Introduction

Australia’s Security of Payment (SOPA) legislation, such as the Building and Construction Industry Security of Payment Act 1999 (NSW) and equivalent statutes across Australian jurisdictions, establishes a rapid adjudication process for resolving payment disputes in the construction industry. The legislation was enacted to address systemic cash-flow problems in the industry by ensuring that contractors and subcontractors receive prompt progress payments for construction work.

The statutory adjudication process is deliberately designed to be quick, informal, and largely document based. As a result, the evidentiary materials submitted with an adjudication application including expert reports, contractual documentation, and statutory declarations, play a central role in the adjudicator’s determination. Unlike traditional litigation, adjudicators generally decide matters solely on the written submissions of the parties, making the quality and reliability of supporting evidence particularly significant.

Among these forms of evidence, statutory declarations frequently serve as a key mechanism through which factual assertions are presented and verified during adjudication.

Overview of the Security of Payment Adjudication Framework

Security of Payment legislation exists in each Australian state and territory. Although there are differences between jurisdictions, particularly between the “East Coast model” and the “West Coast model”, the core procedural structure is broadly consistent.

Typically, the process involves the following steps:

1. a contractor or subcontractor serves a payment claim on the respondent
2. the respondent provides a payment schedule identifying the amount it proposes to pay and the reasons for withholding payment
3. if the claim is disputed or underpaid, the claimant may lodge an adjudication application with an authorised nominating authority
4. an adjudicator is appointed and must determine the amount payable within strict statutory timeframes.

Adjudication is intended to provide a temporary or interim determination that preserves cash flow in the construction industry. The parties remain free to pursue final determination of their rights through litigation or arbitration. However, because adjudicators often have limited time (sometimes as little as ten business days) to determine an application, the process relies heavily on the written material submitted by the parties.

The Evidentiary Nature of SOPA Adjudication

Unlike court proceedings, Security of Payment adjudication does not involve oral evidence, cross-examination, or formal rules of evidence. Instead, adjudicators typically determine disputes based on:

(a)        the payment claim and payment schedule

(b)        the adjudication application and response

(c)         the relevant construction contract

(d)        supporting documents provided by the parties.

These supporting materials may include:

(e)        invoices and payment records

(f)          variation claims

(g)        progress reports

(h)        expert reports

(i)          project correspondence

(j)          statutory declarations.

This documentary approach reflects the legislative intention that adjudication be a fast and efficient process focused primarily on maintaining cash flow rather than determining the final merits of the parties’ contractual rights.

Because adjudicators rely almost entirely on written evidence, the credibility and clarity of supporting documentation can significantly influence the outcome of the determination.

Statutory Declarations as Evidence in Adjudication

Nature and Legal Status

A statutory declaration is a written statement that a person declares to be true before an authorised witness under legislation such as the Oaths Act 1900 (NSW) or the Statutory Declarations Act 1959 (Cth).

The declaration carries legal significance because the declarant formally attests to the truth of the statement, and knowingly making a false statutory declaration may constitute a criminal offence.

Within Security of Payment adjudications, statutory declarations often function as substitutes for witness testimony. They allow parties to present factual information that may not otherwise be evidenced through documentary records.

Common Uses in Adjudication

Statutory declarations are frequently used to:

(a)        verify that particular construction work was performed

(b)        explain the circumstances surrounding variations or delays

(c)         confirm communications or site instructions

(d)        verify the service of payment claims or payment schedules

(e)        authenticate documents annexed to adjudication submissions.

Given the absence of oral testimony in adjudication, these declarations provide adjudicators with a sworn account of relevant project events.

Case Law on Evidence and Adjudication Determinations

Australian courts have consistently emphasised the limited role of judicial review in relation to Security of Payment adjudication determinations.

Two High Court decisions are particularly significant:

Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4
Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5.

In these cases, the High Court confirmed that adjudication determinations cannot be set aside merely because the adjudicator made an error of law within their jurisdiction. Judicial review is generally limited to jurisdictional error or a failure to comply with the fundamental requirements of the statute.

This means that courts will not usually reconsider the factual evidence relied upon by the adjudicator. Even if an adjudicator gives significant weight to contested evidence, such as a statutory declaration, this will rarely justify judicial intervention.

The consequence is that parties must present their best evidentiary case during the adjudication itself, as opportunities to challenge the determination afterwards are limited.

Procedural Fairness and Supporting Evidence

Although courts rarely interfere with adjudication determinations, intervention may occur where there has been a denial of procedural fairness or a failure to comply with statutory requirements.

Examples include situations where:

(a)        an adjudicator considers material that was not properly before them

(b)        a party is denied an opportunity to respond to critical submissions

(c)         the adjudicator fails to consider the matters required by the legislation.

However, disputes concerning the reliability or weight of evidence including statutory declaration, are generally regarded as matters for the adjudicator rather than the courts.

Practical Implications for Drafting Adjudication Submissions

From a practical perspective, statutory declarations should be carefully prepared because they may significantly influence the adjudicator’s understanding of the dispute.

Best practices include:

1. Clarity and specificity – declarations should clearly identify the declarant’s role in the project and describe events in chronological detail.
2. Documentary support – where possible, declarations should refer to and annex supporting documents such as site records, emails, photographs, and contract extracts.
3. Consistency with submissions – the factual statements in declarations should align with the legal arguments presented in the adjudication submissions.
4. Compliance with formal requirements – declarations must comply with the relevant statutory requirements for witnessing and execution.  Improperly executed declarations may reduce their evidentiary weight.

Conclusion

The Australian Security of Payment regime prioritises speed and cash flow over procedural formality. As a result, adjudication is primarily a document based process in which the written submissions of the parties form the basis of the adjudicator’s determination.

Within this framework, statutory declarations play a significant evidentiary role. They allow parties to present sworn factual accounts in circumstances where oral evidence is not available. When properly prepared and supported by documentation, statutory declarations can strengthen an adjudication application or response by clarifying disputed factual issues.

Given the limited scope for judicial review of adjudication determinations, parties should ensure that all relevant evidence, including carefully drafted statutory declarations, is presented at the adjudication stage. Failure to do so may significantly and adversely affect the outcome of the dispute.

Peter Paradise is a director of legal firm Paradise Charnock Hing. The firm specialises in Security of Payment Act claims throughout Australia. With over 100 claims adjudicated Paradise Charnock Hing is one of the most experienced SOPA claim firms in the country.