Know Your Rights When Claiming Rectification Costs!

If you’re a subcontractor working under the Building and Construction Industry Security of Payment Act 2002 (Vic) (the Act), it’s crucial to understand how to properly claim rectification costs and avoid getting caught in disputes over “excluded amounts.” A recent court case, Hanson Construction Materials Pty Ltd v Decmil Australia Pty Ltd [2024] VSC 361, offers valuable lessons for subcontractors on these issues.

Key Points from the Case

Follow the Contract

In the case, Hanson Construction sought a judicial review because the adjudicator considered an “excluded amount” in their decision. This happened because Decmil, the contractor, tried to deduct rectification costs for fixing a foundation without properly following the contract’s steps for claiming those costs. The court found that without a formal demand, these costs were considered damages and thus “excluded amounts” under the Act.

What Are Excluded Amounts?

Under the Act, certain claims, like damages, can’t be included in a payment claim. If an adjudicator includes these excluded amounts in their decision, that part of the decision can be voided.

What This Means for You

Always Check Your Contracts

Make sure you know the terms related to defect rectification costs. If you’re not sure, it’s a good idea to get legal advice to avoid misunderstandings.

Understand Adjudication

If you’re involved in an adjudication, be aware that claims for excluded amounts will not be valid. Any part of your claim that includes these amounts could be dismissed.
Judicial Review: If you think an adjudicator has wrongly included an excluded amount in their decision, you can ask for a judicial review to have the decision corrected, as Hanson did in this case.

Key Takeaway: Always follow the contractual process when claiming costs, and know what counts as an “excluded amount” to avoid complications and ensure you get paid for your work!