK Lawyers successfully represented the respondent to an adjudication application under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“the Act”), with the adjudicator determining wholly in favour of the respondent.
This article considers the adjudication determination, the jurisdictional issues that arose under the Act, and the practical lessons for parties involved in payment claims, adjudication applications and construction disputes in New South Wales.
The determination provides a useful reminder that adjudication applications under the Act are not determined only by the amount claimed or the competing factual narratives advanced by the parties. Before an adjudicator can consider the substance of a claim, there must first be jurisdiction under the Act.
In this matter, the respondent advanced several grounds of opposition and two issues raised by the Respondent went to jurisdiction. The adjudicator found it unnecessary to consider all the issues, as the two issues on jurisdiction were determinative. As a result, the adjudicator deemed he did not have jurisdiction to consider the claim, determining wholly in favour of the respondent.
Key takeaways
- HFK Lawyers represented the respondent, who was successful in the adjudication application.
- The adjudicator determined that the payment claims lacked jurisdiction pursuant to section 7 of the Act and that no building contract could be properly established by the claimant.
- The adjudicator also determined that the payment claims were issued out of time and in breach of section 13(5) of the Act.
- The claimant was awarded none of the monies claimed and was to bear the costs of the adjudication.
2. Critical issues with respect to jurisdiction
2.1 Section 7 – The need for a Building Contract
Pursuant to section 7 of the Act, the Act applies only to contracts for building works. The existence of a building contract is a necessary threshold issue for the claimant to establish. Without that foundation, there was in this case, no basis for the adjudicator to proceed to determine the payment claims under the Act.
In practical terms, this meant that it was not enough for the claimant to assert that money was owed or even to show that significant construction works had been performed at a specific location. The claimant needed to establish that the statutory regime was enlivened. The adjudicator accepted that no building contract was properly evidenced by the claimant, meaning the only reasonable conclusion is that no such building contract exists. Upon that determination, the adjudicator had no option but to determine that the purported payment claims lacked jurisdiction under the Act.
2.2 Section 13 – Formal requirements of a Payment Claim
Although the adjudicator had already determined a lack of jurisdiction, he gave further consideration to section 13 of the Act. Section 13 of the Act is directed specifically to requirements of payment claims, including when they may be issued, and what may be included in a claim.
The Act does not permit a claim to be made for works outside the 12-month period from when the works were carried out (if no other time is specified in contract). This timing requirement was significant in this matter as the relevant works and the payment claim did not align within the timeframe required by the Act. In this matter, the works were conducted in November 2024 and completed on 9 May 2025. The payment claim was dated 2 June 2026, falling outside the 12 month period.
The claimant attempted to argue that pursuant to section 13(4)(a), there was a term agreed by the parties that extended the relevant dates beyond 12 months. However, the absence of a building contract and the inadequacy of evidence to establish the terms of the contract meant that section 13(4)(b) applied, thereby creating a statutory bar from a claim for being out of time. On that basis, the purported payment claims did not comply with section 13(5) of the Act.
3. Conclusion
Together with the finding concerning the absence of a building contract, it meant the adjudicator did not need to consider the remaining grounds advanced by the respondent. The key lesson and takeaway is the Act, and its deadlines and requirements are read strictly. It is important to consider all the necessary requirements before you commence an adjudication application, or you risk bearing the costs of an unsuccessful claim.
If you are considering making an adjudication application, need to address a payment claim, or need to respond to an application, HFK would be pleased to assist. The timelines are strict, and it is important to seek advice promptly so there is ample time to consider the matter, assess the available material, and advise you as required.
