EnerMech Pty Ltd v Acciona Infrastructure Projects Australia Pty Ltd [2024] NSWCA 162
In a significant ruling for the construction industry, the Court of Appeal allowed EnerMech’s claim for the return of a $10 million bank guarantee under a Security of Payment claim.
EnerMech, which was contracted under a subcontract with Acciona for the WestConnex project, had initially issued a progress payment claim to Acciona to recover a $10 million bank guarantee. Acciona responded with a payment schedule stating that no amount was owed. The claim was subsequently adjudicated, and the adjudicator ruled in favor of EnerMech.
Acciona challenged this adjudication in the Supreme Court, arguing that the claim did not pertain to ‘construction work’ as defined by the Security of Payment Act. Acciona contended that the bank guarantees sought by EnerMech did not qualify as ‘payments under a construction contract.’
Justice Stevenson agreed with Acciona, ruling that the payment claim was invalid. EnerMech then appealed that decision to the Court of Appeal.
In a decisive judgment, the NSWCA overturned the earlier ruling and confirmed that a payment claim does not depend on it being specifically ‘for’ construction work. Instead, EnerMech’s claim for the bank guarantee was deemed valid under the broader interpretation of ‘amount of money’ payable under a ‘construction contract’.
The Court also reinforced the role of the adjudicator, stating that it is their responsibility to determine the amount payable under a payment claim.
This ruling broadens the scope for what can be claimed under a payment claim and reinforces the adjudicator’s role in resolving such disputes.
The decision is one of many SOPA cases that have been heard over the past year that give new guidance for SOPA matters.
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