Payment claims must only relate to one Construction Contract

CASE STUDY

Ventia Australia Pty Ltd v BSA Advanced Property Solutions (Fire) Pty Ltd [2021] NSWSC 1534

Facts

BSA Advanced Property Solutions (Fire) Pty Ltd (Subcontractor) and Ventia Australia Pty Ltd (Head Contractor) entered into a subcontract to carry out fire asset maintenance service. The subcontract enabled the Head Contractor to issue “work orders” to the Subcontractor for particular works and also provided that a separate agreement would come into existence each time Head Contractor issued a work order.

In February 2021, the Subcontractor served a payment claim.
The payment claim claimed work related to 1,860 work orders issued by Head Contractor.
The Subcontractor made an adjudication application under the SOPA Act based on the payment claim.

Issue

Whether the payment claim that was served under the Act was in respect of more than one construction contract’

Decision

The Court found that each of the work orders formed a separate contract to the subcontract. Therefore, the payment claim was invalid, and the adjudication was void.

• It confirmed the “One Contract Rule” – A payment claim will not be valid under the SOPA Act, if it purports to claim payment in respect of more than one construction contract.
• Her Honour held that this issue was a jurisdictional issue which was incapable of final resolution by the adjudicator.
• Her Honour rejected Subcontractor’s agreement that multiple work orders were submitted under one construction contract under the purported “arrangement” and found the subcontract explicitly stated that each work order created a new contract.

Key Takeaways

Ensure that each payment claim only claims work in relation to one construction contract.
If there are multiple stages and new contracts are issued, invoice works separately or seek legal advice.