What are Excluded Amounts?
These are amounts that cannot be considered in an application under SOPA.
Liquidated damages are an ‘excluded amount.’
Facts of the case: Vcon v Oliver Hume [2020] VSC 767
Oliver Hume had sought to deduct liquidated damages from payment claims issued by Vcon. Vcon applied for adjudication under SOPA and succeeded in recovering amounts owed under by Oliver Hume using the SOPA.
Following the favourable adjudication determination, Oliver Hume cashed the bank guarantees. Vcon then issued payment claims seeking to recover the amounts recovered by Oliver Hume via the bank guarantees and applied for adjudication.
The adjudicator determined that the payment claim tried to recover amounts converted on account of liquidated damages and therefore was an ‘excluded amount’.
Judgment
The Court agreed with the adjudicator and found that Vcon was attempting to recover amounts that related to liquidated damages.
Takeaway Point
If bank guarantees are provided, it may be possible to call on the bank guarantees even if you obtain a favourable adjudication determination. This leaves Vcon in a position where it will need to commence legal proceedings to recover the money.