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Guidance about the content of SOP claims.

13/01/2011

The Victorian Supreme Court has considered what content was needed in a valid claim under the legislation securing the chain of payments in the building and construction industry .  Claude Neon had asked a subcontractor to do work, piecemeal, on a “do and pay” basis.  The parties had not thought how the work should be valued.  The subcontractor’s invoices described the work in a very summary, qualitative form.  Claude Neon refused to pay invoices in the absence of  documentary evidence of the labour and material supplied.   The subcontractor served a SOP  claim to which it simply attached those invoices.   An adjudication application was lodged.  The subcontractor subsequently detailed the labour hours and materials in a statutory declaration.

Claude Neon argued that the notice of claim did not contain a sufficient description of the physical works so as to enable the Adjudicator to properly go about his task according to the legislation.   In consequence, the adjudication was void because the Adjudicator could not have valued the construction work in the way required by the Act.

The Court held that thefundamental determination to be made by an adjudicator is whether the construction work identified in the payment claim has been carried out and secondly what is its value”.

“… the Adjudicator had before him, and was able to take into account, the summary description of the work contained in the relevant invoice, the statutory declaration of Mr Merrett and the annexed breakdown as to the things that Rhino did to undertake the relevant construction work, namely the provision of labour and materials, rental of additional space, the engagement of the subcontractor and the provision of management. These things were all applied to produce the relevant construction work, and the documents which recorded the details of these elements all combined in this case to provide the Adjudicator in effect, with a valuation of a construction work which he was able to assess. In the absence of controverting material, he was entitled to adopt the Rhino valuation.”

The Court observed “It is not the end product of the thing produced which is to be valued, as for example the value of a building which has been erected or the value of the additional component of a building which has been constructed, although the end product may provide a guide as to the value of the construction work which the claimant undertook. What a contractor does to achieve the end product is essentially comprised in the physical work it carries out through the labour of those it employs and the materials it has supplied.” That strongly suggests  that a record of labour hours and bills of quantities should be provided in support of every adjudication claim.

Read the reasons for judgement in Claude Neon Pty Ltd v  Rhino Signmakers Pty Ltd

 

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One Comment leave one →
  1. Globos permalink
    17/08/2011 11:44 pm

    Interesting analysis of the Adjudication Appeal. Did the Plaintiff in the end, have to pay the amount owing as per Rhino’s claim No 2, or was it null and voided as procedural jurisprudential error?

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