SCEE pursuing $11m from Decmil

Southern Cross Electrical Engineering is still pursuing a claim for $11 million from Decmil in relation to a subcontract, saying today that an adjudication last week requiring Decmil to pay just $152,657 was only a preliminary ruling.

SCEE was awarded a $6 million contract by Decmil in May 2017 at Rio Tinto’s Amrun mine, but claims it did additional work and is seeking more money.

In a statement to the ASX today, SCEE said it carried out substantial additional works during the course of the project beyond the original subcontract scope, and also experienced significant delay and disruption because of “Decmil’s failure to properly manage their works and other subcontractors”.

The company said it had followed existing and standard contract procedures to seek payment from Decmil.

Decmil paid the company about $1.4 million, but SCEE said Decmil had refused to pay the full amounts claimed.

The statement said that, in 2018, Decmil agreed to negotiate in good faith the assessment and close out process. By May 2019, however, the process concluded without a resolution.

SCEE lodged an adjudication application in February 2020 under the Building Industry Fairness (Security of Payment) Act 2017 (QLD) seeking $11 million from Decmil.

Last week, on June 5, the adjudicator determined Decmil had to pay SCEE $152,657, but the original arbitration is still continuing.

The statement said while adjudication was disappointing, the process was not a final determination on the merits of the claims. 

"Adjudication processes are also interim in nature and do not allow claimants to draw on full evidential processes and equitable remedies that would be available in legal or arbitration proceedings," the statement said. 

It said given its concerns about Decmil's financial position, SCEE would pursue security for costs against Decmil to ensure its cost position in the artbitration and seek a prompt hearing. 

SCEE managing director Graeme Dunn said it was disappointing to have performed well for Decmil in a harsh and demanding location and to find itself in a position having to enforce its rights.

“SCEE remains committed to pursuing its substantive claims and is confident as to its entitlement,” Mr Dunn said.

“SCEE does not believe that this matter will have a material impact on the financial performance of the company for the year ending June 30 2020 or any subsequent financial years.”

At 2pm AWST, Decmil shares were down 12 cents to 56 cents, and SCEE's shares were down 1 cent to 43 cents after it lifted its trading halt at 8am this morning.