PDF DOWNLOADThree recent decisions of the Supreme Courts have indicated that a release and waiver given by a contractor or a final certificate by a superintendent can, in certain circumstances, trump the effect of an adjudication decision with the effect that no amount is payable.
In Leighton Contractors Pty Ltd v Vision Energy Pty Ltd, substantial completion was obtained by the subcontractor and the contractor then forwarded for execution a release and waiver. The contract provided that, if the subcontractor failed to either duly execute and return the release or provide details in writing of where it disagrees, then the details contained in the release shall be final and binding on the parties. The subcontractor obtained an adjudication award of some $1.2 million and the release and waiver was sent shortly after this award and provided that the subcontractor owed the contractor some $757,000. Fortunately for the subcontractor, it did issue a notice disagreeing with the terms of the release and waiver so far as it applied to the adjudication decision, and, in so doing, the Court found the release and waiver was binding for all matters except to the items in the notice of dispute.
In Martinek Holdings Pty Ltd v Reed Construction (Qld) Pty Ltd, the adjudicator had ordered the principal to pay an adjudicated amount of around $942,000 to the contractor. The contract provided that the final certificate was conclusive evidence of all monies owing between the parties except for unresolved issues the subject of any notice of dispute pursuant to the dispute resolution provision of the contract. The superintendent issued a final certificate which certified that a nil amount was owing by the principal. The principal argued that the final certificate operated to supersede the adjudication decision. The Court of Appeal held that the final certificate was not a full discharge of the obligations under the contract while the issues the subject of the notice of dispute remained unresolved.
In John Holland Pty Ltd v Roads & Traffic Authority of NSW, the contract provided that the superintendent’s final payment schedule should be conclusive evidence of the final amount owing by one party to the other until the contrary was established as a fact. As a result, the superintendent’s final certificate could overrule an adjudication decision.
Three recent decisions of the Supreme Courts have indicated that a release and waiver given by a contractor or a final certificate by a superintendent can, in certain circumstances, trump the effect of an adjudication decision with the effect that no amount is payable.
Parties need to be very careful in reviewing contractual documents that provide that a release and waiver or the final certificate from a superintendent is in full and final settlement of “all amounts owing” under the contract.
It is essential for contractors that, as in the Vision Energy case and the Martinek case, there is a provision to dispute the terms of the release and waiver or the final certificate.
A properly drafted contract can provide circumstances where a release and waiver or a final certificate would, as was said by Justice Wilson in the Vision Energy case “be apt to trump the effect of the adjudication decision”.
Author
Stephen Pyman
Partner
Key Contacts
BRISBANE
Stephen Pyman
Partner
T +61 (0)7 3135 0625
E
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Troy Lewis
Partner
T +61 (0)7 3135 0614
E
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Janelle Kerrisk
Partner
T +61 (0)7
3135 0608
E
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.