Australian court confirms dismissed claims cannot be re-adjudicated

The case concerned three separate payment claims issued by GE Renewables Australia Pty Ltd and Elecnor Australia Pty Ltd (GE-Elecnor) - the engineering, procurement, and construction contractor for a wind farm in South Australia. Each of the three payment claims sought compensation in connection with delays arising in respect of site access (‘delay events’) allegedly caused by the principal, Goyder.

Goyder applied for judicial review of an adjudication determination of the second payment claim. It was Goyder’s view that the adjudicator had wrongfully permitted GE-Elecnor to bring a second claim for delay costs, as those costs arose from the same delay events for which GE-Elecnor had been compensated following an adjudication determination of the first payment claim. In addition, Goyder sought orders to prevent GE-Elecnor pursuing adjudication in relation to the third payment claim for the same reasons.

The Supreme Court of South Australia dismissed Goyder’s application to quash the second determination and to prevent GE-Elecnor from enforcing that determination. The court did, however, grant Goyder’s application to prevent GE-Elecnor from progressing the third payment claim to adjudication.

Background to the case

On 29 February, GE-Elecnor issued a payment claim which included a claim for AU$15.3 million (US$10.2 million) in prolongation costs and ‘thickening’ costs for additional indirect resources allegedly incurred as a result of the delay events (the ‘first payment claim’).

The first payment claim was taken to adjudication under the Building and Construction Industry Security of Payment Act 2009 (SA) (the Act) with the adjudicator finding that GE-Elecnor was entitled to costs incurred in connection with a delay of 118 days caused by the delay events (the ‘first determination’). While the adjudicator awarded prolongation costs to GE-Elecnor he was not satisfied that a link had been established between the delay events and the thickening costs claimed and awarded $0 for the thickening claim.

On 30 April, GE-Elecnor submitted a further payment claim which included a claim for AU$26.1 million in procurement premiums caused by a change in procurement strategy arising from the same delay events (the ‘second payment claim’). The second payment claim also proceeded to adjudication under the Act. In his determination, the adjudicator awarded approximately AU$21 million to GE-Elecnor (the ‘second determination’). The majority of the amounts awarded in the second determination related to the procurement premiums claim which the adjudicator was satisfied did not overlap with the amounts awarded in the first determination.

On 2 July, GE-Elecnor submitted a further payment claim (the ‘third payment claim’) in which it sought, relevantly, a further AU$20.7 million in respect of thickening costs and procurement premiums arising from the same delay events. GE-Elecnor maintained that there was no overlap with the costs previously claimed in respect of the delay events.

Goyder applied for judicial review of the second determination on the basis that the adjudicator had failed to apply section 22(4) of the Act and had wrongfully permitted GE-Elecnor to re-agitate its claim for delay costs arising out of the delay events.

Section 22(4) of the Act, which is replicated in substantially identical terms in every other Australian state and territory’s security of payment legislation - except the Northern Territory - provides that where an adjudicator has determined the value of any construction work carried out under a construction contract, an adjudicator in any subsequent adjudication must give that work that same value unless satisfied that the value of the work has changed since the previous determination.

Goyder argued that GE-Elecnor’s claim for costs associated with the delay events was a single claim for the same construction work, namely the construction work that would have been carried out within the 118 day period of delay but for the delay events, and that the value of that work had already been decided in the first determination. Accordingly, on Goyder’s case, the adjudicator in the second determination was required by section 22(4) of the Act to apply the same value to that work and no additional costs should have been awarded in respect of the delay events.

Goyder also sought orders preventing GE-Elecnor from pursuing adjudication in respect of the third payment claim for the same reasons.

The court’s decision

The second determination

The court was satisfied that there was no overlap between the costs awarded in the first and second determinations. Accordingly, the adjudicator in the second determination had not been valuing the same work that was the subject of the first determination and section 22(4) of the Act did not apply.

The court emphasised that neither the contract nor the Act required all non-overlapping delay costs to be claimed in a single payment claim. It was not an abuse of process for GE-Elecnor to pursue different components of its delay costs in separate payment claims.

Even if section 22(4) of the Act had applied, it was not, in the court’s view, a jurisdictional matter. As with the other matters that an adjudicator is required to consider when determining the amount of a progress payment, whether there has been a previous determination about the value of the relevant construction work is an issue that may involve interpretation of the relevant contractual provisions and an evaluative assessment of the payment claim and other materials before the adjudicator. The court emphasised that such matters are within the authority conferred on adjudicators by the Act. The court cited the observation of Justice Basten in a 2024 case that the intention of the security of payment legislation is that, with few exceptions, all questions arising from the construction of the contract and the provisions of the legislation itself as applied to the particular factual circumstances are matters for the adjudicator to determine.

Goyder’s application to quash the second determination and to prevent GE-Elecnor taking steps to enforce the determination was dismissed.

The third payment claim

The court granted Goyder’s application to prevent GE-Elecnor from progressing the third payment claim to adjudication.

The court held that adjudicator in the first determination had already discharged the relevant statutory function by rejecting the thickening claim as lacking an evidential foundation. Consequently, it was impermissible for GE-Elecnor to reargue a claim for thickening costs caused by the delay events.

While the third payment claim included vehicle costs for ‘thickened’ personnel that had not previously been claimed, those costs were inextricably related to, and reliant on, the success of the thickening claim for additional personnel that had already been rejected in the first determination.

Practical implications

This decision is authority for the proposition that claims which have been dismissed in their entirety by an adjudicator cannot be resurrected and re-argued on a different basis in future adjudications. This is consistent with New South Wales authorities on the same point.

Equally, there is no requirement for a contractor to pursue all non-overlapping costs arising from a single delay event in one payment claim. In circumstances where claims have been successfully pursued through adjudication, the question of whether further costs in respect of that same claim can be pursued in future adjudications will depend on whether the amounts sought overlap with amounts already awarded in the first adjudication.

The Supreme Court of South Australia’s decision suggests that this is a matter within an adjudicator’s jurisdiction to determine. Accordingly, a mistake - even an obvious one - by an adjudicator in determining whether particular work has already been valued by a previous adjudication determination may be difficult to challenge.