Goldwind Australia Pty Ltd v ALE Heavylift (Australia) Pty Ltd [2021] VSC 625

Nikki Miller, Tom Kearney, Alice Tyson

Key takeouts

The decsion involved a judicial review that was sought in relation to a previous adjudication determination. This determination was about whether a payment claim is for construction work done, or is an attempt to recoup previously deducted liquidated damages.

This decision has implications for the recovery of offset liquidated damages under the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act). The result is that a claimant under the SOP Act can recover amounts previously deducted, that were themselves excluded amounts (such as liquidated damages), in subsequent payment claims. This is as long as the claim is properly characterised as being for work done.

What was under review?

The respondent (Goldwind) deducted liquidated damages for delay in a payment schedule that was issued to the claimant (ALE) in September 2020. The claimant issued a new payment claim under the SOP Act that ignored the delay deduction and made a claim for works performed in September 2020. These works were previously claimed, but unpaid as a result of the delay deduction. Goldwind issued another payment schedule, again applying the delay deduction.

At adjudication the adjudicator held that the claim was for works done, and the delay deduction was an excluded amount. Goldwind then sought judicial review of the adjudication determination, relying on the statement made by Digby J in the previous decision in Shape Australia Pty Ltd v Nuance Group (Aust) Pty Ltd [2018] VSC 808 (Shape). In this case, Digby J argued that an attempt to recoup an excluded amount, that had been previously deducted, was itself an excluded amount under the SOP Act.

Decision

Stynes J determined that the adjudicator did not err by characterising the September 2020 claim as a claim for work done, and consequently taking it into account in determining the adjudication application.

It was critical to Digby J’s reasoning in Shape that the claim was characterised as a claim to recoup liquidated damages. In Goldwind, the claimant’s claim was for unpaid work previously done, rather than an attempt to recoup liquidated damages.

The practical effect of Shape was that if a claimant failed to challenge an excluded amount in a payment schedule, it will be prevented from recovering that amount in a subsequent payment claim. Stynes J said that such an outcome was contrary to the text and purpose of the SOP Act. In light of this decision, it is critical that claimants characterise all payment claims as being for work performed.