The recent NSW Supreme Court decision in McNab Building Services Pty Ltd v Demex Pty Ltd considered an appeal of an Adjudicator’s decision under the NSW SOP Act granting the claimant subcontractor (Demex) the full claim amount of approx. $1.3m for remediation work at a Tweed Heads site for removal asbestos contaminated soil (ACM) and placement of clean fill.
At issue was the calculation of claimed volumes of ACM removed from the site and claimed volumes of clean fill imported to the site which were in dispute. The respondent contractor (McNab) stated in its payment schedule that calculation of soil volumes claimed by the subcontractor in the payment claim were not properly particularised and as a result, the construction work claimed could not be identified.
No explanation or calculation for the conversion of soil tonnage data to soil volumes was supplied with the payment claim and no submissions were made by either party in the Adjudication in respect of that conversion. In the absence of any agreement between the parties and without inviting submissions from either party in the Adjudication, the Adjudicator applied conversion rates of 1.6 and 1.96 tonne per cubic metres respectively.
The Court held the Adjudicator’s application of the conversion factors to calculate the claimed soil volumes were material factors in arriving at his decision and submissions as to the appropriate conversion factor to be applied should have been invited by the Adjudicator, but he had failed to do so. Accordingly, the Court held the respondent contractor was denied procedural fairness in the Adjudication process and the Adjudicator’s decision was void in its entirety.
Civil contractors particularly should note the importance of properly particularising soil volume calculations in payment claims made under the BIF or SOP Acts and ensure sufficient material in support is included at first instance.
For advice contact Julian Troy at Troy Legal, julian@troylegal.com.au.
