Australia: Construction company fails to overturn adjudication determination in Supreme Court of NSW

In brief - Court upholds payment to electrical subcontractor under Security of Payment Act

The Supreme Court of NSW upheld the payment awarded to an electrical subcontractor in an adjudication determination because the construction company sought to rely on submissions in the adjudication response which were not foreshadowed in the payment schedule.

Construction company challenges payment awarded to electrical subcontractor

In an adjudication determination under the Building and Construction Industry Security of Payment Act 1999 (Act), electrical subcontractor Blacklabel Services Pty Ltd was awarded an amount of $47,173.29 against construction company Maxstra NSW Pty Ltd.

Despite the relatively small amount involved, Maxstra challenged the determination in the Supreme Court of NSW and sought a declaration that the determination be declared void and an order for repayment of the amount it had already paid pursuant to the determination.

In the decision in Maxstra NSW Pty Ltd v Blacklabel Services Pty Ltd [2013] NSWSC 406, handed down on 24 April 2013, the Supreme Court dismissed Maxstra's application.

Blacklabel serves Maxstra with payment claim for electrical design work on service station

Maxstra engaged Blacklabel to undertake the electrical design and trade work on the construction of a service station in Kempsey, NSW.

Construction commenced on 15 March 2012 and, after disputes arose between Maxstra and Blacklabel, the electrical work was completed in late July 2012. On 8 August 2012, Blacklabel served on Maxstra a payment claim for the sum of $47,173.29.

In response, Maxstra issued a payment schedule on 20 August 2012, certifying the amount payable as nil on the basis that the amount claimed exceeded the value of the work performed (Payment Schedule). Relevantly, Maxstra expressed its reason for withholding payment or rejecting payment as:

Amount claimed exceeds value of works performed.
Contractor is not entitled to claim for equipment removed from site by contractor on or about 21/7/12
Contractor caused damage to existing work during removal of fixed equipment
Costs incurred in determining incomplete work due to manner in which work was performed (eg. power points fitted off but not connected)
Extra over cost of completing work following termination of contract, the total amount required to complete the works upon termination of the contract exceeds the total amount claimed
Delay damages due to Maxstra by reason of Blacklabel removing equipment due to subsequent lead times to replace.

On 3 September 2012, Blacklabel made an adjudication application for the payment of moneys owing on account of its design work. On 16 September 2012, the adjudicator determined that Maxstra owed Blacklabel $47,173.29 plus adjudication fees and expenses.

How does the Security of Payment Act work?

The object of the Building and Construction Industry Security of Payment Act is to ensure that a person who undertakes construction (or related services) under a construction contract is entitled to receive, and able to recover, progress payments in relation to that work.

The Act permits a person who claims to be entitled to payment (Claimant) to serve a payment claim on the person liable to make the payment. Amongst other things, the payment claim must identify the construction work to which the payment relates, indicate the amount of the progress payment claimed and state that it is a payment claim under the Act.

A person from whom payment is claimed and on whom a payment claim is served (Respondent) may reply by providing a payment schedule. The payment schedule must identify the payment claim to which it relates, indicate the amount of the payment (if any) that the Respondent proposes to make and if that amount is less than the claimed amount, indicate why the scheduled amount is less.

If the Respondent does not provide a payment schedule within 10 business days after the payment claim is served, it becomes liable to pay the entirety of the claimed amount.

If, amongst other things, the Respondent provides a payment schedule certifying the amount payable as less than the amount claimed, the Claimant is entitled to apply for adjudication of the payment claim.

What does the adjudicator determine?

Where an adjudication application has been made, the adjudicator is required to determine:

  • the amount of the progress payment (if any) to be paid to the Claimant
  • the date on which such payment became or becomes payable
  • the rate of interest payable on any such amount

Adjudicator rejects assertion that amount claimed exceeded value of work performed

The adjudicator reviewed, amongst other things, Blacklabel's payment claim for $47,173.29 and Maxstra's Payment Schedule assessing the value of the work as nil on the basis that the amount claimed exceeded the value of the work performed.

The adjudicator determined that neither Maxstra's Payment Schedule nor adjudication response supported its assertion that the amount claimed exceeded the value of work performed. He stated that, even if the adjudication response did include supporting evidence, the evidence would constitute new material which had not been included in the Payment Schedule and therefore he would be precluded from considering it.

Maxstra challenged this determination on the basis that the failure of the adjudicator to consider its submission as to the value of the work amounted to a jurisdictional error.

Reasons for withholding payment need to be included in payment schedule

In determining whether the adjudicator had erred in his decision to disregard certain submissions made by Maxstra, the Supreme Court looked to the requirements of the Act. In particular the Court looked to:

  • Section 20(2B), which excludes the Respondent including in its adjudication response any reasons for withholding payment unless those reasons have already been included in the payment schedule provided to the Claimant; and
  • Section 22(2)(d), which requires the adjudicator to consider, amongst other things "the payment schedule (if any) to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule" (emphasis added).

In considering the facts of the case, Rothman J observed that Maxstra, in its adjudication response, submitted that the design work occurred prior to the renegotiated sub-contract price and that "there was no additional design work and there is no basis to claim additional design work".

His Honour noted that Maxstra's Payment Schedule only provided one reason for withholding the payment or rejecting the payment claimed for design works, which was that the amount claimed exceeded the value of the works performed. On these facts, the Court concluded that, because the reasons set out in Maxstra's adjudication response did not arise from the terms of its Payment Schedule, the adjudicator was correct in not considering the adjudication response.

Supreme Court determines that adjudicator was correct

Rothman J held that:

[i]n taking the view that the Adjudicator was not permitted to consider submissions made in the adjudication response, or otherwise, that are not included in the payment schedule, the Adjudicator was correct. No error of law is disclosed in that finding. Nor does it involve an error of jurisdiction, or a denial of procedural fairness.

His Honour observed that the approach of the court when reviewing a decision should be not to apply an overzealous analysis to the determination of an adjudicator, but rather to take a practical approach, concentrating on the effect of the determination and the reasons of the adjudicator.

Payment schedules need to include all relevant documentation and supporting evidence

This case highlights the importance of thorough, properly prepared and well drafted payment schedules. Be alert to the fact that all payment claims have the potential to be referred to adjudication and, if that happens, it is too late to start locating evidence in defence of the payment claim.

Faith Laube
Construction and engineering
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions