Section 10B(1) of the SOP Act relevantly provides that excluded
amounts must not be taken into account in calculating the amount of
a progress payment. An 'excluded amount' is defined in
section 10B(2) as, among other things:
b. "any amount (other than a claimable variation)
claimed under the construction contract for compensation due to the
happening of an event including any amount relating to-
latent conditions; and
time-related costs; and
changes in regulatory requirements;
c. any amount claimed for damages for breach of the
construction contract or for any other claim for damages arising
under or in connection with the contract..."
The principal in this case, Seabay Properties Pty Ltd, contended
that it was entitled to deduct liquidated damages from the payment
claimed submitted by the contractor under the SOP Act because the
'excluded amounts' prohibition only applied to amounts
claimed by the claimant, and not amounts deducted by the person on
whom a payment claim was served. However, the Court disagreed with
Seabay Properties' contention. After noting that the SOP Act is
not designed to accommodate claims for damages arising under the
construction contract, whether made by the claimant or the party on
whom the claim was served, the Court held that the amount of
liquidated damages deducted by Seabay Properties fell within the
definition of 'excluded amount'. Accordingly, Seabay
Properties was precluded from deducting liquidated damages from the
payment claimed by the contractor in its payment claim.
What does this mean for you
The Court's decision confirms that, where payment is claimed
under the SOP Act, the party on whom the claim is served will not
be entitled to deduct or set off any damages, including liquidated
damages and other delay damages, before making that payment despite
any contractual entitlement to do so. Instead, such claims will
need to be resolved in court or, where applicable, arbitral
proceedings after the payment is made.
Claimants under the SOP Act should carefully review payment
schedules issued by the person on whom the claim was served to
ensure that deductions or set offs for liquidated damages have not
been made and, where such deductions or set offs have been made,
claimants should object.
Note: This decision is the subject of an appeal.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Many retail leases include a covenant to trade, requiring the tenant to open the premises for trade during certain hours.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).