EnerMech Pty Ltd v Acciona Infrastructure Projects Australia Pty Ltd

EnerMech Pty Ltd (the claimant) sought payment from Acciona Infrastructure Projects Australia Pty Ltd (the respondent) under a construction contract. The dispute concerned a payment claim made by EnerMech, which Acciona argued was invalid. Acciona had recourse to bank guarantees provided by EnerMech, and EnerMech's payment claim sought to recover the amount obtained by Acciona through these guarantees. Acciona asserted a defence in its payment schedule, raising the question of whether the validity of the payment claim and the underlying dispute were matters for an adjudicator under the relevant legislation or for the court. The matter came before the Court of Appeal of New South Wales.

The primary legal issues before the Court of Appeal were: (1) whether EnerMech's payment claim was a valid claim for payment "for construction work" as required by the *Building and Construction Industry Security of Payment Act 1999* (NSW) (the Act); and (2) whether the court or an adjudicator had the jurisdiction to determine the validity of the claim and the dispute concerning the recourse to the bank guarantees.

The Court of Appeal allowed EnerMech's appeal, setting aside the previous orders of the Equity Division. The Court reasoned that the payment claim, although seeking to recover an amount obtained by recourse to bank guarantees, was nonetheless a claim for an amount due under the construction contract. The Court held that the Act was intended to provide a rapid mechanism for securing cash flow in the construction industry, and that the nature of the claim, as being for an amount due under the contract, was sufficient to engage the Act. The Court found that the question of whether the amount claimed was actually due was a matter for an adjudicator, not a preliminary jurisdictional question for the court.

Consequently, the Court of Appeal ordered that EnerMech's amended summons be dismissed, with specific orders regarding the costs of the summons and cross-summons. Crucially, the Court ordered that the respondents pay EnerMech the sum of $10,160,109.77, plus interest, and pay EnerMech's costs in the Court of Appeal.