Binah Constructions Pty Ltd v PTMG Pty Ltd [2024] NSWSC 872

Claire Tait  |  Laura-Rose Lynch  |  Nicole Sawick

Key takeouts

• It is within the adjudicator’s power to form an opinion as to the value of a payment claim and make a determination on that basis.

• An adjudicator will not fall into jurisdictional error by awarding an amount in excess of a payment claim if the adjudicator was required to determine the amount of the payment claim.

Facts

PTMG Pty Ltd (PTMG) entered into a subcontract with Binah Constructions Pty Ltd (Binah) for the construction of 25 residential apartments on the NSW south coast.

In March 2024, PTMG served progress claim 25 (PC25) for $27,465, being the balance of the subcontract sum and a sum for variations. The ‘claimed contract summary’ on the second page of PC25 recorded $592,591 as the total amount claimed by PTMG to the date of PC25. On 23 April 2024, Binah issued a payment schedule which certified the amount payable to PTMG as $27,465. This amount was not paid.

In April 2024, PTMG issued progress claim 26 (PC26) for a retention sum. The first page of PC26 recorded the ‘net claimed amount’ as $15,594. The ‘claimed contract summary’ on the second page of PC26 recorded $608,185 as the total amount claimed by PTMG to date, which was comprised of both amounts claimed under PC25 and PC26, of which $592,591 was said to have been approved (ie $15,594 less than the amount claimed).

Binah’s payment schedule stated that the scheduled amount was $nil on the basis that PTMG was not entitled to the retention sum until practical completion had been achieved. On the second page of the payment schedule, the ‘subcontract summary’ recorded the amount claimed by PTMG to date as $608,185 and the amount approved by Binah as $592,591 (ie $15,594 less than the amount claimed).

On 14 May 2024, PTMG lodged an adjudication application and claimed payment of $43,059 being the sum of amounts said to be due under both PC25 and PC26. PTMG asserted that the scheduled amount (for which it was claiming payment) was in fact $27,465 because:

• PC26 indicated the amount of the progress payment that was payable. This was different to the amount stated on the first page of PC26 which was the net amount claimed since the previous claim; and
• Binah had approved the amount of $27,465 in its payment schedule in response to PC25 and then again by certifying the total amount payable was $592,591 in its payment schedule in response to PC26.
• Binah opposed the application on the basis that the claimed amount in PC26 was in fact $15,594, not the sum of both PC25 and PC26. Binah argued that PTMG had conflated PC25 and PC26, and had not made any submissions on PC25 nor included it in the adjudication application.

The adjudicator issued a determination in favour of PTMG, finding that the only amount in dispute was the retention sum on the basis that practical completion had not been achieved.

The adjudicator was satisfied that amount of $608,185 was the amount claimed by PTMG in PC26, notwithstanding that the first page of PC26 showed the claimed amount as $15,594. The adjudicator also found that the ‘payment assessment’ on the second page of the payment schedule issued by Binah in response to PC26 indicated Binah’s intention to pay the amount claimed by PTMG.

Binah commenced proceedings in the NSW Supreme Court to set aside the adjudicator’s determination on the basis that the adjudicator did not have jurisdiction to award an amount in excess of the amount claimed in PC26, which in Binah’s view was $15,594 Specifically, Binah claimed that the adjudicator’s jurisdiction was limited to issues which could be raised by reference to the work the subject of the payment claim being adjudicated and, on that basis, it was not open to the adjudicator to award an amount valued by reference to the combined value of the works the subject of multiple payment claims.

Decision

The court dismissed Binah’s application to set aside the adjudicator’s determination.

While the court agreed in principle with Binah’s statement that an adjudicator cannot award an amount in excess of the payment claim, Binah’s submission was not a complete statement of how the adjudicator’s jurisdiction is defined under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act).

In dismissing the proceedings, the court held that under the SOP Act the jurisdiction of the adjudicator is to determine issues raised by the scope of a payment claim that is the subject of an adjudication application. In determining the scope of the payment claim, it is up to an adjudicator to decide the parameters of a payment claim. The scope can include both the amount and nature of the work the subject of the payment claim. On this basis, it was open to the adjudicator to interpret the amount being claimed in the progress claim and make a determination accordingly.

The court confirmed that the adjudicator’s approach in the interpretation of the claimed amount in PC26 was correct, noting that PTMG was entitled to include in its payment claim an amount which was the subject of a previous claim under s13(6) of the SOP Act.