Security of payment in New South Wales and Victoria [1st edition.] 9780409337266, 0409337269

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SECURITY OF PAYMENT IN NEW SOUTH WALES AND VICTORIA Legislation current as at 30 September 2013. Annotations current to cases decided to 30 September 2013.

JEFFREY WILSON BEc (ANU), LLB(Hons) (Monash) Partner, Norton Rose Fulbright Australia

LexisNexis Butterworths Australia 2014

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Wilson, Jeffrey. Security of payment in New South Wales and Victoria. 1st edition. 9780409337259 (pbk). 9780409337266 (ebk). Includes index. Building laws — New South Wales. Building laws — Victoria. Payment — New South Wales. Payment — Victoria. 343.94407869

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Foreword The Security of Payment legislation, with which this publication so ably deals, is intended principally to facilitate cash flow to contractors in the building and construction industry. Since the initial introduction of legislation to achieve this end in New South Wales in early 2000 all states and territories of Australia have followed suit and in doing so profoundly affected the Australia-wide building and construction industries. This substantial work by Jeffrey Wilson deals in detail with the New South Wales and the Victorian Security of Payment legislation. There is no doubt that this contribution to the sparsely available material in this area will be of great interest and assistance to the very many principals, contractors, adjudicators, consultants, lawyers, courts and others advising on, or dealing with, payment claims. The very convenient format of Jeffrey’s work includes a Comparative Table dealing with provisions in the New South Wales and Victorian legislation followed by the key sections of both Acts thoroughly annotated with a compendium of case note summaries highlighting the facts giving rise to the particular dispute and the approach the courts have taken to the interpretation of these Acts, current to 30 September 2013. As well as addressing the principal differences between the Acts in Victoria and New South Wales and the meaning and operation of the key provisions of these Acts this work goes further and deals with other legislation considered in the context of the New South Wales and Victorian Security of Payment Acts. In the somewhat complex and difficult area of Security of Payment practice, Jeffrey Wilson’s excellent work provides a most accessible reference to important current jurisprudence informing an understanding of the New South Wales and Victorian Acts and fills a major gap by providing a substantial and practical text in the area. I believe that all those who use this work will find it easy to assay and most helpful. The availability of a practical text of this quality will also provide comfort and confidence to Security of Payment practitioners. Those involved with issues relating to Security of Payment legislation in the

building and construction industry will come to appreciate that Jeffrey Wilson’s annotated work, Security of Payment in New South Wales and Victoria, is a must-have publication. Justice John Digby Supreme Court of Victoria

Publisher’s Note Legislation The publisher, authors, contributors and endorsers of this publication each excludes liability for loss suffered by any person resulting in any way from the use of, or reliance on, this publication. © LexisNexis. The legislation reproduced in this work does not purport to be an official or authorised version.

Table of Cases References are to paragraphs A A & M Wilson Building Contractors Pty Ltd v Lavander Pty Ltd [2009] VCC 1504 …. [3.159] Abacus Funds Management Ltd v Davenport [2003] NSWSC 935 …. [3.315] Abigroup Contractors Pty Ltd v River Street Developments Pty Ltd [2006] VSC 425 …. [3.110], [3.111], [3.112], [3.118], [3.152], [3.153], [3.154] AC Hall Airconditioning Pty Ltd v Schiavello (Vic) Pty Ltd [2008] VCC 1490 …. [3.70], [3.71], [3.112], [3.118], [3.159], [7.2] AC Hall Airconditioning Pty Ltd v Schiavello (Vic) Pty Ltd [2008] VCC 1169 …. [3.155], [3.179], [3.217] ACA Developments Pty Ltd v Sullivan; Austruc Constructions Ltd v ACA Developments Pty Ltd [2004] NSWSC 304 …. [3.29] ADH Plant Hire Pty Ltd v Construct Co Pty Ltd [2004] VCC 53; [2004] VCC 159 …. [3.51], [3.55], [3.57], [3.138], [3.152], [3.337] Advance Earthmovers Pty Ltd v Fubew Pty Ltd [2009] NSWCA 337 …. [3.31], [5.2] Age Old Builders v Arvanitis [2006] VCC 1827 …. [3.110], [3.111], [3.112], [3.154] Agusta Industries v Niclad Constructions [2010] NSWSC 925 …. [3.252], [3.331], [5.8] Air Dynamics Control & Services Contracting Pty Ltd v Durham [2005] NSWSC 861 …. [3.175], [3.266] Alan Conolly & Co v Commercial Indemnity Pty Ltd [2005] NSWSC 339 …. [3.102] Aldoga Aluminium Pty Ltd v De Silva Starr Pty Ltd [2005] NSWSC 284 …. [4.4] Allpro Building Services Pty Ltd v C & V Engineering Services [2009] NSWSC 1247 …. [3.107] — v Micros Architectural Division Pty Ltd [2010] NSWSC 453 …. [3.192], [3.193], [3.252], [3.312] — v — [2010] NSWSC 474 …. [3.252] AMD Formwork Pty Ltd v Yarraman Construction Group Pty Ltd [2004] VCC 17; [2004] VCC 128 …. [3.134], [3.152], [3.154], [3.343], [3.344], [6.1] Amflo Constructions Pty Ltd v Jefferies [2003] NSWSC 856 …. [3.164], [3.339] Anderson Street Banksmeadow Pty Ltd v Helcon Contracting Australia Pty Ltd [2013] NSWSC 657 …. [3.267], [3.276] Aquatec-Maxcon Pty Ltd v Minson Nacap Pty Ltd [2005] VSCA 167 …. [3.150] Ardnas (No 1) Pty Ltd v J Group (Aust) Pty Ltd [2012] NSWSC 805 …. [3.103] Arpic Pty Ltd v Austin Australia Pty Ltd [2004] NSWSC 83 …. [3.224] Arrow International Australia Ltd v 77 Bouverie Pty Ltd [2009] VCC 1503 …. [3.159] Asian Pacific Building Corporation Pty Ltd v Aircon Duct Fabrication Pty Ltd (No 2) [2010] VSC 340 …. [3.283] Asian Pacific Building Corporation Pty Ltd v Aircon Duct Fabrication Pty Ltd [2010] VSC 300 …. [3.287], [3.293] Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 …. [7.2] Australian Remediation Services Pty Ltd v Earth Tech Engineering Pty Ltd [2005] NSWSC 362 …. [3.177] — v — [2005] NSWSC 715 …. [3.227] — v — [2005] NSWSC 805 …. [3.353]

Austruc Constructions Ltd v ACA Developments Pty Ltd; ACA Developments Pty Ltd v Sarlos [2004] NSWSC 131 …. [3.29], [3.172], [3.201], [3.233]

B Badge Constructions (SA) Pty Ltd v Rule Chambers Pty Ltd [2007] SASC 417 …. [1.4] Barclay Mowlem Construction Ltd v Estate Property Holdings Pty Ltd [2004] NSWSC 649 …. [3.100] — v — [2004] NSWSC 658 …. [3.100], [3.151] — v Tesrol Walsh Bay Pty Ltd [2004] NSWSC 716 …. [3.124], [3.125], [3.349] — v — [2004] NSWSC 1232 …. [3.123], [3.124] Baseline Constructions Pty Ltd v Classic Group Painting Pty Ltd [2006] NSWSC 397 …. [3.102], [3.211] Bauen Constructions Pty Ltd v Sky General Services Pty Ltd [2012] NSWSC 1123 …. [3.99], [3.184], [3.236], [3.276], [3.279], [3.329], [5.9] Bauen Constructions v Westwood Interiors [2010] NSWSC 1359 …. [3.275], [3.276] Baulderstone Hornibrook Pty Ltd v HBO & DC Pty Ltd [2001] NSWSC 821 …. [3.141] — v Queensland Investment Corporation [2006] NSWSC 522 …. [3.122], [3.318] — v — [2007] NSWCA 9 …. [3.122], [3.318] BBB Constructions Pty Ltd v Frankipile Australia Pty Ltd [2008] NSWSC 982 …. [4.4] Beckhaus Civil Pty Ltd v Brewarrina Shire Council (No 2) [2004] NSWSC 1160 …. [3.84], [3.140], [3.306], [3.308] — v Council of the Shire of Brewarrina [2002] NSWSC 960 …. [3.88], [3.89], [3.110] Bell Partners Accountants & Business Advisors Pty Ltd v Kann Finch Pty Ltd [2004] NSWSC 1034 …. [3.21], [3.44], [3.103] Bell v Pearce (Home Building) [2005] NSWCTTT 433 …. [5.2] Belmadar Constructions Pty Ltd v Environmental Solutions International Ltd [2005] VSC 241 …. [3.222], [3.230], [3.374] Berem Interiors Pty Ltd v Shaya Constructions (NSW) Pty Ltd [2007] NSWSC 1340 …. [3.10], [3.248] Biseja Pty Ltd v NSI Group Pty Ltd [2006] NSWSC 835 …. [3.24], [3.32] Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9; [2006] NSWCA 238 …. [3.57], [3.90], [3.132], [3.147], [3.160], [3.163], [3.233], [3.234], [4.1], [4.8] — v — [2009] NSWCA 32 …. [5.5] Blueview Constructions Pty Ltd t/a WRS Constructions v Vain Lodge Holdings Pty Ltd [2005] VCC 1325 …. [3.50], [3.54], [3.110], [3.111], [3.112] BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd (No 2) [2013] QSC 67 …. [3.267], [3.276] Boutique Developments Ltd v Construction & Contract Services Pty Ltd [2007] NSWSC 1042 …. [3.23] Brady Constructions Pty Ltd v Dominion Lifestyle Tower Apartments Pty Ltd [2006] VCC 1830 …. [3.153], [3.154], [3.222], [6.1], [6.3] Brambles Australia Ltd v Davenport [2004] NSWSC 120 …. [3.32], [3.311] Brasher v O’Hehir [2005] NSWSC 1194 …. [3.272] Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2003] NSWCA 4 …. [3.131], [3.145] — v — [2005] NSWCA 248 …. [3.140], [3.306] Broad Construction Services (NSW) Pty Ltd v Vadasz t/a Australasian Piling Co [2008] NSWSC 1057 …. [3.187], [3.205], [3.243] Brodyn Pty Ltd t/a Time Cost and Quality v Dasein Constructions Pty Ltd [2004] NSWSC 1230 …. [3.263], [4.1], [4.5] —v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421 …. [3.44], [3.45], [3.73], [3.99], [3.102],

[3.176], [3.177] [3.178], [3.182], [3.200], [3.210], [3.211], [3.229], [3.232], [3.233], [3.234], [3.235], [3.236], [3.238], [3.239], [3.241], [3.242], [3.243], [3.244], [3.245], [3.246], [3.247], [3.248], [3.249], [3.250], [3.251], [3.252], [3.254], [3.258], [3.263], [3.265], [3.267], [3.273], [3.274], [3.275], [3.276], [3.280], [3.284], [3.286], [3.290], [3.296] — v — [2003] NSWSC 1019 …. [3.72] Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1 …. [3.93], [3.100], [3.114], [3.146], [3.152], [3.154], [3.209], [3.235], [3.237] Bucklands Convalescent Hospital v Taylor Projects Group Pty Ltd [2007] NSWSC 1514 …. [3.122], [3.239]

C Calsun Materials Handling Pty Ltd v Lovton Pty Ltd [2008] NSWDC 74 …. [3.25] Cardiacos v Cooper Consulting & Construction Services (Aust) Pty Ltd [2009] NSWSC 938 …. [3.31] Cardinal Project Services Pty Ltd v Hanave Pty Ltd [2010] NSWSC 1367 …. [3.107], [3.129], [3.232], [3.275], [3.298] Cashgain Pty Ltd v Excell Building Corp Pty Ltd [2007] NSWSC 196 …. [4.4] Cavanah v Advance Earthmoving & Haulage Pty Ltd [2008] FMCA 427 …. [4.6] CC No 1 v Reed Constructions Australia Pty Ltd [2010] NSWSC 294 …. [3.102] CCD Group Pty Ltd v Premier Drywall Pty Ltd [2006] NSWSC 1012 …. [3.10], [4.4] Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190 …. [3.142], [3.232], [3.274], [3.275], [3.276] — v — [2010] NSWSC 1167 …. [3.275] — v — (2011) NSWLR 393 …. [3.102] Christos Charisiou Building Group Pty Ltd v Geopec Pty Ltd [2006] VCC 1831 …. [3.154] Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391 …. [3.94], [3.94], [3.112], [3.113], [3.124], [3.146], [3.233], [3.354] Class Electrical Services v Go Electrical Pty Ltd [2013] NSWSC 363 …. [3.13], [3.104], [3.165], [3.276] Claude Neon Pty Ltd v Rhino Signmakers Pty Ltd [2010] VSC 619 …. [3.287] Cleadon Trust Ltd, Re [1939] Ch D 286 …. [3.272], [7.3] Clyde Bergemann Senior Thermal Pty Ltd v Varley Power Services Pty Ltd [2011] NSWSC 1039 …. [3.210], [3.252], [3.276] Concrete Panel Co Pty Ltd, The v Advanced Storage Systems (Vic) Pty Ltd [2004] VCC 2; [2004] VCC 114 …. [3.7], [3.15], [3.48], [3.113], [3.134], [3.152] Conset Pty Ltd v Johns Lyng Commercial Builders Pty Ltd [2010] VCC 0275 …. [3.136] Consolidated Constructions Pty Ltd v Ettamogah Pub (Rouse Hill) Pty Ltd [2004] NSWSC 110 …. [3.29], [3.90] Contrax Plumbing Victoria Pty Ltd v Golf Club Properties Ltd [2006] VCC 237 …. [3.112], [3.113] Cooper Morison Pty Ltd v Casa D’Abruzzo Club [2006] VCC 184 …. [3.113], [3.152] Cooper v Home Productions Pty Ltd (General) [2004] NSWCTTT 597 …. [5.2] — v Veghelyi [2005] NSWSC 602 …. [3.270], [5.2] Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229 …. [3.64], [3.93], [3.233] — v Hargreaves Pty Ltd [2004] NSWSC 1206 …. [3.265], [3.273] — v JM Hargreaves (NSW) Pty Ltd [2005] NSWSC 77 …. [3.211] — v — [2005] NSWCA 228 …. [3.64], [3.208], [3.307] Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1423 …. [3.341]

— v Quasar Constructions [2004] NSWSC 1174 …. [3.29] Cranbrook School v JA Bradshaw Civil Contracting Pty Ltd [2013] NSWSC 430 …. [3.10], [3.193] Cromer Excavations Pty Ltd v Cruz Concreting Services Pty Ltd [2011] NSWSC 51 …. [3.167]

D David Hurst Constructions Pty Ltd v Durham [2008] NSWSC 318 …. [3.196], [3.242], [3.254] — v Shorten [2008] NSWSC 164 …. [3.31] De Martin & Gasparini Pty Ltd v Energy Australia [2002] NSWCA 330 …. [3.113] — v State Concrete Pty Ltd [2006] NSWSC 31 …. [3.211], [3.252] Demir Pty Ltd v Graf Plumbing Pty Ltd [2004] NSWSC 553 …. [4.4] Diddy Boy Pty Ltd v Design Environment Pty Ltd [2009] NSWSC 14 …. [4.4] Digital City Pty Ltd v QX Australia Pty Ltd [2004] NSWSC 933 …. [3.260] Director of Housing (Victoria) v Structx Pty Ltd (t/a Bizibuilders) [2011] VSC 410 …. [3.38], [3.287] DJ’s Home and Property Maintenance v Dujkovic [2012] NSWSC 870 …. [3.321], [3.327] DJE Building Services Pty Ltd v Insurance Australia Ltd [2011] NSWDC 95 …. [3.31] Domaine Homes (Vic) Pty Ltd v RIA Building Pty Ltd [2005] VSC 111 …. [6.3] Downer Construction (Australia) Pty Ltd v Energy Australia [2007] NSWCA 49 …. [3.233], [3.246] Downer EDI Works Pty Ltd v Parsons Brinckerhoff Australia Pty Ltd [2011] NSWCA 78 …. [3.321] Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 …. [3.102], [3.106], [3.107], [3.108], [3.109], [3.211], [3.212], [3.213], [3.220], [3.298], [3.342] Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [2011] VSC 477 …. [6.6] — v — (No 4) [2012] VSC 155 …. [3.346] Duynstee v Dickens & Dickens t/as NRJ Irrigation Systems [2009] NSWSC 292 …. [3.102]

E Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd [2012] NSWCA 31 …. [3.20], [3.24], [3.32], [3.93], [3.94], [3.277], [7.6] Emag Constructions Pty Ltd v Highrise Concrete Contractors (Aust) Pty Ltd [2003] NSWSC 903 …. [3.193], [3.317], [3.332] Emergency Services Superannuation Board v Davenport [2004] NSWSC 697 …. [3.267], [3.276] Energetech Australia Pty Ltd v Sides Engineering Pty Ltd [2005] NSWSC 801 …. [3.46] — v — [2005] NSWSC 1143 …. [4.7] Energy Australia v Downer Construction (Australia) Pty Ltd [2005] NSWSC 1042 …. [3.65], [3.246] — v — [2006] NSWSC 52 …. [3.173], [3.185], [3.246], [3.254] Errol Investments Pty Ltd v Taylor Projects Group Pty Ltd [2005] NSWSC 1125 …. [3.206] Estate Property Holdings Pty Ltd v Barclay Mowlem Construction Ltd [2004] NSWCA 393 …. [3.100] Ettamogah Pub (Rouse Hill) Pty Ltd v Consolidated Constructions Pty Ltd (in liq) [2006] NSWSC 1450 …. [3.339], [4.4]

F Façade Innovations Pty Ltd v Timwin Constructions Pty Ltd [2005] NSWCA 197 …. [3.257] Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2005] NSWCA 49 …. [3.162], [3.177], [3.340], [5.6] — v — [2006] NSWCA 259 …. [3.45], [3.171], [3.319], [3.320], [3.327], [3.331], [4.2], [5.8] — v Masterform [2005] NSWSC 525 …. [4.4]

— v — [2005] NSWSC 728 …. [3.93], [3.94], [3.252], [5.2] Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87; [1983] HCA 25 …. [3.153], [7.1] Fernandes Constructions Pty Ltd v Tahmoor Coal t/a Centennial Coal [2007] NSWSC 381 …. [3.98] Fifty Property Investments Pty Ltd v O’Mara [2006] NSWSC 428 …. [3.10], [3.248], [3.276] Fifty Sixth Taljan Pty Ltd v Dattilo Holdings Pty Ltd [2007] VSC 226 …. [3.152], [3.153], [7.2] Filadelfia Projects Pty Ltd v EntirITy Business Services Pty Ltd [2009] NSWSC 1468 …. [3.14], [3.107] — v — [2010] NSWSC 473 …. [3.170], [3.260] — v — [2011] NSWSC 116 …. [3.252] Filipe v Inscope Solutions Pty Ltd [2004] NSWCA 417 …. [3.92] Firedam Civil Engineering Pty Ltd v KJP Construction Pty Ltd [2007] NSWSC 1162 …. [3.171], [3.252], [3.319], [3.321], [3.325], [3.326], [3.327] FK Gardner & Sons Pty Ltd v Dimin Pty Ltd [2007] 1 Qd R 10 …. [3.57], [3.138], [3.337] 470 St Kilda Road Pty Ltd v Reed Constructions Australia Pty Ltd [2012] VSC 235 …. [3.51], [3.57], [3.116], [3.180], [3.289] Fyntray Constructions Pty Ltd v Macind Drainage & Hydraulic Services Pty Ltd [2002] NSWCA 238 …. [3.49], [3.53], [3.94]

G Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 …. [3.52], [3.7], [3.58], [3.66], [3.112], [3.286], [7.4], [7.5] General Homes v Jonathon B and Leanne A Caelli t/a JC Electrical [2007] NSWSC 463 …. [3.263] Geotech Pty Ltd v Drakk Constructions Pty Ltd [2010] VCC 0484 …. [3.160], [3.163] Glen Eight Pty Ltd v Home Building Pty Ltd (in liq) [2005] NSWSC 907 …. [3.227], [5.3] Glenrich Builders Pty Ltd v 1-5 Grantham Street Pty Ltd & 415 Brunswick Road Pty Ltd [2008] VCC 1170 …. [3.134], [6.3] GMW Urban Pty Ltd v Alexandria Landfill Pty Ltd [2012] NSWSC 237 …. [3.108], [3.212], [3.220] Go Electrical Pty Limited v Class Electrical Services Pty Limited [2013] NSWSC 517 …. [3.269], [3.276] Golf Links Estate Blackheath Pty Ltd v LJ Williams Earthmoving Pty Ltd [2001] NSWSC 603 …. [3.372] Grant Constructions Pty Ltd v Claron Constructions Pty Ltd [2006] NSWSC 369 …. [5.1] Grave v Blazevic Holdings [2010] NSWCA 324 …. [3.149] Greenaways Australia Pty Ltd v CBC Management Pty Ltd [2004] NSWSC 1186 …. [4.4] Grid Projects NSW Pty Ltd v Proyalbi Organic Set Plaster Pty Ltd [2012] NSWSC 1571 …. [3.41], [3.102] Grindley Constructions Pty Ltd v Painting Masters Pty Ltd [2012] NSWSC 234 …. [3.227], [3.276] Grocon Constructors v Planit Cocciardi Joint Venture (No 2) [2009] VSC 426 …. [3.289], [3.290], [3.291], [3.292], [3.293], [3.296] Grocon Constructors v Planit Cocciardi Joint Venture [2009] VSC 339 …. [3.283] Grosvenor Constructions (NSW) Pty Ltd (in administration) v Musico [2004] NSWSC 344 …. [3.255], [3.283]

H Halkat Electrical Contractors Pty Ltd v Holmwood Holdings Pty Ltd [2007] NSWCA 32 …. [3.199], [3.243], [3.275] Hanave Pty Ltd v Nahas Construction (NSW) Pty Ltd [2012] NSWSC 888 …. [3.302] — v — [2011] NSWSC 1476 …. [3.252] Hawkins Construction (Australia) Pty Ltd v Mac’s Industrial Pipework Pty Ltd [2001] NSWSC 815 …. [3.3], [3.87], [3.98], [3.371]

— v — [2002] NSWCA 136 …. [3.98], [3.371] Herscho v Expile Pty Ltd [2004] NSWCA 468 …. [3.151] Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd [2009] VSC 156 …. [3.119], [3.120], [3.180], [3.190], [3.284], [3.286], [3.310], [3.334] Hill as Trustee for the Ashmore Superannuation Benefit Fund v Halo Architectural Design Services Pty Ltd [2013] NSWSC 865 …. [3.39], [3.102], [3.321], [3.327], [3.362] Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 … [3.98] HM Australia Holdings Pty Ltd v Edelbrand Pty Ltd t/a Domus Homes [2011] NSWSC 604 …. [3.24], [3.276] Holdmark (Aust) Pty Ltd v Melhemcorp Pty Ltd [2009] NSWSC 305 …. [3.273] Holdmark Developers Pty Ltd v GJ Formwork Pty Ltd [2004] NSWSC 905 …. [3.40], [3.45], [3.51], [3.55] Holmwood Holdings Pty Ltd v Halkat Electrical Contractors Pty Ltd [2005] NSWSC 1129 …. [3.10], [3.200], [3.243], [3.318] Hope v Bathurst City Council (1980) 29 ALR 577 …. [3.38]

I Integral Energy Australia v Kinsley & Associate Pty Ltd [2009] NSWSC 64 …. [3.210] Inten Constructions Pty Ltd v Refine Electrical Services Pty Ltd [2006] NSWSC 1282 …. [3.204], [3.355] Isis v Clarence [2004] NSWSC 73 …. [3.102], [3.128], [3.130], [3.131], [3.145] Isis Projects Pty Ltd v Clarence Street Ltd [2004] NSWSC 222 …. [3.80], [3.146] — v — [2004] NSWSC 714 …. [3.94], [3.146] IWD No 2 Pty Ltd v Level Orange Pty Ltd [2012] NSWSC 1439 …. [3.10], [3.32], [3.33] — v — [2012] NSWSC 1394 …. [3.279], [5.5]

J Jackson Clements Burrows Pty Ltd v Seabay Properties Pty Ltd [2009] VCC 0557 …. [3.133] JAR Developments Pty Ltd v Castleplex Pty Ltd [2007] NSWSC 737 …. [3.171], [3.240], [3.241] JBK Engineering Pty Ltd v Brick & Block Co Pty Ltd [2006] NSWSC 1192 …. [3.208] — v — [2006] NSWSC 1301 …. [3.263] — v — [2007] NSWSC 163 …. [7.1] Jem Developments Pty Ltd v Hansen Yuncken Pty Ltd [2006] NSWSC 1087 …. [3.261] Jemzone Pty Ltd v Trytan Pty Ltd [2002] NSWSC 395 …. [3.6], [3.7], [3.15], [3.39], [3.48], [3.94], [3.98], [3.113] [3.121], [3.134], [3.152] John Goss Projects Pty Ltd v Leighton Contractors Pty Ltd [2006] NSWSC 798 …. [3.212], [3.252], [3.252], [3.355] John Holland Pty Ltd v Cardno MBK (NSW) Pty Ltd [2004] NSWSC 258 …. [3.134], [3.152], [3.169], [3.186], [3.195] — v Made Contracting Pty Ltd [2008] NSWSC 374 …. [3.174], [3.297], [3.299] — v Roads and Traffic Authority of New South Wales (2006) 66 NSWLR 624 …. [3.269], [3.276] — v — [2006] NSWSC 874 …. [3.339], [3.356] — v — [2007] NSWCA 19 …. [3.60], [3.187], [3.203], [3.205], [3.233], [3.243], [3.252]

K Kalifair Pty Ltd v Digi-Tech (Australia) Limited (2002) 55 NSWLR 737 …. [3.255] Karimbla Construction v Alliance Group Building [2003] NSWSC 617 …. [3.122], [4.4]

Katherine Pty Ltd v CCD Group Pty Ltd [2008] NSWSC 131 …. [3.81], [4.9] Kell & Rigby Pty Ltd v Flurrie Pty Ltd [2006] NSWSC 906 …. [5.3] — v Guardian International Properties Pty Ltd [2007] NSWSC 554 …. [3.142], [3.166], [3.167], [3.1789], [3.239] Kembla Coal & Coke Pty Ltd v Select Civil Pty Ltd [2004] NSWSC 628 …. [3.43], [3.60], [3.61], [3.62], [3.63], [3.73], [3.90] Kingston Building Pty Ltd v Mckay [2009] NSWDC 204 …. [3.329] Kittu Randhawa v Monica Benavides Serrato [2009] NSWSC 170 …. [3.326], [5.7], [5.8]

L Lahey Constructions Pty Ltd v Trident Civil Contracting Pty Ltd [2013] NSWSC 176 …. [3.125] Laing O’Rourke Australia Construction v H&M Engineering & Construction [2010] NSWSC 818 …. [3.252] Lanskey Constructions Pty Ltd v Noxequin Pty Ltd (in liq) t/a Fyna Formwork [2005] NSWSC 963 …. [3.101], [3.206], [3.233], [3.268] Leighton Contractors Pty Ltd v Campbelltown Catholic Club Ltd [2003] NSWSC 1103 …. [3.47], [3.94], [3.98], [3.100], [3.100], [3.122] Leighton Pty Ltd v Arogen Pty Ltd [2012] NSWSC 1323 …. [3.186], [3.202], [3.276], [3.279] Levadetes Pty Ltd v Iberian Artisans Pty Ltd [2009] NSWSC 641 …. [3.12], [3.31], [3.249] LH Blue Pty Ltd v AXF Construction Pty Ltd [2010] VCC 0485 …. [3.117], [3.158] Lifestyle Retirement Projects No 2 Pty Ltd v Parisi Homes Pty Ltd [2005] NSWSC 411 …. [3.177] — v — [2005] NSWSC 705 …. [3.236] Lucas Stuart Pty Ltd v Council of the City of Sydney [2005] NSWSC 925 …. [3.151] — v — [2005] NSWSC 840 …. [3.147], [3.152], [4.8] — v Hemmes Hermitage Pty Ltd [2009] NSWSC 477 …. [3.122], [3.148] Lucchitti t/a Palluc Enterprises v Tolco Pty Ltd [2003] NSWSC 1070 …. [3.40], [3.339] LU Simon Builders Pty Ltd v Fowles [1992] 2 VR 189 …. [3.154], [6.1]

M M & L Watson Pty Ltd t/a BBR Designs v Rilsung Pty Ltd [2003] NSWCA 36 …. [3.150] Machkevitch v Andrew Building Constructions [2012] NSWSC 546 …. [3.10] Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743 …. [4.4] Max Cooper & Sons (Builders) Pty Ltd v M & E Booth & Sons Pty Ltd [2003] NSWSC 929 …. [4.4] Maxstra Constructions Pty Ltd v Active Crane Hire Pty Ltd [2013] VSC 177 …. [3.139], [3.286], [3.338] — v Gilbert t/as AJ Gilbert Concrete [2013] VSC 243 …. [3.69], [3.77], [3.79], [3.294], [3.295] Maxstra NSW Pty Ltd v Blacklabel Services Pty Ltd [2013] NSWSC 406 …. [3.279] McLaughlin’s Family Restaurant v Cordukes Ltd [2004] NSWCA 447 …. [3.151] Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 …. [3.55], [3.57], [3.92], [3.115], [3.116], [3.135], [3.137], [3.138], [3.286], [3.288], [3.293], [3.335], [3.336], [3.337] — v — (No 2) [2010] VSC 255 …. [3.293] Meyer v Brian Burston Building Design Consultant (General) [2005] NSWCTTT 235 …. [5.2] Michael John Smith t/a Michael Smith Constructions v Avibe Pty Ltd [2006] NSWSC 1402 …. [5.3] Midcoast County Council t/a Midcoast Water v Reed Construction Australia Pty Ltd [2011] NSWCA 268 …. [3.147] Minister for Commerce v Contrax Plumbing Pty Ltd [2004] NSWSC 823 …. [3.169], [3.186], [3.350], [3.359]

— v — [2005] NSWCA 142 …. [3.46], [3.203], [3.246], [3.351], [3.359] Modcol v National Buildplan Group [2013] NSWSC 380 …. [3.373], [3.374] MPM Constructions Pty Ltd v Trepcha Constructions Pty Ltd [2004] NSWSC 103 …. [3.193], [3.312] Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 …. [3.94], [3.124], [3.125], [3.127], [3.134], [3.152], [3.233], [3.268], [3.297], [3.298], [3.350] Multipower Corp Pty Ltd v S & H Electrics Pty Ltd [2006] NSWSC 757 …. [3.241]

N NC Refractories Pty Ltd v Consultant Bricklaying Pty Ltd [2013] NSWSC 842 …. [3.102] Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) (2005) 64 NSWLR 462; [2005] NSWCA 409 …. [3.57], [3.93], [3.112], [3.116], [3.152], [3.235] — v — [2005] 64 NSW LR 462 …. [3.57], [3.116] Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd [2010] QCA 119 …. [3.57] [3.116] Nigro v EVS Group Pty Limited [2012] NSWSC 1545 …. [3.109], [3.213], [3.276], [3.342] NSW Land and Housing Corporation v DJ’s Home and Property Maintenance Pty Ltd (in liq) [2013] NSWSC 1167 …. [3.303], [3.372]

O Okaroo Pty Ltd v Vos Construction and Joinery Pty Ltd [2005] NSWSC 45 …. [3.10], [3.248], [3.371] Olbourne v Excell Building Corp Pty Ltd [2009] NSWSC 349 …. [3.11] Olympia Group (NSW) Pty Ltd v Hansen Yuncken Pty Ltd [2011] NSWSC 165 …. [3.34], [3.186], [3.199], [3.300] Olympia Group Pty Ltd v Tyrenian Group Pty Ltd [2010] NSWSC 319 …. [3.321], [3.329] Ontrac v BHCF [2008] NSWDC 76; [2008] NSWDC 132 …. [3.95], [3.112], [3.325] Oppedisano v Micos Aluminium Systems [2012] NSWSC 53 …. [3.31], [3.278] Over Fifty Mutual Friendly Society Ltd v Smithies [2007] NSWSC 291 …. [3.29] Owners Strata Plan 74635 v Buildcorp Group Pty Limited [2013] NSWCA 40 …. [7.7] Owners Strata Plan 56587 v Consolidated Quality Projects [2009] NSWSC 1476 …. [3.10], [3.92], [3.330] Owners Strata Plan 61172 v Stratabuild Ltd [2011] NSWSC 1000 …. [3.252] Oxbara Pty Ltd v Geotech Pty Ltd [2002] ACTSC 116 …. [3.98], [3.113], [3.121], [3.128], [3.339], [3.15]

P Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2005] NSWSC 378 …. [3.182], [3.184], [3.245], [3.252], [3.323], [3.327] — v — [2006] NSWSC 13 …. [3.99], [3.176], [3.208], [3.236], [3.247], [3.252], [3.307], [3.323], [3.327], [3.328], [4.2] — v — [2006] NSWSC 724 …. [3.124] Pacific Islands Express Pty Ltd v Empire Building Development Pty Ltd [2008] NSWSC 576 …. [4.4] Parist Holdings Pty Ltd v Thiessen Architects Pty Ltd [2003] NSWSC 2070/03) …. [3.12], [3.15] — v WT Partnership Australia Pty Ltd [2003] NSWSC 365 …. [3.20], [3.185], [3.186], [3.191], [3.200] Parkview Constructions Pty Ltd v Sydney Civil Excavations [2009] NSWSC 61 …. [3.307] — v Tayeh [2009] NSWSC 186 …. [4.3] Parkview Qld Pty Ltd v Fortia Funds Management Ltd [2009] NSWSC 1065 …. [3.11], [3.94] Parsons Brinckerhoff Australia Pty Ltd v Downer EDI Works Pty Ltd [2010] NSWSC 1295 …. [3.321] Paul Michael Pty Ltd v Urban Traders Pty Ltd [2010] NSWSC 1246 …. [3.256]

Paynter Dixon Constructions Pty Ltd v JF & CG Tilston Pty Ltd [2003] NSWSC 869 …. [3.97] Pearl Hill Pty Ltd v Concorp Construction Group (Vic) Pty Ltd [2011] VSCA 99 …. [6.2] Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2008] NSWSC 858 …. [3.238] — v — [2009] NSWCA 157 …. [3.125], [3.132], [3.250], [3.251] — v — [2009] NSWSC 416 …. [3.91], [3.106], [3.107], [3.212] Performance Builders (Vic) Pty Ltd v Southern Restaurants Vic Pty Ltd [2004] VCC 4; [2004] VCC 116 …. [3.229] Peter’s of Kensington Pty Ltd v Seersucker Pty Ltd [2008] NSWSC 897 …. [3.21] Phoenix International Group Pty Ltd v Resources Combined No 2 Pty Ltd [2009] VSCA 309 …. [3.225] — v — [2009] VSC 425 …. [3.281], [3.282] — v — (No 2) [2009] VSC 459 …. [3.225], [3.229] Pioneer Sugar Mills Pty Ltd v United Group Infrastructure Pty Ltd [2005] QSC 354 …. [3.371] Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] NSWCA 279 …. [3.60], [3.246], [3.252], [3.339], [7.3] — v — [2008] NSWSC 753 …. [3.272], [3.352], [7.3] Plus 55 Village Management Pty Ltd v Parisi Homes Pty Ltd [2005] NSWSC 559 …. [4.4] Power Serve v Powerline’s Clearing Group [2011] NSCSC 1180 …. [3.276], [3.355] Precision Flooring Pty Ltd v Tricon Projects Pty Ltd (Home Building) [2005] NSWCTTT 250 …. [5.2] Presser v Oceanview Properties Pty Ltd [2006] VSC 143 …. [6.3] Procorp Civil Pty Ltd v Napoli Excavations & Contracting Pty Ltd [2006] NSWSC 205 …. [3.214] — v — [2006] NSWSC 358 …. [3.264] Professional Floor Service Pty Ltd v Techor Developments Pty Ltd [2009] VCC 0560 …. [3.156], [3.157], [3.345], [6.4] Project Venue Development No 11 Pty Ltd v TQM Design & Construct Pty Ltd [2009] NSWSC 699 …. [4.4] Property & Equity Developments Pty Ltd v Parnell [2004] NSWSC 1035 …. [3.100] Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248 …. [3.7], [3.15], [3.48], [3.96], [3.112], [3.113], [3.125] Prynew Pty Ltd v Piling Contractors (Qld) Pty Ltd [2005] NSWSC 1211 …. [3.224]

Q Quasar Constructions NSW Pty Ltd v A J Stockman Pty Ltd [2004] NSWSC 117 …. [3.73] — v Demtech Pty Ltd [2004] NSWSC 116; 20 BCL 276 …. [3.64], [3.9], [3.95], [3.297], [3.307]

R Rail Corporation of NSW v Nebax Constructions Australia Pty Ltd t/as TrackSyde Constructions [2012] NSWSC 6 …. [3.92], [3.102], [3.103], [3.104], [3.107], [3.165], [3.187], [3.276] Reed Constructions Pty Ltd v Eire Contractors Pty Ltd [2009] NSWSC 678 …. [3.147], [3,240], [3.324], [3.339] [5.9] Reiby Street Apartments Pty Ltd v Winterton Constructions Pty Ltd [2006] NSWSC 375 …. [3.233] Reiby Street Pty Ltd v Winterton Constructions Pty Ltd [2005] NSWSC 545 …. [3.252] Remo Constructions Pty Ltd v Dualcorp Pty Ltd [2008] NSWSC 1172 …. [4.4] Republic of Turkey v Mackie Pty Ltd [2012] VSC 309 …. [3.38], [3.283], [3.287] Roads and Traffic Authority (RTA) v John Holland Pty Ltd [2006] NSWSC 567 …. [3.203], [3.243] Robson Civil Projects Pty Ltd v Wattex Mining Pty Ltd [2009] NSWSC 1071 …. [3.132]

Rojo Building Pty Ltd v Jillcris Pty Ltd [2006] NSWSC 309 …. [3.142], [3.166] — v — [2007] NSWCA 68 …. [3.142], [3.166] — v — [2007] NSWSC 880 …. [3.142], [3.166] Romeo v TQM Design and Construct Pty Limited [2013] NSWCA 72 …. [3.32] Roseville Bridge Marina Pty Ltd v Bellingham Marine Australia Pty Ltd [2009] NSWSC 320 …. [3.258], [3.360] Rothnere Pty Ltd v Quasar Constructions NSW Pty Ltd [2004] NSWSC 1151 …. [3.211], [3.252] Rubana Holdings Pty Ltd v 3D Commercial Interiors Pty Ltd [2008] NSWSC 1405 …. [3.45], [3.161], [3.162]

S Sand Excavation Pty Ltd v Nahas Constructions Pty Ltd [2011] NSWSC 184 …. [3.140], [3.146] Schokman v Xception Constructions Pty Ltd [2005] NSWSC 297 …. [3.142], [3.155], [3.161], [3.166], [3.239] Seabay Properties Pty Ltd v Galvin Construction Pty Ltd [2011] VSC 183 …. [3.51], [3.57], [3.67], [3.68], [3.138], [3.218], [3.337] Shelford Engineering and Construction Pty Ltd v Rescom Constructions Pty Ltd [2005] VCC 361 …. [3.178], [3.229], [3.280], [6.1] Shell Refining (Australia) Pty Ltd v A J Mayr Engineering Pty Ltd [2006] NSWSC 94 …. [3.22], [3.35], [3.208], [3.247], [3.307] — v — [2006] NSWSC 154 …. [3.257] Shellbridge Pty Ltd v Rider Hunt Sydney Pty Ltd [2005] NSWSC 1152 …. [3.102], [3.259], [3.269] Shorten v David Hurst Constructions Pty Ltd [2008] NSWCA 134 …. [3.31] — v — [2008] NSWSC 546 …. [3.252], [3.253] Siemens Ltd v Origin Energy Uranquinty Power Pty Ltd [2011] NSWSC 195 …. [3.143], [3.144], [3.353] — v Tolco [2007] NSWSC 257 …. [3.359] — v Vaughan Constructions Pty Ltd [2006] VSC 452 …. [3.224], [3.224] Skilled Group Ltd v CSR Viridian Pty Ltd [2012] VSC 290 …. [3.18] Smith v Coastivity Pty Ltd [2008] NSWSC 313 …. [3.24], [3.32], [3.248], [3.269] Springs Golf Club Pty Ltd v Profile Gold Pty Ltd [2006] NSWSC 395 …. [3.255], [3.264] — v — [2006] NSWSC 344 …. [3.124], [3.239] St Hilliers Contracting Pty Ltd v Dualcorp Civil Pty Ltd [2010] NSWSC 1468 …. [3.276] Stallion Civil Group Pty Ltd v Tresedar Pty Ltd [2009] NSWDC 125 …. [3.10], [3.147] State Asphalt Services Pty Ltd v Leighton Contractors Pty Ltd [2013] NSWSC 528 …. [3.107], [3.129] Steel v Beks [2010] NSWSC 1404 …. [3.276] Summit Design & Construction Pty Ltd, Re [1999] NSWSC 1136 …. [3.373], [3.374]

T Tarastar Pty Ltd v Sullivan [2009] VCC 0941 …. [3.38] Taylor Projects Group Pty Ltd v Brick Dept Pty Ltd [2005] NSWSC 439 …. [3.122], [3.168], [3.318] — v — [2005] NSWSC 571 …. [3.318], [3.322], [3.326] Thiess Pty Ltd v Lane Cove Tunnel Nominee Company Pty Ltd [2009] NSWCA 53 …. [3.39], [3.127] — v — [2008] NSWSC 729 …. [3.127] — v Zurich Specialities London Ltd [2009] NSWCA 47 …. [3.10] Timwin Construction Pty Ltd v Façade Innovations Pty Ltd [2005] NSWSC 548 …. [3.233], [3.252],

[3.254], [3.257] Tolfab Engineering Pty Ltd v Tie Fabrications Pty Ltd [2005] NSWSC 326 …. [3.73], [3.252], [3.318] Tombleson v Dancorell Constructions Pty Ltd [2007] NSWSC 1169 …. [3.262] Tooma Constructions Pty Ltd v Eaton & Sons Pty Ltd [2002] NSWSC 514 …. [3.128], [3.339], [3.15] TQM Design & Construct Pty Ltd v Dasein Constructions Pty Ltd [2004] NSWSC 1216 …. [3.184], [3.186], [3.252] Transgrid v Siemens Ltd [2004] NSWSC 87 …. [3.60] — v — (2004) 61 NSWLR 521; [2004] NSWCA 395 …. [3.60], [3.233], [3.244], [3.352] — v Walter Construction Group Ltd [2004] NSWSC 21 …. [3.59], [3.60], [3.74], [3.194], [3.207] Trustees of Roman Catholic Church for the Diocese of Lismore v T F Woollam & Son [2012] NSWSC 1559 …. [3.102], [3.276] Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2007] NSWSC 941 …. [3.233], [3.233], [3.358] — v — [2007] NSWSC 1298 …. [3.263] — v — [2008] NSWSC 399 …. [3.252], [3.297], [3.357], [3.358], [5.4] T S Constructions Pty Ltd v Piecor Pty Ltd [2009] VCC 1045 …. [3.152] Tsoukatos v Mustafa [2007] NSWSC 614 …. [3.327]

U University of Sydney v Cadence Australia Pty Ltd [2009] NSWSC 635 …. [3.91], [3.102], [3.107] Urban Traders v Paul Michael Pty Ltd [2009] NSWSC 1072 …. [3.107], [3.129], [3.212], [3.307]

V Van Ek Contracting Pty Ltd v Roads Corporation [2007] VSC 336 …. [3.224], [3.363] Veolia Water Solutions & Technologies v Kruger Engineering Australia Pty Ltd [2006] NSWSC 1406 …. [3.105], [3.183], [3.271] — v — [2007] NSWSC 46 …. [3.253] — v — (No 3) [2007] NSWSC 459 …. [3,263], [4.5]

W Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266 …. [3.28], [3.32], [3.41], [3.49], [3.53], [3.57], [3.88], [3.94], [3.97], [3.110], [3.138] — v — [2003] NSWSC 1140 …. [3.57], [3.337] Walton Construction (Qld) Pty Ltd v Salce [2008] QSC 235 …. [3.33] Watpac Construction (NSW) v Austin Corp Pty Ltd [2010] NSWSC 168 …. [3.132], [3.212], [3.252], [3.298], [3.361] Williams v Concreting Services Pty Ltd [2013] NSWSC 366 …. [3.276], [3.342] Winslow Constructors Pty Ltd v John Holland Rail Pty Ltd & MVM Rail Pty Ltd [2008] VCC 1491 …. [3.163], [4.8] Wooding v Eastoe [2006] NSWSC 277 …. [3.10], [3.132]

Z Zebicon Pty Ltd v Remo Constructions Pty Ltd [2008] NSWSC 1408 …. [3.42], [3.148], [3.322], [3.325], [3.329] Ziade Investments No 1 Pty Ltd v Tricon Projects Pty Ltd [2004] NSWSC 1070 …. [4.4] Zurich Specialities London Ltd v Thiess Pty Ltd [2008] NSWSC 1010 …. [3.10], [3.30]

Table of Contents Foreword Publisher’s Note Table of Cases Chapter 1 Introduction: Security of Payment Across Australia Queensland Security of Payment Legislation Western Australia and Northern Territory Security of Payment Legislation South Australian Security of Payment Legislation Australian Capital Territory Security of Payment Legislation Tasmanian Security of Payment Legislation Chapter 2 Comparison Table of New South Wales and Victorian Security of Payment Legislation Chapter 3 Annotated New South Wales and Victorian Security of Payment Legislation NSW Act s 1: Name of Act Victorian Act: Name of Act (as applying to construction contracts entered into prior to 30/3/07) Victorian Act: Name of Act (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 2: Commencement Victorian Act s 2: Commencement (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 2: Commencement (as applying to construction contracts entered into on or after 30/3/07)

NSW Act s 3: Object of Act Victorian Act s 3: Object of Act (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 3: Object of Act (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 4: Definitions Victorian Act s 4: Definitions (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 4: Definitions (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 5: Construction work Victorian Act s 5: Construction work (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 5: Construction work (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 6: Related goods and services Victorian Act s 6: Related goods and services (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 6: Related goods and services (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 7: Application of Act Victorian Act s 7: Application of Act (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 7: Application of Act (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 8: Rights to progress payments Victorian Act s 9: Rights to progress payments (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 9: Rights to progress payments (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 9: Amount of progress payment

Victorian Act s 10: Amount of progress payment (as applying to construction contracts entered into prior to 30/3/07) Victorian Act ss 10, 10A, 10B: Amount of progress payment (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 10: Valuation Victorian Act s 11: Valuation (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 11: Valuation (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 11: Due date for payment Victorian Act s 12: Due date for payment (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 12: Due date for payment (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 12: Pay when paid Victorian Act s 13: Pay when paid (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 13: Pay when paid (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 13: Payment claims Victorian Act s 14: Payment claims (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 14: Payment claims (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 14: Payment schedules Victorian Act s 15: Payment schedules (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 15: Payment schedules (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 15: Consequences of not paying claimant where no payment schedule

Victorian Act s 16: Consequences of not paying claimant where no payment schedule (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 16: Consequences of not paying claimant where no payment schedule (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 16: Consequences of not paying in accordance with payment schedule Victorian Act s 17: Consequences of not paying claimant in accordance with payment schedule (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 17: Consequences of not paying claimant in accordance with payment schedule (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 17: Adjudication applications Victorian Act s 18: Adjudication applications (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 18: Adjudication applications (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 18: Eligibility criteria for adjudicators Victorian Act s 19: Eligibility criteria for adjudicators (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 19: Eligibility criteria for adjudicators (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 19: Adjudicator’s appointment Victorian Act s 20: Appointment of adjudicator (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 20: Appointment of adjudicator (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 20: Adjudication responses Victorian Act s 21: Adjudication responses (as applying to construction contracts entered into prior to 30/3/07)

Victorian Act s 21: Adjudication responses (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 21: Adjudication procedures Victorian Act s 22: Adjudication procedures (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 22: Adjudication procedures (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 22: Adjudicator’s determination Victorian Act ss 23, 24: Adjudicator’s determination (as applying to construction contracts entered into prior to 30/3/07) Victorian Act ss 23, 23A, 24: Adjudicator’s determination (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 23: Respondent required to pay adjudicated amount Victorian Act s 25: Obligation to pay adjudicated amount (as applying to construction contracts entered into prior to 30/3/07) Victorian Act ss 28M, 28N: Obligation to pay adjudicated amount (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 24: Consequences of not paying adjudicated amount Victorian Act s 27: Consequences of not complying with adjudicator’s determination (as applying to construction contracts entered into prior to 30/3/07) Victorian Act ss 28O, 28P, 28Q: Consequences of not complying with adjudicator’s determination (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 25: Filing adjudication certificate as judgment debt and challenging adjudicator’s determinations Victorian Act: Filing adjudication certificate as judgment debt: challenging adjudicator’s determinations (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 28R: Filing adjudication certificate as judgment debt: challenging adjudicator’s determinations (as applying to construction contracts entered into on or after 30/3/07)

Victorian Act only (ss 28A – 28L): Review of adjudication (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 26: New adjudication application NSW Act only (ss 26A – 26F): Division 2A claimant’s rights against principal contractor Victorian Act s 28: New adjudication application (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 28: New adjudication application (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 27: Right to suspend work Victorian Act s 29: Right to suspend work (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 29: Right to suspend work (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 28: Authorised nominating authorities Victorian Act ss 42, 43, 44: Authorised nominating authorities (as applying to construction contracts entered into prior to 30/3/07) Victorian Act ss 42, 43, 43A – 43C, 44: Authorised nominating authorities (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 29: Adjudicator’s fees Victorian Act s 45: Adjudicator’s fees (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 45: Adjudicator’s fees (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 30: Liability of adjudicators and authorised nominating authorities Victorian Act s 46: Liability of adjudicator (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 46: Liability of adjudicator (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 31: Notices and service Victorian Act s 50: Service of notices (as applying to construction contracts

entered into prior to 30/3/07) Victorian Act s 50: Service of notices (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 32: Effect on civil proceedings Victorian Act s 47: Effect on civil proceedings (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 47: Effect on civil proceedings (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 33: Act binds the Crown Victorian Act s 8: Act binds the Crown (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 8: Act binds the Crown (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 34: No contracting Out Victorian Act s 48: No contracting out (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 48: No contracting out (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 35: Regulations Victorian Act s 52: Regulations (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 52: Regulations (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 37: Savings and transitional provisions Victorian Act: Savings and transitional provisions (as applying to construction contracts entered into prior to 30/3/07) Victorian Act s 53: Transitional provision (as applying to construction contracts entered into on or after 30/3/07) NSW Act s 38: Review of Act Victorian Act: Review of Act (as applying to contracts entered into prior to 30/3/07)

Victorian Act: Review of Act (as applying to contracts entered into on or after 30/3/07) NSW Act: Schedule 2 Victorian Act only (ss 30 – 41): Recovery from principal (as applying to contracts entered into prior to 30/3/07) Victorian Act only (ss 29A, 30 – 40): Recovery from principal (as applying to contracts entered into on or after 30/3/07) Victorian Act: Other sections not in the NSW Act (as applying to contracts entered into prior to 30/3/07) Victorian Act: Other sections not in the NSW Act (as applying to contracts entered into on or after 30/3/07) Chapter 4 Commonwealth Legislation Considered in the Context of the Security of Payment Legislation Australian Constitution Corporations Act Bankruptcy Act 1966 (Cth) Trade Practices Act 1974/Competition and Consumer Act 2010 (Cth) Chapter 5 Other New South Wales Legislation Considered in the Context of the New South Wales Security of Payment Legislation Commercial Arbitration Act 2010 (NSW) Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) Home Building Act 1989 (NSW) Supreme Court Act 1970 (NSW) Civil Procedure Act 2005 (NSW) and Uniform Civil Procedure Rules 2005 District Court Act 1973 (NSW) Interpretation Act 1987 (NSW) Evidence Act 1995 (NSW) Electronic Transactions Act 2000 (NSW)

Chapter 6 Other Victorian Legislation Considered in the Context of the Victorian Security of Payment Legislation Supreme Court and County Court and Rules County Court Act 1958 (Vic) Domestic Building Contracts Act 1995 Fair Trading Act 1999 (Vic) Magistrates’ Court Civil Procedure Rules Evidence Act 2008 (Vic) Chapter 7 Other Principles from Decided Cases in Context of Security of Payment Legislation Allowing interlocutory determinations to be litigated Principles to be applied in summary judgment application Payment by respondent to subcontractor of claimant in discharge of payment obligation to claimant Can an amending Act be taken into account in interpretation of the prior legislation? Doctrine of severance and the Act Allowing issue to be raised in Court of Appeal even though not raised before adjudicator or single judge Leave to withdraw an admission as to service Appendix Index

[page 1]

Chapter 1 Introduction: Security of Payment Across Australia [1.1] The Building and Construction Industry Security of Payment Act 1999 (NSW) (the NSW Act) came into effect on 26 March 2000. The NSW Act was based, in part, on the English Housing Grants, Construction and Regeneration Act 1996. Substantial amendments to the NSW Act came into effect on 3 March 2003. The NSW Act was further amended commencing on 28 February 2011 by adding a new Div 2A (ss 26A–26F) which can impose withholding of payment obligations on the ‘principal contractor’. Further amendments have been made to the NSW Act which as at the date of finalisation of this Introduction in November 2013 had not yet commenced. The Building and Construction Industry Security of Payment Amendment Act 2013 was passed by the Legislative Assembly in October 2013 and the Legislative Council on 12 November 2013. The Amending Act commences on a day to be appointed by proclamation which is anticipated not to be until 2014 but readers should check to see when the Amending Act is proclaimed. The Amending Act provides that the amendments do not apply in relation to construction contracts entered into before the commencement of the amendments. The Amending Act will effect the following changes to the NSW Act: impose a maximum progress payment period of 15 business days after a payment claim is made by a head contractor; impose a maximum payment period of 30 business days after a payment of claim is made by a subcontractor; provide for Regulations made under the NSW Act to require retention moneys to be held in trust for the subcontractor in a specific trust account, to provide for procedures for payment out of the trust account, the keeping

of records in connection with the trust account, and the resolution of disputes in connection with the trust account; a requirement for head contractors to serve with payment claims a ‘supporting statement’ that relates to the payment claim. The supporting statement is to be in the form prescribed by the Regulations and will include a requirement for a declaration that all subcontractors have been paid all amounts that have become due and payable to them in relation to the construction work; and the removal of the requirement presently in the NSW Act for payment claims under the Act to be endorsed with the statement that they are made under the Act. The Building and Construction Industry Security of Payment Act 2002 (Vic) (the Victorian Act) was based heavily on the NSW Act as first enacted. The Victorian Act was substantially amended to incorporate a number of the amendments to the New South Wales legislation which came into effect in New South Wales in 2003. A number of Victoria-only amendments were also incorporated, which have the effect of making the [page 2] Victorian Act very different from the legislation in the other states and territories in a number of key areas. The amendments, for the most part, only apply to contracts entered into on or after 30 March 2007, and in this book are referred to as ‘the 2007 amendments’. This work deals in detail with the NSW and Victorian Acts, but readers should be aware that security of payment legislation in the other states and territories has also been enacted which has adopted aspects of the New South Wales and Victorian Acts but in other areas deals with the issue of security of payment in different ways. QUEENSLAND SECURITY OF PAYMENT LEGISLATION [1.2] On 1 October 2004 Queensland introduced its own version of the security of payment legislation. The Building and Construction Industry Payments Act 2004 (Qld) (the Queensland Act) follows the New South Wales (and to a lesser extent Victorian) legislation which preceded it and is designed to ensure rapid

adjudication for ‘payment on account’ disputes. The Queensland Act similarly establishes a procedure for securing payments which cannot be contracted out of. From each ‘reference date’ under a contract there is an entitlement to a progress payment. If the contract is silent as to the payment terms, the contractor will be entitled to payment within 10 business days of having lodged the progress claim. The Subcontractor’s Charges Act 1974 (Qld) (SCA) remains in force in Queensland notwithstanding the enactment of the Queensland Act. A party is forced to choose between the remedies available to it under the Queensland Act and those available under the SCA. WESTERN AUSTRALIA AND NORTHERN TERRITORY SECURITY OF PAYMENT LEGISLATION [1.3] Western Australia and the Northern Territory introduced their own versions of security of payment legislation in 2004: Construction Contracts Act 2004 (WA) and Construction Contracts (Security of Payment) Act 2004 (NT). The broad objectives of the Western Australian and Northern Territory legislation are similar to those of the security of payment legislation in the other states. As in those other states ‘pay when paid’ and ‘pay if paid’ clauses are prohibited. Also prohibited are provisions in construction contracts that purport to require a payment to be made more than 50 days after the payment is claimed. The provisions in the legislation dealing with a contractor’s entitlement to claim progress payments are dealt with in a very different way than in the other states. In Western Australia and the Northern Territory, the legislation implies into construction contracts clauses in relation to a contractor’s right to make payment claims, the obligation of the party receiving the payment to respond within specified periods of time, the amounts the contractor is entitled to be paid, interest on overdue payments, provisions dealing with ownership of goods, duties as to unfixed goods on insolvency, and retention moneys. However, all those provisions are implied into a construction contract only where the construction contract is silent on the issue, making it possible for the parties to ‘contract out’ of those provisions. [page 3] If a ‘payment dispute’ arises, any party to the construction contract may apply

to have the dispute adjudicated. The adjudication process, as in the other states, is intended to be an expeditious procedure to have such payment disputes promptly decided but on the basis that payment of the amount determined payable by the adjudicator is taken to be an advance towards the total amount payable under the contract. Specifically, the provisions of the legislation do not prevent a party to a construction contract instituting proceedings before an arbitrator or court in relation to a dispute or other matter arising under the contract, and the arbitrator or court dealing with such dispute can make orders for the restitution of any amount paid by reason of the adjudication. Significantly (and unlike the position in the other states) a principal can also apply for adjudication of a payment dispute, and a principal can create a payment dispute by the principal serving a payment claim in relation to the performance or non-performance by the contractor. The legislation applies in Western Australia to construction contracts entered into after 1 January 2005. In the Northern Territory the legislation applies to construction contracts entered into after 1 July 2005. SOUTH AUSTRALIAN SECURITY OF PAYMENT LEGISLATION [1.4] The Building and Construction Industry Security of Payment Act 2009 (SA) (the South Australian Act) commenced on 10 December 2011. The South Australian Act is, in its terms, very similar to (and obviously based on) the New South Wales Act but there are a number of important differences including: The period under the South Australian Act for payment terms when there is no express provision in the construction contract is 15 business days after a payment claim is made rather than the 10 business day period in New South Wales. The time for provision of a payment schedule in response to a payment claim under the Act is also longer in South Australia than New South Wales being a period of 15 business days as opposed to 10 business days in New South Wales. A person is not eligible to be an adjudicator in relation to a construction contract ‘if either or both of the parties have nominated the person to be an adjudicator in relation to the contract’ (s 18(2)(b)), the obvious intention being to reinforce the fact that it is an authorised nominating authority that nominates an adjudicator, not a party or the parties. The South Australian

Act does not have an equivalent of the new Div 2A in the New South Wales legislation. A claimant has the express right to withdraw an adjudication application before it is determined (see s 27 of the South Australian Act). The Worker’s Liens Act 1893 remains in force in South Australia, notwithstanding the enactment of the South Australian Act. Under the Worker’s Liens Act workers and subcontractors can have a lien over land of the owner (ss 4, 5 and 6). The lien can be registered with the General Registry Office (s 10) and the registration is deemed to be a caveat on title (s 12). The owner of land can pay the amount of the claim the subject of the lien into court and ‘relieve … property from liability with regard to the lien’ (s 26). Consideration should be given therefore to a provision in a construction contract prepared for a principal providing that the amount of any such payment made by a principal shall [page 4] be a debt due from the contractor to the principal. See Badge Constructions (SA) Pty Ltd v Rule Chambers Pty Ltd [2007] SASC 417 in relation to contracting out of a contractor’s right to register a lien. AUSTRALIAN CAPITAL TERRITORY SECURITY OF PAYMENT LEGISLATION [1.5] The Building and Construction Industry (Security of Payment) Act 2009 (ACT) (the Australian Capital Territory Act) commenced on 1 July 2010. The Australian Capital Territory Act is broadly similar to the legislation in New South Wales but in a number of areas the drafting of the provisions is different. In addition to different drafting, there are a number of areas where the legislation differs in substance from the New South Wales model, including the following: To be eligible to be an adjudicator the person also needs to have successfully completed a relevant training course (s 20)(1)(c)) and a person is not eligible to be an adjudicator if the person is employed by or represents a building or construction industry organisation such as HIA or MBA (s 20(2)(b)). The period for a respondent to make an adjudication response is longer than in New South Wales (s 22(1)). The Supreme Court has jurisdiction to hear appeals on any question of law

arising out of an adjudication decision where the Supreme Court grants leave or the parties to the decision consent (s 43(2) and (3)). On the determination of an appeal the Supreme Court may confirm, amend or set aside the adjudication decision or remit the adjudication decision back to the original adjudicator for reconsideration or to a new adjudicator (s 43(6)). The Supreme Court also has jurisdiction to determine a question of law arising in an application to the court made by one of the parties to an adjudication decision (s 44). There are no express provisions dealing with service of documents under the Australian Capital Territory legislation. TASMANIAN SECURITY OF PAYMENT LEGISLATION [1.6] The Tasmanian Building and Construction Industry Security of Payment Act 2009 (the Tasmanian Act) commenced on the day it received royal assent on 17 December 2009. The Tasmanian Act has similar objectives to the New South Wales Act and although it covers the same matters as in New South Wales, in a number of areas the drafting of the provisions is different from New South Wales although in most cases the effect is similar or the same. There are also a number of important differences in substance from New South Wales Act, including the following: There is no exclusion to the application of the Tasmanian Act in respect of contracts for residential construction. The Tasmanian Act applies to building or construction contracts insofar as they relate to the supply by a person in Tasmania of building or construction related goods and services even though those [page 5] goods and services are supplied in respect of building work or construction work carried out outside Tasmania (s 7(3)). The default due date for payment when the construction contract does not specify a date is a different period depending on whether the payment claim is served in respect of a residential structure where the respondent is

the owner of the land and not a building practitioner (15 business days) but 10 business days in any other case. The period of time for a respondent to serve a payment schedule after a payment claim is received is 20 business days where the payment claim relates to a residential structure, the respondent is the owner of the land and not a building practitioner, and 10 business days in any other case (s 19(3)(a) and (b)). A claimant may at any time before an adjudication application has been determined withdraw the application (s 21(8)). The time for an adjudication response is 10 business days after receiving a copy of the adjudication application or five business days after receiving notice of the adjudicator’s acceptance (s 23(2)) which is longer than the periods in New South Wales. The service of notice provisions in the Tasmanian Act expressly acknowledges the possibility of service by email or other electronic method if the person has agreed to service by such means (s 40).

[page 7]

Chapter 2 Comparison Table of New South Wales and Victorian Security of Payment Legislation [2.1] Subject: NSW as applying to construction contracts entered into prior to 30/3/07

Section: NSW

Section: Victoria as applying to construction contracts entered into prior to 30/3/07

Section: Victoria as in force for construction contracts entered into on or after 30/3/07*

Part 1: Preliminary 1 Name of Act

1 [No Victorian equivalent] 1 Purpose

[No Victorian equivalent] 1 Purpose

3 [Some differences to

2 [Similar to NSW. See also the transitional provisions in s 53] 3 [Some differences to

[No equivalent ‘Purpose’ section in the NSW Act but see s 3 ‘Object of Act’ in NSW] 2 Commencement 2 2 [Similar to NSW]

3 Object of Act

3

4 Definitions

4

5 Definition of 5 ‘construction work’ 6 Definition of 6 ‘related goods and services’

NSW: s 3(2) is different as Victoria does not expressly provide that the statutory entitlement to progress payments applies regardless of whether the construction contract makes such provision] 4 [Some differences to NSW: especially the ‘progress payment’ definition which is much broader in NSW]

5

NSW: s 3(2) is different as Victoria does not expressly provide that the statutory entitlement to progress payments applies regardless of whether the construction contract makes such provision] 4 [Similar to NSW but has new definitions not in NSW, eg, ‘adjudication review’, ‘claimable variation’, ‘excluded amount’ and ‘variation’] 5

6

6

[page 8] 7 Application of Act

7

7

7 [Residential building work exclusion in s 7(2) (b) and (ba) is in materially

different terms to NSW] [Sch 2 Pt 2 cl 2 in 7(6) Operative NSW is similar to date s 7(6) in Victoria] [s 33 in NSW is 8 Act binds the the equivalent of s Crown 8 in Victoria] 8 Right to 8(1) 9(1) [Similar to progress payments NSW]

7(6) Operative date 8 Act binds the Crown 9(1) [Similar to NSW]

Part 2: Right To Progress Payments

9 Amount of progress payment

8(2) ‘Reference date’

9(2) [‘Reference date’ has some differences from NSW especially the ‘second limb’, ie, s 9(2) (a)(ii) which in Victoria may apply even where the construction contract expressly provides for the date for progress claims to be made]

9

10 [Similar to NSW]

9(2) [‘Reference date’ has some differences from NSW especially the ‘second limb’, ie, s 9(2) (a)(ii) which in Victoria may apply even where the construction contract expressly provides for the date for progress claims to be made. Note also the different reference dates for progress payments, one-off payments and final payments] 10, 10A and 10B [Materially different to NSW with new concepts of ‘claimable

10 Valuation of 10 construction work and related goods and services

11 Due date for payment

12 Effect of ‘pay when paid’ provisions

11 [Similar to NSW]

11 12 11(2) Interest 11(3)–(5) Lien over unfixed plant and materials 12(1) 13(1) [Similar to NSW]

variations’ (s 10A) and ‘excluded amounts’ (s 10B)] 11 [Similar to NSW but has new concepts of ‘claimable variations’ and ‘excluded amounts’] 12 12(2) Interest 12A Lien in respect of unpaid progress payment 13(1) [Similar to NSW]

[page 9] 12(2)

13(2) [Similar to 13(2) [Similar to NSW except s NSW] 12(2)(c) in the NSW Act is not in the Victorian Act]

Part 3: Procedure for Recovering Progress Payments Division 1 — Payment Claims and Payment Schedules 13 Payment claims

13(1)

14(1) [Similar to 14(1) [Similar to NSW but note in NSW] Victoria it needs to be a person ‘entitled to a progress payment’ whereas in NSW

13(2)

it is a person who ‘claims to be entitled’] 14(3) [Similar to NSW]

13(3)

[No Victorian equivalent]

13(4)

[No Victorian equivalent]

13(5)

14(2) [Similar wording but

14(2) [Similar to NSW but also has reference to ‘prescribed information’] 14(3) [Similar to NSW but refers to ‘excluded amount[s]’ and does not have reference as in NSW to retention moneys] 14(4) [Materially different to NSW as it distinguishes between progress claims, and single, one-off and final payment claims] 14(5) Single, oneoff and final payment claims 14(6) Single, oneoff and final payment claims: one payment claim only 14(7) Single, oneoff and final payment claims: where not paid 14(8)

potentially to a materially different effect especially as there is no equivalent of the NSW s 13(6)] 13(6)

[No Victorian equivalent]

14(9) [Similar to NSW but has extra qualifying words ‘if the amount has not been paid’] [page 10]

14 Payment schedules

14

15 Consequences 15 of not paying claimant where no payment schedule

16 Consequences of not paying claimant in

16

15

15 [Similar to NSW but also refers to ‘excluded amounts’, ‘prescribed forms’ and ‘prescribed information’] 16 [Similar to NSW but includes reference to ‘excluded amounts’]

16 [Provisions about making adjudication application (s 15(2)(a) (ii)) and no cross-claim (s 15(4)(b)), etc in NSW are not in the Victorian Act] 17 [Provisions 17 about making adjudication application (s 16(2)(a) (ii)) and

accordance with payment schedule

no cross-claim (s 16(4)(b)), etc in NSW are not in the Victorian Act]

Division 2 — Adjudication of Disputes 17 Adjudication applications

17

18 [Note: in Victoria adjudication is only available where a payment schedule has been served within the 10 business days. In NSW adjudication is also available where no payment schedule was served or the amount paid was less than the scheduled amount. NSW s 17(2) and (4) are not in the Victorian Act]

[No NSW equivalent to Victorian s 18(4)]

18 Eligibility criteria for adjudicators

18

19 [Extra criteria not in NSW Act:

18 [Similar to NSW but some of the time periods are different and it is possible for the authorised nominating authority to have to be one of three nominated in the construction contract]

18(4) To be binding, there must be at least 3 pre-agreed authorised nominating authorities 19 [Extra criteria not in NSW Act:

see s 19(2)(b) and see s 19(2)(b) and (d)] (d)] 19 Appointment of adjudicator

19

20 [Similar to NSW]

20 [Similar to NSW] [page 11]

20 Adjudication responses

20

21 [Victorian Act also refers to ‘include name and address of any relevant principal’: see s 21(2)(c) and (4)]

21 [Similar to NSW but: • Also refers to ‘excluded amounts’ • Does not have an equivalent of the NSW s 20(2B) that prohibits an adjudication response from containing any reasons not in the payment schedule, and has a new procedure where there are reasons in the adjudication response not in the payment schedule (s 21(2B)) • Victorian Act also requires the adjudication response to ‘include name and address of any relevant principal’: see s 21(2)(c) and (4)]

21 Adjudication procedures

21

22 [See s 21(4A) in the NSW Act providing for no legal representation at conference, etc: not in the Victorian Act]

22 Adjudicator’s determination

22(1)

23(1) [Note s 22(1)(c) in NSW (interest) is not in the Victorian Act] 23(2) [Similar to 23(2) [Similar to NSW] NSW] 23(2A) Adjudicator is prohibited from taking into account ‘excluded

22(2)

22 [Similar to NSW but: • Legal representation is only if permitted by adjudicator: see s 22A(5A) • Adjudicator is required to serve notice on any person who has financial or contractual interest in the subject of the adjudication: see s 22(2) • It is up to the claimant to agree to an adjudicator’s request for more time to make his or her determination: see s 22(4)(b) and (4A)] 23(1) [Similar to NSW]

amounts’ or other prohibited matters [page 12]

23 Respondent required to pay adjudicated amount

23(2B) Adjudicator’s determination is void if it contravenes s 23(2A) 22(3) [Adjudicator 23(3) [Adjudicator 23(3) [Adjudicator must include must include must include reasons unless reasons only if reasons] requested by the either party so parties not to] requests] 22(4) [Adjudicator [No Victorian 23(4) is generally bound equivalent] by earlier adjudicator’s valuations of work] 23A Adjudication determination to be given to parties and Building Commission 22(5) 24 Correcting 24 [Similar to mistakes in NSW but see new determinations s 24(3) and (4)] 23(1) Definition 27(6) [Different 28M(2) [Similar of ‘relevant date’ timing] to NSW]

23(2) [Express payment obligation]

25(1) [Similar to NSW]

28M(1)

25(2)–(6) and 26 [Deals with alternative of providing security]

25(2)–(6) and 26 [Repealed]

Division 2A — Review of Adjudication (Victoria only) 28A Threshold for review 28B Application for review by respondent 28C Application for review by claimant 28D Procedure for making application 28E Right to make submissions 28F Designated trust account 28G Appointment of review adjudicator 28H Adjudication review procedures 28I Adjudication review determination [page 13]

28J Authorised nominating authority must notify persons of review determination 28K Withdrawal of adjudication review application 28L Correcting mistakes in review determinations Division 2B — Payment and Recovery of Adjudicated Amounts (Victoria only) 28M Respondent required to pay adjudicated amount 28N Payment offer review determination 28O Consequences of respondent not paying adjudicated amount 28P Consequences of claimant not paying adjudicated amount 28Q Adjudication certificates

24 Consequence of not paying claimant adjudicated amount

25 Filing adjudication certificate as judgment debt

24(1) and (2)

28R Proceedings to recover amount payable under s 28M or s 28N 280(1) and (2) and 28P

27(1), (2) and (3) [Note: s 27(1)(b) also refers to provision of security as alternative to payment which is not available in NSW after the Building and Construction Industry Security of Payment Amendment Act 2002 (NSW)] 24(3)–(5) [The 27(2), (4) and (6) 28Q and 28P NSW Act refers to [The Victorian Act the adjudication has no certificate adjudication procedures to be certificate filed as a procedures but judgment debt in sets out the court, not in procedure for Victoria] obtaining judgment in court] 25 [No Victorian 28R equivalent]

[page 14]

26 Claimant may make new application in certain circumstances

[No NSW equivalent after the 2003 amendments] 26

26 Trust accounts

26 [Repealed]

28

28

Division 2A — Claimant’s Rights against Principal Contractor 26A

26B

26C

26D

26E

[No Victorian equivalent but see Victorian Act, Div 4, Recovery from Principal, ss 29A– 41] [No Victorian equivalent but see Victorian Act, Div 4, Recovery from Principal, ss 29A– 41] [No Victorian equivalent but see Victorian Act, Div 4, Recovery from Principal, ss 29A– 41] [No Victorian equivalent but see Victorian Act, Div 4, Recovery from Principal, ss 29A– 41] [No Victorian equivalent but see

[No Victorian equivalent but see Victorian Act, Div 4, Recovery from Principal, ss 29A– 41] [No Victorian equivalent but see Victorian Act, Div 4, Recovery from Principal, ss 29A– 41] [No Victorian equivalent but see Victorian Act, Div 4, Recovery from Principal, ss 29A– 41] [No Victorian equivalent but see Victorian Act, Div 4, Recovery from Principal, ss 29A– 41] [No Victorian equivalent but see

26F

Victorian Act, Div 4, Recovery from Principal, ss 29A– 41]

Victorian Act, Div 4, Recovery from Principal, ss 29A– 41]

[No Victorian equivalent but see Victorian Act, Div 4, Recovery from Principal, ss 29A– 41]

[No Victorian equivalent but see Victorian Act, Div 4, Recovery from Principal, ss 29A– 41]

26A Division 3 — Claimant’s Right to Suspend 27 Claimant may suspend work

27(1)

29(1)

29(1)

27(2) [Note extra 3 business days period not in the Victorian Act]

29(2)

29(2) [Similar to NSW but time periods different]

[page 15] 27(2A) [NSW Act [No Victorian provides that equivalent] claimant can claim for loss from any removal of works from contract by respondent] 27(3) 29(3) [Victorian

29(4)

29(5) [Note also s 29(3) says that a suspension under the Act does not constitute a breach of the construction

Act only says that contract] suspension is not a breach of the Construction Contract] [Victorian 30-41: Div 4 — ‘Recovery from Recovery from Principal’ Principal provisions are not in the NSW Act as in NSW almost identical provisions are in the NSW Contractors Debts Act 1997, but see NSW Div 2A, Claimant’s Rights against Principal Contractor, ss 26A–26F] Division 4 — General

28 Nominating authorities

28

29A–41: Div 4 — Recovery from Principal

Division 5 — Authorised Nominating Authorities, Adjudicators and Review Adjudicators 42, 43 and 44 [Different wording but similar subject matter]

42, 43 and 44 [Different wording but similar subject matter. See also ss 43A (functions of an authorised nominating authority), 43B (authorised nominating

29 Adjudicator’s fees

29(1)

45(1)

authority to provide information) and 43C (authorised nominating authority fees)] 45(2)

29(2) 29(3) 29(4) 29(5) [No NSW equivalent] [No NSW equivalent]

45(2) 45(3) 45(4) 45(5) 45(6)

45(3) 45(4) 45(5) 45(6) 45(7) 45(8)

[page 16] 30 Protection from liability for adjudicators and authorised nominating authorities 31 Service of notices

30(1) 30(2) [Extends immunity to authorised nominating authorities] 31

46 [No Victorian equivalent]

46 [No Victorian equivalent]

50 [Note the NSW provisions (s 31(1)(e) and (3)) that expressly permit service in accordance with the construction contract or any other law, do not

50 [Note s 31(3) which expressly permits service under ‘any other law’ in NSW is not in the Victorian Act]

appear in the Victorian Act] 32 Effect of Part on civil proceedings

32

Div 6: 47 [Also extends expressly to arbitration and other ADR proceedings, see s 47(2) and (4)]

Division 6: 47 [Also extends expressly to arbitration and other ADR proceedings, see s 47(2) and (4)] 47A Functions of Building Commission 47B Register of authorised nominating authorities 47C Recording and publishing of determinations

Part 4: Miscellaneous 33 Act binds 33 Crown 34 No contracting 34 out

35 Regulations

[No NSW equivalent] 35

8

8

48 [Narrower 48 provision in Victoria after the Building and Construction Industry Security of Payment Amendment Act 2002 (NSW) 49 Confidentiality 49 Confidentiality 52 [Similar to NSW]

52 [Similar to NSW]

36 [Repealed]

36 [Repealed]

37 Savings and transitional provisions

37 [See Sch 2]

[No Victorian equivalent]

38 Review of Act

38

[No Victorian equivalent] 49 Confidentiality 49 Confidentiality

[No NSW equivalent] [No NSW equivalent]

53

51 Supreme Court 51 Supreme Court

[page 17] [No NSW equivalent] [No NSW equivalent]

Sch 2: Savings and transitional

Sch 2

53 Amendment of the Building Act 1993 (Vic) 54 Amendment of the Commercial Arbitration Act 1984 (Vic) [No Victorian equivalent]

53 Now amended to be transitional provision 54 [Repealed]

53

* Note: The amended ss 48, 49, 50(1) and 52(1) and (2) came into operation on the date of Royal Assent, being 25 July 2006.

[page 19]

Chapter 3 Annotated New South Wales and Victorian Security of Payment Legislation NSW ACT: NAME OF ACT Part 1 — Preliminary 1 Name of Act This Act is the Building and Construction Industry Security of Payment Act 1999. VICTORIAN ACT: NAME OF ACT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) [3.1] There is no Victorian equivalent. VICTORIAN ACT: NAME OF ACT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) [3.2] There is no Victorian equivalent. NSW ACT: COMMENCEMENT 2 Commencement This Act commences on a day or days to be appointed by proclamation.

[3.3] The NSW Act commenced on 26 March 2000. The major amendments to the NSW Act effected by the Building and Construction Industry Security of Payment Amendment Act 2002 (NSW) (the 2002 NSW Amending Act) commenced on 3 March 2003. See Sch 2 at pp 269–70 for the provisions governing the application of the 2002 NSW Amending Act. The Act applies to subcontracts entered into after the commencement date even where the head contract precedes the commencement date: Hawkins Construction (Australia) Pty Ltd v Mac’s Industrial Pipework Pty Ltd [2001] NSWSC 815. [page 20] VICTORIAN ACT: COMMENCEMENT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 2 Commencement (1) Subject to subsection (2), this Act comes into operation on a day to be proclaimed. (2) If this Act does not come into operation before 31 January 2003, it comes into operation on that day. [3.4] The Victorian Act came into operation on 31 January 2003. It only applies to construction contracts entered into on or after 31 January 2003: see s 7(6). See the New South Wales case at [3.3] as the section is to similar effect in Victoria. VICTORIAN ACT: COMMENCEMENT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 2 Commencement (1) Subject to subsection (2), this Act comes into operation on a day to be proclaimed. (2) If this Act does not come into operation before 31 January 2003, it

comes into operation on that day. [3.5] The Victorian Act came into operation on 31 January 2003. It only applies to construction contracts entered into on or after 31 January 2003: see s 7(6). The major amendments to the Victorian Act effected by the Building and Construction Industry Security of Payment (Amendment) Act 2006 (Vic) (the 2006 Amending Act) apply only to payment claims under construction contracts entered into on or after the commencement of s 42 of the 2006 Amending Act, 30 March 2007 (see new s 53 of the Act) but the amended ss 48, 49, 50(1) and (2) come into operation on the date of Royal Assent, 25 July 2006 (see s 2(1) of the 2006 Amending Act). See the New South Wales case at [3.3] as the New South Wales and Victorian provisions both refer to the date the construction contract was ‘entered into’. In light of the broad definition of ‘construction contract’, difficult questions could arise as to when the construction contract was entered into if, for example, work was performed under a letter of intent that preceded the commencement date but subsequently a formal contract was executed after the commencement date. NSW ACT: OBJECT OF ACT 3 Object of Act (1) The object of this Act is to ensure that any person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services. [page 21] (2) The means by which this Act ensures that a person is entitled to receive a progress payment is by granting a statutory entitlement to such a payment regardless of whether the relevant construction contract makes provision for progress payments. (3) The means by which this Act ensures that a person is able to recover a progress payment is by establishing a procedure that involves:

(a)

the making of a payment claim by the person claiming payment, and (b) the provision of a payment schedule by the person by whom the payment is payable, and (c) the referral of any disputed claim to an adjudicator for determination, and (d) the payment of the progress payment so determined. (4) It is intended that this Act does not limit: (a) any other entitlement that a claimant may have under a construction contract, or (b) any other remedy that a claimant may have for recovering such other entitlement. Section 3(1) ‘progress payments’ [3.6] Austin J in Jemzone Pty Ltd v Trytan Pty Ltd [2002] NSWSC 395 relied on the reference to the ‘progress payments’ in s 3(1) as a statement of legislative intention that the Act did not apply; for example, to a ‘final account’. This has been reversed in New South Wales by the 2002 NSW Amending Act: see the amended definition of ‘progress payment’ in s 4. VICTORIAN ACT: OBJECT OF ACT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 3 Object of Act (1) The object of this Act is to ensure that any person who carries out construction work or who supplies related goods and services under a construction contract is entitled to receive, and is able to recover, specified progress payments in relation to the carrying out of that work and the supplying of those goods and services. (2) The means by which this Act ensures that a person is entitled to receive a progress payment is by granting a statutory entitlement to that payment in circumstances where the relevant construction contract fails to do so. (3) The means by which this Act ensures that a person is able to recover a progress payment is by establishing a procedure that involves — (a) the making of a payment claim by the person claiming payment; and

[page 22] (b)

the provision of a payment schedule by the person by whom the payment is payable; and (c) the referral of any disputed claim to an adjudicator for determination; and (d) the payment of the amount of the progress payment determined by the adjudicator or the setting side of money as security for payment of the progress payment; and (e) the recovery of the progress payment in the event of a failure to pay. (4) It is intended — (a) that this Act does not limit any other entitlement that a person may have under a construction contract, or any other remedy that a person may have for recovering that other entitlement; and (b) in particular — (i) that the payment of the amount of the progress payment determined by the adjudicator or the setting aside of money as security does not prejudice any claim, counter-claim or defence that may be raised in proceedings (including arbitration proceedings or other dispute resolution proceedings) concerning the work or supply of good and services to which the payment claim relates; and (ii) that the payment of the amount of the progress payment determined by the adjudicator is allowed for in any proceedings (including arbitration proceedings or other dispute resolution proceedings) brought under the construction contract concerning the work or the supply of goods and services to which the payment claim relates. Section 3(1) ‘progress payments’ [3.7] Jemzone v Trytan (see [3.6] above) would probably still be good law in Victoria under s 14. In Victoria the court may, however, take judicial notice of the fact that in the second reading speech to the Building and Construction Industry Security of Payment Amendment Act 2002, in New South Wales, the Minister categorised the amendments to the Act to include final payment claims as a change ‘made to remove possible ambiguities’, suggesting that the original

legislative intention was that final payments were to be subject to the statutory scheme. In The Concrete Panel Co Pty Ltd v Advanced Storage Systems (Vic) Pty Ltd [2004] VCC 2; [2004] VCC 114 decision, however, Shelton J of the County Court held that there was an ‘issue to be tried’ as to whether the Act applies to final claims: at [12]. The ‘final payment claim’ defence succeeded before Finkelstein J in Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248 (see [3.113]). Vickery J in Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 agreed with Protectavale that a final payment claim could not be served under the old Act: at [221]. As to what amounts to a ‘final payment claim’ see [232], [234], [245]–[248]. [page 23] VICTORIAN ACT: OBJECT OF ACT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 3 Object of Act (1) The object of this Act is to ensure that any person who undertakes to carry out construction work or who undertakes to supply related goods and services under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services. (2) The means by which this Act ensures that a person is entitled to receive a progress payment is by granting a statutory entitlement to that payment in accordance with this Act. (3) The means by which this Act ensures that a person is able to recover a progress payment is by establishing a procedure that involves — (a) the making of a payment claim by the person claiming payment; and (b) the provision of a payment schedule by the person by whom the payment is payable; and (c) the referral of any disputed claim to an adjudicator for determination; and

(d)

the payment of the amount of the progress payment determined by the adjudicator; and (e) the recovery of the progress payment in the event of a failure to pay. (4) It is intended that this Act does not limit — (a) any other entitlement that a claimant may have under a construction contract; or (b) any other remedy that a claimant may have for recovering that other entitlement. [3.8] The Victorian Act in s 3 is materially the same as s 3 in the NSW Act. NSW ACT: DEFINITIONS 4 Definitions In this Act: adjudicated amount means the amount of a progress payment that an adjudicator determines to be payable, as referred to in section 22. adjudication application means an application referred to in section 17. adjudication certificate means a certificate provided by an authorised nominating authority under section 24. adjudication fees means any fees or expenses charged by an authorised nominating authority, or by an adjudicator, under this Act. adjudication response means a response referred to in section 20. [page 24] adjudicator, in relation to an adjudication application, means the person appointed in accordance with this Act to determine the application. authorised nominating authority means a person authorised by the Minister under section 28 to nominate persons to determine adjudication applications. business day means any day other than: (a) a Saturday, Sunday or public holiday, or (b) 27, 28, 29, 30 or 31 December.

claimant means a person by whom a payment claim is served under section 13. claimed amount means an amount of progress payment claimed to be due for construction work carried out, or for related goods and services supplied, as referred to in section 13. construction contract means a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party. construction work is defined in section 5. due date, in relation to a progress payment, means the due date for the progress payment, as referred to in section 11. exercise a function includes perform a duty. function includes a power, authority or duty. payment claim means a claim referred to in section 13. payment schedule means a schedule referred to in section 14. progress payment means a payment to which a person is entitled under section 8, and includes (without affecting any such entitlement): (a) the final payment for construction work carried out (or for related goods and services supplied) under a construction contract, or (b) a single or one-off payment for carrying out construction work (or for supplying related goods and services) under a construction contract, or (c) a payment that is based on an event or date (known in the building and construction industry as a “milestone payment”). recognised financial institution means a bank or any other person or body prescribed by the regulations for the purposes of this definition. related goods and services is defined in section 6. respondent means a person on whom a payment claim is served under section 13. scheduled amount means the amount of a progress payment that is proposed to be made under a payment schedule, as referred to in section 14.

[page 25] Definition of ‘progress payment’

[3.9] Subparagraph (a) in the definition of ‘progress payment’ requires the payment in question to ‘have the character of remuneration or reward referable to the doing of the work’ so that if the work in question is the totality of the contracted work and the claimed remuneration is for the totality of the contracted work it is not a ‘final payment’ that comes within (a) of the definition of ‘progress payment’: Barrett J in Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd [2004] NSWSC 116 at [28] and [29]. In Quasar therefore a claim for payment of the whole unpaid balance of the lump sum price where there was no progress payment entitlement which arose before the contract came to an end, was not a progress payment within (a) of the progress payment definition. Progress payment, whether in (a) or (b) or (c) of the definition: … can only have that character if it is “for” work done or, where some element of advance payment has been agreed, “for” work undertaken to be done. The relevant concepts do not extend to damages for breach of contract, including damages for the loss of an opportunity to receive in full a contracted lump sum price. Compensation of that kind does not bear to actual work the relationship upon which the “progress payment” concept is founded: Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd [2004] NSWSC 116 at [34].

Definition of ‘construction contract’ and ‘arrangement’ referred to in definition [3.10] In Okaroo Pty Ltd v Vos Construction and Joinery Pty Ltd [2005] NSWSC 45 the claimant was subcontracted to the head contractor (Consolidated) who was contracted to the respondent (Vos). Nicholas J held at [41] that in the definition of construction contract, the term ‘other arrangement’: … encompasses transactions or relationships which are not legally enforceable agreements. The distinction in the definition between ‘a contract’ and ‘other arrangement’ is intended by the legislature to be one of substance so that under the Act construction contracts include agreements which are legally enforceable and transactions which are not. Thus in distinguishing between these relationships I understand the legislature intends that ‘contract’ is to be given its common law meaning and that ‘arrangement’ means a transaction or relationship which is not enforceable at law as a contract would be.

Nicholas J further held at [42] that: In deciding whether a contract or other arrangement is within the definition of construction contract the only matter for consideration is whether it is one under which one party undertakes to carry out construction work, or to supply related goods and services, for another party. There is no other requirement or qualification which is expressly or by implication included in the definition which must be satisfied.

It seems therefore that on Nicholas J’s interpretation the Act creates a right to payment (not just progress payment) where none otherwise existed: Where, for example, the arrangement is one which does not give rise to liability for payment enforceable at common law against the party for whom the work is done the statute provides for liability for a progress payment. … So understood, it is clear that issues of entitlement and liability stem from the statute and not from the

provisions of the contract or arrangement which is the construction contract: at [51], [53].

Young CJ in Wooding v Eastoe [2006] NSWSC 277 determined that a construction contract did exist between the claimant and respondent upon a conventional analysis of [page 26] what is sufficient to constitute a contract, and did not refer to the broad interpretation of ‘construction contract’ in Okaroo. Young CJ further held that an adjudicator could not take account of any alleged equitable assignment of a contract: at [29], [33]. In Fifty Property Investments Pty Ltd v O’Mara [2006] NSWSC 428 the claimant subcontractor alleged it had a construction contract with the respondent principal, not the head contractor. In circumstances where the existence of a construction contract between the claimant and respondent was denied by the respondent, and 1. the claimant’s invoice had initially been sent to the head contractor; 2. correspondence from the claimant suggested it was the head contractor who requested the claimant to do the work; 3. the head contractor submitted a variation claim on the basis that the claimant was his subcontractor, Brereton J (without reference to Okaroo) held that there was no construction contract between the claimant and the respondent. Accordingly a basic and essential requirement of jurisdiction was not satisfied and the adjudication determination was therefore void: at [41], [42], [59]. Okaroo was considered in CCD Group Pty Ltd v Premier Drywall Pty Ltd [2006] NSWSC 1012 where the adjudicator relying on Okaroo decided there was a ‘construction contract’ as the work was carried out for the respondent’s benefit. There was, however, no undertaking by the claimant to carry out work for the respondent (as while the work was being carried out the only ‘arrangement’ was between the claimant and a third party). Macready AJ held there was a genuine dispute, therefore, about whether there was a construction contract: at [46], [47]. The submission in an adjudication response that there was no construction contract because the principal was named as ‘Homewood’ rather than ‘Holmwood’ was held to have been correctly rejected by the adjudicator as

‘totally lacking in merit’: Holmwood Holdings Pty Ltd v Halkat Electrical Contractors Pty Ltd [2005] NSWSC 1129 at [22]. In Berem Interiors Pty Ltd v Shaya Constructions (NSW) Pty Ltd [2007] NSWSC 1340, Bergin J distinguished Okaroo Pty Ltd v Vos Construction and Joinery Pty Ltd [2005] NSWSC 45 as in ‘that case there was evidence of a conversation between the developer and the sub-contractor in relation to such an arrangement which satisfied Nicholas J that the arrangement fell within the broad definition of “construction contract” in the Act. In the present case … there is no evidence upon which I could be satisfied that there was an arrangement’: at [29], [30]. The claimant argued that a provision in a construction risks insurance policy that provided the insured must ‘take all reasonable precautions to safeguard the subject matter insured and to prevent loss or damage’ was an agreement by the insured to carry out construction work for the insurer and therefore amounted to a construction contract. The argument failed as it was not an agreement as the claimant alleged, rather an agreement that in order to qualify for indemnity under the policy the insured needed to take reasonable precautions: Zurich Specialities London Ltd v Thiess Pty Ltd [2008] NSWSC 1010 at [15], [16]. The Court of Appeal upheld the decision at first instance: Thiess Pty Ltd v Zurich Specialties London Ltd [2009] NSWCA 47 at [14], [16]. Okaroo was applied by Hungerford ADCJ in Stallion Civil Group Pty Ltd v Tresedar Pty Ltd [2009] NSWDC 125. The claimant (subcontractor) had a contract with the [page 27] builder but served its payment claim on the respondent (developer) who in turn had a contract with the builder. The respondent did not reply with a payment schedule and its attempt to resist the claimant’s application for summary judgment failed. Hungerford ADCJ held that: 1. Where the arrangements reached between the three parties was that the respondent was to pay the invoiced amount of the claimant regardless of to whom the invoice was addressed and all invoices were addressed to the respondent that was sufficient to amount to a construction contract between the claimant and the respondent. That was so notwithstanding

there was also a construction contract between the claimant and the builder: at [26]–[32]. 2. Claims for damages for variations (like delay damages) can be claimed to be due for construction work under the Act: at [37]. 3. Describing claims for damages as claims for variations was not misleading and deceptive conduct sufficient to deny the claimant’s entitlement to judgment: the mere service of a payment claim cannot amount to misleading and deceptive conduct: at [47], [49], [54]. In Machkevitch v Andrew Building Constructions Pty Ltd [2012] NSWSC 546, McDougall J agreed with Nicholas J’s decision in Okaroo as to the meaning of ‘construction contract’ in the Act and further held that: In my view, what is required is that there be something more than a mere undertaking; or something which can be said to give rise to an engagement, although not legally enforceable engagement, between two parties; or a state of affairs under which one party undertakes to the other to do something; or an arrangement between parties to like effect. In those circumstances, the court must look for a concluded state of affairs, which is bilateral at least, which can amount to an arrangement under which one party to it undertakes to perform construction work for another party to it. It is not necessary that the arrangement be legally enforceable; but an ‘arrangement’ which is legally enforceable may be, a priori, a construction contract. … In my view, considerations of legislative purpose and context indicate, in the present case, that the word ‘arrangement’ denotes some engagement, or state of affairs, or agreement (whether legally enforceable or not) under which, perhaps among other things, one party undertakes to perform construction work for another: at [27]–[29].

Where a new developer took over an existing project from the original developer, there was an architect who had performed services for the original developer who had outstanding payments due to it by the original developer. The ‘arrangement’ that the new developer would take over the responsibility of the payment of outstanding amounts to the architect was held not to be a ‘construction contract or other arrangement’ within s 4. That was because at the time when the new developer took over the project, the ‘architectural services in respect of which [the architect] sought payment had already been provided by then’: IWD No 2 Pty Ltd v Level Orange Pty Ltd [2012] NSWSC 1439 at [29]. However, in an earlier conversation in 2011 prior to the new developer taking over the project, the new developer said that he would make sure that the architect was paid and, on that basis, the architect said he would do the job. That was held in IWD to amount to a ‘construction contract or other arrangement’ (at [41]). See also Cranbrook School v JA Bradshaw Civil Contracting Pty Ltd [2013] NSWSC 430 where

[page 28] an ineffective purported novation did not give rise to a new ‘construction contract or other arrangement’. Definition of ‘construction contract’: written ‘construction contract’ and separate ‘arrangement’ [3.11] Even though the original construction contract between the claimant (builder) and the developer remained on foot, an ‘arrangement’ sufficient to amount to a ‘construction contract’ as defined under the Act can still come into existence: Olbourne v Excell Building Corp Pty Ltd [2009] NSWSC 349 at [49], [53], [56], [57]. See also [45] for a summary of the complex and often confused contractual arrangements between multiple entities which gave rise to the ‘arrangement’. Where there was a written construction contract between the claimant and respondent, McDougall J held that in addition there was ‘an arrangement’ whereby payment claims were served on the superintendent, and service under this arrangement was good service of payment claims under the Act: The Owner’s Strata Plan 56587 v Consolidated Quality Projects Pty Ltd [2009] NSWSC 1476 at [20], [34]–[36]. In refusing a summary judgment application, McDougall J decided that ‘when negotiations that of themselves might have given rise to an arrangement capable of being a construction contract [as defined in the Act] are formalised in written agreements that do not of themselves amount to a construction contract (as between [the claimant] and [the respondent]), there is a triable question as to whether there is any continuing or supervening arrangement’: Parkview Qld Pty Ltd v Fortia Funds Management Ltd [2009] NSWSC 1065 at [17]. Definition of ‘construction contract’: possibility of more parties than claimant and respondent [3.12] A construction contract can comprise more parties than just the claimant and respondent: Parist Holdings Pty Ltd v Thiessen Architects Pty Ltd [2003] 2070/30 (30 May 2003, Bergin J, unreported) at [8]. McDougall J similarly held that the definition of ‘construction contract’ is ‘clearly apt to include not only bilateral but also multilateral contracts or arrangements’: Levatedes Pty Ltd v Iberian Artisans Pty Ltd [2009] NSWSC 641 at [59]. See also [3.249] below. Application for credit not a ‘construction contract’

[3.13] An application for commercial credit between a builder and the supplier of electrical goods would ordinarily not be a ‘construction contract’ because there is no relevant undertaking to perform construction work or supply related goods and services — rather the individual orders subsequently placed could contain such an undertaking and therefore be individual construction contracts: Class Electrical Services v Go Electrical [2013] NSWSC 363 at [20], [37], [39]. Commencing an adjudication where there may be no relevant construction contract is not an abuse of process [3.14] Gzell J held that lodging adjudication documents where there may be no relevant construction contract is not an abuse of process and no injunction should be granted: Filadelfia Projects Pty Ltd v EntirITy Business Services Pty Ltd [2009] NSWSC 1468. [page 29] VICTORIAN ACT: DEFINITIONS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 4 Definitions In this Act: adjudicated amount means the amount of a progress payment that an adjudicator determines to be payable as referred to in section 23 together with any amount added to that amount under section 45(7); adjudication application means an application referred to in section 18; adjudication response means a response referred to in section 21; adjudicator, in relation to an adjudication application, means the person appointed in accordance with this Act to determine the application; authorised nominating authority means a person authorised by the Building Commission under section 42 to nominate persons to determine adjudication applications; Building Commission means the Building Commission established under the Building Act 1993; business day means a day that is not — (a) a Saturday or Sunday; or

(b) a day that is wholly or partly observed as a public holiday throughout Victoria; certified debt in relation to a claimant, means the amount specified in a debt certificate as being owed to the claimant; claimant means a person who serves a payment claim under section 14; claimed amount means an amount of a progress payment claimed to be due for construction work carried out, or for related goods and services supplied, as referred to in section 14; construction contract means a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party; construction work has the meaning given in section 5; debt certificate means a certificate issued under section 33; function includes power, authority or duty; judgment includes order; notice of claim means a notice referred to in section 32; payment claim means a notice referred to in section 14; payment schedule means a schedule referred to in section 15; [page 30] principal means a principal referred to in section 31; progress payment means a payment to which a person is entitled under section 9; recognised financial institution means an authorised deposit-taking institution within the meaning of the Banking Act 1959 of the Commonwealth; related goods and services has the meaning given to section 6; respondent means a person on whom a payment claim is served under section 14; scheduled amount means the amount of a progress payment that is proposed to be made under a payment schedule, as referred to in section 15. ‘Progress payment’

[3.15] Austin J in Jemzone Pty Ltd v Trytan Pty Ltd [2002] NSWSC 395 found the definition of progress payment ‘unhelpful’ and therefore the words where used in s 8 and elsewhere should be given the meaning they have in the construction contract. A ‘final account’ claim under the contract in question did not amount to a ‘progress payment’ and therefore the Act had no application to that claim. This would probably still be good law in Victoria under s 14. Even in Victoria the court may take judicial notice of the fact that in the second reading speech to the Building and Construction Industry Security of Payment Amendment Act 2002 (Vic), the Minister categorised the amendments to the Act to include final payment claims as a change ‘made to remove possible ambiguities’, suggesting that the original legislative intention was that final payments were to be subject to the statutory scheme. In The Concrete Panel Co Pty Ltd v Advanced Storage Systems (Vic) Pty Ltd [2004] VCC 2; [2004] VCC 114 at [12], however, Shelton J held that there was an ‘issue to be tried’ as to whether the Act applies to final claims. The ‘final payment claim’ defence succeeded before Finkelstein J in Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248: see [3.113]. “Construction contract” [3.16] See the New South Wales cases at [3.10], as the definition is the same in Victoria. VICTORIAN ACT: DEFINITIONS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 4 Definitions In this Act: adjudicated amount means the amount of a progress payment that an adjudicator determines to be payable as referred to in section 23 together with any amount added to that amount under section 45(7); adjudication application means an application referred to in section 18; adjudication certificate means a certificate provided by an authorised nominating authority under section 28Q; [page 31]

adjudication determination means a determination made by an adjudicator under section 23; adjudication fees means any fees or expenses charged by an authorised nominating authority or by an adjudicator or review adjudicator under this Act; adjudication response means a response referred to in section 21; adjudication review means a review of an adjudication determination under Division 2A of Part 3; adjudication review application means an application under section 28B or 28C; adjudicator, in relation to an adjudication application, means the person appointed in accordance with this Act to determine the application; authorised nominating authority means a person authorised by the Building Commission under section 42 to nominate persons to determine adjudication applications; Authority means the Victorian Building Authority established under the Building Act 1993; business day means a day that is not — (a) a Saturday or Sunday; or (b) a day that is wholly or partly observed as a public holiday throughout Victoria; certified debt in relation to a claimant, means the amount specified in a debt certificate as being owed to the claimant; claimable variation has the meaning given in section 10A; claimant means a person who serves a payment claim under section 14; claimed amount means an amount of a progress payment claimed to be due for construction work carried out, or for related goods and services supplied, as referred to in section 14; construction contract means a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party; construction work has the meaning given in section 5; debt certificate means a certificate issued under section 33; designated trust account means an account kept with a recognised financial institution (whether in the name of the respondent or otherwise) for the purpose of holding amounts payable to claimants under this Act;

discharge notice means a notice referred to in section 40; due date, in relation to a progress payment, means the due date for the progress payment, as referred to in section 12; [page 32] excluded amount has the meaning given in section 10B; exercise in relation to a function, includes perform a duty; function includes power, authority or duty; judgment includes order; notice of claim means a notice referred to in section 32; payment claim means a claim referred to in section 14; payment schedule means a schedule referred to in section 15; principal means a principal referred to in section 31; progress payment means a payment to which a person is entitled under section 9, and includes (without affecting that entitlement) — (a) the final payment for — (i) construction work carried out under a construction contract; or (ii) related goods and services supplied under the contract; or (b) a single or one-off payment for — (i) construction work carried out under a construction contract; or (ii) related goods and services supplied under the contract; or (c) a payment that is based on an event or date (known in the building and construction industry as a “milestone payment”); Note: The amount of a progress payment is calculated in accordance with sections 10, 10A, 10B and 11.

recognised financial institution means an authorised deposit-taking institution within the meaning of the Banking Act 1959 of the Commonwealth; related goods and services has the meaning given in section 6; respondent means a person on whom a payment claim is served under section 14; review adjudicator in relation to an adjudication review application, means the adjudicator appointed in accordance with this Act to determine the application;

review determination means the determination made by a review adjudicator under section 28I in respect of an adjudication review application; scheduled amount means the amount of a progress payment that is proposed to be made under a payment schedule, as referred to in section 15; variation in relation to a construction contract, means a change in the scope of the construction work to be carried out, or the related goods and services to be supplied, under the contract. [3.17] The 2006 Amending Act makes the definitions largely consistent with New South Wales, for example, final, one-off and milestone payments are now all included in the progress payment definition, but the Victorian Act includes definitions not in NSW such as claimable variation, excluded amount, variation, etc. [page 33] Definition of ‘construction contract’ and ‘arrangement’ referred to in the definition [3.18] See the New South Wales cases at [3.10] which should be persuasive as the definition is the same in the NSW Act. In Skilled Group Ltd v CSR Viridian Pty Ltd [2012] VSC 290 at [153], Vickery J held that ‘any “arrangement”, which can be short of a contract, under which a party undertakes to carry out construction work will suffice to make the Act applicable’. NSW ACT: CONSTRUCTION WORK 5 Definition of “construction work” (1) In this Act, construction work means any of the following work: (a) the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures forming, or to form, part of land (whether permanent not), (b) the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of any works forming, or to form, part of land, including walls, roadworks, power-lines,

(c)

(d)

(e)

(f) (g)

telecommunication apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage or coast protection, the installation in any building, structure or works of fittings forming, or to form, part of land, including heating, lighting, airconditioning, ventilation, power supply, drainage, sanitation, water supply, fire protection, security and communications systems, the external or internal cleaning of buildings, structures and works, so far as it is carried out in the course of their construction, alteration, repair, restoration, maintenance or extension, any operation which forms an integral part of, or is preparatory to or is for rendering complete, work of the kind referred to in paragraph (a), (b) or (c), including: (i) site clearance, earth-moving, excavation, tunnelling and boring, and (ii) the laying of foundations, and (iii) the erection, maintenance or dismantling of scaffolding, and (iv) the prefabrication of components to form part of any building, structure or works, whether carried out on-site or off-site, and (v) site restoration, landscaping and the provision of roadways and other access works, the painting or decorating of the internal or external surfaces of any building, structure or works, any other work of a kind prescribed by the regulations for the purposes of this subsection. [page 34]

(2) Despite subsection (1), construction work does not include any of the following work: (a) the drilling for, or extraction of, oil or natural gas, (b) the extraction (whether by underground or surface working) of

(c)

minerals, including tunnelling or boring, or constructing underground works, for that purpose, any other work of a kind prescribed by the regulations for the purposes of this subsection.

VICTORIAN ACT: CONSTRUCTION WORK (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 5 Definition of “construction work” (1) In this Act, construction work means any of the following work — (a) the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures forming, or to form, part of land (whether permanent or not); (b) the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of any works forming, or to form, part of land, including walls, roadworks, power-lines, telecommunication apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for the purposes of land drainage or coast protection; (c) the installation in any building or structure of fittings forming, or to form, part of land, including heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply, fire protection, security and communications systems; (d) the external or internal cleaning of buildings and structures, so far as it is carried out in the course of their construction, alteration, repair, restoration, maintenance or extension; (e) any operation which forms an integral part of, or is preparatory to or is for rendering complete, work of the kind referred to in paragraph (a), (b) or (c), including — (i) site clearance, earth-moving, excavation, tunnelling and boring; and (ii) the laying of foundations; and (iii) the erection, maintenance or dismantling of scaffolding; and (iv) the prefabrication of components to form part of any building or structure, whether carried out on-site or off-site;

(v)

and site restoration, landscaping and the provision of roadways and other access works; [page 35]

(f)

the painting or decorating of the internal or external surfaces of any building or structure; (g) any other work of a kind prescribed for the purposes of this subsection. (2) Despite subsection (1), construction work does not include any of the following work — (a) the drilling for, or extraction of, oil or natural gas; (b) the extraction (whether by underground or surface working) of minerals, including tunnelling or boring, or constructing underground works, for that purpose; (c) any other work of a kind prescribed for the purposes of this subsection. VICTORIAN ACT: CONSTRUCTION WORK (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 5 Definition of “construction work” (1) In this Act, construction work means any of the following work — (a) the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures forming, or to form, part of land (whether permanent or not); (b) the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of any works forming, or to form, part of land, including walls, roadworks, power-lines, telecommunication apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for the purposes of land drainage or coast protection; (c) the installation in any building, structure or works of fittings

(d)

(e)

forming, or to form, part of land, including heating, lighting, airconditioning, ventilation, power supply, drainage, sanitation, water supply, fire protection, security and communications systems; the external or internal cleaning of buildings, structures or works, so far as it is carried out in the course of their construction, alteration, repair, restoration, maintenance or extension; any operation which forms an integral part of, or is preparatory to or is for rendering complete, work of the kind referred to in paragraph (a), (b) or (c), including — (i) site clearance, earth-moving, excavation, tunnelling and boring; and (ii) the laying of foundations; and (iii) the erection, maintenance or dismantling of scaffolding; and (iv) the prefabrication of components to form part of any building, structure or works, whether carried out on-site or off-site; and [page 36] (v)

site restoration, landscaping and the provision of roadways and other access works; (f) the painting or decorating of the internal or external surfaces of any building, structure or works; (g) any other work of a kind prescribed for the purposes of this subsection. (2) Despite subsection (1), construction work does not include any of the following work — (a) the drilling for, or extraction of, oil or natural gas; (b) the extraction (whether by underground or surface working) of minerals, including tunnelling or boring, or constructing underground works, for that purpose; (c) any other work of a kind prescribed for the purposes of this subsection. [3.19] The Victorian Act is materially the same as the equivalent provision in

New South Wales. NSW ACT: RELATED GOODS AND SERVICES 6 Definition of “related goods and services” (1) In this Act, related goods and services, in relation to construction work, means any of the following goods and services: (a) goods of the following kind: (i) materials and components to form part of any building, structure or work arising from construction work, (ii) plant or materials (whether supplied by sale, hire or otherwise) for use in connection with the carrying out of construction work, (b) services of the following kind: (i) the provision of labour to carry out construction work, (ii) architectural, design, surveying or quantity surveying services in relation to construction work, (iii) building, engineering, interior or exterior decoration or landscape advisory services in relation to construction work, (c) goods and services of a kind prescribed by the regulations for the purposes of this subsection. (2) Despite subsection (1), related goods and services does not include any goods or services of a kind prescribed by the regulations for the purposes of this subsection. (3) In this Act, a reference to related goods and services includes a reference to related goods or services. Section 6(1) ‘related goods and services’: project superintendence [3.20] In Parist Holdings Pty Ltd v WT Partnership Australia Pty Ltd [2003] NSWSC 365 it was held that project superintendence work was covered by the definition of ‘related goods and services’. [page 37]

In Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd [2012] NSWCA 31 the Court of Appeal held that a ‘Project Management Delivery Agreement’ was a contract for the supply of ‘related goods and services’ as ‘building advisory services’ under s 6(1)(b)(iii) as the duties included advising as to progress of work, steps to be taken if problems arose and instructing the builder: see [33]– [36]. Section 6(1) ‘related goods and services’: design systems [3.21] In Bell Partners Accountants & Business Advisors Pty Ltd v Kann Finch Pty Ltd [2004] NSWSC 1034 the contract was for ‘design systems’ and Harrison M held it came within the definition of ‘related goods and services’: at [23]. In Peter’s of Kensington Pty Ltd v Seersucker Pty Ltd [2008] NSWSC 897 at [32] McDougall J held that the contract to perform the services of the preparation and lodgment with the local council of an application under s 96 of the Environmental Planning and Assessment Act 1979 (NSW) to reduce the number of car parking spaces required, was a contract for the performance of related goods and services, ‘if those services relate to the performance of work which, if performed, would be construction work then in my view the requirements of s 6(1)(b)(ii) are met even though that construction work might not ultimately be carried out’. Section 6(1) ‘related goods and services’: transport costs [3.22] In Shell Refining (Australia) Pty Ltd v AJ Mayr Engineering Pty Ltd [2006] NSWSC 94 it was held that costs of transporting building materials was related goods and services coming within s 6(1). Section 6(1) ‘related goods and services’: expert reports [3.23] The provision of engineering reports to a party to assist in its litigation with an insurer does not fall within the definition of ‘construction work’ or ‘related goods and services’ as the work itself was not repair work but reports to determine whether repair work was necessary. To come within the definition the services must relate to the actual construction work itself: Boutique Developments Ltd v Construction & Contract Services Pty Ltd [2007] NSWSC 1042 at [7]. In Boutique Developments, however, Gzell J determined that it was for the adjudicator to decide the question whether or not he or she has jurisdiction and dismissed the application for an injunction to restrain the claimant from taking any step to obtain or enforce the adjudication determination.

Section 6(1) ‘related goods and services’: provision of services as a developer in a joint venture type agreement [3.24] A deed in the nature of a joint venture agreement was entered into between the owners of land (the respondent) and a developer (the claimant) with the intention of undertaking a project involving the construction upon the land of a residential development. Under the deed the respondent contributed the land for the project and the claimant performed services including coordinating equity raising and other services. A builder was separately appointed. The claimant provided a payment claim and the respondent did not respond with a payment schedule. The claimant’s claim was referred to adjudication. The respondent sought declaratory and injunctive relief in relation to the adjudication determination. McDougall J in Smith v Coastivity Pty Ltd [2008] NSWSC [page 38] 313 held that the claimant did not provide services of any one of the kinds mentioned in s 6(1)(b) as: it did not provide labour to carry out construction work as provided in s 6(1)(b)(i); it did not provide architectural design surveying or quantity surveying services in relation to construction work that came within s 6(1)(b)(ii); and it did not provide building engineering interior or exterior decoration or landscaping advisory services in relation to construction work coming within s 6(1)(b)(iii). The wording in s 6(1)(b) requires services of the kind listed in the subclauses to be provided, not services in relation to those services. McDougall J accepted that the claimant would have been required to ‘co-ordinate, or control, manage, supervise and co-ordinate the provision of services falling within’ s 6(1)(b)(ii) or (iii) but ‘it did not thereby undertake itself to provide those services’: at [40]. McDougall J also held that the provision of the services via the claimant did not come within the definition of construction work in s 5(1)(e): at [41]. Accordingly, the claimant did not undertake to provide related goods and services and did not undertake to carry out construction work and as that was one of the basic and essential requirements for the existence of a valid adjudication determination the owners were entitled to the declaratory and injunctive relief they sought.

After considering the decisions in Biseja v NSI Group [2006] NSWSC 835 and Brian Leigh Smith v Coastivity Pty Ltd [2008] NSWSC 313, Einstein J in HM Australia Holdings Pty Ltd v Edelbrand Pty Ltd t/as Domus Homes [2011] NSWSC 604 preferred the approach in Coastivity of construing the terms of the agreement to determine if a construction contract as defined in the Act existed. In Einstein J’s determination the agreement in question did not ‘require anything more than an obligation to coordinate the services of those carrying out the relevant “related services”. Coordination of services falling within the Act is not sufficient, this is a point clearly made by McDougall J in Coastivity at [39]– [40]’: at [50]. Further, the focus of the court should be on the obligations in the contract, not the work actually performed: at [56]. The claimant here was obliged to perform coordination of architectural services (as opposed to being obliged to perform the architectural services themselves), and therefore the contract was not one where the claimant undertook to carry out the relevant ‘related services’ as referred to in s 6(1)(b): at [62]. On appeal, the Court of Appeal in Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd [2012] NSWCA 31 held that the ‘Project Management Delivery Agreement’ was a contract for the supply of ‘related goods and services’ as ‘building advisory services’ under s 6(1)(b)(iii) as the duties included advising as to progress of work, steps to be taken if problems arose and instructing the builder (see [33]–[36]). Section 6(1) ‘related goods and services’: claims for interest and director’s time dealing with funding failures [3.25] Claims for interest on overdue payments and for the claimant’s director’s time in dealing with ‘funding failures’ are in the nature of claims for damages and are not within the definition of ‘related goods and services’. Those claims were not valid payment claims: Calsun Materials Handling Pty Ltd v Lovton Pty Ltd [2008] NSWDC 74 at [19]–[21] per Sidis DCJ. [page 39] VICTORIAN ACT: RELATED GOODS AND SERVICES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 6 Definition of “related goods and services”

(1) In this Act, related goods and services, in relation to construction work, means any of the following goods and services — (a) goods of the following kind — (i) materials and components to form part of any building, structure or work arising from construction work; (ii) plant or materials (whether supplied by sale, hire or otherwise) for use in connection with the carrying out of construction work; (b) services of the following kind — (i) the provision of labour to carry out construction work; (ii) architectural, design, surveying or quantity surveying services in relation to construction work; (iii) building, engineering, interior or exterior decoration or landscape advisory or technical services in relation to construction work; (c) goods and services of a kind prescribed for the purposes of this subsection. (2) Despite subsection (1), related goods and services does not include any goods or services of a kind prescribed for the purposes of this subsection. (3) In this Act, a reference to related goods and services includes a reference to related goods or services. Section 6(1) ‘related goods and services’ [3.26] See the New South Wales cases at [3.20]–[3.25] as the definition is almost identical in Victoria. VICTORIAN ACT: RELATED GOODS AND SERVICES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 6 Definition of “related goods and services” (1) In this Act, related goods and services, in relation to construction work, means any of the following goods and services — (a) goods of the following kind — (i) materials and components to form part of any building, structure or work arising from construction work;

(ii)

(b)

plant or materials (whether supplied by sale, hire or otherwise) for use in connection with the carrying out of construction work; services of the following kind — (i) the provision of labour to carry out construction work; (ii) architectural, design, surveying or quantity surveying services in relation to construction work; [page 40] (iii)

building, engineering, interior or exterior decoration or landscape advisory or technical services in relation to construction work; (c) goods and services of a kind prescribed for the purposes of this subsection. (2) Despite subsection (1), related goods and services does not include any goods or services of a kind prescribed for the purposes of this subsection. (3) In this Act, a reference to related goods and services includes a reference to related goods or services. Section 6(1) ‘related goods and services’ [3.27] The Victorian Act is now in terms materially the same as the NSW Act and so the cases referred to in [3.20]–[3.25] should be persuasive authority in Victoria. NSW ACT: APPLICATION OF ACT 7 Application of Act (1) Subject to this section, this Act applies to any construction contract, whether written or oral, or partly written and partly oral, and so applies even if the contract is expressed to be governed by the law of a jurisdiction other than New South Wales. (2) This Act does not apply to: (a) a construction contract that forms part of a loan agreement, a

contract of guarantee or a contract of insurance under which a recognised financial institution undertakes: (i) to lend money or to repay money lent, or (ii) to guarantee payment of money owing or repayment of money lent, or (iii) to provide an indemnity with respect to construction work carried out, or related goods and services supplied, under the construction contract, or (b) a construction contract for the carrying out of residential building work (within the meaning of the Home Building Act 1989) on such part of any premises as the party for whom the work is carried out resides in or proposes to reside in, or (c) a construction contract under which it is agreed that the consideration payable for construction work carried out under the contract, or for related goods and services supplied under the contract, is to be calculated otherwise than by reference to the value of the work carried out or the value of the goods and services supplied. (3) This Act does not apply to a construction contract to the extent to which it contains: (a) provisions under which a party undertakes to carry out construction work, or supply related goods and services, as an employee (within [page 41]

(b)

(c)

the meaning of the Industrial Relations Act 1996) of the party for whom the work is to be carried out or the related goods and services are to be supplied, or provisions under which a party undertakes to carry out construction work, or to supply related goods and services, as a condition of a loan agreement with a recognised financial institution, or provisions under which a party undertakes: (i) to lend money or to repay money lent, or (ii) to guarantee payment of money owing or repayment of money lent, or

(iii)

to provide an indemnity with respect to construction work carried out, or related goods and services supplied, under the construction contract. (4) This Act does not apply to a construction contract to the extent to which it deals with: (a) construction work carried out outside New South Wales, and (b) related goods and services supplied in respect of construction work carried out outside New South Wales. (5) This Act does not apply to any construction contract, or class of construction contracts, prescribed by the regulations for the purposes of this section. Section 7(2) onus of proof [3.28] The onus of proving the allegation that a construction contract is one that comes within the exceptions listed in s 7(2) is cast upon the party so alleging: Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266 at [76]. Section 7(2)(a) ‘forms part of a loan agreement’ [3.29] In s 7(2)(a) the words ‘forms part of’ a loan agreement require the construction contract to be included in or incorporated into the loan agreement; for a construction contract to be merely associated with a loan agreement is not sufficient to come within the exception in s 7(2)(a): Consolidated Constructions Pty Ltd v Ettamogah Pub (Rouse Hill) Pty Ltd [2004] NSWSC 110 at [28]–[31]. In Consolidated Constructions the contractor was advised that the principal was obtaining finance under a loan agreement to enable it to make payments to the contractor: that was not sufficient to make the construction contract ‘part of’ the loan agreement. McDougall J at [30]–[31] gave the following non-exhaustive examples of where a construction contract may form part of a loan agreement: where the principal assigns the benefit of the construction contract to an external financier; or where the benefit of the construction contract is the subject of a charge in favour of the financier. In these cases the contractor cannot look to the financier for payment under the Act. McDougall J further considered the operation of s 7(2)(a) in Austruc

Constructions Ltd v ACA Developments Pty Ltd; ACA Developments Pty Ltd v Sarlos [2004] NSWSC 131. [page 42] In Austruc the principal, the builder and the builder’s financier entered into a builder’s side deed and McDougall J held that it was arguable that the builder’s side deed had the effect that the construction contract forms part of the loan agreement because under the builder’s side deed: 1. the principal charged its interest under the construction contract to the financier; 2. the builder undertook direct obligations to the financier in respect of its performance under the construction contract; 3. the builder’s rights under the construction contract were limited in certain respects; 4. the builder’s exercise of its rights on default by the principal were qualified by the obligation to give the financier notice and the opportunity to remedy the default; 5. the builder had the right to request the principal to instruct the financier to issue bank cheques in favour of the builder for payment of progress claims; 6. it regulated the position that would arise if the financier went into possession; 7. it provided for the assignment of subcontracts, warranties, etc in certain circumstances; 8. it provided for the financier to have the right to give a payment schedule in response to any payment claim made under the Act; and 9. it provided that the financier could pay the builder direct any amount admitted to be owed in a payment schedule and provided who was to be the authorised nominating authority for the purposes of the Act. McDougall J again considered the operation of the side deed referred to in Austruc Constructions Ltd v ACA Developments Pty Ltd; ACA Developments Pty Ltd v Sarlos [2004] NSWSC 131 in ACA Developments Pty Ltd v Sullivan; Austruc Constructions Ltd v ACA Developments Pty Ltd [2004] NSWSC 304. McDougall J decided that although it may be accepted that the purpose of the

loan agreement was to provide a source of funds that would enable the principal to meet its obligations to the builder under the construction contract and that (at least to a degree) performance under the loan agreement depended on performance under the construction contract, nevertheless it did not follow from the extent of that association between the loan agreement and the construction contract that the contract formed part of the loan agreement. Further, although McDougall J indicated in Austruc Constructions Ltd v ACA Developments Pty Ltd; ACA Developments Pty Ltd v Sarlos [2004] NSWSC 131 that it was arguable that the builder’s side deed had the effect of making the construction contract part of the loan agreement, upon a proper consideration of the construction contract, the side deed and the loan agreement the construction contract did not in fact form part of the loan agreement and s 7(2)(a) therefore did not apply as: 1. the builder was not a party to and had no rights arising out of the terms of the loan agreement; 2. the financier was not a party to and had no rights arising out of the terms of the construction contract; 3. under the builder’s side deed the principal and the builder assumed obligations to the financier but the builder acquired no rights against the financier; [page 43] 4. performance by the principal and the builder of their obligations under the construction contract was not dependent upon or in any legal way affected by the performance by the financier of its obligations under the loan agreement; and 5. the agreements did not give the builder alternative and concurrent rights against both the principal and the financier in respect of any one progress claim. In Corbett Court Pty Ltd v Quasar Constructions [2004] NSWSC 1174 the tripartite deed regulated in certain ways the consequences where the financier lends money under a facility agreement by paying the amount of a certified claim direct to the builder at the request of the principal. There was, however, nothing in the tripartite deed that imposed any obligation on the financier to do so and nothing gave the contractor any right to require the financier to do so.

Accordingly, McDougall J held that the tripartite deed did not constitute a ‘loan agreement’ as referred to in s 7(2)(a)(i). McDougall J did however leave open the possibility that the tripartite deed when read in conjunction with the facility agreement could bring into existence a loan agreement (but that matter was not argued). In Over Fifty Mutual Friendly Society Ltd v Smithies [2007] NSWSC 291 at [25] Einstein J held that ‘[t]here is authority to the effect that for the purposes of s 7(2)(a) of the Act, a construction contract will not form part of a loan agreement unless “the former is included in, or incorporated into, the latter”’, relying on Consolidated Constructions Pty Ltd v Ettamogah Pub (Rouse Hill) Pty Ltd [2004] NSWSC 110 at [21]. The facts of Over 50 Mutual Friendly Society Ltd were that loan documentation between the principal and its financiers were varied so that the financier paid moneys advanced to the principal directly to subcontractors. The financiers were under the varied loan documentation entitled to appoint a project manager. Subcontractors were successful in arguing that there was an ‘arrangement’ between them and the financier sufficient to amount to a construction contract and their claims in an adjudication were successful before the adjudicator. Einstein J held that to be successful in their challenge to the adjudication determination the financiers were required to ‘establish a serious case that the “arrangement” and thus “construction contract” found by the Adjudicator formed part of a loan agreement’: at [24]. Einstein J found that: … on no conceivable view did the arrangement found by the Adjudicator form part of the finance instruments. That is so because the Adjudicator expressly found that the arrangement did not arise from the finance instruments but, as a finding of fact on contested evidence arose from statements made [written and oral] and from actions taken on behalf of the [financiers]: at [27]–[28].

Section 7(2)(a) ‘forms part of a contract of insurance’ [3.30] The claimant argued that a provision in a construction risks insurance policy that provided the insured must ‘take all reasonable precautions to safeguard the subject matter insured and to prevent loss or damage’ was an agreement by the insured to carry out construction work for the insurer. The argument failed as it was not an agreement as the claimant alleged, rather an agreement that in order to qualify for indemnity under the policy the insured needed to take reasonable precautions: Zurich Specialities London Ltd v Thiess Pty Ltd [2008] NSWSC 1010 at [15], [16].

[page 44] Section 7(2)(b) ‘construction contract for … residential building work’ [3.31] In David Hurst Constructions Pty Ltd v Shorten [2008] NSWSC 164, the contract in question was for the construction of 10 residential units in NSW, only one of which the owner intended to live in. Nicholas J found that s 7(2)(b) ‘does not operate to exclude from the application of the Act a contract which is for some residential building work which fits the description, and is also for some residential building work which does not’ (at [22]). The Act therefore applied to the contract in question. This decision was upheld on appeal (Shorten v David Hurst Constructions Pty Ltd [2008] NSWCA 134), Bell JA stating ‘the words of the provision do not admit of excluding from the Act some part of the residential building work done under a construction contract. A construction contract for the carrying out of work is either within the ambit of subs (2)(b) or it is not’: at [54]. See also Oppedisano v Micos Aluminium Systems Pty Ltd [2012] NSWSC 53 at [32]–[38] which also concerned a contract for multiple residential units, only one of which the respondent intended to reside in. Where the relevant construction contract or other arrangement was between a builder and other persons s 7(2)(b) applied provided at least some of those other persons ‘for whom the work is carried out reside(s) in or propose(s) to reside in the relevant premises’: Levatedes Pty Ltd v Iberian Artisans Pty Ltd [2009] NSWSC 641 at [62]. Where what may have been residential building work was being carried out for a company that the directors of the company intended to reside in, s 7(2)(b) did not apply as a company cannot ‘reside’ in a ‘building’: Advance Earthmovers Pty Ltd v Fubew Pty Ltd [2009] NSWSC 337 at [57]–[61]. The concept of ‘residence’ in s 7(2)(b) does not necessarily mean that the respondent needs to actually be living in the subject premises when the construction contract was entered into. Further the intention of the respondent to live in the premises does not need to be actually communicated to the claimant: Cardiacos v Cooper Consulting & Construction Services (Aust) Pty Ltd [2009] NSWSC 938 at [41], [42]. Although not finally determining the matter, Murrell SC DCJ decided that on a summary judgment application it was reasonably arguable that s 7(2)(b) applied so that a ‘tripartite web of interwoven obligations’ between a builder and

an insurer and the insureds (the home owners) amounted to an ‘arrangement’ which was a construction contract, excluded from the Act by s 7(2)(b): DJE Building Services Pty Ltd v Insurance Australia Ltd [2011] NSWDC 95 at [2], [9], [10]. However, the builder was still entitled to summary judgment on the basis of the construction contract between the builder and the insurer. Section 7(2)(c) ‘consideration payable … calculated other than by reference to the value of the work’ [3.32] Section 7(2)(c) does not operate to exclude lump sum contracts from the operation of the Act: Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266 at [71], [76]–[78]. In Brambles Australia Ltd v Davenport [2004] NSWSC 120 Einstein J considered a contract which was for an agreed lump sum but contained a profit share arrangement [page 45] with respect to material items discovered during demolition activities and terms dealing with materials salvaged from the demolition activities, the property in which passed to the claimant subcontractor as and when they were severed from the premises. Einstein J held that the respondent had not established that all or any part of the consideration payable for the construction work was to be calculated otherwise and by reference to the value of work carried out: the terms and conditions dealing with sale or retention of salvaged materials could not be said to establish that the contract did not involve payment in monetary terms or that the consideration payable was to be calculated otherwise and by reference to the value of the work carried out. A different result could have ensued if there was no lump sum price and the only consideration payable for the demolition works was a transfer of title of salvaged materials to the respondent subcontractor. See also Brian Leigh Smith v Coastivity Pty Ltd [2008] NSWSC 313 (see [3.32] below). Where the consideration for a contract for project management services was 10 per cent of the cost of the building works, the contract was not caught by s 7(2)(c) as the consideration was still calculated by reference to the value of the work. This was so even though it was agreed that the project management fee could be satisfied by transfer to the project manager of three units in the

completed development: Biseja Pty Ltd v NSI Group Pty Ltd [2006] NSWSC 835 at [21], [23]. Where the consideration for the performance of the services of a developer under a joint venture type agreement with owners of property was a profit share entitlement on the sale of the proposed development, McDougall J in Brian Leigh Smith v Coastivity Pty Ltd [2008] NSWSC 313 at [62] held that ‘the notion of an entitlement to share in profit is fundamentally inconsistent with the concept of value, or valuation as it is used in the relevant sections of the Act’. McDougall J concluded that the consideration payable to the developer ‘for any services to be provided by it under the deed was a consideration calculated otherwise than by reference to the value of those services’: at [71]. In Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd [2012] NSWCA 31 the Court of Appeal held that where the claimant’s payment entitlements were to a fixed monthly amount, and a bonus which was dependent on performance, the contract was not excluded from the operation of the Act by s 7(2)(c) as s 7(2)(c) only excludes contracts where the payment mechanisms referred to in s 10(2) (which includes the contractual payment valuation method) ‘cannot have application’: at [47]–[51]. Parties to a construction contract entered into a settlement agreement where the respondent agreed to pay certain amounts in satisfaction of disputed claims the claimant had made. The claimant issued a payment claim under the Act when the respondent did not pay on time. The respondent did not submit a payment schedule and the claimant issued a summary judgment application to recover the amount claimed in the payment claim. The court of appeal held that it was at least arguable that the ‘payments required to be made were not made by reference to the value of any work performed’ and therefore s 7(2)(c) could apply so that the Act did not apply to the settlement agreement: Romeo v TQM Design & Construct Pty Ltd [2013] NSWCA 72 at [8]. A Public Private Partnership (or Build, Own, Operate and Transfer) concession agreement would be the sort of construction contract that s 7(2)(c) is envisaging where although there may be an undertaking to carry out construction work, the consideration payable is essentially the grant of the relevant concession, not an amount calculated by [page 46]

reference to the value of the work carried out. This would seem to be what was referred to in the relevant part of the second reading speech to the NSW Act. When referring to the exception the Minister said: Particular types of contracts are excluded from the operation of the legislation. The main exclusions are … contracts where the payment is not made in monetary terms, for example, a contract wherein return for carrying out construction work the Contractor is to receive the right to lease or operate the building or structure …

Section 7(3)(c) and ‘guarantee payment of money …’ [3.33] In a conversation prior to a new developer taking over the project, the new developer said that he would make sure that the architect was paid, and on that basis the architect said he would do the job. That was held in IWD No 2 Pty Ltd v Level Orange Pty Ltd [2012] NSWSC 1439 at [41] to amount to a ‘construction contract or other arrangement’. However, the ‘arrangement’ arising from the conversation between the new developer and the architect was held not to amount to a provision by which a party undertook to guarantee payment of moneys owing, or to provide an indemnity in respect of services supplied, in relation to construction work and therefore s 7(3)(c)(i) and (ii) did not apply to exclude the ‘construction contract or other arrangement’ from the operation of the Act. That was because the ‘construction contract or other arrangement’ between the new developer and the architect was ‘not subject to [the new developer] or [the architect] entering into any contract or arrangement with [the original developer]. It was not contingent on [the original developer], or any other party, failing to make payments to [the architect] … [I]t was an independent promise by [the new developer] that [the architect] would be paid for the work it did’: at [69]. Accordingly, Stevenson J held: The circumstances before me are quite different from those considered by McMurdo J in Walton Construction (Qld) Pty Ltd v Salce [2008] QSC 235. In that case, after the relevant subcontractor had done work on the site, and after the builder had failed to pay invoices sent to it by the subcontractor, a representative of the developer said: Don’t worry — [the developer] will make sure you get paid. If [the builder] does not pay you then [the developer] will pay you direct and hold back payment from [the builder]. McMurdo J held that this promise amounted to an undertaking to guarantee payment of money, falling within the Queensland equivalent of s 7(3)(c)(ii) of the Act. The promise in Walton was quite different from that in this case: at [73]–[74].

Section 7(4) construction work performed outside NSW [3.34] Where a construction contract applied to work to be performed in a Commonwealth Territory outside of New South Wales, it was not a construction contract to which the New South Wales Security of Payment legislation applied because s 7(2) provides that the Act ‘does not apply to a construction contract to

the extent to which it deals with … construction work carried outside New South Wales’. In Olympia Group (NSW) Pty Ltd v Hansen Yuncken Pty Ltd [2011] NSWSC 165 at [24] Ball J said: That question is to be answered by considering the terms of the relevant construction contract in the context in which they operate. In my opinion, that requires the court to identify the subject matter of the contract and to ask whether that subject matter has required quality (that is, dealing with

[page 47] construction work or related goods and services of the type referred to in s 7(3)). Whether or not it has the required quality does not depend simply on the terms of the contract. It also depends on the objective facts relating to the relevant work.

Because the contract required the builder to ‘undertake and complete building works’ to a project located in a Commonwealth Territory outside of New South Wales, it dealt with construction work carried on outside New South Wales even though portions of the works were being performed by subcontractors who were based in New South Wales and did work in order to meet their obligations in New South Wales: at [25]–[26]. Section 7(4) costs of transporting goods manufactured in NSW, into Victoria covered [3.35] In Shell Refining (Australia) Pty Ltd v AJ Mayr Engineering Pty Ltd [2006] NSWSC 94 part of the claimed amount was for the costs of transporting the goods manufactured in New South Wales into Victoria. Bergin J held those amounts could be included in a payment claim as the legislative intention derived from the Act and in particular s 7(4) ‘is that progress claims and payment for the provision of goods and services in Victoria in respect of construction work carried out in New South Wales are not excluded from the Act’: at [71], [73]. VICTORIAN ACT: APPLICATION OF ACT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 7 Application of Act (1) Subject to this section, this Act applies to any construction contract, whether written or oral, or partly written and partly oral, and so applies even if the contract is expressed to be governed by the law of a

jurisdiction other than Victoria. (2) This Act does not apply to — (a) a construction contract that forms part of a loan agreement, a contract of guarantee or a contract of insurance under which a recognised financial institution undertakes — (i) to lend money or to repay money lent; or (ii) to guarantee payment of money owing or repayment of money lent; or (iii) to provide an indemnity with respect to construction work carried out, or related goods and services supplied, under the construction contract; or (b) a construction contract which is a domestic building contract within the meaning of the Domestic Building Contracts Act 1995 between a builder and a building owner (within the meaning of that Act), for the carrying out of domestic building work (within the meaning of that Act) the whole of which is carried out on any part of a premises that the building owner resides in or proposes to reside in; or [page 48] (c)

a construction contract under which it is agreed that the consideration payable for construction work carried out under the contract, or for related goods and services supplied under the contract, is to be calculated otherwise than by reference to the value of the work carried out or the value of the goods and services supplied. (3) This Act does not apply to a construction contract to the extent to which it contains — (a) provisions under which a party undertakes to carry out construction work, or supply related goods and services, as an employee of the party for whom the work is to be carried out or the related goods and services are to be supplied; or (b) provisions under which a party undertakes to carry out construction work, or to supply related goods and services, as a condition of a loan agreement with a recognised financial institution; or (c) provisions under which a party undertakes —

(i) (ii)

to lend money or to repay money lent; or to guarantee payment of money owing or repayment of money lent; or (iii) to provide an indemnity with respect to construction work carried out, or related goods and services supplied, under the construction contract. (4) This Act does not apply to a construction contract to the extent to which it deals with — (a) construction work carried out outside Victoria; and (b) related goods and services supplied in respect of construction work carried out outside Victoria. (5) This Act does not apply to any construction contract, or class of construction contracts, prescribed for the purposes of this section. (6) This Act does not apply to a construction contract entered into before the commencement of this section. [3.36] See the New South Wales cases referred to at: [3.28] Section 7(2) onus of proof; [3.29] Section 7(2)(a) ‘forms part of a loan agreement’; [3.30] Section 7(2)(b) ‘forms part of a contract of insurance’; [3.32] Section 7(2)(c) ‘consideration payable … calculated other than by reference to the value of the work’; [3.34] Section 7(4) costs of transporting goods manufactured in New South Wales, into Victoria covered as the section is almost identical in Victoria. [page 49] VICTORIAN ACT: APPLICATION OF ACT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 7 Application of Act (1) Subject to this section, this Act applies to any construction contract, whether written or oral, or partly written and partly oral, and so applies

even if the contract is expressed to be governed by the law of a jurisdiction other than Victoria. (2) This Act does not apply to — (a) a construction contract that forms part of a loan agreement, a contract of guarantee or a contract of insurance under which a recognised financial institution undertakes — (i) to lend money or to repay money lent; or (ii) to guarantee payment of money owing or repayment of money lent; or (iii) to provide an indemnity with respect to construction work carried out, or related goods and services supplied, under the construction contract; or (b) a construction contract which is a domestic building contract within the meaning of the Domestic Building Contracts Act 1995 between a builder and a building owner (within the meaning of that Act), for the carrying out of domestic building work (within the meaning of that Act), other than a contract where the building owner is in the business of building residences and the contract is entered into in the course of, or in connection with, that business; or (ba) a construction contract for the carrying out of any work of a kind referred to in section 6 of the Domestic Building Contracts Act 1995 relating to a residence other than — (i) a contract where the person for whom the work is, or is to be, carried out is a person who is in the business of building residences and the contract is entered into in the course of, or in connection with, that business; or (ii) a contract where the work carried out, or to be carried out, under the contract is, or is part of or is incidental to work to be carried out under another construction contract; or (c) a construction contract under which it is agreed that the consideration payable for construction work carried out under the contract, or for related goods and services supplied under the contract, is to be calculated otherwise than by reference to the value of the work carried out or the value of the goods and services supplied. [page 50]

(3) This Act does not apply to a construction contract to the extent to which it contains — (a) provisions under which a party undertakes to carry out construction work, or supply related goods and services, as an employee of the party for whom the work is to be carried out or the related goods and services are to be supplied; or (b) provisions under which a party undertakes to carry out construction work, or to supply related goods and services, as a condition of a loan agreement with a recognised financial institution; or (c) provisions under which a party undertakes — (i) to lend money or to repay money lent; or (ii) to guarantee payment of money owing or repayment of money lent; or (iii) to provide an indemnity with respect to construction work carried out, or related goods and services supplied, under the construction contract. (4) This Act does not apply to a construction contract to the extent to which it deals with — (a) construction work carried out outside Victoria; and (b) related goods and services supplied in respect of construction work carried out outside Victoria. (5) This Act does not apply to any construction contract, or class of construction contracts, prescribed for the purposes of this section. (6) This Act does not apply to a construction contract entered into before the commencement of this section. [3.37] The New South Wales cases referred to at: [3.28] Section 7(2) onus of proof; [3.29] Section 7(2)(a) ‘forms part of a loan agreement’; [3.30] Section 7(2)(b) ‘forms part of a contract of insurance’; [3.32] Section 7(2)(c) ‘consideration payable … calculated other than by reference to the value of the work’; [3.34] Section 7(4) costs of transporting goods manufactured in New South Wales, into Victoria covered should be persuasive authority in Victoria as the Victorian Act is similar to the NSW Act. Section 7(2)(b) and (ba) Domestic Building Contracts Act exemption

[3.38] In Victoria the exemption in relation to domestic building work under the amended Victorian Act is in different terms. It refers in s 7(2)(b) to ‘a domestic building contract … other than a contract where the building owner is in the business of building residences and the contract is entered into in the course of … that business’. It is probable that an owner who is getting multiple residences constructed would be regarded as being in the business of building residences and therefore the construction contract would be [page 51] subject to the Security of Payment legislation even though it was a domestic building contract. In Tarastar Pty Ltd v Virginia Elizabeth Sullivan and Brendan John Dunne [2009] VCC 0941 at [14], Shelton J suggested that an owner who was getting residences constructed and intended to live in one, might not be ‘in the business of building residences’, referring to Mason J’s decision in Hope v Bathurst City Council (1980) 29 ALR 577 that ‘business’ was interpreted as ‘a commercial enterprise in the nature of a going concern engaged … on a continuous and repetitive basis’. In Director of Housing (Vic) v Structx Pty Ltd t/a Bizibuilders [2011] VSC 410, Vickery J held that the Director of Housing was not ‘in the business of building residences’ within s 7(2)(b): the expression ‘in the business of building residences connotes the construction … as a commercial enterprise on the basis of … an enterprise engaged in for the purpose of profit on a continuous basis’: at [28]. See also [37], [39]. In Republic of Turkey v Mackie Pty Ltd [2012] VSC 309: 1. Where there was a contract for the construction of the private residence of the Consular General of the Republic of Turkey, that construction contract was a construction contract which satisfied the requirements of being a ‘domestic building contract’ within the meaning of the Domestic Building Contracts Act 1995 (Vic), as referred to in s 7(2)(b) of the Act. Therefore the Act does not apply to the construction contract: at [35]–[39]. Even though it may have been proposed to use the premises for hiring out or for functions, it does not change the characterisation that the premises were being used primarily as a private residence: at [38]. 2. Where an adjudicator decided he had jurisdiction on the basis that s 7(2)

(b) of the Act did not apply, that was a mixed question of fact and law, and applying the approach in Director of Housing (Vic) v Structx Pty Ltd: … the decision of the adjudicator to the effect that he had jurisdiction in all circumstances, is open to review by way of certiorari. That issue goes to an essential and fundamental foundation for the jurisdiction of the adjudicator. … Accordingly, the adjudication determination must be quashed and set aside: at [40]–[43].

NSW ACT: RIGHTS TO PROGRESS PAYMENTS Part 2 — Rights to progress payments 8 Rights to progress payments (1) On and from each reference date under a construction contract, a person: (a) who has undertaken to carry out construction work under the contract, or (b) who has undertaken to supply related goods and services under the contract, is entitled to a progress payment. [page 52] (2) In this section, reference date, in relation to a construction contract, means. (a) a date determined by or in accordance with the terms of the contract as the date on which a claim for a progress payment may be made in relation to work carried out or undertaken to be carried out (or related goods and services supplied or undertaken to be supplied) under the contract, or (b) if the contract makes no express provision with respect to the matter — the last day of the named month in which the construction work was first carried out (or the related goods and services were first supplied) under the contract and the last day of each subsequent named month. Section 8(1) and (2) ‘progress payment’ entitlement

[3.39] Austin J in Jemzone Pty Ltd v Trytan Pty Ltd [2002] NSWSC 395 found the definition of progress payment ‘unhelpful’ and therefore the words where used in s 8 and elsewhere should be given the meaning they have in the construction contract. A ‘final account’ claim under the contract in question did not amount to a ‘progress payment’ and therefore the Act had no application to that claim. This has been reversed in New South Wales by the 2002 Amending Act: refer to the amended definition of ‘progress payment’ in s 4. The ‘progress payment’ referred to in s 8(2) is the contractual progress payment not the statutory progress payment and the ‘reference date’ is the contractual reference date: Thiess Pty Ltd v Lane Cove Nominees Pty Ltd [2009] NSWCA 53 at [44]. In Hill (as Trustee for Ashmore Superannuation Benefit Fund) v Halo Architectural Design Services Pty Ltd [2013] NSWSC 865 a construction contract provided that the reference date was the seventh day of each month. Stevenson J held that s 8(1) means that the progress payment to which a person who has performed construction work is entitled is a progress payment in respect of ‘all of the construction works done at that reference date’ (at [24]), because s 13(5) provides that a claimant cannot serve more than one payment claim in respect of each reference date. Stevenson J interpreted ‘in respect of’ to mean ‘on and from’ consistently with the wording of s 8(1) ‘so that the effect of the subsection is that a claimant may only serve one payment claim “on and from” each reference date’ (at [26]). Accordingly, where the claimant served a payment claim for work done in February on 9 November, a payment claim for work done in March on 13 November and a payment claim for work done in April on 16 November, it was held that only the first payment claim served on 9 November was valid because by reason of s 13(5) the claimant was: … only entitled to serve one payment claim “in respect of” (that is, on and from) the reference date of 7 November 2012. The one claim was the first one that it served, on 9 November 2012 (in respect of the work done in February 2012) … it was not possible for the [claimant] to serve any further payment claims “in respect of” the reference date of 7 November 2012: at [37].

Section 8(2) ‘reference date’ [3.40] In Lucchitti t/a Palluc Enterprises v Tolco Pty Ltd [2003] NSWSC 1070 at [37], Bergin J summarised s 8(2) thus: [page 53] If the work is done pursuant to a construction contract then on and from the reference date, that being

either in the contract or at the end of the month on which the work was done, the progress payment can be claimed.

In Holdmark Developers Pty Ltd v GJ Formwork Pty Ltd [2004] NSWSC 905 the contract provided ‘the Sub-contractor shall send his tax invoice monthly to the office. Payments will be thirty days’. McDougall J held that the better view of the clause was that it provided for a reference date of the last day of each month. Section 8(2)(b) and ‘named month’ [3.41] In s 8, ‘the expression “named month” means the month “named” in the claim for a progress payment as being the month in which the work referred to in the claim was undertaken’ and, similarly, ‘the last day of each subsequent named month was the last day of each subsequent month in which work was undertaken, as named in a claim for progress payment’: Grid Projects NSW Pty Ltd v Proyalbi Organic Set Plaster Pty Ltd [2012] NSWSC 1571 at [21], [23]. Payment claim served prior to reference date [3.42] A payment claim served prior to the reference date is invalid: Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266. Reference to a contractual provision which provides that: If the Contractor submits a payment claim before the time for lodgement of that payment claim, such early lodgement shall not require the Superintendent to issue the payment certificate in respect of that payment claim earlier than would have been the case had the Contractor submitted the payment claim in accordance with the Contract (at [12]).

does not validate a payment claim served before the reference date (at [56]–[60] per Nicholas J), but an agreement to change the date for submission of progress claims will be effective so that the reference date under the Act becomes the earlier agreed date: at [54] per Nicholas J. Premature service of a payment claim may have provided a good defence to a payment claim, but because no payment schedule was served, it cannot subsequently be relied on in defence to the claimant’s application for judgment: Zebicon Pty Ltd v Remo Constructions Pty Ltd [2008] NSWSC 1408 at [33] per McDougall J. The reference date is a matter adjudicator can determine [3.43] McDougall J held in Kembla Coal & Coke Pty Ltd v Select Civil Pty Ltd [2004] NSWSC 628 that the Act does not require an adjudicator to be satisfied as to the reference date before proceeding in the adjudication but if the point is raised it is something that the adjudicator can determine: at [39].

Five payment claims all served on same day [3.44] In Bell Partners Accountants & Business Advisors Pty Ltd v Kann Finch Pty Ltd [2004] NSWSC 1034 five payment claims were all served on 19 September 2003, which had reference dates of 24 March, 7, 21 and 30 April and 31 July 2003. Harrison M held those payment claims complied with the Act even though all were served on the same day, presumably as s 8(1) provides payments claims can be served ‘on and from each reference date’: at [21]. [page 54] Reference dates do not cease on termination [3.45] The Court of Appeal in Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2004] NSWCA 394 held that under s 8(2) reference dates do not cease on termination of the construction contract or ceasing work, unless the contract expressly so provides and ‘the only non-contractual limit to … reference dates is that which in effect flows from the limits in s 13(4)’: at [63]. In Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd [2006] NSWCA 259 the Court of Appeal came to the same conclusion: at [36] and [1]. In Rubana Holdings Ltd v 3D Commercial Interiors Pty Ltd [2008] NSWSC 1405 McDougall J decided that in light of Brodyn v Davenport his earlier decision in Holdmark Developers Pty Ltd v GJ Formwork Pty Ltd [2004] NSWSC 905, that where a construction contract came to an end, the last reference date was the last reference date after the last performance of work, was no longer correct: at [19]. Milestone reference dates [3.46] In Energetech Australia Pty Ltd v Sides Engineering Pty Ltd [2005] NSWSC 801 the claimant was entitled to be paid upon achieving specified milestones, the second such milestone being ‘Practical completion’. Therefore before practical completion the claimant was only entitled to make one payment claim but no issue was raised in the case that such a payment regime offended against s 34.1 Section 8(2)(a) ‘date upon which a claim for progress payment may be made’ [3.47] In Leighton Contractors Pty Ltd v Campbelltown Catholic Club Ltd

[2003] NSWSC 1103 at [75], Einstein J explained the words ‘the date on which a claim for a progress payment may be made’ in s 8(2)(a): The particular focus placed by the Club on the meaning of the words “claim for a progress payment may be made” appearing in section 8(2)(a) is shortly answered in the present context by the fact that Leighton was entitled under the subject contract to make a progress claim by a procedure, the first stage of which involved written notification to the superintendent. [Contract clause 37.1]. Hence the section 8(2)(a) “date determined by or in accordance with the terms of the contract as the date on which a claim for a progress payment may be made”, was the date when Leighton was entitled to give its progress claim to the Superintendent.

VICTORIAN ACT: RIGHTS TO PROGRESS PAYMENTS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 9 Rights to progress payments (1) On and from each reference date under a construction contract, a person — (a) who has undertaken to carry out construction work under the contract; or (b) who has undertaken to supply related goods and services under the contract — is entitled to a progress payment under this Act, calculated by reference to that date. [page 55] (2) In this section, reference date, in relation to a construction contract, means — (a) a date determined by or in accordance with the terms of the contract as — (i) a date on which a claim for a progress payment may be made; or (ii) a date by reference to which the amount of a progress payment is to be calculated — in relation to work carried out or to be carried out or related goods and services supplied or to be supplied under the contract; or (b) if the contract makes no express provision with respect to the matter, the date occurring 20 business days after the previous

reference date or (in the case of the first reference date) the date occurring 20 business days after — (i) construction work was first carried out under the contract; or (ii) related goods and services were first supplied under the contract. Section 9(1) ‘progress payment’ [3.48] Austin J in Jemzone Pty Ltd v Trytan Pty Ltd [2002] NSWSC 395 found the definition of progress payment ‘unhelpful’ and therefore the words where used in NSW Act s 8 and elsewhere should be given the meaning they have in the construction contract. A ‘final account’ claim under the contract in question did not amount to a ‘progress payment’ and therefore the Act had no application to that claim. This has been reversed in New South Wales by the 2002 Amending Act: refer to the amended definition of ‘progress payment’ in s 4. Even in Victoria the court may take judicial notice of the fact that in the second reading speech to the Building and Construction Industry Security of Payment Amendment Act 2002, the Minister categorises the amendments to the Act to include final payment claims as a change ‘made to remove possible ambiguities’, suggesting that the original legislative intention was that final payments were to be subject to the statutory scheme. In The Concrete Panel Co Pty Ltd v Advanced Storage Systems (Vic) Pty Ltd [2004] VCC 2; [2004] VCC 114, however, Shelton J held that there was an issue to be tried as to whether the Act applies to final claims. The ‘final payment claim’ defence succeeded before Finkelstein J in Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248: see [3.113]. Section 9(2) ‘reference date’ [3.49] Fyntray Constructions Pty Ltd v Macind Drainage & Hydraulic Services Pty Ltd [2002] NSWCA 238 considered the two limbs of the definition of ‘reference date’ in s 8(2) of the original NSW Act which is in the same terms as the Victorian Act. Heydon JA, with whom Ipp AJA agreed, held that s 8(2)(a) before the 2002 amendments revealed: … a legislative intention to permit payment claims to be made either by reference to a contractual date for making a claim (ie under clause 42.1) or by reference to a contractual date by reference to which the amount of the progress payment is to be calculated (ie taking into account clause 42.2). An entitlement to a progress payment resting on recourse to the latter date is not precluded by the

[page 56] fact that there was an earlier entitlement to a progress payment resting on a recourse to the former date: at [ 51].

Therefore, although: … clause 42.1 compels monthly claims, s 8 contemplates entitlements to progress payments arising not only by reason of the dates for making claims under clause 42.1, but by reason of a date by reference to which the amount of the progress payment is to be calculated under clause 42.2, and the latter date includes periods which may be greater than the preceding month: at [51].

Fyntray should remain good law in Victoria as the Victorian section (s 9(2)(a)) is essentially identical to s 8(2)(a) in the NSW Act before the 2002 amendments. Fyntray was referred to with approval by Nicholas J in Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266. However, as a result of the amendments to the NSW Act the ‘second limb’ (now s 8(2)(b)) only applies if the ‘contract makes no express reference to the matter’. Verbal agreement to reference dates [3.50] In Blueview Constructions Pty Ltd t/a WRS Constructions v Vain Lodge Holdings Pty Ltd [2005] VCC 1325 at [19], Shelton J of the Victorian County Court held that a verbal agreement between the claimant and the respondent that progress claims could be submitted on the 25th of each month was sufficient to make them reference dates under the Act. Section 9(2)(a)(ii) reference date ‘determined by or in accordance with the terms of the contract’ [3.51] A term in a construction contract that: ‘Terms. Payment is due 30 days from date of invoice’ did not amount to a reference date ‘determined by or in accordance with the terms of the contract’ under s 9(2)(a)(ii) of the Victorian Act: ADH Plant Hire Pty Ltd v Construct Co Pty Ltd [2004] VCC 53; [2004] VCC 159 per Shelton J of the County Court. Contrast the New South Wales decision, Holdmark Developers Pty Ltd v GJ Formwork Pty Ltd [2004] NSWSC 905 (see [3.40]) where slightly different wording was held to amount to a contractual reference date. In ADH Plant Hire the claimant’s summary judgment application under s 16 failed (even though no payment schedule was provided) as the relevant payment claims were served before the reference date provided under s 9(2)(b) and ss 15 and 16 therefore were ‘not enlivened’: at [14], [15]. However, see [3.57] for the more recent decisions of Seabay Properties Pty Ltd v Galvin Construction Pty Ltd [2011] VSC 183 and 470 St Kilda Road Pty Ltd v

Reed Constructions Australia Pty Ltd [2012] VSC 235 where Vickery J found that premature service of a payment claim does not render it invalid. See also the New South Wales cases referred to at: [3.42] Payment claim served prior to reference date; [3.43] Reference date is a matter adjudicator can determine; [3.44] Five payment claims all served on same day; [3.46] Milestone reference dates; [3.47] Section 8(2)(a) ‘date upon which a claim for progress payment may be made’; as the section in Victoria is almost identical to the New South Wales section. [page 57] References dates after termination [3.52] In Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 at [174], Vickery J held that the old Act in Victoria applying to contracts entered into prior to 30 March 2007 did provide for a payment claim to be served following termination of the construction contract in the following limited circumstances: (a) where the construction contract expressly or impliedly provides for a payment claim to be served following termination of the construction contract, or the cessation of work under it, or makes provision for further reference dates within the meaning of the Act beyond the date of termination; or (b) where, immediately prior to the termination of the construction contract a claimant has an entitlement under the Act to a progress payment pursuant to s 9 for works done or goods and materials supplied prior to the termination, where the relevant reference date has arisen prior to the termination, the claimant retains its right to a progress payment. This is so, because the claimant has an accrued right “on and from each reference date” which continues beyond the termination or cessation of work, and is unconstrained by any statutory time limit.

VICTORIAN ACT: RIGHTS TO PROGRESS PAYMENTS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 9 Rights to progress payments (1) On and from each reference date under a construction contract, a person

— (a)

who has undertaken to carry out construction work under the contract; or (b) who has undertaken to supply related goods and services under the contract — is entitled to a progress payment under this Act, calculated by reference to that date. (2) In this section, reference date, in relation to a construction contract, means — (a) a date determined by or in accordance with the terms of the contract as — (i) a date on which a claim for a progress payment may be made; or (ii) a date by reference to which the amount of a progress payment is to be calculated — in relation to a specific item of construction work carried out or to be carried out or a specific item of related goods and services supplied or to be supplied under the contract; or (b) subject to paragraphs (c) and (d), if the contract makes no express provision with respect to the matter, the date occurring 20 business days after the previous reference date or (in the case of the first reference date) the date occurring 20 business days after — (i) construction work was first carried out under the contract; or (ii) related goods and services were first supplied under the contract; or [page 58] (c)

in the case of a single or one-off payment, if the contract makes no express provision with respect to the matter, the date immediately following the day that — (i) construction work was last carried out under the contract; or (ii) related goods and services were last supplied under the contract; or

(d)

in the case of a final payment, if the contract makes no express provision with respect to the matter, the date immediately following — (i) the expiry of any period provided in the contract for the rectification of defects or omissions in the construction work carried out under the contract or in related goods and services supplied under the contract, unless subparagraph (ii) applies; or (ii) the issue under the contract of a certificate specifying the final amount payable under the contract a final certificate; or (iii) if neither subparagraph (i) nor subparagraph (ii) applies, the day that — (A) construction work was last carried out under the contract; or (B) related goods and services were last supplied under the contract.

Section 9(2)(a) ‘reference date’ other than for single, one-off or final payment claims [3.53] Fyntray Constructions Pty Ltd v Macind Drainage & Hydraulic Services Pty Ltd [2002] NSWCA 238 at [51] considered the two limbs of the definition of ‘reference date’ in s 8(2) of the original NSW Act which is in similar terms as the Victorian Act. Heydon JA, with whom Ipp AJA agreed, held that s 8(2)(a) before the 2002 amendments revealed: … a legislative intention to permit payment claims to be made either by reference to a contractual date for making a claim (ie under clausw 42.1) or by reference to a contractual date by reference to which the amount of the progress payment is to be calculated (ie taking into account clause 42.2). An entitlement to a progress payment resting on recourse to the latter date is not precluded by the fact that there was an earlier entitlement to a progress payment resting on a recourse to the former date.

Therefore, although: … clause 42.1 compels monthly claims, s 8 contemplates entitlements to progress payments arising not only by reason of the dates for making claims under clause 42.1, but by reason of a date by reference to which the amount of the progress payment is to be calculated under clause 42.2, and the latter date includes periods which may be greater than the preceding month: at [51].

Fyntray should remain good law in Victoria as the Victorian section (s 9(2)(a)) is very similar to s 8(2)(a) in NSW before the 2002 amendments. Fyntray was referred to with approval by Nicholas J in Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266. However, as a result of the

amendments in NSW the ‘second limb’ (now s 8(2)(b)) only applies if the ‘contract makes no express reference to the matter’. [page 59] Verbal agreement to reference dates [3.54] In Blueview Constructions Pty Ltd t/a WRS Constructions v Vain Lodge Holdings Pty Ltd [2005] VCC 1325 at [19] Shelton J of the Victorian County Court held that a verbal agreement between the claimant and the respondent that progress claims could be submitted on the 25th of each month was sufficient to make them reference dates under the Act. Section 9(2)(a)(ii) Reference date ‘determined by or in accordance with the terms of the contract’ [3.55] A term in a construction contract that: ‘Terms. Payment is due 30 days from date of invoice’ did not amount to a reference date ‘determined by or in accordance with the terms of the contract’ under s 9(2)(a)(ii) of the Victorian Act: ADH Plant Hire Pty Ltd v Construct Co Pty Ltd [2004] VCC 53; [2004] VCC 159 per Shelton J of the County Court. Accordingly the claimant’s summary judgment application under s 16 failed (even though no payment schedule was provided) as the relevant payment claims were served before the reference date provided under s 9(2)(b) and ss 15 and 16 therefore were ‘not enlivened’: at [14], [15]. Contrast the New South Wales decision, Holdmark Developers Pty Ltd v GJ Formwork Pty Ltd [2004] NSWSC 905 (see [3.40]) where slightly different wording was held to amount to a contractual reference date. Where the contract provided for progress claims to be served on the 25th of the month, that constituted the reference date under the Act: Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 at [83]. Victoria now has different reference dates for single, one-off and final payments [3.56] See s 9(2)(c) and (d) whereby there are now in Victoria specific reference dates for single, one-off and final payments. Section 9(1) ‘on and from each reference date …’: what if payment claim served before the reference date?

[3.57] Where the contract provided for progress claims to be served on the 25th of the month, that constituted the reference date under the Act. The contractor sent its payment claim on Saturday 24 October 2009 by email but Vickery J held that it was not served before the next business day, Monday 26 October 2009 when it was received by the superintendent who was authorised to accept payment claims under the Act: Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 at [83]. Distinguishing Walter Construction Group Pty Ltd v CPL (Surrey Hills) Pty Ltd [2003] NSWSC 1140 (as the section in the NSW Act is different) and refusing to follow FK Gardner & Sons Pty Ltd v Dimin Pty Ltd [2007] 1 Qd R 10, Vickery J followed his earlier decision in Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 and held that premature service of a payment claim does not render it invalid unless the premature service means it was not made bona fide: Seabay Properties Pty Ltd v Galvin Construction Pty Ltd [2011] VSC 183 at [131], [134], [136]. (In 2004 Shelton J in the County Court had earlier decided in ADH Plant Hire that a summary judgment application failed where the relevant payment claim was served before the reference date as then ss 15 and 16 were ‘not enlivened’: see [3.51].) In Seabay, Vickery J also held that the 10 business day period referred to in s 15(4) (b)(i) in the case of service [page 60] prior to the reference date does not commence until the reference date: at [134] citing Metacorp. In 470 St Kilda Road Pty Ltd v Reed Constructions Australia Pty Ltd [2012] VSC 235 at [46], Vickery J subsequently held that his decision in Metacorp was wrongly decided on the question of the bona fide requirement (in light of other authorities) ‘insofar as it is said in that case that a payment claim, whether served prematurely before the due reference date or served on and from the reference date, must be made bona fide in order to be valid, and I decline to follow myself’. The other authorities referred to included Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (2005) 64 NSW LR 462; Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; and the Queensland Court of Appeal in Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd [2010] QCA 119. See also 470 St Kilda Road Pty Ltd at [43], [44].

Section 9(d)(2)(iii) Reference date for final payment claim after termination [3.58] In Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106, Vickery J held that under the new Act: … in circumstances where a construction contract has been terminated, or otherwise work has ceased under it, a final payment claim may [also] be made within the terms of the New Act so as to provide a “final balancing of account” between the contracting parties. … In the case of termination, it may be taken that s 9(2)(d)(iii) applies to set a notional reference date for the purposes of serving a final payment claim pursuant to the time limit provided in s 14(5)(b): at [181], [183].

Further, such final payment claims could include claims for retention moneys, variations which are ‘claimable variations’. NSW ACT: AMOUNT OF PROGRESS PAYMENT 9 Amount of progress payment The amount of a progress payment to which a person is entitled in respect of a construction contract is to be: (a) the amount calculated in accordance with the terms of the contract, or (b) if the contract makes no express provision with respect to the matter, the amount calculated on the basis of the value of construction work carried out or undertaken to be carried out by the person (or of related goods and services supplied or undertaken to be supplied by the person) under the contract. Section 9(a) ‘calculated in accordance with the … contract’ [3.59] Where there is a contractual mechanism for the determination of an entitlement to a progress claim, an adjudicator under the Act is obliged to follow that mechanism: TransGrid v Walter Construction Group Ltd [2004] NSWSC 21 at [19], [20]; Kembla Coal & Coke Pty Ltd v Select Civil Pty Ltd [2004] NSWSC 628 at [83], but see [3.60] below. Relevance of superintendent’s determination [3.60] The adjudicator is entitled to exercise his or her own judgment and is not bound by the determination of the superintendent in determining the amount of the progress

[page 61] payment or the value of construction work carried out: TransGrid v Walter Construction Group Ltd [2004] NSWSC 21 at [46]–[54]. In TransGrid v Siemens Ltd [2004] NSWSC 87 (revised 1/03/2004), Macready M expressed the view that the preferable construction of the Act is that an ‘adjudicator does not step into the shoes of the superintendent’ so that where the superintendent under the contractual procedures has already determined the amount of a progress claim, the adjudicator should not go and make that assessment again: at [51]–[68]. However, Macready M’s decision was overturned and in the Court of Appeal, Hodgson JA held that it was not necessary to decide that matter for the purposes of the appeal but he did not prefer the view of Macready M as it was not consistent with the use of the word ‘calculated’ in s 9(a) and was also not consistent with the provisions against contracting out in s 34: Transgrid v Siemens Ltd [2004] NSWCA 395 at [35]. In John Holland Pty Ltd v Roads and Traffic Authority of New South Wales [2007] NSWCA 19 at [38], Hodgson JA held that: I note that in Transgrid v Siemens Ltd [2004] NSWCA 395; (2004) 61 NSWLR 521 at [35], I expressed the view (obiter) to the effect that “calculated in accordance with the terms of the contract” meant calculated on the criteria established by the contract, and did not mean reached according to mechanisms provided by the contract; and I adhere to that view as being more in accord with the use of the word “calculated” and with the prohibition in s 34 of the Act on contracting out of the effect of the Act. On the other view, contractual provisions denying progress payments for construction work otherwise than as certified by a superintendent or in accordance with review procedure provided by the contract could in my opinion have the effect of restricting the operation of the Act, and thus be made void by s 34. I do not think the legislature intended to make such usual provisions void.

On appeal in Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] NSWCA 279 at [53]–[56] Hodgson JA held: I adhere to the view I expressed in Transgrid v Siemens Ltd [2004] NSWCA 395; (2004) 61 NSWLR 521 at [35] and John Holland Pty Ltd v Roads and Traffic Authority of New South Wales [2007] NSWCA 19 at [38], to the effect that “calculated in accordance with the terms of the contract” in s 9(a) of the Building and Construction Industry Security of Payment Act 1999 (the Act) does not engage contract mechanisms determining what is due under the contract, independently of calculations referrable to the work performed. This means that contractors are not deprived of entitlement to payment under the Act because a condition precedent, such as the obtaining of a superintendent’s certificate, has not been satisfied; and it means equally that contractors are not ipso facto entitled to payment because of the operation of a deeming provision such as cl 37(2) of the contract in this case. Accordingly, in my opinion, the adjudicator did make an error of law. However, as explained by Allsop P, he nevertheless addressed the task given to him under s 22 of the Act, and considered all of the submissions of the parties, but reached the view that some of them were not relevant. Accordingly, his adjudication was not vitiated.

Claim preparation costs [3.61] A payment claim may include an amount for preparation of the measurement and other evidence of cost of the claimed variation works where s 9(a) applies and the contract allows it: Kembla Coal & Coke Pty Ltd v Select Civil Pty Ltd [2004] NSWSC 628 at [106]. This does not apply however where s 9(b) and s 10(b) apply: at [107]. [page 62] Claim for delay costs [3.62] A claim under a clause in a contract dealing with valuation or variations which provided that: (f) If the valuation relates to extra costs incurred by the Contractor for delay or disruption, the valuation shall include a reasonable amount for overheads but shall not include profit or loss of profit …

was not a claim for damages, but rather ‘the bargain of the parties … as to an element of the true cost of carrying out a variation’: Kembla Coal & Coke Pty Ltd v Select Civil Pty Ltd [2004] NSWSC 628 at [121], [122]. Claim for interest [3.63] In Kembla Coal & Coke Pty Ltd v Select Civil Pty Ltd [2004] NSWSC 628 at [134]–[135], McDougall J held: In principle, I think, a claim for interest on unpaid progress payments … is not sufficiently related to the construction work “for” which the progress payment is claimed to be itself an element of that progress payment. In principle, therefore, I think that the analysis of Barrett J in Quasar applies to claims for interest on unpaid progress payments. It may be, under a particular form of contract, that the amount of a progress claim is expressly specified to include interest on any amounts earlier payable under the contract that were paid late. If that were the case (so that, for example, the Superintendent were required to assess it and include it as an element of a progress claim), it might be something that an adjudicator could take into account in a determination under the Act. However, since there is no such provision in this contract, I express no concluded view on this point.

Claim for delay damages or interest [3.64] In Coordinated Construction Co Pty Ltd v JM Hargreaves (NSW) Pty Ltd [2005] NSWCA 228 it was argued by the respondent (relying on Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd [2004] NSWSC 116) that a claim for delay damages was not a claim ‘for construction work’ (for example, as that

expression appears in the s 4 definitions of ‘claimed amount’ or ‘progress payment’). Hodgson JA, with whom Ipp and Basten JJA concurred, held that: … any requirement from s 13 and the definition of “claimed amount” that the progress payment must be for construction work carried out or for related goods and services supplied should not be given a narrow construction or effect. … In my opinion, the circumstance that a particular amount may be characterised by a contract as “damages” or “interest” cannot be conclusive as to whether or not such an amount is for construction work carried out or for related goods and services supplied. Rather, any amount that a construction contract requires to be paid as part of the total price of construction work is generally, in my opinion, an amount due for that construction work, even if the contract labels it as “damages” or “interest”; while on the other hand, any amount which is truly payable as damages for breach of contract is generally not an amount due for that construction work. Under the contract in this case, delay damages are payable only if an EOT is for a compensable cause, that is, in general some act or omission of the head contractor or the superintendent or the sub-contract superintendent; but nevertheless, they are not of their nature damages for breach but rather are additional amounts which may become due and payable under the contract (cl 34.9) and which are then to be included in progress payments (cl 37.1). They are therefore prima facie within s 9(a) of the Act: at [40]– [42].

[page 63] However, Hodgson JA did envisage some restriction on what could be claimed: If they represent off-site costs (such as office overheads) or other on-site costs, it may be a question of fact and degree whether they are for construction work carried out or for related goods and services supplied. They would in my opinion properly be regarded at least as part of the price for the totality of the construction work when completed. And it would seem artificial to say that they are excluded from the Act if they are not referable to work that has already been carried out, particularly when s 9(b) refers to the value of construction work undertaken to be carried out and related goods and services undertaken to be supplied. However, it is not necessary in this case altogether to exclude the possibility that some delay damages claimed under this contract might possibly not be for construction work carried out or related goods and services supplied within the definition of “claimed amount” in s 4; but it is certainly not obvious that this is so in relation to any of the claims in this case: at [44].

See also the judgment of Basten JA on this point at [59]–[63]. Claim for latent conditions [3.65] A claim under a clause entitling compensation for the latent conditions encountered was a matter that was adjudicated without any objection that such a claim was not ‘for construction work’: Energy Australia v Downer Construction (Australia) Pty Ltd [2005] NSWSC 1042. VICTORIAN ACT: AMOUNT OF PROGRESS PAYMENT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07)

10 Amount of progress payment The amount of a progress payment to which a person is entitled in respect of a construction contract is to be — (a) the amount calculated in accordance with the terms of the contract; or (b) if the contract makes no express provision with respect to the matter, the amount calculated on the basis of the value of — (i) construction work carried out by the person under the contract; or (ii) related goods and services supplied by the person under the contract — as the case requires. [3.66] See the New South Wales cases referred to at: [3.59] Section 9(a) ‘calculated in accordance with the … contract’; [3.60] Relevance of superintendent’s determination; [3.61] Claim preparation costs; [3.62] Claim for delay costs; [3.63] Claim for interest; [3.64] Claim for delay damages or interest; [3.65] Claim for latent conditions; which should be persuasive authority in Victoria as the New South Wales provision considered in those cases is almost identical to Victoria. In Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 Vickey J considered claims for prolongation costs under the old Act: [page 64] Even though a prolongation claim is not directly a claim for payment for work which has been done, in my opinion, it may be the subject of a progress payment claim which can be enforced under the old Act if the relevant construction contract permits prolongation claims to be claimed as part of a progress claim: at [59]. Under the AS4000-1997 contract … delay damages were payable under clause 34.9 only if an extension of time claim is made for some “qualifying cause of delay”… they are nevertheless, not of their nature strictly damages for breach of the contract there are however additional amounts which may become due

and payable under the contract and which, when they fall due for payment, may then be included in a progress payment. A contractual compensation claim is therefore prima facie within Part 2 of the Old Act: at [68].

VICTORIAN ACT: AMOUNT OF PROGRESS PAYMENT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 10 Amount of progress payment (1) The amount of a progress payment to which a person is entitled in respect of a construction contract is to be — (a) the amount calculated in accordance with the terms of the contract; or (b) if the contract makes no express provision with respect to the matter, the amount calculated on the basis of the value of — (i) construction work carried out or undertaken to be carried out by the person under the contract; or (ii) related goods and services supplied or undertaken to be supplied by the person under the contract — as the case requires. (2) Despite subsection (1) and anything to the contrary in the construction contract, a claimable variation may be taken into account in calculating the amount of a progress payment to which a person is entitled in respect of that construction contract. (3) Despite subsection (1) and anything to the contrary in the construction contract, an excluded amount must not be taken into account in calculating the amount of a progress payment to which a person is entitled in respect of that construction contract. 10A Claimable variations (1) This section sets out the classes of variation to a construction contract (the claimable variations) that may be taken into account in calculating the amount of a progress payment to which a person is entitled in respect of that construction contract. (2) The first class of variation is a variation where the parties to the construction contract agree — (a) that work has been carried out or goods and services have been supplied; and (b) as to the scope of the work that has been carried out or the goods

and services that have been supplied; and [page 65] (c)

that the doing of the work or the supply of the goods and services constitutes a variation to the contract; and (d) that the person who has undertaken to carry out the work or to supply the goods and services under the contract is entitled to a progress payment that includes an amount in respect of the variation; and (e) as to the value of that amount or the method of valuing that amount; and (f) as to the time for payment of that amount. (3) The second class of variation is a variation where — (a) the work has been carried out or the goods and services have been supplied under the construction contract; and (b) the person for whom the work has been carried out or the goods and services supplied or a person acting for that person under the construction contract requested or directed the carrying out of the work or the supply of the goods and services; and (c) the parties to the construction contract do not agree as to one or more of the following — (i) that the doing of the work or the supply of goods and services constitutes a variation to the contract; (ii) that the person who has undertaken to carry out the work or to supply the goods and services under the construction contract is entitled to a progress payment that includes an amount in respect of the work or the goods and services; (iii) the value of the amount payable in respect of the work or the goods and services; (iv) the method of valuing the amount payable in respect of the work or the goods and services; (v) the time for payment of the amount payable in respect of the work or the goods and services; and (d) subject to subsection (4), the consideration under the construction contract at the time the contract is entered into — (i) is $5 000 000 or less; or

(ii)

exceeds $5 000 000 but the contract does not provide a method of resolving disputes under the contract (including disputes referred to in paragraph (c)). (4) If at any time the total amount of claims under a construction contract for the second class of variations exceeds 10% of the consideration under the construction contract at the time the contract is entered into, subsection (3)(d) applies in relation to that construction contract as if any reference to “$5 000 000” were a reference to “$150 000”. Example A building contractor enters into a construction contract. The consideration (contract sum) under the contract at the time the contract is entered into is [page 66] $3 million. The contract contains a dispute resolution clause. The contractor undertakes work at the direction of the other party. The contractor claims (the new claim) that the work is a variation to the contract. The other party does not agree that the work constitutes a variation to the contract (disputed variation). The contractor has already made a number of claims for disputed variations under the contract. The new claim brings the total amount of claims for disputed variations under the contract to $350 000. This amount exceeds 10% of the contract sum. As the contract sum exceeds $150 000 and the contract contains a dispute resolution clause, the disputed variation in the new claim and all subsequent disputed variations under the contract will not be claimable variations under this Act. 10B Excluded amounts (1) This section sets out the classes of amounts (excluded amounts) that must not be taken into account in calculating the amount of a progress payment to which a person is entitled under a construction contract. (2) The excluded amounts are — (a) any amount that relates to a variation of the construction contract that is not a claimable variation; (b) any amount (other than a claimable variation) claimed under the construction contract for compensation due to the happening of

(c)

(d) (e)

an event including any amount relating to — (i) latent conditions; and (ii) time-related costs; and (iii) changes in regulatory requirements; 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; any amount in relation to a claim arising at law other than under the construction contract; any amount of a class prescribed by the regulations as an excluded amount.

Section 10A(2)(b) and where the parties ‘agree …’ [3.67] The matters that s 10A(2)(b) require the parties to ‘agree’ can be agreed orally, in writing or implied from conduct (Seabay Properties Pty Ltd v Galvin Construction Pty Ltd [2011] VSC 183 at [40]) but the agreement must have ‘been formed and in place by the time of service of the payment claim’: Seabay at [49], [53], [54]. In Seabay, Vickery J held that certification for payment of certain variations by the superintendent evidenced agreement between the parties as to each of the matters in s 10A(2): at [57]. It is difficult to see, however, how a superintendent’s certification could evidence an agreement between the parties, unless the superintendent was under the contract the agent of the principal — the judgment does not make it clear if that was the case. [page 67] Section 10B(2)(b)(ii) and ‘time related costs’ or liquidated damages [3.68] Where the respondent claimed its liquidated damages should be taken into account in assessing the amount of the payment claim, Vickery J held that the liquidated damages was an ‘excluded amount’ either because it was time-related costs as referred to in s 10(B)(2)(b)(ii) or because it was ‘compensation due to the happening of an event’, the event being the contractor’s failure to meet the ‘date for practical completion’: Seabay Properties Pty Ltd v Galvin Construction Pty Ltd [2011] VSC 183 at [108], [109], [111]. Further, excluded amounts apply

to set-offs or counter-claims raised by a respondent, not just to the claims by a claimant: Seabay at [122], [124], [125]. Section 10B(2)(c) ‘excluded amounts’ and possible conflict with s 11(1)(b) ‘cost of rectifying the defect’ [3.69] Where s 11(1)(b)(iv) has application there may be conflict between that provision and s 10B(2)(c) if the ‘estimated cost of rectifying the defect’ in s 11(1)(b)(iv) were also ‘excluded amounts’ under s 10B(2)(c). In Maxstra Constructions Pty Ltd v Gilbert t/as AJ Gilbert Concrete [2013] VSC 243 at [62] Vickery J held that s 10B(2)(c) where it refers to claims for damages being excluded amounts did not include ‘the estimated cost of rectifying the defect’ where s 11(1)(b)(iv) applies. Accordingly, s 23(2A)(a) did not prevent the adjudicator from taking into account the estimated cost of rectifying the defects in his adjudication determination. Section 10A(3)(b) ‘the person … requested or directed the carrying out of the work’ [3.70] The request or direction does not need to be one that complies with the procedures for the ordering of variations under the contract: AC Hall Airconditioning Pty Ltd v Schiavello (Vic) Pty Ltd [2008] VCC 1490 at [35], [36]. Section 10A(3)(d)(ii) Second class claimable variations and ‘method of resolving disputes’ [3.71] In AC Hall Airconditioning Pty Ltd v Schiavello (Vic) Pty Ltd [2008] VCC 1490 s 10A(3)(d)(ii) was brought into operation because the value of claimed variations exceeded 10 per cent of the original consideration. The dispute resolution clause provided: 15. Arbitration 15(a) Where a dispute or difference arises in respect of any aspect of the Works during or after completion of the Works then such dispute or difference shall be resolved by a court of competent jurisdiction in the State where the Works are performed. 15(b) Subject to the foregoing, the parties may agree in writing to refer part or all of such dispute or difference to arbitration according to the laws relating to arbitration in force in the State in which the Works are performed.

Shelton J held that there was no ‘method of resolving disputes’ under s 10A(3) (d)(ii) as: all sub-clause 15(a) does is ‘re-state the parties’ existing rights to have the matter litigated’ (at [32]);

sub-clause 15(b) ‘is not an arbitration requirement as defined in s 4 of the Commercial Arbitration Act’ (at [33]); and what is required by sub-clause (3)(d)(ii) ‘is a binding dispute resolution mechanism separate from the Court system’: at [33]. [page 68] See the New South Wales cases referred to at: [3.59] Section 9(a) ‘calculated in accordance with the … contract’; [3.60] Relevance of superintendent’s determination; [3.61] Claim preparation costs; [3.62] Claim for interest; which should be persuasive authority in Victoria except to the extent that the prohibition now in Victoria against including ‘excluded amounts’ in a payment claim is relevant. Note also the express entitlement to interest now in s 12(2). NSW ACT: VALUATION 10 Valuation of construction work and related goods and services (1) Construction work carried out or undertaken to be carried out under a construction contract is to be valued: (a) in accordance with the terms of the contract, or (b) if the contract makes no express provision with respect to the matter, having regard to: (i) the contract price for the work, and (ii) any other rates or prices set out in the contract, and (iii) any variation agreed to by the parties to the contract by which the contract price, or any other rate or price set out in the contract, is to be adjusted by a specific amount, and (iv) if any of the work is defective, the estimated cost of rectifying the defect. (2) Related goods and services supplied or undertaken to be supplied under a construction contract are to be valued: (a) in accordance with the terms of the contract, or (b) if the contract makes no express provision with respect to the

matter, having regard to: (i) the contract price for the goods and services, and (ii) any other rates or prices set out in the contract, and (iii) any variation agreed to by the parties to the contract by which the contract price, or any other rate or price set out in the contract, is to be adjusted by a specific amount, and (iv) if any of the goods are defective, the estimated costs of rectifying the defect, and, in the case of materials and components that are to form part of any building, structure or work arising from construction work, on the basis that the only materials and components to be included in the valuation are those that have become (or, on payment, will become) the property of the party for whom construction work is being carried out.

[page 69] Adjudicator’s role [3.72] Summarising of the effect of s 10, Einstein J in Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2003] NSWSC 1019 at [13] held: In short, even where no express contractual provision is made with respect to the amount of a progress payment to which a person is entitled in respect of a construction contract or where no express provision is made with respect to the valuation of construction work carried out under a construction contract, the adjudicator has a judgmental role in determining those matters. And the adjudicator exercises that role by reference to the integers stipulated for by the Act.

Section 10(1)(b) ‘having regard to’ [3.73] The requirement in s 10(1)(b) of the adjudicator ‘having regard to’ the matters there set out are: … no more than matters that must be recognised and accepted by an adjudicator as matters to be taken into account in performing the specified valuation task. A provision compelling a decision maker to “have regard to” specified matters in making the particular decision does no more than require that he or she “give weight to them as a fundamental element” in coming to a conclusion: Quasar Constructions NSW Pty Ltd v AJ Stockman Pty Ltd [2004] NSWSC 117 at [12].

Under s 10(1)(b), where it applies, ‘there is no room in such a calculation for any amount that is payable by way of damages for breach of contract’ but this may not apply where: (1) the entitlement (even though it may be equivalent to an entitlement to damages) is given by the

express terms of the contract as an element of a progress payment; and (2) the calculation of that entitlement is, therefore, carried out pursuant to ss 9(a) and 10(1)(a): Kembla Coal & Coke Pty Ltd v Select Civil Pty Ltd [2004] NSWSC 628 at [92].

In Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2004] NSWCA 394 at [74] the Court of Appeal held that under s 10(1)(b) ‘regard is not to be had to a cross-claim for damages for delay; but in so far as a cross-claim for damages may rely on defective or incomplete work … this is to be taken into account under s 10(1)(b)’. In Tolfab Engineering Pty Ltd v Tie Fabrications Pty Ltd [2005] NSWSC 326 the matter in issue under s 10(1)(b) in the adjudication was the extent of completion of the work. The adjudicator determined the adjudication application by attempting to assess the merit in the respondent’s reasons for not paying, by deciding the respondent’s reasons were not supportable and then accepting the claimant’s claims in full. The respondent’s complaint was that the adjudicator was not performing his proper function and was just rubber stamping the claimant’s claims. Macready AJ held that in ‘the circumstances where the determinations have to be made within ten days and substantially on documents … the adjudicator’s approach is appropriate’: at [53], [54]. Determination of Superintendent [3.74] The adjudicator is entitled to exercise his or her own judgment and was not bound by the determination of the superintendent in determining the amount of the progress payment or the value of construction work carried out: TransGrid v Walter Construction Group Ltd [2004] NSWSC 21 at [46]–[54]. [page 70] VICTORIAN ACT: VALUATION (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 11 Valuation of construction work and related goods and services (1) Construction work carried out under a construction contract is to be valued — (a) in accordance with the terms of the contract; or (b) if the contract makes no express provision with respect to the matter, having regard to —

(i) (ii) (iii)

the contract price for the work; and any other rates or prices set out in the contract; and any variation agreed to by the parties to the contract by which the contract price, or any other rate or price set out in the contract, is to be adjusted by a specific amount; and (iv) if any of the work is defective, the estimated cost of rectifying the defect. (2) Related goods and services supplied under a construction contract are to be valued — (a) in accordance with the terms of the contract; or (b) if the contract makes no express provision with respect to the matter, having regard to — (i) the contract price for the goods and services; and (ii) any other rates or prices set out in the contract; and (iii) any variation agreed to by the parties to the contract by which the contract price, or any other rate or price set out in the contract, is to be adjusted by a specific amount; and (iv) if any goods are defective, the estimated cost of rectifying the defect. (3) For the purposes of subsection (2)(b), the valuation of materials and components that are to form part of any building, structure or work arising from construction work is to be on the basis that the only materials and components to be included in the valuation are those that have become (or, on payment, will become) the property of the party for whom construction work is being carried out. [3.75] See the New South Wales cases referred to at: [3.72] Adjudicator’s role; [3.73] Section 10(1)(b) ‘having regard to’; [3.74] Determination of superintendent; which should be persuasive authority in Victoria as the section considered in those cases is materially the same as in Victoria. [page 71] VICTORIAN ACT: VALUATION (AS APPLYING TO CONSTRUCTION

CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 11 Valuation of construction work and related goods and services (1) Construction work carried out or undertaken to be carried out under a construction contract is to be valued — (a) in accordance with the terms of the contract; or (b) if the contract makes no express provision with respect to the matter, having regard to — (i) the contract price for the work; and (ii) any other rates or prices set out in the contract; and (iii) if there is a claimable variation, any amount by which the contract price or other rate or price set out in the contract, is to be adjusted as a result of the variation; and (iv) if any of the work is defective, the estimated cost of rectifying the defect. (2) Related goods and services supplied or undertaken to be supplied under a construction contract are to be valued — (a) in accordance with the terms of the contract; or (b) if the contract makes no express provision with respect to the matter, having regard to — (i) the contract price for the goods and services; and (ii) any other rates or prices set out in the contract; and (iii) if there is a claimable variation, any amount by which the contract price or other rate or price set out in the contract, is to be adjusted as a result of the variation; and (iv) if any goods are defective, the estimated cost of rectifying the defect. (3) For the purposes of subsection (2)(b), the valuation of materials and components that are to form part of any building, structure or work arising from construction work is to be on the basis that the only materials and components to be included in the valuation are those that have become (or, on payment, will become) the property of the party for whom construction work is being carried out. [3.76] See the New South Wales cases referred to at: [3.72] Adjudicator’s role; [3.73] Section 10(1)(b) ‘having regard to’;

[3.74] Determination of superintendent; which should be persuasive authority in Victoria as the section considered in those cases is very similar to Victoria, but in Victoria now there is express reference to ‘claimable variations’ in ss 11(1)(b)(iii) and 11(2)(b)(iii). [page 72] Section 11(1) and whether ‘the terms of the contract’ include a method of valuation of work [3.77] Section 11(1)(b)(iv) only applies where the construction contract does not contain the terms dealing with the valuation of the work because of s 11(1)(a): Maxstra Constructions Pty Ltd v Gilbert t/as AJ Gilbert Concrete [2013] VSC 243 at [19]. In Maxstra Constructions, the construction contract required a progress claim to be based on the tender breakdown and expressed in percentages against each component and gave the respondent the right to withhold retention moneys to the extent that the claimant’s breaches exposed the respondent to claims for damages or liquidated damages and gave the respondent the right to reduce a progress claim to the extent it was not satisfied as to the value of the work. Vickery J held that those provisions did not amount to: … a contractual mechanism which was capable of producing a calculation of the amount due under a progress payment or a valuation of construction work carried out under the relevant construction contract. At best it provided for the broad parameters within which such a calculation or valuation might be conducted: at [33].

Section 11(1)(b)(iv) only applies where contract does not contain terms dealing with valuation of the work [3.78] See [3.77] above. Section 11(1)(b)(iv) and possible conflict with s 10B(2)(c) ‘excluded amounts’ [3.79] Where s 11(1)(b)(iv) has application there may be conflict between that provision and s 10B(2)(c) if the ‘estimated cost of rectifying the defect’ in s 11(1)(b)(iv) were also ‘excluded amounts’ under s 10B(2)(c). Vickery J held that s 10B(2)(c) where it refers to claims for damages being excluded amounts did not include ‘the estimated cost of rectifying the defect’ where s 11(1)(b)(iv) applies: Maxstra Constructions Pty Ltd v Gilbert t/as AJ Gilbert Concrete [2013] VSC 243 at [62]. Accordingly, s 23(2A)(a) did not prevent the adjudicator from

taking into account the estimated cost of rectifying the defects in his adjudication determination. NSW ACT: DUE DATE FOR PAYMENT 11 Due date for payment (1) A progress payment under a construction contract becomes due and payable: (a) on the date on which the payment becomes due and payable in accordance with the terms of the contract, or (b) if the contract makes no express provision with respect to the matter, on the date occurring 10 business days after a payment claim is made under Part 3 in relation to the payment. (2) Interest is payable on the unpaid amount of a progress payment that has become due and payable at the rate: (a) prescribed under section 101 of the Civil Procedure Act 2005 (b) specified under the construction contract, whichever is the greater. [page 73] (3) If a progress payment becomes due and payable, the claimant is entitled to exercise a lien in respect of the unpaid amount over any unfixed plant or materials supplied by the claimant for use in connection with the carrying out of construction work for the respondent. (4) Any lien or charge over the unfixed plant or materials existing before the date on which the progress payment becomes due and payable takes priority over a lien under subsection (3). (5) Subsection (3) does not confer on the claimant any right against a third party who is the owner of the unfixed plant or materials. (6) Except as otherwise provided by this section, the rules and principles of the common law and equity apply to the determination of priorities between a lien under subsection (3) over any unfixed plant and materials and any other interest in the plant and materials. (7) Section 73(2) of the Personal Property Securities Act 2009 of the Commonwealth is declared to apply to liens under subsection (3).

Due date for payment in contract subject to condition precedent [3.80] In Isis Projects Pty Ltd v Clarence Street Ltd [2004] NSWSC 222 Macready M decided that the contract did make express provision with respect to the due date for payment and therefore s 11(1)(b) did not apply to provide such a date. The contractual date was, however, subject to a condition precedent (the obligation to provide evidence of the amount due) which suspended the obligation to issue a payment certificate (and presumably therefore the due date for payment). Section 11(2)(b) ‘interest is payable … at the rate specified under the construction contract’ [3.81] In Katherine Pty Ltd v CCD Group Pty Ltd [2008] NSWSC 131 the adjudicator awarded an amount of $100,000 in favour of the contractor for work done and material supplied and determined that an extra $240,000 should be paid on account of interest at nine per cent per month, compounding. The respondent sought from the court relief in respect of the interest component of the determination under s 51AA of the Trade Practices Act 1974. Section 51AA (now Australian Consumer Law s 20) provided that: A corporation must not, in trade or commerce, engage in conduct that is unconscionable …

In the circumstances, McDougall J decided that the interest rate in the construction contract (that equated to 180 per cent per annum) was clearly a penalty as the only evidence of loss which could be compared to that rate was the claimant’s overdraft interest rate which was in the order of 16.5 per cent per annum. McDougall J decided that ‘it would be an injustice to permit the claimant to have the full benefit of a bargain that, through its incorporation of a penalty, is unconscionable’: at [48]. Accordingly, the claimant was not permitted to enforce the determination of the adjudicator to the extent of the interest awarded by the adjudicator. The claimant could nevertheless claim interest but only at the overdraft rate applicable at the times when the payment was overdue. [page 74] VICTORIAN ACT: DUE DATE FOR PAYMENT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 12 Due date for payment

A progress payment under a construction contract becomes due and payable — (a) on the date on which the payment becomes due and payable in accordance with the terms of the contract; or (b) if the contract makes no express provision with respect to the matter, on the date occurring 10 business days after a payment claim is made under Part 3 in relation to the payment. [3.82] See the New South Wales case referred to at: [3.80] Due date for payment in contract subject to condition precedent, which should be persuasive authority in Victoria as s 12 in the Victorian Act is identical to s 11(1) in the NSW Act. Note there is no Victorian equivalent of the NSW Act s 11(2)–(5). VICTORIAN ACT: DUE DATE FOR PAYMENT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 12 Due date for payment (1) A progress payment under a construction contract becomes due and payable — (a) on the date on which the payment becomes due and payable in accordance with the terms of the contract; or (b) if the contract makes no express provision with respect to the matter, on the date occurring 10 business days after a payment claim is made under Part 3 in relation to the payment. (2) Interest is payable on the unpaid amount of a progress payment that has become due and payable in accordance with subsection (1) at the greater of the following rates — (a) the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983; or (b) the rate specified under the construction contract. 12A Lien in respect of unpaid progress payment (1) If a progress payment under a construction contract becomes due and payable, the claimant is entitled to exercise a lien in respect of the unpaid amount over any unfixed plant or materials supplied by the

claimant for use in connection with the carrying out of construction work for the respondent. (2) The claimant must serve a notice in the prescribed form on the respondent before exercising a lien under subsection (1). (3) A lien under subsection (1) is extinguished on the claimant receiving the progress payment. [page 75] (4) Any lien or charge over the unfixed plant or materials existing before the date on which the progress payment becomes due and payable takes priority over a lien under subsection (1). (5) Subsection (1) does not confer on the claimant any right against a third party who is the owner of the unfixed plant or materials. [3.83] See the New South Wales case referred to at: [3.80] Due date for payment in contract subject to condition precedent, which should be persuasive authority in Victoria as s 12(1) of the Victorian Act is identical to s 11(1) in the NSW Act. The new ss 12(2) and 12A are broadly consistent with s 12(2)–(5) in the NSW Act. Note that the entitlement to interest in s 12(2) at the higher of the contract specified rate and the Penalty Interest Rates Act rate would appear to apply to all progress payments; that is, not only where a payment claim under the Act is made. NSW ACT: PAY WHEN PAID 12 Effect of “pay when paid” provisions (1) A pay when paid provision of a construction contract has no effect in relation to any payment for construction work carried out or undertaken to be carried out (or for related goods and services supplied or undertaken to be supplied) under the contract. (2) In this section: money owing, in relation to a construction contract, means money owing for construction work carried out or undertaken to be carried out (or for related goods and services supplied or undertaken

to be supplied) under the contract. pay when paid provision of a construction contract means a provision of the contract: (a) that makes the liability of one party (the first party) to pay money owing to another party (the second party) contingent on payment to the first party by a further party (the third party) of the whole or any part of that money, or (b) that makes the due date for payment of money owing by the first party to the second party dependent on the date on which payment of the whole or any part of that money is made to the first party by the third party, or (c) that otherwise makes the liability to pay money owing, or the due date for payment of money owing, contingent or dependent on the operation of another contract. [3.84] Surprisingly, there has not been any detailed case consideration of the operation of the pay when paid prohibition in s 12. However, in Beckhaus Civil Pty Ltd v Brewarrina [page 76] Shire Council (No 2) [2004] NSWSC 1160 at [78], Macready M notes that s 12 ‘[places] head contractors at additional risk when facing a recalcitrant principal’. VICTORIAN ACT: PAY WHEN PAID (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 13 Effect of “pay when paid” provisions (1) A pay when paid provision of a construction contract has no effect in relation to any payment for — (a) construction work carried out under the contract; or (b) related goods and services supplied under the contract. (2) In this section — money owing, in relation to a construction contract, means money owing for — (a) construction work carried out under the contract; or

(b) related goods and services supplied under the contract; pay when paid provision of a construction contract means a provision of the contract — (a) that makes the liability of one party (the first party) to pay money owing to another party (the second party) contingent on payment to the first party by a further party (the third party) of the whole or any part of that money; or (b) that makes the due date for payment of money owing by the first party to the second party dependent on the date on which payment of the whole or any part of that money is made to the first party by the third party. [3.85] The New South Wales provisions are slightly more expansive: see NSW Act s 12(2)(c) which has no equivalent in Victoria. VICTORIAN ACT: PAY WHEN PAID (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 13 Effect of “pay when paid” provisions (1) A pay when paid provision of a construction contract has no effect in relation to any payment for — (a) construction work carried out or undertaken to be carried out under the contract; or (b) related goods and services supplied or undertaken to be supplied under the contract. (2) In this section — money owing, in relation to a construction contract, means money owing for — [page 77] (a) construction work carried out under the contract; or (b) related goods and services supplied under the contract; pay when paid provision of a construction contract means a provision of the contract —

(a)

(b)

(c)

that makes the liability of one party (the first party) to pay money owing to another party (the second party) contingent on payment to the first party by a further party (the third party) of the whole or any part of that money; or that makes the due date for payment of money owing by the first party to the second party dependent on the date on which payment of the whole or any part of that money is made to the first party by the third party; or that otherwise makes the liability to pay money owing, or the due date for payment of money owing, contingent or dependent on the operation of another contract.

[3.86] The Victorian provision is now consistent with New South Wales. NSW ACT: PAYMENT CLAIMS Part 3 — Procedure for recovering progress payments Division 1 — Payment claims and payment schedules 13 Payment claims (1) A person referred to in section 8(1) who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment. (2) A payment claim: (a) must identify the construction work (or related goods and services) to which the progress payment relates, and (b) must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount), and (c) must state that it is made under this Act. (3) The claimed amount may include any amount: (a) that the respondent is liable to pay the claimant under section 27(2A), or (b) that is held under the construction contract by the respondent and that the claimant claims is due for release. (4) A payment claim may be served only within: (a) the period determined by or in accordance with the terms of the

construction contract, or [page 78] (b)

the period of 12 months after the construction work to which the claim relates was last carried out (or the related goods and services to which the claim relates were last supplied), whichever is the later. (5) A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract. (6) However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim. Incorrect contract number on payment claim [3.87] In Hawkins Construction (Australia) Pty Ltd v Mac’s Industrial Pipework Pty Ltd [2001] NSWSC 815, a mere reference to the incorrect contract number did not invalidate an otherwise complying payment claim, so that provided it identifies the work done it will comply with s 13(2)(c). Payment claim and progress claim served at same time [3.88] A payment claim under the Act can be served at the same time as a progress claim under the construction contract; the Act contemplates a dual system: Beckhaus Civil Pty Ltd v Council of the Shire of Brewarrina [2002] NSWSC 960bat [65]–[66] per Macready AJ. It is not misleading and deceptive conduct to serve a contractual progress claim and a statutory payment claim on the same day: Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266 at [87]. Payment claim and progress claim in one document [3.89] There is no reason why a contractual progress claim and a payment claim under the Act cannot be made on the one document provided this is made sufficiently clear in the document: Beckhaus Civil Pty Ltd v Council of the Shire of Brewarrina [2002] NSWSC 960 at [65]–[66]. Section 13(1) Preconditions to serve progress claims and ‘or claims to be entitled’

[3.90] In Consolidated Constructions Pty Ltd v Ettamogah Pub (Rouse Hill) Pty Ltd [2004] NSWSC 110 the respondent relied on non-compliance with preconditions in the construction contract which had to be satisfied by the claimant before it was entitled to a progress payment, to argue that it was therefore not entitled to serve a payment claim under the Act, and therefore the respondent was not required to serve a payment schedule in response. Having regard to the 2002 NSW Amending Act amendments to s 13(1) to add ‘or who claims to be entitled’, McDougall J rejected the defence and gave summary judgment for the claimant. ‘It is a necessary consequence [of the 2002 amendments] … that a person may make a payment claim without being, in fact or in law, entitled to be paid a progress payment’: Kembla Coal & Coke Pty Ltd v Select Civil Pty Ltd [2004] NSWSC 628 at [35]. There is no requirement that the claimant have a bona fide belief that it is entitled to the amount claimed for the payment claim to be valid under s 13: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238 at [73]. [page 79] Section 13(1) ‘may serve a payment claim’: only one opportunity provided [3.91] Rein J in Perform (NSW) Pty Ltd v Mev-Aust Pty Ltd [2009] NSWSC 416 suggested that where no further work is done since a payment claim is served, then if that claim is made again the following month the reference date for the second claim will be the same as the first claim and therefore not permissible under s 13(5) and (6): see [39], [42]. Section 13(1) when read with s 13(5) and (6) means that when a payment claim has been served and the payment claim adjudicated the dissatisfied claimant cannot serve a further payment claim or proceed to adjudication: University of Sydney v Cadence Australia Pty Ltd [2009) NSWSC 635 at [39]. See also [3.102] below. See also Rail Corporation of NSW v Nebax Constructions [2012] NSWSC 6 where McDougall J held that a claimant could in an appropriate case submit one payment claim, comprised of several invoices, even though each invoice is said to be a payment claim for the purposes of the Act. Section 13(1) ‘may serve a payment claim on the person who … is or may be liable to make the payment’: service on architect/superintendent

[3.92] Hodgson J A indicated in Filipe v Inscope Solutions Pty Ltd [2004] NSWCA 417 at [4] that sending a payment claim to the architect may raise a possible defence to a claim under the Act as it may not have been service on the building owner. However, in The Owners of Strata Plan 56587 v Consolidated Quality Projects Pty Ltd [2009] NSWSC 1476, service of a payment claim on the superintendent was held to be good service on the principal because of McDougall J’s interpretation of the progress payment provisions (which did not refer to payment claims under the Act) and a previous course of dealing in relation to earlier payment claims: see [24], [29], [31]–[33]. That was the case notwithstanding that the superintendent was not the agent of the principal: at [24]. See also Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 (Victorian Supreme Court), referred to at [3.116]. Section 13(2) basis of the claim: what is sufficient as a valid payment claim? [3.93] Section 13(2) does not require any legal basis for the claimed amounts to be set out: Falgate Constructions Pty Ltd v Masterform Pty Ltd [2005] NSWSC 728 at [28]. It is sufficient (to identify the construction work or related goods and services under s 13(2)(a)) in the case of an express contractual delay damages entitlement ‘that the basis of contractual entitlement be shown’ (Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229 at [25]) and failure by the claimant to do so ‘could be a ground on which an adjudicator could exclude a relevant amount from the determination’: at [26]. Hodgson and Ipp JJA in the Court of Appeal in Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) [2005] NSWCA 409 formulated a very robust test of what will suffice as a valid payment claim. Ipp JA said: Provided that a payment claim is made in good faith and purports to comply with s 13(2) of the Act, the merits of that claim, including the question whether the claim complies with s 13(2) is a matter for adjudication under s 17 and not a ground for resisting summary judgment in proceedings under

[page 80] s 15. In particular, if no adjudication is sought summary judgment cannot be resisted on grounds that could have been raised by way of a payment schedule leading to adjudication: at [76].

Hodgson JA held that it was only if the failure to disclose the construction

work in a payment claim was patent could it possibly be treated as a nullity for failure to comply with s 13(2)(a) but that would not be the case as long as it purported ‘in a reasonable way to identify the particular work in respect of which the claim is made’: at [36]. Therefore, where a payment claim ‘purports in a reasonable way to identify the work’ but ‘where the respondent cannot identify all the work in question, the respondent’s remedy is not to ignore the payment claim but to serve a payment schedule’: at [39]. Santos JA in Nepean did not agree with the formulation of Hodgson and Ipp JJA, preferring what Hodgson JA decided at [25] in Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229, namely: I note also that s 13(2)(a) requires that a payment claim “identify” the construction work or related goods or services to which the payment relates. This requirement must be interpreted, in my opinion, having regard to the requirement in s 14(3) that the payment schedule indicate the respondents’ reasons for withholding payment, the limitation on the adjudication response in s 20(2B) to those reasons, and the corresponding limitation in s 22(2)(c), as well as the circumstances that … payment claims may include amounts that are not (in a narrow sense) for construction work that has actually been carried out (or) for related goods and services that have actually been supplied. In my opinion, the relevant construction work or related goods and services must be identified sufficiently to enable the respondent to understand the basis of the claim …

In Brookhollow Pty Ltd v R & R Consultants Pty Ltd [2006] NSWSC 1 at [41], Palmer J summarised the law as to compliance with s 13(2): … (ii) there are some non-compliances with the requirements of s 13(2) of the Act which will result in the nullity of a payment claim for all purposes under the Act; there are other non-compliances which will not produce that result; (iii) a payment claim which does not, on its face, purport in a reasonable way to: – identify the construction work to which the claim relates; or – indicate the amount claimed; or – state that it is made under the Act fails to comply with an essential and mandatory requirement of s 13(2) so that it is a nullity for the purposes of the Act; (iv) a payment claim which, on its face, purports reasonably to comply with the requirements of s 13(2) will not be a nullity for the purposes of engaging the adjudication and enforcement procedures of Pt 3 of the Act; (v) in the case of a payment claim which purports reasonably on its face to comply with s 13(2): – if the respondent wishes to object that it does not in fact comply so that it is a nullity for the purposes of the Act, the respondent must serve a payment schedule under s 14(4) and an adjudication response under s 20, in which that objection is taken; – if the respondent does not serve a payment schedule within the time limited under the Act and the claimant ultimately seeks the entry of judgment under s 15(4), the respondent may not resist summary judgment on the ground that the payment claim was not a valid payment

[page 81] claim by reason of non-compliance with the requirements of s 13: the respondent has only one chance to take that objection, namely, in a timeously served payment schedule; (vi) in the case of a payment claim which was never served on the respondent or which does not purport reasonably on its face to comply with the requirements of s 13(2): – the payment claim is a nullity for the purposes of the Act; – an adjudication founded upon that payment claim is a nullity, regardless of whether the objection to the validity of the payment claim was taken in a timeously served payment schedule; – an application under s 15(4) for judgment for the statutory debt created by s 14(4) may be defeated on the ground that there was no payment claim in existence for the purposes of s 15(1)(b).

Palmer J in Brookhollow further held that if a defence is raised on the basis of s 13(4) or (5) it must be raised in a payment schedule, otherwise it cannot be relied upon to set aside or restrain enforcement of an adjudication determination: at [48]. The fact that a respondent was able to respond to the payment claim provides ‘powerful support’ for the proposition that the payment claim complied with s 13(2)(a): Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd [2012] NSWCA 31 at [83]. Section 13(2)(a) ‘identify the construction work’: what is sufficient for a valid payment claim [3.94] Section 13(2)(a) requires more than just an identification in the payment claim in general terms of the work that is the subject of the construction contract as a whole: what is needed for compliance is the identification of the work that is the subject of the payment claim, that is, ordinarily the work carried out since the last payment claim: Jemzone Pty Ltd v Trytan Pty Ltd [2002] NSWSC 395. There is nothing in s 13 to suggest that a payment claim cannot include entitlements to more than one progress payment: Fyntray Constructions Pty Ltd v Macind Drainage & Hydraulic Services Pty Ltd [2002] NSWCA 238 at [50]. So the payment claim can relate to work done in months prior to the one in which the payment claim is served: at [53]. In Leighton Contractors Pty Ltd v Campbelltown Catholic Club Ltd [2003] NSWSC 1103 at [56], Einstein J held the challenged payment claim to be valid and in compliance with s 13(2)(a) as it: (i)

identified the Contract and the Campbelltown Catholic Club project;

(ii) provided a main summary of the Contract price, the amount approved to date, the amount previously certified and the balance due; (iii) included a summary of the work carried out broken down into different trades and stating the %

complete for each trade.2 34 items are specifically set out under the heading “Trade” (TB 840– 841); and (iv) included a breakdown of all the variations claimed which states the % complete for each variation.3 There are in excess of 100 variations individually described over more than 2 pages (TB 842–844).

[page 82] Einstein J held, however, that: It does not seem to me to be a proper reading of the [Walter] judgment [Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266] (at [66] and in particular the last sentence of that paragraph) to regard it as a holding that all that was necessary was to state in a payment claim that it covered work and related goods and services provided under a particular contract in respect of a named project: at [53].

Einstein J went on to say: … it is critical that the recipient of a payment claim be made aware by the terms of that claim that the provisions of the Act have been engaged: at [58].

The s 13(2)(a) requirement that a payment claim identify the construction work to which the progress payment relates is capable of being satisfied where: 1. The payment claim gives an item reference which, in the absence of evidence to the contrary, is to be taken as referring to the contractual or other identification of the work; 2. That reference is supplemented by a single line item description of the work; 3. Particulars are given of the amount previously completed and claimed and the amount now said to be complete; 4. There is a summary that pulls all the details together and states the amount claimed: Isis Projects Pty Ltd v Clarence Street Pty Ltd [2004] NSWSC 714 at [37]. The requirement to identify the construction work can be satisfied by the payment claim incorporating by reference earlier invoices which do so: Falgate Constructions Pty Ltd v Masterform Pty Ltd [2005] NSWSC 728 at [26]. However, see the decision of McDougall J in Parkview Qld Pty Ltd v Fortia Funds Management Ltd [2009] NSWSC 1065 at [38]: [W]hen the statute talks of identification of the construction work … to which the progress payment relates, it has to be taken as requiring some identification of the particular work and not just of the heading under which it might fall. To say that a description as “approved variations” which does not identify any of the variations or the amount claimed for them so clearly identifies the construction work

… in question that the contrary contention is hopeless seems to me to be a very ambitious proposition indeed.

Mason P in Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391 at [33] agreed with the application by McDougall J at first instance of the Multiplex principles (see Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140) where McDougall J held: 37 In principle, I think, the requirement in s 13(2)(a) that a payment claim must identify the construction work to which the progress payment relates is capable of being satisfied where: (1) The payment claim gives an item reference which, in the absence of evidence to the contrary, is to be taken as referring to the contractual or other identification of the work; (2) That reference is supplemented by a single line item description of the work; (3) Particulars are given of the amount previously completed and claimed and the amount now said to be complete; (4) There is a summary that pulls all the details together and states the amount claimed. 38 Where payment claims in that format have been used, apparently without objection, on 11 previous occasions, it is very difficult to understand how the use of the same format on the 12th and

[page 83] 13th occasions could be said not to comply with the requirements of s 13(2)(a). If payments claims in that format had sufficiently identified the construction work to which the progress payment claimed related on 11 previous occasions, I find it hard to understand how they would lose that character on the 12th and 13th occasion. … 41. Approaching the question in accordance with the instruction offered by Palmer J in Luikens [Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140], I think that the previous conduct of the parties (when, apparently, there was no dispute) supports the conclusion that progress claims 12 and 13 do sufficiently identify the construction work to which their respective progress payments claimed relate.

In Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391 at [31] Mason P agreed with the principles stated by Palmer J in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 at [76]–[78]4 but observed that in applying Palmer J’s principles to a payment claim rather than a payment schedule it must be borne in mind that ‘a payment claim is no more than a claim. It must comply with s 13, but (unlike a payment schedule) it is not its function to identify the scope of a dispute’. Mason P in Clarence Street further held that: The payment claims are to be read in context, including the context of industry conventions and the usage adopted by the parties in their earlier contractual dealings. Construction work for which a claim is made may be identified by reference to earlier documents such as variation claims and other documents

capable of being identified by reference to the contract or the earlier dealings of the parties. This list is not intended to be exhaustive: at [40].

The progress claim in question was described as consisting of: (1) A cover sheet showing to whom it was sent (and showing that it was “faxed 15 May 2003”) and a list of documents attached. (2) A 6 page document described as “Lumpsum [sic] Tax Invoice” that described the work by a number of one line items (referring, I infer, to their descriptions in some contractual document) and showing for each the original contract value, the amount of previous claims, the value of work to date and the percentage completed. The tax invoice also described, in one line items, a large number of variations. For each variation, it gave a reference (in each case prefaced by the letter “V” and, I infer, referring to a previous claim for the variation bearing that reference), a short description of the work, the amount approved, the amount previously claimed, the value of work to date and the percentage complete. The tax invoice concluded (leaving aside formal matters and signature) with a summary of its contents, concluding with a calculation of the “total now due”. (3) A number of supporting documents: at [8].

Mason P held the payment claims ‘amply satisfied the statutory requirement’: at [42]. In Parkview Qld Pty Ltd v Fortia Funds Management Ltd [2009] NSWSC 1065 at [38], McDougall J refused a summary judgment application as: … when the Statute talks of identification of construction work … it has to be taken as requiring some identification of the particular work and not just the heading under which it might fall. To say that a description as “approved variations” which does not identify any of the variations or the amount claimed for them so clearly indentifies the … work … that the contrary contention is hopeless seems to me to be a very ambitious proposition indeed.

[page 84] The fact that a respondent was able to respond to the payment claim provides ‘powerful support’ for the proposition that the payment claim complied with s 13(2)(a): Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd [2012] NSWCA 31 at [83]. Section 13(2)(a) ‘must identify the construction work’ where the whole balance of the contract sum claimed [3.95] Where the claimant simply claimed the balance of the contract sum (even though the contract was terminated early) and did not refer in the payment claim to the actual work done, the claims did not comply with s 13: Ontrac v BHCF [2008] NSWDC 76 at [23]–[24]. Further, ‘[t]he payment must … have the

character of the remuneration or reward referable to the doing of work’ applying Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd (2004) 20 BCL 276. Section 13(2(a) ‘must identify the construction work’: stricter test applied in Victoria [3.96] In the Federal Court decision of Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248, decided under the Victorian Act, Finkelstein J applied a stricter test as to the identification of the construction work: see [3.112]. Including items that cannot be categorised as ‘construction work’ does not invalidate payment claim [3.97] The requirement for the payment claim to identify the construction work to which the progress claim relates does not invalidate a payment claim just because it may contain claims for items which cannot be categorised as construction work or related goods and services. Accordingly, in Walter Construction Group Pty Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266 it was no answer to a summary judgment application for the respondent to say that the payment claim included a claim for delay costs or that the precondition under the construction contract for delay costs to be payable of an extension of time was not satisfied; if the respondent wanted to ventilate those issues it should have served a payment schedule: In a challenge which raises the question of compliance with s 13(2)(a) the question is not whether an item of the payment claim relates to construction work or related goods and services within s 5 and s 6 respectively, but whether the payment claim adequately identifies such work or goods and services. In this case the payment claim of 20 December 2002 clearly did so: at [68].

Bergin J in Paynter Dixon Constructions Pty Ltd v JF & CG Tilston Pty Ltd [2003] NSWSC 869 at [35] agreed with Nicholas J’s approach in Walter but was: … not satisfied that Nicholas J’s judgment is authority for the proposition for which the defendant also contends that the claim for damages for wrongful repudiation of the contract is a matter that the adjudicator can determine. His Honour was considering a claim in respect of services provided under a construction contract that specifically dealt with an entitlement in the subcontractor to an amount for such costs. That is a very different matter to a claim for damages for wrongful repudiation of a contract.

However, in Paynter Dixon the adjudication of the claim for damages for wrongful repudiation was allowed to proceed as part of the claim was for construction work. Also by providing a payment schedule the respondent gave rise to a valid appointment of the [page 85]

adjudicator: if the respondent did not believe the payment claim was a valid one under the Act it did not need to respond with a payment schedule: at [38]. See also the cases at [3.62]–[3.65] referring to claims for delay costs, delay damages, interest and latent conditions. Section 13(2)(c) ‘state that it is made under the Act” [3.98] Omission of ‘and’ and abbreviation of ‘Industry’ to ‘Ind.’ in the mandatory reference to the Act will not invalidate the payment claim: Hawkins Construction (Australia) Pty Ltd v Mac’s Industrial Pipework Pty Ltd [2001] NSWSC 815, affirmed on appeal Hawkins Construction (Australia) Pty Ltd v Mac’s Industrial Pipework Pty Ltd [2002] NSWCA 136. Austin J in Jemzone Pty Ltd v Trytan Pty Ltd [2002] NSWSC 395 referred to and approved the approach in Hawkins but held a notation and progress claim that ‘[t]his invoice is subject to the Building and Construction Industry Security of Payment Act …’ did not comply with s 13(2)(c) as it was not a statement that the payment claim was made under the Act. The same notation was used in the payment claim in Oxbara Pty Ltd v Geotech Pty Ltd [2002] ACTSC 116 and Connoll M followed Jemzone. These were, however, decided very early in the history of the Act and it is suggested that these decisions are unlikely to be followed now. In Leighton Contractors Pty Ltd v Campbelltown Catholic Club Ltd [2003] NSWSC 1103 the fact that the covering letter (and not the payment claim itself) used the words ‘this is a payment claim made under the [Act]’ did not invalidate the payment claim, nor did the attachment to the letter of a statutory declaration not required by the Act and even though the covering letter used the words ‘for your subsequent certification’ which were more appropriate for a contractual claim under the contract rather than the Act. Einstein J did, however, suggest that if superfluous wording or attached documents in a payment claim leave doubt in the mind of the recipient as to whether it was a payment claim under the Act or not then there may not be strict compliance with s 13(2)(c). In Fernandes Constructions Pty Ltd v Tahmoor Coal Pty Ltd t/a Centennial Coal [2007] NSWSC 381 at [27], McDougall J summarised the approach to be taken in construing a payment claim as: (1) For a document to be a valid payment claim under the Act, it must, among other things, be a “payment claim” and state that it is made under the Act. (2) The test is objective. (3) In applying the test, the document should be considered as a whole and in context. The context may include not only all the terms of the document but also (as for example was the case in Leighton) the terms of any covering letter, or facsimile transmission sheet, pursuant to which the

document was sent to its recipient. (4) Further, the context may extend beyond the terms of the document and any covering note to the “factual matrix’ — at least, insofar as that matrix is one that is (or should be) known to both parties, and therefore to the hypothetical reasonable observer by whom the analysis of the document is undertaken: at [27].

In Fernandes the document that was relied on as the payment claim was described as a ‘tax invoice’ and had the notation that it was ‘prepared under’ the Act. McDougall J held (at [41]) that it ‘sufficiently’ complied with s 13(2)(c) and that: [page 86] … the approach to construction of a document purporting (or alleged) to be a payment claim under the Act should reflect in substance the approach to the construction of commercial contracts that has been laid down by decisions of the highest authority. I refer to the observation of Lord Wright in Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 at 514, that the courts should construe commercial contracts “fairly and broadly, without being too astute or subtle in finding defects”: at [37].

Section 13(4)(b) and 12-month time limit [3.99] The 12-month time limit in s 13(4)(a) is not a basic and essential requirement under the Brodyn principles, so non-compliance does not result in invalidity of an adjudication determination: Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 13 at [35], [36]. The adjudicator determined that a payment claim was valid under s 13 because it was made ‘within 12 months of the end of the defects liability period’. However, it was not made within 12 months of the last construction work being carried out as required by s 13(4)(b). In Bauen Constructions Pty Ltd v Sky General Services Pty Ltd [2012] NSWSC 1123 at [63] Sackar J held that the adjudicator ‘was distracted … by the defects liability period and miscalculated the relevant timeframe for the purposes of the Act. It follows the adjudicator committed a jurisdictional error and the adjudication should be quashed’. Section 13(4)(b) ‘12 months after the construction work to which the claim relates’ [3.100] In Leighton Contractors Pty Ltd v Campbelltown Catholic Club Ltd [2003] NSWSC 1103 at [94], Einstein J held that s 13(4(b): … in its reference to “the construction work to which the claim relates” should be regarded as referring in a general way to the construction work or the related goods and services. Hence as long as any item of construction work to which the claim relates [in that general sense], was carried on during the 12

month period prior to the service of a payment claim, that payment claim could also, unexceptionally, include items of construction work carried on prior to that 12 month period.5

Barclay Mowlem Construction Ltd v Estate Property Holdings Pty Ltd [2004] NSWSC 658 was followed by Campbell J in Property & Equity Developments Pty Ltd v Parnell [2004] NSWSC 1035, where four earlier progress claims were incorporated into one payment claim under the Act. Even though the work the subject of one of the progress claims was outside the 12-month period in s 13(4) (b), because some of the work claimed for in the payment claim was within the 12-month period, the entire payment claim was valid: at [15]. In Property & Equity Developments Pty Ltd v Parnell [2004] NSWSC 1035 Campbell J interpreted s 13(4)(b) as operating so that ‘if any task for which payment is sought by a payment claim was carried out within 12 months before service of the payment claim, then the entirety of the payment claim is within time’ (at [15]), following the Court of Appeal decision in Estate Property Holdings Pty Ltd v Barclay Mowlem Construction Ltd [2004] NSWCA 393. In Estate Property Holdings the Court of Appeal held that Einstein J’s interpretation of s 13(4) was incorrect inasmuch as under his Honour’s interpretation s 13(4) in Leighton Contractors Pty Ltd v Campbelltown Catholic Club Ltd [2003] NSWSC 1103 required that only some work under the construction contract had been performed under the construction contract in the 12-month period as opposed [page 87] to the Court of Appeal’s interpretation that some work for which payment was claimed in the payment claim was required to have been performed in the 12month period. The words ‘the construction work to which the claim relates’ in s 13(4)(b) means the ‘construction work carried out by the claimant’, so it would not include remedial work carried out by the principal. In Brookhollow Pty Ltd v R & R Consultants Pty Ltd [2006] NSWSC 1 at [79], Palmer J was of that view, but it was not necessary to decide the question in Brookhollow. Section 13(4)(a) and (b) are alternatives [3.101] Section 13(4)(a) and (b) are alternatives. Only one of them needs to be satisfied: Lanskey Constructions Pty Ltd v Noxequin Pty Ltd (in liq) t/a Fyna Formwork [2005] NSWSC 963 at [25].

Section 13(5) ‘cannot serve more than one payment claim for each reference date’ [3.102] In Isis v Clarence [2004] NSWSC 73 the claimant included claims for variations where the superintendent had previously rejected the claims in earlier progress claims. It was argued by the respondent that therefore s 13(5) was breached as it amounted to service of more than one payment claim in respect of a reference date. The respondent’s claim was rejected partly because of s 13(6) which allows a claimant to claim in a payment claim an amount that has been the subject of a previous claim. In Alan Conolly & Co v Commercial Indemnity Pty Ltd [2005] NSWSC 339 three tax invoices each had the required notation under s 13(2)(c) and each claimed (different) amounts due as required by s 13(2)(b). The issue was whether that offended against s 13(5) as the service of more than one payment claim in respect of a reference date. Macready M held that in the circumstances where the tax invoices were all faxed at the same time, and where each made different types of claims, that they ‘constituted one payment claim as it is clear to the recipient what was being claimed’: at [20], [23]. However, if the three tax invoices were delivered on successive days then Macready M would have held that there was a breach of the provisions of the Act: at [20], [21]. But even if the Master had so decided, he would not have declared the adjudication determination void, applying Brodyn: at [31]. In Shellbridge Pty Ltd v Rider Hunt Sydney Pty Ltd [2005] NSWSC 1152 the respondent objected to a ‘composite’ payment claim that was comprised essentially of two earlier payment claims. It was argued, therefore, that the later claim was unauthorised by the Act as it amounted to the service of more than one payment claim in respect of a reference date in breach of s 13(5). It was also argued that when the claimant referred the later payment claim to adjudication, the reference was late under s 17 as essentially the time to do so began to run from the service of the payment schedule provided in response to the earlier payment claims which were part of the later payment claim. Barrett J held that s 13(5) when read with s 13(6) does not prevent the ‘cumulation of amounts in successive payment claims’ and therefore the later payment claim served in respect of the later reference date is permissible ‘as there is no overstepping of the limit allowed by s 13(5)’: at [29]. Einstein J in Baseline Constructions Pty Ltd v Classic Group Painting Pty Ltd [2006] NSWSC 397 found no breach of s 13(5) where a claimant served a new payment claim which claimed similar (but not identical) claims to those included in an earlier payment

[page 88] claim, even though in some cases it appeared that the only relevant difference was that the amount claimed had changed: at [13], [42]. It may have been different where ‘a claimant served more than one payment claim in respect of each reference date … and/or proceeded following one determination to serve precisely the same payment claim and to then seek to have a competing determination by a new adjudicator’: at [42]. In Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 at [14] Allsop P held that the words ‘“cannot serve more than one payment claim” in s 13(5) are a sufficiently clear statutory indication that a document purporting to be a payment claim that is in respect of the same reference date as the previous claim is not a payment claim under the Act and does not attract the statutory regime of the Act’. Further, s 8 does not permit a party to ‘create fresh reference dates by lodging the same claim for the same completed works in successive payment claims. That is not the intended operation of the last phrase of s 8(2)(b) “and the last day of each subsequent named month”’: at [13]. Further, in University of Sydney v Cadence Australia Pty Ltd [2009] NSWSC 635 McDougall J held that the same principles apply where the claimant seeks to agitate the same claim but as part of an expanded one: at [4]–[6], [38], [39]. Section 13(5) ‘cannot be construed as preventing the service of a valid payment claim after an earlier invalid one’: Duynstee v Dickens & Dickens t/as NRJ Irrigation Systems [2009] NSWSC 292 at [30]. In CC No 1 Pty Ltd v Reed Constructions Australia Pty Ltd [2010] NSWSC 294 there was an application for summary judgment based on an earlier payment claim, and it was held there was no abuse of process just because later payment claims included claims for some items in the earlier payment claims: … The February payment claim had a new reference date even though the construction work was completed towards the end of 2009. This is permitted under the Act: see s 13(4)(b). As has been frequently said it is not simply a repetition by itself which leads to an abuse. There must be something in all the circumstances for the abuse to arise. Here it is plain that the additional amounts now sought to be recovered in respect of variations which were the subject of the earlier claims is for a different amount. The amount is a distinct item of cost which was not claimed in the earlier claims. Although in an expansive use of the word there is some “reagitation” of the factual background there has been no “reagitation” of the entitlement to the earlier claimed amount. It is plain that in the ordinary case where a claim is made to a completed piece of work the owner might justifiably feel entitled to regard the claim as the totality of the claim. In the present circumstances it is clear that there was an accidental omission of the claim for preliminaries. There is no suggestion of misleading or deceptive conduct in respect of the omission and what it is sought to rectify is said to be clear entitlement to some payment of an additional amount by the contractor in respect of the same item

of work. It obviously would have been more expedient if the claim had been made earlier so that the owner could have considered it at the time of the earlier claim. Although there will be more work because of the contractor’s default in this regard I do not think that this is a sufficient reason to conclude that there is an abuse of process: at [31]–[32].

Section 13(5) means that ‘there should be only one application for adjudication of any one payment claim’: Rail Corporation of NSW v Nebax Constructions Australia Pty Ltd t/as TrackSyde Constructions [2012] NSWSC 6 at [43]. Where a payment claim simply resubmitted claims that had been made earlier and rejected, it was made in contravention of s 13(5): Trustees of Roman Catholic Church for Diocese of Lismore v TF Woollam & Son [2012] NSWSC 1559. McDougall J held [page 89] that notwithstanding what may have been determined in Brodyn, the decisions in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2011) 78 NSWLR 393 and Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 support the view that if more than one payment claim is served in respect of a reference date ‘then a payment claim, or more accurately purported payment claim, served in contravention of that prohibition, cannot form any foundation for the exercise of an adjudicator’s power to determine’: at [44]. Accordingly, it followed that the adjudicator lacked jurisdiction to determine the application and the adjudication determination should be quashed. In Grid Projects NSW Pty Ltd v Proyalbi Organic Set Plaster Pty Ltd [2012] NSWSC 1571, Stevenson J considered Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2004] NSWCA 394 and Hodgson JA’s determination that s 8(2) ‘does not provide that reference dates cease on termination of a contract or cessation of work’. Notwithstanding what was said in Brodyn, because the July payment claim was in respect of the reference date of 30 June for the last work performed up to 25 June, s 13(5) operated so that the claimant could not serve a further payment claim in August in respect of the same work the subject of the July payment claim, relying on Allsop P’s remarks in Dualcorp. Because the existence of a valid payment claim was a prerequisite to the adjudicator having jurisdiction, his determination was made without jurisdiction and was void: at [42], [43]. In Hill as Trustee for Ashmore Superannuation Benefit Fund v Halo

Architectural Design Services Pty Ltd [2013] NSWSC 865 a construction contract provided that the reference date was the seventh day of each month. Stevenson J held that s 8(1) means that the progress payment to which a person who has performed construction work is entitled is a progress payment in respect of ‘all of the construction works done at that reference date’ (at [24]) because s 13(5) provides that a claimant cannot serve more than one payment claim in respect of each reference date. Stevenson J interpreted ‘in respect of’ to mean ‘on and from’ consistently with the wording of s 8(1) ‘so that the effect of the subsection is that a claimant may only serve one payment claim “on and from” each reference date’: at [26]. Accordingly, where the claimant served a payment claim for work done in February on 9 November, a payment claim for work done in March on 13 November, and a payment claim for work done in April on 16 November it was held that only the first payment claim served on 9 November was valid because by reason of s 13(5) the claimant was ‘only entitled to serve one payment claim “in respect of” (that is, on and from) the reference date of 7 November 2012. The one claim was the first one that it served, on 9 November 2012 (in respect of the work done in February 2012) … it was not possible for the [claimant] to serve any further payment claims “in respect of” the reference date of 7 November 2012’: at [37]. After the claimant served a payment claim the respondent in discussions said it would pay for the work the subject of the payment claim at a lesser hourly rate. The claimant then served a new claim at the lesser hourly rate to which it did not receive a payment schedule. The respondent contended that the second claim was not based on a construction contract but rather a settlement agreement, or, if it was based on a construction contract, it was the second claim under that construction contract in respect of the same reference date and was impermissible under s 13(5). Hammerschlag J held in NC Refractories Pty Ltd v Consultant Bricklaying Pty Ltd [2013] NSWSC 842 that [page 90] the original construction contract was varied by the agreement between the parties that a lesser rate would be paid and when the claimant submitted the second invoice it accepted the offer of the respondent to pay a lesser rate, therefore, ‘by necessary implication, the earlier invoice was withdrawn, leaving only the later one alive’: at [39]. Accordingly, there was no contravention of s 13(5).

Section 13(5) Multiple payment claims all served on same day [3.103] In Bell Partners Accountants & Business Advisors Pty Ltd v Kann Finch Pty Ltd [2004] NSWSC 1034 five payment claims were all served on 19 September 2003, which had reference dates of 24 March, 7, 21 and 30 April and 31 July 2003. Harrison M held those payment claims complied with the Act even though all were served on the same day, presumably as s 8(1) provides payments claims can be served ‘on and from each reference date’: at [21]. See also Rail Corporation of NSW v Nebax Constructions Australia Pty Ltd t/as TrackSyde Constructions [2012] NSWSC 6 where McDougall J held that a claimant could in an appropriate case submit one payment claim, comprised of several invoices, even though each invoice is said to be a payment claim for the purposes of the Act. See also Ardnas (No 1) Pty Ltd v J Group (Aust) Pty Ltd [2012] NSW SC 805 where there were two invoices (which were sent under cover of one facsimile). The two invoices claimed separate amounts for separate work but each had the same date and contained a notation that they were claims made under the Act. Hammerschlag J held that ‘viewing the matter as a matter of substance rather than form, only one payment claim was made comprising two amounts, each reflected in an invoice of the same date’: at [12]. Accordingly, there was no breach of s 13(5). Section 13(5) An adjudication can only have a single construction contract to which the adjudication application relates, not a multiplicity of contracts [3.104] In Rail Corporation of New South Wales v Nebax Constructions Australia Pty Ltd t/as TrackSyde Constructions [2012] NSWSC 6 at [44], McDougall J held that ‘because s 13(5) prevents … the service of more than one payment claim per reference date per construction contract, and because the right to adjudication “of a payment claim” is clearly referrable to a payment claim that complies with the various requirements of s 13, there can only be one adjudication application for any particular payment claim for any particular contract’. McDougall J amplified what he held in the Rail Corporation case in his judgement in Class Electrical Services Pty Ltd v Go Electrical Pty Ltd [2013] NSWSC 363, to make it clear that an adjudication application can only have a single construction contract to which the adjudication application relates, not a multiplicity of contracts: see [6]. Section 13(6) ‘including in a payment claim an amount … the subject of a

previous claim’ [3.105] The service of a payment claim and then subsequent service of a further payment claim (even though the later payment claim replicates the earlier payment claim) is a procedure authorised by s 13(6) of the Act where the two payment claims were served in respect of different reference dates: Veolia Water Solutions & Technologies v Kruger Engineering Australia Pty Ltd [2006] NSWSC 1406 at [10]. However, it was held in [page 91] Veolia where there is a challenge in court as to the adjudicator’s determination in respect of the first payment claim, there is a prima facie case for some relief to be granted to the respondent that challenges the first adjudication application in terms of an order restraining the claimant from lodging an adjudication application or taking any further step under the act in respect of the second payment claim until the issue for determination in respect of the first payment claim has been decided by the court. That is because of the argument that any subsequent determination would necessarily proceed in accordance with s 22(4) in respect of the overlapping work as between the two payment claims: at [13], [14], [18]. Where no further work is done since earlier payment claim a subsequent payment claim is not allowed [3.106] Rein J in Perform (NSW) Pty Ltd v Mev-Aust Pty Ltd [2009] NSWSC 416 suggests that where no further work is done since a payment claim is served, then if that claim is made again the following month the reference date for the second claim will be the same as the first claim and therefore not permissible under s 13(5) and (6): see [39], [42]. Claimant cannot have a claim covering same items as an earlier claim adjudicated [3.107] In Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69, Macfarlan JA after considering a number of indications in the Act determined that the legislative intent was to ‘render adjudication determinations relevantly conclusive’, except to the extent that the Act allows a determination to be revisited. Accordingly, it ‘would in my view be quite contrary to the scheme of

the Act to permit claimants simply to resubmit the already adjudicated claims if they were dissatisfied with the adjudication’: at [60]. The claimant in Perform (NSW) Pty Ltd v Mev-Aust Pty Ltd [2009] NSWSC 416 had a claim adjudicated and then sought to prosecute a second claim, covering the same items as the first but with only minor alterations to the amounts claimed and an alternative basis of the claims was also included. No further construction work or services had been performed. Rein J held (at [42]) that: 1. When a claim is rejected a claimant cannot serve another claim framed in a different way; 2. The second claim is incompetent because it ventilates the issues which have already been decided; and 3. I … also find that it is incompetent because the Act permits only one payment claim to be made in respect of the same work … However, in Urban Traders Pty Ltd v Paul Michael Pty Ltd [2009] NSWSC 1072, McDougall J held that it did not follow from the decision in Dualcorp, Perform or University of Sydney v Cadence Australia Pty Ltd [2009] NSWSC 635 that ‘every repetition, in a subsequent payment claim, of a claim made in an earlier payment must amount to an abuse of process. That is so even if the earlier payment claim has been the subject of an adjudicator’s determination’: at [41]. The question of whether there has been an abuse of process needs to take account of ss 13(6) and 22(4) of the Act, and consideration of ‘all the relevant contextual facts’. [page 92] Accordingly, in Urban Traders McDougall J granted an injunction restraining the claimant from prosecuting the adjudication in respect of the earlier adjudicated variation claims only: see [64]. Further, in Urban Traders where some of the claims had been the subject of an earlier payment claim to which no payment schedule had been provided, McDougall J held that the statutory liability which may arise under s 14(4) does not create any issue estoppel: see [89] and [90]. Also, where a party serves a payment claim to which it does not receive a payment schedule and then subsequently serves an identical payment claim to which it does receive a payment schedule, it is not prohibited from seeking summary judgment in

respect of the first payment claim: State Asphalt Services Pty Ltd v Leighton Contractors Pty Ltd [2013] NSWSC 528 at [60]. In State Asphalt Services, Stevenson J considered McDougall J’s comments in Urban Traders and in Cardinal Project Services Pty Ltd v Hanave Pty Ltd [2010] NSWSC 1367 and decided that nothing in those cases would give rise to a contrary conclusion. After referring to Urban Traders, Gzell J in Filadelfia Projects Pty Ltd v EntirITy Business Services Pty Ltd [2009] NSWSC 1468 held that service of a payment claim on a person who might not have entered into a construction contract with the claimant is not an abuse of process. However, where four invoices the subject of an earlier adjudication were included in a later adjudication, McDougall J held that there was no case for injunctive relief in respect of the later adjudication. In Allpro Building Services Pty Ltd v C & V Engineering Services Pty Ltd [2009] NSWSC 1247 at [15] McDougall J said: I do not regard either the repetition of the four claims at large or the confusion as to one of them in particular as falling within the circumstances said to give rise to issue estoppel or to abuse of process, so as to warrant the grant of injunctive relief. I should perhaps explain that last comment. I accept, based on Dualcorp, that the Hillman determination creates an issue estoppel. I accept that it applies to the four invoices in question and to Mr Hillman’s valuation of them. However, in circumstances where, effectively, credit is given for the valuation (so that the issue estoppel is respected) and the only doubt, as to the $25,000, is readily capable of explanation, I do not regard the form of the payment claim in question as requiring the grant of injunctive relief.

Further, in Allpro Building Services, McDougall J held that the circumstances where the claimant in an adjudication was claiming in respect of invoices the subject of a claim by a third party in a different forum on the same respondent, this did not amount to an abuse of process as ‘the essence of the abuse of process is that it is the one person’s actions in prosecuting vexatious or multiple claims that consititute the abuse’: at [22]. Also the mere repetition of earlier claims does not constitute an abuse of process as: Those concepts become relevant to the extent that any of the payment claims have been the subject of prior adjudication (or, of course, of court proceedings) or to the extent that any of those invoices is being propounded in a way that makes it relevantly an abuse of process. Repetition by itself does not seem to do so, particularly in circumstances where the Act acknowledges in at least two places that a claim may be advanced more than once (see ss 13(6) and 22(4)): at [25].

Section 13(5) means that ‘there should be only one application for adjudication of any one payment claim’: Rail Corporation of NSW v Nebax Constructions Australia Pty Ltd t/as TrackSyde Constructions [2012] NSWSC 6 at [43]. [page 93]

Adjudicator’s determination relied on in support of injunction restraining cashing of bank guarantee [3.108] In GMW Urban Pty Ltd v Alexandria Landfill Pty Ltd [2012] NSWSC 237 an injunction was granted restraining the respondent proprietor from calling bank guarantees. McDougall J granted the injunction even though the proprietor had a superintendent’s certificate in its favour for liquidated damages because: 1. the same liquidated damages claim was rejected by the adjudicator who found in favour of the claimant contractor; 2. the principles of ‘issue estoppel’ have been held to apply to adjudications, citing Dualcorp; and 3. the attempt to enforce the claim to liquidated damages by the proprietor by calling upon the bank guarantees was an attempt ‘to dispute the limited finality of that issue which was considered and resolved by the adjudicator’: at [25]. Dualcorp not limited to issue estoppel in respect of subsequent adjudications [3.109] The claimant succeeded in its adjudication application against the respondent, the adjudication certificate was filed as a judgment for a debt in court under s 25(1) and pursuant to the judgment and a garnishee order the claimant obtained payment from the respondent’s bank account. The respondent issued proceedings in the Local Court seeking restitution of the amount paid together with interest and costs on the basis that it was not the party to the construction contract. The Magistrate deciding the matter held that the adjudicator’s decision gave rise to an estoppel on the question of who was the relevant party to the construction contract. The Magistrate also held that s 32 did not allow the respondent to bring the claim in court because s 32(2) only applies where the resppndent was the party to the particular construction contract. On appeal in Nigro v EVS Group Pty Ltd [2012] NSWSC 1545, Hislop J held that: 1. The Dualcorp decision on issue estoppel was not limited to an issue estoppel in respect of subsequent adjudications as in Dualcorp it was held that ‘the policy of the Act [is] to render adjudicators’ determinations final on issues which they resolved, subject only to provisions of the Act conferring limited rights of correction of determinations’ (at [49]); and 2. Because the rights in s 32 were rights of a party ‘to a construction contract’, before a party could exercise the rights afforded by s 32 it requires as an essential prerequisite ‘the existence of a construction contract to which the plaintiff and defendant were parties’. As ‘the

foundation of the [respondent’s] case is that he was not a party to a construction contract and has no liability thereunder … the claimant’s contention that s 32 has no application is correct … Section 32 provides for revisiting of the initial decision in some circumstances. It has no application in the circumstances of this case’: at [59], [60], [64]. Accordingly, on the facts in Nigro, the respondent could not bring its case for recovery of the amounts paid unless the adjudicator’s determination and the judgment that had been entered were set aside by the Supreme Court in separate proceedings. [page 94] VICTORIAN ACT: PAYMENT CLAIMS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 14 Payment claims (1) A person who is “entitled to a progress payment” under a construction contract (the claimant) may serve a payment claim on the person who under the contract is liable to make the payment. (2) A claimant may serve only one payment claim in respect of a specific progress payment. (3) A payment claim — (a) must identify the construction work or related goods and services to which the progress payment relates; and (b) must indicate the amount of the progress payment that the claimant claims to be due for the construction work done or related goods and services supplied to which the payment relates (the claimed amount); and (c) must state that it is made under this Act. Section 14(1) ‘person who is entitled to a progress payment’ is not referring to contractual entitlements [3.110] The words ‘person who is entitled to a progress payment under a construction contract’ should not be construed as referring to a contractual entitlement: they refer to the statutory entitlement under the Act: Beckhaus Civil

Pty Ltd v Council of the Shire of Brewarrina [2002] NSWSC 960 at [65] and [66] per Macready AJ; and Nicholas J in Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266 agreeing with Beckhaus. Those words were in s 13(1) of the original NSW Act and are in s 14(1) of the Victorian Act. In the Victorian case of Blueview Constructions Pty Ltd t/a WRS Constructions v Vain Lodge Holdings Pty Ltd [2005] VCC 1325 the respondent argued that to succeed in its summary judgment application where the respondent did not provide a payment schedule the claimant needed to show that a progress payment was due and payable under the contract. Shelton J, relying on Macready AJ’s decision in Beckhaus and Nicholas J in Walter, held that in s 14(1) of the Victorian Act like s 13(1) of the NSW Act, ‘entitled to a progress payment’ did not refer to a contractual entitlement: at [10]. Further, in Age Old Builders Pty Ltd v Arvanitis [2006] VCC 1827 Shelton J held that there was no obligation upon the claimant to show compliance with the construction contract provisions in relation to the making of progress claims, to submit a payment claim under the Act: at [19]. See also the Victorian Supreme Court decision in Abigroup Contractors Pty Ltd v River Street Developments Pty Ltd [2006] VSC 425 at [13]. Compliance with s 14(2)(a) ‘may serve only one payment claim …’ [3.111] The respondent in Blueview Constructions Pty Ltd t/a WRS Constructions v Vain Lodge Holdings Pty Ltd [2005] VCC 1325 argued that the payment claim [page 95] offended against s 14(2) of the Victorian Act. The payment claim was accompanied by a note, ‘Please disregard previous fax. The claim had an error in it’, the argument being that there was therefore more than ‘one payment claim in respect of a specific progress payment’. Shelton J rejected the argument and held: “Payment claim” is defined in s 4 of the Act as meaning a claim referred to in s 14. Thus “payment claim”, as used in s 14(2) of the Act, means a claim which complies with s 14. There is no evidence before me to show that the previous Claim 11 complied with s 14. For example, it may not have stated that it was made under the Act as required by s 14(3)(c) of the Act. The onus is on the defendant to establish that the earlier Claim 11 complied with the Act. It has not done this: at [22].

The respondent’s argument in Age Old Builders Pty Ltd v Arvanitis [2006] VCC 1827 that the service of three claims was in breach of s 14(2) failed before

Shelton J who held that only one of those claims was a payment claim under the Act as the other two claims did not include the required notation under the Act: at [11]. See also the Victorian Supreme Court decision in Abigroup Contractors Pty Ltd v River Street Developments Pty Ltd [2006] VSC 425. Compliance with s 14(3)(a) [3.112] The progress claim in Blueview Constructions Pty Ltd t/a WRS Constructions v Vain Lodge Holdings Pty Ltd [2005] VCC 1325 stated: ‘Note: Variations claim 7 of $36,558.31 plus GST to be included in this claim’. Shelton J held that in the absence of affidavit material from the respondent suggesting that it was unaware of how the claim was calculated, it did comply with s 14(3) (a) of the Victorian Act. Shelton J in Contrax Plumbing Victoria Pty Ltd v Golf Club Properties Ltd [2006] VCC 237 at [4] held that the inclusion of claims in the payment claim in respect of other projects was not relevant as to whether the claim complied with s 14 of the Act. The argument that a payment claim was not valid under s 14 because it was not a ‘stand alone’ document (as it referred to other documents which had to be referred to, to understand the payment claim) failed in Age Old Builders Pty Ltd v Arvanitis [2006] VCC 1827 before Shelton J who cited with approval Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWSCA 391 at [13]. In one of the few Federal Court decisions to consider the Victorian Act, Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248, the payment claim read as follows. Contract Sum

$6,295,000.00

Variations (See the attached Schedule 1)

$232,772.45

Prolongation claim (See the attached Schedule 2)

$129,058.00

Adjusted Contract Sum Less Retentions (0.125% of the Contract Sum — $6,300,000)

$6,656,830.05 $78,750.00

Payments Received

$6,000,400.00

Subtotal

$6,079,150.00

Claimed amount … (Adjusted Contract Sum — Subtotal) GST Claimed amount (incl. GST)

$577,680.05 $57,768.01 $635,448.06

[page 96] Finkelstein J in the Protectavale judgment held that the information on the payment claim did not satisfy s 14 as there was no ‘identification of the work previously completed and paid for and the work (apart from the variations) to which the invoice relates’: at [14]. Although it was possible to derive that $215,850 of the amount claimed related to the original contract sum amount there was ‘no breakdown or explanation of the work to which the claimed amount of $215,850 relates’: at [14]. Finkelstein J went on to say: To satisfy s 14, however, it was encumbent upon [the claimant] to either identify the particular construction work the subject of the claim (if that was the position) or to state that the claim did not relate to construction work but was simply a contractual entitlement akin to a milestone payment: at [15].

See also the New South Wales decision in Ontrac v BHCF [2008] NSWDC 76 referred to at [3.95] above. Note that Shelton J in AC Hall Airconditioning Pty Ltd v Schiavello (Vic) Pty Ltd [2008] VCC (26 November 2008) refused to follow the Protectavale decision, preferring to follow the NSW Court of Appeal decision in Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) [2005] NSWCA 409: see [3.93] above. A payment claim which does not identify the work undertaken to which the progress payment relates ‘will be invalid because one of the basic and essential requirements of the Act have not been met, insofar as the claim relates to work claimed for which is not identified for the purposes of s 14(3)(a). Any adjudication founded upon such an invalid payment claim, will itself be invalid: at least to that extent’: Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 at [45]. Vickery J found: What is necessary is an identification of the work which is sufficient to enable a respondent to understand the basis of the claim and provide a considered response to it. … It is to be tempered by what is reasonably necessary to be comprehensible to the recipient party when considered objectively, that is from the perspective of a reasonable party who is in the position of [the] recipient. In evaluating the sufficiency of the identification of the work, it is appropriate to take into account the background knowledge of the parties derived from their past dealings and exchanges of information: at [51].

Where part of the payment claims did sufficiently describe the work for which payment was sought and other parts did not, it was held that the non-compliant parts could be severed. Vickery J held that the Act did not operate to exclude the common law doctrine of severance: at [115]. Final payments

[3.113] In Jemzone Pty Ltd v Trytan Pty Ltd [2002] NSWSC 395 a final account was held in New South Wales not to be a progress payment and therefore the Act had no application to the final account relied on by the claimant as a payment claim. See also De Martin & Gasparini Pty Ltd v Energy Australia [2002] NSWCA 330 per Santow J and Pearlman AJA and Oxbara Pty Ltd v Geotech Pty Ltd [2002] ACTSC 116 at [21]. This no longer applies in New South Wales given the amended wording of s 13(1) and the amended definition of progress payment in s 4. In Concrete Panel Co Pty Ltd v Advanced Storage Systems (Vic) Pty Ltd [2004] VCC 2 Shelton J held that there was an issue to be tried as to whether the Act applies to final claims. The defence to a summary judgment application that the payment claim was really a final claim failed in Contrax Plumbing Victoria Pty Ltd v Golf Club Properties Ltd [page 97] [2006] VCC 237. Shelton J held that the argument that the payment claim was really a final payment claim failed because: the payment claim needed to be characterised at the time it was served: the alleged negotiations which varied the works to delete remaining works were only entered into after delivery of the claim (at [8]); and there were still further works to be carried out by the claimant and therefore the claim in question could not have been a final claim: at [9]. See also [10] and [11] in the judgment. In Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248 at [17] Finkelstein J held that a final payment claim is in ‘substance … a claim for payment which, when made, will discharge the Principal from further obligations to pay money under the construction contract’. In Protectavale the payment claim in question was served after practical completion but before final completion of the works and before the time prescribed in the contract for the service of a final payment claim (which was within 28 days of the end of the defects liability period). Notwithstanding those matters, it was held that the payment claim in question was intended to be a final payment claim even though it did not claim the whole of the amount due under the contract. Part of the reason why Finkelstein J found it to be a final payment claim was that it seemed ‘to be a balancing claim for what is due under the contract less the balance of the retention moneys. That is,

it appears to be a final payment claim’: at [22]. Finkelstein J reconciled the date of service with the date set out in the contract for the service of the final payment claim on the basis that just because it was lodged early that: … [would not] be fatal to the validity of the claim. It could simply be treated as becoming operative at the time the contract permits the claim to be made … Unless its operation is suspended until the contract allows a final claim to be made, the pre-amendment Payment Act would be given an operation that could hardly have been intended (ie by allowing the claim to be made much earlier than is contemplated under the contract or by allowing a final payment claim to be treated as a progress payment claim): at [23].

See also the New South Wales cases referred to at: [3.87] Incorrect contract number on payment claim; [3.88] Payment claim and progress claim served at same time; [3.89] Payment claim and progress claim in one document; [3.93] Section 13(2) basis of the claim: what is sufficient as a valid payment claim?; [3.94] Section 13(2)(a) ‘identify the construction work’: what is sufficient for a valid payment claim?; [3.98] Section 13(2)(c) ‘state that it is made under the Act’; [3.103] Section 13(5) Multiple payment claims all served on same day; which should be persuasive authority in Victoria. In Cooper Morison Pty Ltd v Casa D’Abruzzo Club [2006] VCC 184 Shelton J cited with approval Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391 at [14] as referred to at [3.94] above. [page 98] VICTORIAN ACT: PAYMENT CLAIMS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 14 Payment claims (1) A person referred to in section 9(1) who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment. (2) A payment claim —

(a) (b) (c)

must be in the relevant prescribed form (if any); and must contain the prescribed information (if any); and must identify the construction work or related goods and services to which the progress payment relates; and (d) must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount); and (e) must state that it is made under this Act. (3) The claimed amount — (a) may include any amount that the respondent is liable to pay the claimant under section 29(4); (b) must not include any excluded amount. Note Section 10(3) provides that a progress payment must not include an excluded amount. (4) A payment claim in respect of a progress payment (other than a payment claim in respect of a progress payment that is a final, single or one-off payment) may be served only within — (a) the period determined by or in accordance with the terms of the construction contract in respect of the carrying out of the item of construction work or the supply of the item of related goods and services to which the claim relates; or (b) the period of 3 months after the reference date referred to in section 9(2) that relates to that progress payment — whichever is the later. (5) A payment claim in respect of a progress payment that is a final, single or one-off payment may be served only within — (a) the period determined by or in accordance with the terms of the construction contract; or (b) if no such period applies, within 3 months after the reference date referred to in section 9(2) that relates to that progress payment. (6) Subject to subsection (7), once a payment claim for a claimed amount in respect of a final, single or one-off payment has been served under this Act, no further payment claim can be served under this Act in respect of the construction contract to which the payment claim relates. [page 99]

(7) Nothing in subsection (6) prevents a payment claim for a claimed amount in respect of a final, single or one-off payment being served under this Act in respect of a construction contract if — (a) a claim for the payment of that amount has been made in respect of that payment under the contract; and (b) that amount was not paid by the due date under the contract for the payment to which the claim relates. (8) A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract. (9) However, subsection (8) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim if the amount has not been paid. [3.114] See New South Wales cases referred to at [3.87]–[3.105] which should be persuasive authority in Victoria as the New South Wales and Victorian provisions are now very similar. Note, however, that the prohibition now in Victoria of including in a payment claim any excluded amounts needs to be considered when referring to the New South Wales cases. Brookhollow Pty Ltd v R & R Consultants Pty Ltd [2006] NSWSC 1 (see [3.93]), for example, would probably be decided differently in Victoria as a result. Section 14(1) Service of payment claim on superintendent [3.115] Where the relevant clause in the contract obliged the contractor to give to the superintendent a copy of any notice or claim which the contractor served upon the principal and where the superintendent was empowered to give directions and carry out its functions on behalf of and as agent of the principal and not as an independent certifier, Vickery J held that this amply demonstrated ‘that the superintendent also had the ostensible authority of his principal … to receive service of payment claims under the Act’: Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 at [148]. Section 14(1) ‘A person … who is or claims to be entitled to a progress payment’ [3.116] A payment claim ‘which is delivered shortly prior to its reference date, even a few days before, would not, in the usual case, evidence lack of bona fides on the part of the person making the claim because the work carried out in respect of which the claim is made in all likelihood would have been done, or substantially completed’: Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 at [102]. This is because s 14(1) includes

persons ‘who claim to be entitled’ to a progress payment in addition to those who may actually be entitled. However, see below on the bona fides issue. Note also that the fact that the payment claim was dated 25 October even though served on 24 October, ‘on its face this was a claim to entitlement to a progress payment on and from the reference date under the Contract. The fact that it may have been delivered prior to the reference date did not detract from the substance of the payment claim that was made’: Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 at [104]. [page 100] Note that in 470 St Kilda Road Pty Ltd v Reed Constructions Australia Pty Ltd [2012] VSC 235, Vickery J held that his decision in Metacorp was wrongly decided (in light of other authorities) on the bona fides requirement ‘insofar as it is said in that case that a payment claim, whether served prematurely before the due reference date or served on and from the reference date, must be made bona fide in order to be valid, and I decline to follow myself’: at [46]. The other authorities referred to included Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (2005) 64 NSW LR 462; and the Queensland Court of Appeal in Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd [2010] QCA 119. See also 470 St Kilda Road Pty Ltd at [43], [44]. Section 14(2)(e) ‘… state it is made under this Act’ [3.117] A reference to ‘Building and Construction Guarantee of Payment Act 2002 was sufficient compliance with s 14(2)(e) in the circumstances’: LH Blue Pty Ltd v AXF Construction Pty Ltd [2010] VCC 0485 at [17]–[20]. Section 14(6) Subsequent payment claim ‘superseding’ earlier payment claims [3.118] Section 14(6) now means there is no room for the earlier line of argument that a later payment claim that included amounts in an earlier payment claim had the effect of ‘superseding’ or in some way invalidating the earlier payment claim: AC Hall Airconditioning Pty Ltd v Schiavello (Vic) Pty Ltd (No 2) [2008] VCC 1490 at [13]. Shelton J accordingly did not follow Abigroup Contractors Pty Ltd v River Street Developments Pty Ltd [2006] VSC 425 as it was decided under the unamended Act. Section 14(8) ‘cannot serve more than one payment claim for each reference

date’ [3.119] Two invoices included in the same envelope were in truth one payment claim and so did not breach s 14(8): Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd [2009] VSC 156 at [153]. Section 14(8) and (9) Claims made in payment claim that were made in previous payment claim [3.120] Section 14(9) permits the inclusion of claims included in an earlier payment claim to be included in a later payment claim, provided the earlier claims have not been paid: Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd [2009] VSC 156 at [168], [161]. NSW ACT: PAYMENT SCHEDULES 14 Payment schedules (1) A person on whom a payment claim is served (the respondent) may reply to the claim by providing a payment schedule to the claimant. (2) A payment schedule: (a) must identify the payment claim to which it relates, and (b) must indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount). [page 101] (3) If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent’s reasons for withholding payment. (4) If: (a) a claimant serves a payment claim on a respondent, and (b) the respondent does not provide a payment schedule to the claimant: (i) within the time required by the relevant construction contract, or (ii) within 10 business days after the payment claim is served, whichever time expires earlier,

the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates. Section 14(1) Require entitlement to serve a payment claim [3.121] Section 14 can have no application if there was no entitlement to serve a payment claim, for example, because it was a ‘final account’ and therefore in Victoria and NSW prior to the Amending Acts the claimant was not entitled to a progress payment: Jemzone Pty Ltd v Trytan Pty Ltd [2002] NSWSC 395. See also Oxbara Pty Ltd v Geotech Pty Ltd [2002] ACTSC 116 which approves Jemzone. Section 14(1) ‘a person on whom a payment claim is served … may reply to the claim …’ [3.122] A payment certificate issued under the contract by the superintendent would not ordinarily satisfy the s 14(1) requirement for a payment schedule to be provided by the respondent as the superintendent in issuing payment certificates is not agent of the principal: Leighton Contractors Pty Ltd v Campbelltown Catholic Club Ltd [2003] NSWSC 1103 at [106], [107]. Further, a payment certificate issued by the superintendent under the terms of the contract will not ordinarily qualify as a payment schedule under the Act unless it complies with the specific requirements of s 14(2) and (3). There is no reason, however, why a superintendent could not be appointed to be agent of the principal for the purposes of the Act and issuing payment schedules. There is some support for this view in Karimbla Construction v Alliance Group Building [2003] NSWSC 617 at [11]. Prudently this should be done in writing and prior to the issue of the payment schedule. In Bucklands Convalescent Hospital v Taylor Projects Group Pty Ltd [2007] NSWSC 1514 at [35] Hammerschlag J held that ‘as a matter of law it does not seem to me that a person who is a superintendent under a contract and who has certifying functions under it is incapable of being appointed as agent to respond to a payment claim under the Act’. In Baulderstone Hornibrook Pty Ltd v Queensland Investment Corporation [2006] NSWSC 522 the payment claim and the payment schedule was signed ‘for Queensland Investment Corporation’ (the respondent) but signed by a solicitor for the respondent. Einstein J held that the requirements of s 14(1) were satisfied as:

(i)

There are no requirements in s 14 of the Act that in order for a document to be a “payment schedule” it must be signed in a particular manner or by a particular person.

[page 102] (ii) Indeed, there are no requirements that the payment schedule be signed at all. (iii) The only relevant requirement is that the payment schedule be provided by the respondent (being the person on whom the payment claim has been served) to the claimant (s 14(1)). (iv) The question as to whether the payment schedule has been provided to the claimant by the respondent is a question of fact: at [36].

It was not necessary therefore for the respondent to adduce any evidence as to the authority of its solicitors to sign the payment schedule but it nevertheless did so by producing the letter of retainer from its solicitors which was in terms that: The work we are to do is draft documentation for the delivery of design and construction services for extensions to Westpoint (including, if appropriate, tender documents), finalise documents with the selected contractor and deal with other matters as they arise in relation to the Westpoint extensions project.

Einstein J held that the bringing into existence of the payment schedule fell within the words ‘deal with other matters as they arise in relation to the Westpoint extensions project’ or fell within the implied authority to do all things incidental to the object of the retainer (at [46]) and therefore the solicitors were authorised by the respondent to prepare the payment schedule: at [47]. On appeal in Baulderstone Hornibrook Pty Ltd v Queensland Investment Corporation [2007] NSWCA 9, the decision of Einstein J was affirmed and the appeal by the claimant dismissed: It would be erroneous to find in the present case that the document headed “Payment Schedule” was not provided by the respondent to the appellant because its preparation and service upon the appellant by [the respondent’s solicitors] on Mr Douglas’ instructions constituted an unauthorised frolic on their part. Such a proposition makes no commercial sense given the history of the payment claims/payment schedules between the parties for a period in excess of a year: at [68] per Tobias J.

Baston JA in Baulderstone distinguished the judgment of Einstein J in Taylor Projects Group Pty Ltd v Brick Dept Pty Ltd [2005] NSWSC 439 at [37]–[39] which was to the effect that the document relied upon as a ‘payment schedule’ in that case having been provided not by the respondent, but by its solicitor, did not comply with s 14(1): at [150], [153]. See also the decision in Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd [2009] NSWSC 477 where the respondent attempted to rely on an assessment made by the respondent’s quantity surveyor of the amount claimed in the payment claim, as a payment schedule provided by the respondent. McDougall J

held that the quantity surveyor’s assessment could not amount to a payment schedule under the Act as under the Act ‘a claimant is entitled to have a written reply from (or binding on) the respondent so that the claimant can decide whether to accept the scheduled amount or to proceed to adjudication. A claimant should not be required to act upon the basis of informal indications by those who advise the respondent, even if (in a particular case) that adviser is trusted, and its advice has always been followed in the past: at [42]. This was particularly the case seeing that the quantity surveyor’s assessment did not even indicate the amount the respondent proposed to pay and was only an assessment of the quantity surveyor: at [39]. See also the cases referred to at [3.317] below. [page 103] Section 14(1) and (4)(b) What does ‘providing’ a payment schedule mean? [3.123] McDougall J observed that where a letter which amounted to a payment schedule was posted it may have been ‘provided’ even though not received (Barclay Mowlem Construction Ltd v Tesrol Walsh Bay Pty Ltd [2004] NSWSC 1232 at [42]) but expressed no concluded view on the point. On the facts of the case the respondent could not prove the payment schedule was posted: there was no evidence of actual posting or of the procedures in the respondent’s office for collection of mail and its stamping or franking or of records such as a posting book. Section 14(2) and (3) What is sufficient to amount to a payment schedule and ‘reasons for withholding payment’? [3.124] In Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, Palmer J said that in determining whether the reasons for withholding payment contained in a payment schedule are sufficient or not, regard must be had to the fact that the payment schedule is: … in many cases, given and received by parties who are experienced in the building industry and are familiar with the particular building contract, the history of construction of the project and the broad issues which have produced the dispute as to the claimant’s payment claim. [A] payment claim and a payment schedule must be produced quickly; much that is contained therein in an abbreviated form which would be meaningless to the uninformed reader will be understood readily by the parties themselves. A payment claim and a payment schedule should not, therefore, be required to be as precise and as particularised as a pleading in the Supreme Court: at [76].

However, Palmer J in Multiplex went on to say:

A respondent to a payment claim cannot always content itself with cryptic or vague statements in its payment schedule as to its reasons for withholding payment on the assumption that the claimant will know what issue is sought to be raised. … More often than not … parties to a building dispute see the issues only from their own viewpoint: they may not be equally in possession of all of the facts and they may not equally appreciate the significance of what facts are known to them: at [77].

Palmer J also held that: Section 14(3) of the Act, in requiring a respondent to “indicate” its reasons for withholding payment, does not require that a payment schedule give full particulars of those reasons. The use of the word “indicate” rather than “state”, “specify” or “set out”, conveys an impression that some want of precision and particularity is permissible as long as the essence of “the reason” for withholding payment is made known sufficiently to enable the claimant to make a decision whether or not to pursue the claim and to understand the nature of the case it will have to meet in an adjudication: at [78].

In Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391 Mason P, delivering the unanimous judgment of the Court of Appeal, agreed with those principles in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140. In Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 13 the payment schedule stated: We again refute all your claims and as such do not intend to make the payment claimed.

Brereton J held that to say the claim was ‘again refuted’ was not a statement of any reasons for not paying, so did not comply with s 14(3): at [71]. In Barclay Mowlem Construction Ltd v Tesrol Walsh Bay Pty Ltd [2004] NSWSC 716 the purported payment schedule referred to ‘ongoing communications’ and that ‘it [page 104] is apparent that the parties are in dispute … [and] it is considered appropriate that we refer the matter to the Independent Certifier’: at [4]. The purported payment schedule did not indicate any amount that the respondent proposed to pay and it did not say that it proposed to pay nothing. McDougall J held that there was a serious issue to be tried as to whether the document in fact amounted to a payment schedule even though it did not say expressly the amount it proposed to pay. Whether there was an inference from the terms of the document that the respondent did not propose to pay any amount to the claimant was a matter which required analysis of the content of the ‘ongoing communications’ which could not be undertaken on an application for summary judgment: at [10]–[14]. Accordingly, McDougall J refused to grant the summary judgment application.

In the subsequent hearing (Barclay Mowlem Construction Ltd v Tesrol Walsh Bay Pty Ltd [2004] NSWSC 1232) McDougall J held that the 18 May letter in question from the respondent did amount to a payment schedule: I think that there are two answers to that submission. The first is that s 14(3) requires in substance that the respondent to a payment claim indicate in its payment schedule its reasons if it proposes to pay less than the claimed amount. The subsection is not concerned with the adequacy or sufficiency of those reasons. (There may be a limiting case where what is indicated cannot in any real sense of the word “reasons” be described as reasons, but this is not such a case, and I therefore do not propose to consider that question.) If the reasons are inadequate, the claimant will no doubt proceed to adjudication. In that event, the respondent will be limited, in its adjudication response, to the reasons given in the payment schedule (s 20(2B)). … As to the claim for costs associated with the extensions of time, the 18 May letter referred (as I have said) to the letter of 12 May 2004. That earlier letter gave two reasons for rejecting the claim. On any view, I think, it is legitimate to read the two letters together; and on any view when this is done, [Tesrol Walsh Bay] gave reasons for not accepting this aspect of the payment claim: at [26]–[28].

Rein J’s judgment in Springs Golf Club Pty Ltd v Profile Golf Pty Ltd [2006] NSWSC 344 makes it clear that the requirement of s 14(2) and (3) should not be narrowly construed and, as was held in Multiplex, some want of precision or particularity is permissible. In Springs the letter relied on as a payment schedule did not expressly refer to a ‘payment claim’ (instead referring to it simply as ‘your letter dated Friday 29 July’) or use the terminology ‘payment schedule’. It was in the following terms: Further to your letter dated Friday 29 July 2005 A letter dated 10 July 2005 was forwarded to Cordelia St Sth Brisbane but was returned to us soon after. A copy of this letter was given to you at our meeting on 14th July 2005. Within this letter were our understandings while Profile Golf (Owen Hester) was carrying out construction with James Dalton as on-site supervisor. A copy of this letter is enclosed. Within the meeting of the 14th July 2005, * Lost Revenue: 40% of lost revenue equated to $62,400.00. * Excess Materials: Materials not used equated to $52,990.00. * Surveying Work: Brendan disagreed we had discussions with James Dalton. * Defects: Defects list given to Brendan was deemed to cost $10,000.00. At the end of the meeting Profile Gold was offered $30,310.00 as last and final payment. Yours sincerely: at [3].

[page 105]

Rein J held it to be a valid payment schedule as the letter provided ‘necessary particularity to sufficiently make Springs’ reasons for withholding payment of some of the claimed amount known to Profile and to enable Profile to make a decision about whether or not to pursue the claim and to understand the nature of the case it would have to meet in an adjudication’: at [39]. Section 14(3) Can the ‘reasons for withholding payment’ be in a document incorporated by reference? [3.125] In Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248 at [29] Finkelstein J held that ‘a payment schedule cannot artificially be constructed out of a series of documents by showing that those documents in combination contained all the necessary information required of a payment schedule’. The respondent in Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2009] NSWCA 157 in its March payment schedule sought to incorporate by reference the reasons for withholding payment that it included in its February payment schedule, but did not attach a copy of the February payment schedule. Giles JA (McColl and Young JJA agreeing) held that although the adjudicator was not correct in his determination that the Act does not allow incorporation by reference of extrinsic material, that error (and his consequent refusal to consider the reasons for withholding payment in the February payment schedule) did not make his determination void: see [45], [49], [50], [52], [53], [55], [56], [58], [60]. Einstein J’s indications at first instance that it was ‘strongly arguable’ that incorporation by reference of extrinsic material was not allowed, was reversed on appeal, the Court of Appeal determining that: ‘indicate’ in s 14(3) needs to be given a common sense application and the reasons for withholding payment can therefore be indicated in a document incorporated by reference, but as the payment schedule needs to be intelligible also to the adjudicator, a copy of the extrinsic material should be supplied to the adjudicator (at [49]); and it is a question of fact, however, whether the incorporation of extrinsic material does sufficiently indicate the reasons for non-payment and ‘[r]eference to a memorandum internal to the provider of the payment schedule … [or to] a conversation … is unlikely to do so’: at [52]. See also [3.124] and McDougall J’s observations in Barclay Mowlem Construction Ltd v Tesrol Walsh Bay Pty Ltd [2004] NSWSC 716 about incorporation by reference of an earlier letter from the respondent. In Lahey Constructions Pty Ltd v Trident Civil Contracting Pty Ltd [2013]

NSWSC 176 certain issues were dealt with very briefly by the respondent in its payment schedule but the same issues (certain contractual arguments) were dealt with expansively in a previous adjudication under the same contract between the same parties. This is relevant to assess whether the brief reference to the issue in the payment schedule was sufficient for the purposes of s 14(3) of the Act: at [29]–[33]. Section 14(3) ‘withholding payment’ [3.126] The words ‘withholding payment’ in s 14(3) mean ‘withholding payment of all or any part of the claimed amount in the payment claim’: Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140. Further, to construe the phrase as meaning [page 106] ‘withholding payment only by reason of a set-off or cross claim’ is not justified by the wording of the section: at [68]. Section 14(4)(b)(i) ‘within the time required by the relevant construction contract’ [3.127] In Thiess Pty Ltd v Lane Cove Tunnel Nominee Co Pty Ltd [2008] NSWSC 729 at [17] a construction contract provided that the principal: … must issue a payment schedule within 4 Business Days of receipt of the payment claim. The payment schedule must identify the payment claim to which it relates and if it is for an amount less than the claimed amount, the payment schedule must indicate why the amount stated in the payment schedule as payable is less and if it is less because the [principal] is withholding payment for any reason, the [principal’s] reasons for withholding payment, provided that the amount stated in the payment schedule may not be less than the amount certified by the Independent Verifier …

Hammerschlag J held that the four business day period did not under s 14(4)(b) (i) supplant the 10 business day period in s 14(4)(b)(ii). This was because there was ‘no clear contextual support for the necessary implication that the contract provided an answer’ to the issue (at [16]), even though for s 14(4)(b)(i) to apply the contract did not need to refer to the section: at [22]. Indications in the contractual wording that it was not intended to apply to payment schedules under the Act included the different definition of business days from the Act and the inconsistent obligations in respect of a payment schedule the clause imposed than required by the Act: at [25]–[33]. The decision of Hammerschlag J in that the time provided in the contract for service of the contractual payment schedule

did not supplant the time of a payment schedule under the Act as provided in s 14(b)(ii)) was affirmed on appeal but for different reasons: Thiess Pty Ltd v Lane Cove Nominees Pty Ltd [2009] NSWCA 53 at [37], [48]–[52]. Section 14(4) ‘the respondent becomes liable to pay the claimed amount …’ [3.128] Section 14(4) (and s 15(1)(b)) presuppose the existence of a due date for the progress payment to which the progress claim relates, that is, there must exist an entitlement to a progress payment to which the payment claim relates and a due date for that progress payment: Isis v Clarence [2004] NSWSC 73 at [13]. Therefore if there is no such entitlement to a progress payment or due date, summary judgment may be refused. Section 14(4) was relied on by the claimant in Tooma Constructions Pty Ltd v Eaton & Sons Pty Ltd [2002] NSWSC 514 (subsequently followed in Oxbara Pty Ltd v Geotech Pty Ltd [2002] ACTSC 116) to argue there could be no ‘genuine dispute’ under s 459G of the Corporations Act 2001 (Cth) where the statutory demand was served based on the unpaid amount of the payment claim where no payment schedule was served. Macready M held that even if the respondent was not entitled to dispute the payment claim under the Act, that would not affect the entitlement to allege a genuine dispute under s 459G of the Corporations Act, as s 32 of the Act makes it clear that the parties’ rights under the construction contract are preserved. Section 14(4) ‘respondent does not provide a payment schedule’ [3.129] Where a party serves a payment claim to which it does not receive a payment schedule and then subsequently serves an identical payment claim to which it does receive a payment schedule, it is not prohibited from seeking summary judgment in respect of the first payment claim: State Asphalt Services Pty Ltd v Leighton Contractors Pty Ltd [2013] NSWSC 528 at [60]. In State Asphalt Services, Stevenson J considered [page 107] McDougall J’s comments in Urban Traders Pty Ltd v Paul Michael Pty Ltd [2009] NSWSC 1072 and in Cardinal Project Services Pty Ltd v Hanave Pty Ltd [2010] NSWSC 1367 and decided that nothing in those cases would give rise to a contrary conclusion. Payment claim served after practical completion

[3.130] In Isis v Clarence [2004] NSWSC 73 the respondent argued that payment claims served after practical completion were not allowed under the contract and therefore there was no entitlement to a progress payment to which the payment claims related. The court rejected the respondent’s contentions as upon an interpretation of the contractual provisions there was an entitlement to progress payments after practical completion. Contractual requirement that claims be ‘supported by evidence of amount due’ [3.131] Macready M, in Isis v Clarence [2004] NSWSC 73 following the Court of Appeal in Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2003] NSWCA 4, held there was a triable issue as to whether the claimant had complied with the contractual requirement that progress claims ‘be supported by evidence of the amount due’ and accordingly summary judgment was refused: at [40]. Rights of set-off to a payment claim under the Act [3.132] See Bittannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9. In Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2009] NSWCA 157, Young JA in obiter comments held that: Set-off of mutual liquidated debts is permitted in court proceedings by s 21 of the Civil Procedure Act 2005. Apart from that, the better view appears to be that the only right of set-off in NSW prior to insolvency is equitable set-off. It is most doubtful whether adjudicators have the right to consider any equitable rights and titles. I adhere to what I said in Wooding v Estoe [2006] NSWSC 277 that adjudicators cannot recognise equitable assignments of contracts: at [139]–[140].

The other right of set-off that Young JA recognised is a statutory right to setoff. There should also be added an express contractual right of set-off provided the contractual set-off does not offend against s 34: see Robson Civil Projects Pty Ltd v Wattex Mining Pty Ltd [2009] NSWSC 1071 at [53]–[56] where Hammerschlag J refers to the adjudicator’s determination that a contractual right of set-off would have been applied by him but for a prequalification for its application which the adjudicator determined was not satisfied. In Watpac Constructions (NSW) Pty Ltd v Austin Corporation Pty Ltd [2010] NSWSC 168, McDougall J observed: … It is not hard to understand why an untrammelled power to set off, against amounts otherwise due to a subcontractor, any amounts claimed by the head contractor to be due for backcharges might fall foul of s 34.

However, as I pointed out … above, it is at least arguable that the power to set off backcharges that cl 14.5 gives to Watpac is constrained by both express and implied considerations of reasonableness. The basis for implying constraints (over and above what might flow from the use of the words “a reasonable estimate”) could include that the known background to the making of the subcontract included the terms of the Act, and the known consequences of an untrammelled power to make set-offs could well include that the whole of cl 14.5 is void.

[page 108] The parties did not address as to whether clause 14.5 was in fact void, by operation of s 34, and I do not propose to go where the parties did not. It is however necessary to consider whether there were reasonable arguments that could be put against that conclusion. [Counsel for the plaintiff] emphasised that cl 14.5 did not authorise arbitrary or unreasonable estimates, and did not impose any condition precedent or subsequent on Austin’s entitlement to a progress payment. It bore, at most, on the proper quantification of that entitlement: at [169]–[171].

Clause 14.5 provided: 14.5 Set-Off Without limiting the Builder’s right under the Subcontract the Builder may deduct from any money due to the Subcontractor: (a) any money due, or a reasonable estimate of amounts which the Builder asserts will become due, from the Subcontractor to the Builder whether under or in connection with the Subcontract or otherwise; and (b) all losses, costs, charges, damages or expenses which the Builder has incurred or paid and for which the Subcontractor is or may be liable to make reimbursement to the Builder or to any corporation which is a subsidiary of or related to the Builder within the meaning of the Corporations Act 2001 (Cth), but has failed to pay or reimburse, and if those moneys are insufficient the Builder may have recourse to any Bank Guarantees and retention under the Subcontract.

VICTORIAN ACT: PAYMENT SCHEDULES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 15 Payment schedules (1) A person on whom a payment claim is served (the respondent) may reply to the claim by providing a payment schedule to the claimant. (2) A payment schedule — (a) must identify the payment claim to which it relates; and (b) must indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount). (3) If the scheduled amount is less than the claimed amount, the schedule

must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent’s reasons for withholding payment. (4) If — (a) the claimant serves a payment claim on a respondent; and (b) the respondent does not provide a payment schedule to the claimant — (i) within the time required by the relevant construction contract; or (ii) within 10 business days after the payment claim is served; whichever time expires earlier — the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.

[page 109] Section 15(1) ‘payment claim’: in its payment schedule the respondent is not prevented from challenging earlier payment claims [3.133] In Jackson Clements Burrows Pty Ltd v Seabay Properties Pty Ltd [2009] VCC 0557 certain amounts the subject of earlier payment claims (to which no payment schedules were provided) were included in a subsequent payment claim, and in its payment schedule the respondent claimed that there were overpayments in respect of the earlier payment claims. The claimant sought to challenge the payment schedule to the extent it claimed in respect of the alleged overpayment in earlier payment claims. Shelton J dismissed the claimant’s challenge to the payment schedule and held that s 15(1): … does not provide that the payment schedule is limited to the payment claim to which it is responding. Nor can it be implied, in my view, that earlier payment claims are conclusive and not open to challenge at a later point in time if not challenged by a payment schedule served within time pursuant to s 15 [at [8]]. It seems clear to me that payments made pursuant to a payment claim are on account only and subject to challenge at a later stage: at [9].

Section 15(4) Summary judgment [3.134] The claimant’s summary judgment application failed in the first case in Victoria to consider the Act: The Concrete Panel Co Pty Ltd v Advanced Storage Systems (Vic) Pty Ltd [2004] VCC 2; [2004] VCC 114. Shelton J of the County

Court applied Jemzone Pty Ltd v Trytan Pty Ltd [2002] NSWSC 395 in holding that the serious issues to be tried which were sufficient to defeat the summary judgment application were whether the Act applied to final claims and whether the payment claim sufficiently identified the construction work. In a case decided only months after the Concrete Panel case Shelton J gave summary judgment in favour of the claimant, deciding to follow the New South Wales approach in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 and John Holland Pty Ltd v Cardno MBK (NSW) Pty Ltd [2004] NSWSC 258 and move away from an overly strict interpretation of s 15 (s 14 of the Victorian Act). Summary judgment was granted for claim number 6 even though it incorporated claims 4 and 5 which earlier claims did not state they were made under the Act: AMD Formwork Pty Ltd v Yarraman Construction Group Pty Ltd [2004] VCC 17. See also Glenrich Builders Pty Ltd v 1–5 Grantham Street Pty Ltd [2008] VCC 1170, where Shelton J refused a summary judgment application on the basis that there was an issue to be tried as to whether a payment schedule which complied with the Act had been provided even though the payment schedule on its face did not indicate the amount of the payment that the defendant proposed to make (at [85]): see the wording of the payment schedule reproduced at [79]. Section 15(4) When does time commence to run? [3.135] In Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 at [107] Vickery J said: In my opinion, time does not begin to run against a respondent for the purpose of s 15(4) from the date when a payment claim is physically delivered to it, if this occurs prior to the relevant reference date. This is so because the entitlement to payment, which is conferred by s 9 upon a claimant, only arises “on and from each reference date under a construction contract”. In the case of the premature

[page 110] delivery of a payment claim prior to the reference date to which the claim relates, rights under the Act only become enlivened upon the arrival of the relevant reference date.

See also the New South Wales cases referred to at: [3.121] Section 14(1) Require entitlement to serve a payment claim; [3.122] Section 14(1) ‘a person on whom a payment claim is served … may reply to the claim …’; [3.124] Section 14(2) and (3) What is sufficient to amount to a payment

schedule and ‘reasons for withholding payment’?; [3.125] Section 14(3) Can the ‘reasons for withholding payment’ be in a separate document?; [3.126] Section 14(3) ‘withholding payment’; [3.128] Section 14(4) ‘The respondent becomes liable to pay the claimed amount …’; [3.130] Payment claim served after practical completion; [3.131] Contractual requirement that claims be ‘supported by evidence of amount due’; which should be persuasive authority in Victoria as s 15 of the Victorian Act is identical to s 14 in the NSW Act. VICTORIAN ACT: PAYMENT SCHEDULES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 15 Payment schedules (1) A person on whom a payment claim is served (the respondent) may reply to the claim by providing a payment schedule to the claimant. (2) A payment schedule — (a) must identify the payment claim to which it relates; and (b) must indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount); and (c) must identify any amount of the claim that the respondent alleges is an excluded amount; and (d) must be in the relevant prescribed form (if any); and (e) must contain the prescribed information (if any). (3) If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent’s reasons for withholding payment. (4) If — (a) a claimant serves a payment claim on a respondent; and (b) the respondent does not provide a payment schedule to the claimant — (i) within the time required by the relevant construction contract; or

(ii)

within 10 business days after the payment claim is served; [page 111]

whichever time expires earlier — the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates. Section 15(3) What is sufficient to comply with s 15(3)? [3.136] In Conset Pty Ltd v Johns Lyng Commercial Builders Pty Ltd [2010] VCC 0275 a payment schedule in respect of variations which stated: Variations claimed not yet approved $256k Variations approved $104k ($152k)

was not sufficient to comply with s 15(3), as it does not ‘enable the recipient to decide whether or not to pursue the claim and understand the case will have to meet in an adjudication’: at [19]. Accordingly, the claimant’s application for summary judgment to the extent of the $152k succeeded. See also the New South Wales cases referred to at: [3.121] Section 14(1) Require entitlement to serve a payment claim; [3.122] Section 14(1) ‘a person on whom a payment claim is served … may reply to the claim …’; [3.124] Section 14(2) and (3) What is sufficient to amount to a payment schedule and ‘reasons for withholding payment’?; [3.125] Section 14(3) Can the ‘reasons for withholding payment’ be in a document incorporated by reference?; [3.126] Section 14(3) ‘withholding payment’; [3.128] Section 14(4) ‘The respondent becomes liable to pay the claimed amount …’; [3.130] Payment claim served after practical completion; [3.131] Contractual requirement that claims be ‘supported by evidence for amount due’; which should be persuasive authority in Victoria as s 15 of the Victorian Act is

identical to s 14 in the NSW Act, save for the new references to excluded amount and the prescribed form and information in s 15(2)(c), (d) and (e). Section 15(4) When a payment claim is served if served by email [3.137] In Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 at [93] Vickery J said that in the case of service of a payment claim by email addressed to a director of the respondent, the director: … had to take a number of steps before it could be said that he had received the payment claim. [The director] would have to observe on his computer the notification of the email sent from his email server; he would then have to gain access to the email on his computer; and then open its attachment which comprised Payment Claim 15. Untilat least these steps had been taken by [the director], it could not be said that the email and its attachment had been “received” at the place of business of the Superintendent and the email remained merely accessible to the intended recipient.

[page 112] Section 15(4)(b)(ii) Where a payment claim is served before the reference date, when does the 10 business days start to run? [3.138] Distinguishing Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266 (as the section of the Act in NSW is different) and refusing to follow FK Gardner & Sons Pty Ltd v Dimin Pty Ltd [2007] 1 Qd R 10, Vickery J followed his earlier decision in Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 that premature service of a payment claim does not render it invalid unless the premature service means it was not made bona fide: Seabay Properties Pty Ltd v Galvin Construction Pty Ltd [2011] VSC 183 at [131], [134], [136]. Shelton J in the County Court had earlier decided in ADH Plant Hire Pty Ltd v Construct Co Pty Ltd [2004] VCC 53 that a summary judgment application failed where the relevant payment claim was served before the reference date as then ss 15 and 16 were ‘not enlivened’: see [3.55]. The 10 business day period referred to in s 15(4)(b)(i) in the case of service prior to the reference date does not commence until the reference date: see Seabay at [134] citing Metacorp. On the bona fides issue, however, see [3.116] above. Service 15(4) Service of payment claim outside the time provided [3.139] McMillan J in Maxstra Constructions Pty Ltd v Active Crane Hire Pty Ltd [2013] VSC 177 at [37] said that the requirement for timely service under the Act:

… is not a basic and essential precondition to the adjudicator’s having jurisdiction under the Act. Therefore, even if I had found that the payment schedule had in fact not been served in time, the adjudicator’s determination that it had been served in time would not be overturned.

NSW ACT: CONSEQUENCES OF NOT PAYING CLAIMANT WHERE NO PAYMENT SCHEDULE 15 Consequences of not paying claimant where no payment schedule (1) This section applies if the respondent: (a) becomes liable to pay the claimed amount to the claimant under section 14(4) as a consequence of having failed to provide a payment schedule to the claimant within the time allowed by that section, and (b) fails to pay the whole or any part of the claimed amount on or before the due date for the progress payment to which the payment claim relates. (2) In those circumstances, the claimant: (a) may: (i) recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction, or (ii) make an adjudication application under section 17(1)(b) in relation to the payment claim, and (b) may serve notice on the respondent of the claimant’s intention to suspend carrying out construction work (or to suspend supplying related goods and services) under the construction contract. [page 113] (3) A notice referred to in subsection (2)(b) must state that it is made under this Act. (4) If the claimant commences proceedings under subsection (2)(a)(i) to recover the unpaid portion of the claimed amount from the respondent as a debt: (a) judgment in favour of the claimant is not to be given unless the court is satisfied of the existence of the circumstances referred to in subsection (1), and

(b)

the respondent is not, in those proceedings, entitled: (i) to bring any cross-claim against the claimant, or (ii) to raise any defence in relation to matters arising under the construction contract.

Section 15(1)(b) ‘fails to pay’ [3.140] In Beckhaus Civil Pty Ltd v Brewarrina Shire Council (No 2) [2004] NSWSC 1160, the claimant suspended work as it was entitled to do under s 27(1) as there was a ‘failure to pay’. Under s 27(3) the claimant was not liable to the respondent for liquidated damages for the period of the suspension: at [68], [69]. The question was when did the benefit of s 27(3) come to an end? On 18 November 2002 the amount of the payment claim was paid but on condition of the provision of a bank guarantee by the claimant, which could be drawn upon by the respondent if the respondent’s appeal succeeded against the decision to give judgment on the unanswered payment claim. Macready M held that the claimant did not ‘receive payment’ on 18 November as referred to in s 27(2) (and therefore under s 15(1)(b) had still failed ‘to pay’) as the claimant was unable to receive the benefit of the payment because of the conditions of the provision of a bank guarantee and the security it needed to provide to procure the bank guarantee. Accordingly, the entitlement to suspend the works (and the benefit of s 27(3)) continued beyond 18 November: at [83], [84]. Macready M’s decision on this point was affirmed on appeal (Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2005] NSWCA 248 at [216]–[219]) and the Court of Appeal held that the suspension continued until termination of the contract: at [219]. In Sand Excavation Pty Ltd v Nahas Constructions Pty Ltd [2011] NSWSC 184 at [58] the construction contract provided that: … the Builder shall not be obliged to make a progress payment or the final payment to the Subcontractor if the Subcontractor has failed to …..submit a Subcontractor Declaration in the form contained at Annexure C.

The respondent did not submit a payment schedule in response to the payment claim and resisted the claimant’s summary judgment application on the basis that before the claimant could succeed in its application it needed to establish under s 15(1)(b) that the respondent had failed ‘to pay … the claimed amount on or before the due date for the progress payment to which the payment claim relates’ and that as the ‘due date’ was deferred until the subcontractor declaration was provided, there was no such failure

[page 114] to pay by the due date. Macready AJ held that the clause in the contract which the respondent relied on did not vary the due date for payment, being couched in terms of being a ‘basis for refusing to make a progress payment. On its face it does not touch upon when a progress payment is due for payment. That is a separate temporal matter’: at [66]. Accordingly, it was held that ‘the correct construction of the Act is that the matters which are now raised by the [respondent] are matters of defence which must be raised in a payment schedule served within time and cannot be raised in this hearing under s 15(4) of the Act’: at [67]. Section 15(2) Lengthy summary judgment hearing [3.141] In Baulderstone Hornibrook Pty Ltd v HBO & DC Pty Ltd [2001] NSWSC 821, the court refused to hear a summary judgment application where the defendant/respondent failed to provide a payment schedule within the 10 business day period. The refusal, however, was based on the court’s reluctance to entertain such a summary judgment application which would take longer than one day given the need to (1) decide ‘important issues raised in relation to the Act’ and (2) hear the issues raised by the respondent’s cross-claim. Clearly now in New South Wales s 15(4)(b)(i) would prevent the respondent bringing a cross-claim in the proceedings under the Act and the refusal to hear the summary judgment application would be unlikely to be decided the same way. Section 15(2)(a)(i) and (ii) ‘or’: claimant cannot commence adjudication and then apply for summary judgment [3.142] Where under s 14(1) no payment schedule has been served and the claimant makes an adjudication application, it cannot subsequently rely on the failure to provide the payment schedule to apply for judgment based on that failure: Schokman v Xception Construction Pty Ltd [2005] NSWSC 297 at [22]. That is because the word ‘or’ separating s 15(2)(a)(i) and (ii) is used disjunctively: at [27]. See also Rojo Building Pty Ltd v Jillcris Pty Ltd [2006] NSWSC 309 (affirmed on appeal [2007] NSWCA 68) referred to at [3.166] below and Kell & Rigby Pty Ltd v Guardian International Properties Pty Ltd [2007] NSWSC 554, referred to also at [3.166] below. In Rojo Building Pty Ltd v Jillcris Pty Ltd [2007] NSWSC 880 at [63]

McDougall J said: [N]either the giving of a notice under s 17(2)(a) nor (if it happens) the provision of a payment schedule under s 17(2)(b) constitutes the making of an adjudication application. The claimant is not bound to apply for adjudication after the payment schedule is provided.

Accordingly the giving of a notice under s 17(2)(a) is not ‘of itself sufficient to constitute, or to trigger, the making of any election for which s 15(2)(a) provides’ (at [66]), but McDougall J expressed ‘no view as to whether the claimant could retreat to the other statutory alternative given by s 15(2)(a)’: at [63]. See now Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190 at [216] and [217] where McDougall J held that where the court set aside an adjudication determination (on the basis that the adjudication application was not made in compliance with s 17(2)(a)), the claimant would still have its rights to apply for summary judgment [page 115] based on the respondent’s earlier failure to provide a payment schedule. See [3.274] below. Section 15(2)(a)(i) ‘… recover the unpaid portion … in any court … [3.143] In Siemens Ltd v Origin Energy Uranquinty Power Pty Ltd [2011] NSWSC 195 the respondent applied for a stay of the claimant’s summary judgment proceedings in court. Ball J refused the stay, holding that neither matters referred to adjudication nor a summary judgment application under s 15(2)(a)(i) can be referred to arbitration: see [43], [45]. Ball J said: … s 15(2)(a)(i) specifically says that the claimant may bring proceedings in any court of competent jurisdiction. In doing so, it gives the claimant a right. Section 34 of the SOP Act [Building and Construction Industry (Security of Payment Act) 1999 (NSW)] makes it clear that the claimant cannot contract out of that right. … [I]n my opinion, a provision of an arbitration agreement that prevents a party from exercising a right under s 15(2)(a)(i) to bring proceedings in a court of competent jurisdiction is, to that extent, void under s 34 of the SOP Act: at [45].

Section 15(2)(a)(ii) Abritration agreement will not prevent exercises of rights under s 15(2)(a)(i) [3.144] In Siemens Ltd v Origin Energy Uranquinty Power Pty Ltd [2011] NSWSC 195 the respondent applied for a stay of the claimant’s summary judgment proceedings in court. Ball J refused the stay, holding that neither

matters referred to adjudication nor a summary judgment application under s 15(2)(a)(i) can be referred to arbitration: see [43], [45]: … s 15(2)(a)(i) specifically says that the claimant may bring proceedings in any court of competent jurisdiction. In doing so, it gives the claimant a right. Section 34 of the SOP Act [Building and Construction Industry (Security of Payment Act) 1999 (NSW)] makes it clear that the claimant cannot contract out of that right. … [I]n my opinion, a provision of an arbitration agreement that prevents a party from exercising a right under s 15(2)(a)(i) to bring proceedings in a court of competent jurisdiction is, to that extent, void under s 34 of the SOP Act: at [45].

Section 15(4) Summary judgment [3.145] Macready M, in Isis v Clarence [2004] NSWSC 73, following the Court of Appeal in Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2003] NSWCA 4 held there was a triable issue as to whether the claimant had complied with the contractual requirement that progress claims ‘be supported by evidence of the amount due’ and accordingly summary judgment was refused: at [40]. Section 15(4)(b)(ii) ‘raise any defence … under the construction contract’ [3.146] On appeal against the decision of Macready M, Einstein J in Isis Projects Pty Ltd v Clarence Street Ltd [2004] NSWSC 222 decided that in order for a claimant to establish the respondent’s liability under s 15(1)(a), it must prove that a valid payment claim has been served and prove what is the due date for payment: at [33]. The summary judgment application succeeded before the Master but Einstein J on appeal dismissed the summary judgment application as he found there was a serious issue to be tried, namely whether under the contract a progress claim could be made in respect of work carried out after the date of practical completion and before the final payment claim. Further, this [page 116] issue was not raising ‘any defence in relation to matters arising under the construction contract’ so s 15(4)(b)(ii) did not apply to prevent the issue from being raised. However, upon hearing of the action (that is, not the interlocutory, summary judgment application dealt with by Macready M, and Einstein J on appeal), McDougall J held that where the respondent sought to raise a defence to the payment claim that the payment claim was not supported by the contractually required ‘evidence of the amount due’ or ‘such evidence as the Superintendent may reasonably require’, those defences did come within the prohibition in s

15(4)(b)(ii) of raising defences in relation to matters raised under the construction contract: Isis Projects Pty Ltd v Clarence Street Pty Ltd [2004] NSWSC 714 at [52]–[60] per McDougall J. In Isis Projects Pty Ltd v Clarence Street Pty Ltd [2004] NSWSC 714, McDougall J reconciled his finding in relation to s 15(4)(b)(ii) with Einstein J’s finding in the earlier Isis Projects Pty Ltd v Clarence Street Ltd [2004] NSWSC 222, on the basis that a ‘defence that there is no relevant reference date (that is, that a statutory requirement has not been satisfied) is conceptually different to a defence that some contractually required information has not been supplied (ie a defence, arising under the contract, that a contractual requirement has not been satisfied)’: at [63]. On appeal (Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391, Mason P, Giles and Santow JJA), Mason P delivering the unanimous judgment agreed with McDougall J that the defence sought to be raised by the respondent based on cl 42.1 of the contract ‘trespasses into the area forbidden by s 15(4)(b)(ii)’: at [61]. In Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1 Palmer J held that: … if the respondent does not serve a payment schedule within the time limited under the Act and the claimant ultimately seeks the entry of judgment under s 15(4), the respondent may not resist summary judgment on the ground that the payment claim was not a valid payment claim by reason of noncompliance with the requirements of s 13: the respondent has only one chance to take that objection, namely, in a timeously served payment schedule: at [41].

In Sand Excavation Pty Ltd v Nahas Constructions Pty Ltd [2011] NSWSC 184 the construction contract provided that: … The Builder shall not be obliged to make a progress payment or the final payment to the Subcontractor if the Subcontractor has failed to … submit a Subcontractor Declaration in the form contained at Annexure C: at [58].

The respondent did not submit a payment schedule in response to the payment claim and resisted the claimant’s summary judgment application on the basis that before the claimant could succeed in its application it needed to establish under s 15(1)(b) that the respondent had failed ‘to pay … the claimed amount on or before the due date for the progress payment to which the payment claim relates’ and that as the ‘due date’ was deferred until the subcontractor declaration was provided, there was no such failure to pay by the due date. Macready AJ held that the clause in the contract which the respondent relied on did not vary the due date for payment, being couched in terms of being a ‘basis for refusing to make a progress payment. On its face it does not touch upon when a progress payment is due for payment. That is a separate temporal matter’:

[page 117] at [66]. Accordingly, it was held that ‘the correct construction of the Act is that the matters which are now raised by the [respondent] are matters of defence which must be raised in a payment schedule served within time and cannot be raised in this hearing under s 15(4) of the Act’: at [67]. Section 15(4)(b)(ii) Defence based on Trade Practices breaches [3.147] The respondent’s defence in Lucas Stuart Pty Ltd v Council of the City of Sydney [2005] NSWSC 840 failed, Einstein J holding that: It seems clear that the attempt by the Council to invoke the cause of action under the Trade Practices Act and under the Fair Trading Act, albeit sought to be pleaded in the defence, requires a positive crossclaim proceeding. For that reason alone the Council in relation of those causes of action could not pursue such a cross-claim: s 15(4)(b)(i). The attempt by the Council to invoke the estoppel defence flies in the face of s 15(4)(b)(ii): at [24]–[25].

The Court of Appeal decided subsequently that breaches of the Trade Practices Act 1974 (Cth) (now Competition and Consumer Act 2010) can be pleaded by way of defence to a claim for judgment under s 15 of the Building and Construction Industry Security of Payment Act 1999 (NSW), or by crossclaim: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238 at [90]–[104]. Such a defence is not a matter arising under the contract and so s 15(4)(b)(ii) should not prevent a defence based on such conduct in service of a payment claim: Bitannia at [96] per Hodgson, Tobias and Basten JJA. See also Midcoast County Council v Reed Construction Australia Pty Ltd [2011] NSWCA 268, where the finding was that in fact there was no misleading and deceptive conduct. A party contending in an adjudication application as to certain dates of service of a payment claim and payment schedule, being merely that party’s contentions, could not amount to misleading and deceptive conduct: Reed v Eire [2009] NSWSC 678 at [63]. The mere service of a payment claim ‘cannot … be misleading or deceptive in itself … The real issue is whether the contents of the payment claim amounted to misleading or deceptive conduct’: Stallion Civil Group Pty Ltd v Tresedar Pty Ltd [2009] NSWDC 125 at [47]; and see [48]–[54]. Section 15(4)(b)(ii) Defence that payment claim was served prematurely [3.148] Premature service of a payment claim may have provided a good defence to a payment claim, but because no payment schedule was served, it

cannot subsequently be relied on in defence to the claimant’s application for judgment: Zebicon Pty Ltd v Remo Constructions Pty Ltd [2008] NSWSC 1408 at [33] per McDougall J. See also Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd [2009] NSWSC 477 at [11]–[13]. Section 15(4)(b)(ii) Defence that ‘I am not the party liable’ [3.149] Where the respondent failed to submit a payment schedule or an appearance to court proceedings commenced by the claimant consequent upon that failure, the respondent sought to set aside the judgment arguing it was his company, not him, that was the party to the relevant construction contract. The Court of Appeal held that such a defence was not one prevented by s 15(4)(b) (ii): ‘A defence that “I am not a party to, and thus not liable under, the construction contract” is not a defence arising under the [page 118] contract sued upon. It is a denial of the existence, as between applicant and respondent, of any such contract’: Grave v Blazevic Holdings Pty Ltd [2010] NSWCA 324 at [36]. Successful summary judgment application: costs [3.150] If the summary judgment application is unsuccessful, in NSW at least, there is some authority that the respondent would ordinarily be entitled to a costs order: M&L Watson Pty Ltd t/a BBR Designs v Rilsung Pty Ltd [2003] NSWCA 36 per Meagher, Giles and Santow JJA. Victorian authorities on other types of interlocutory judgments would suggest the result may be different in Victoria: see, for example, Aquatec-Maxcon Pty Ltd v Minson Nacap Pty Ltd [2005] VSCA 167. Stay of summary judgment [3.151] Where the claimant is entitled to summary judgment for a statutory debt, for example, where the respondent fails to serve a payment schedule in response to a valid payment claim, if a stay of orders is sought, the period of the stay should only be sufficient for the respondent to urgently apply to the Court of Appeal for an extension of the stay: Barclay Mowlem Construction Ltd v Estate Property Holdings Pty Ltd [2004] NSWSC 658 at [5] per Einstein J. Further, a

stay of part only of the amount the subject of the summary judgment might be ordered: Barclay Mowlem at [8]–[9] per Einstein J. In McLaughlin’s Family Restaurant v Cordukes Ltd [2004] NSWCA 447, the claimant obtained judgment under s 15(2)(a)(i); the respondent appealed the judgment and sought a stay of the judgment pending the appeal. Giles JA in the Court of Appeal held that relevant matters in deciding to grant a stay included: 1. the apparent merits of the proposed appeal (at [7]); 2. any evidence that the payment of the judgment sum will cause hardship to the respondent, or if the appeal succeeds whether the claimant may be unable to repay the judgment sum plus interest (at [9]); and 3. ‘an approach by which in circumstances such as the present the Court should be reluctant to grant a stay where there is no case of hardship and the final position between the parties can be worked out in the larger proceedings which the claimant is to bring’ (at [10]), agreeing with Hodgson JA in Herscho v Expile Pty Ltd [2004] NSWSC 468. In Lucas Stuart Pty Ltd v Council of the City of Sydney [2005] NSWSC 925, Palmer J at first instance refused a stay of the summary judgment which was sought by the respondent where the respondent had in the Court of Appeal only obtained a limited stay (the stay granted by the Court of Appeal was until the claimant provided a parent company guarantee for the repayment of the judgment debt should the respondent’s appeal against the summary judgment be successful). [page 119] VICTORIAN ACT: CONSEQUENCES OF NOT PAYING CLAIMANT WHERE NO PAYMENT SCHEDULE (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 16 Consequences of not paying claimant where no payment schedule (1) This section applies if the respondent — (a) becomes liable to pay the claimed amount to the claimant under section 15(4) as a consequence of having failed to provide a payment schedule to the claimant within the time allowed by that section; and

(b)

fails to pay the whole or any part of the claimed amount on or before the due date for the progress payment to which the payment claim relates. (2) In those circumstances, the claimant — (a) may recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction; and (b) may serve notice on the respondent of the claimant’s intention — (i) to suspend carrying out construction work under the construction contract; or (ii) to suspend supplying related goods and services under the construction contract. (3) A notice referred to in subsection (2)(b) must state that it is made under this Act. (4) Judgment in favour of the claimant is not to be entered unless the court is satisfied of the existence of the circumstances referred to in subsection (1). Summary judgment application [3.152] The claimant’s summary judgment application failed in the first case in Victoria to consider the Act, The Concrete Panel Co Pty Ltd v Advanced Storage Systems (Vic) Pty Ltd [2004] VCC 2; [2004] VCC 114, where Shelton J of the County Court applied Jemzone Pty Ltd v Trytan Pty Ltd [2002] NSWSC 395 in holding that the serious issues to be tried which were sufficient to defeat the summary judgment application were whether the Act applied to final claims and whether the payment claim sufficiently identified the construction work. In a case decided only months after Concrete Panel Shelton J gave summary judgment (in AMD Formwork Pty Ltd v Yarraman Construction Group Pty Ltd [2004] VCC 17) in favour of the claimant, deciding to follow the NSW approach in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 and John Holland Pty Ltd v Cardno MBK (NSW) Pty Ltd [2004] NSWSC 258 and move away from an overly strict interpretation of s 15 (s 14 of the Victorian Act). Summary judgment was granted for claim number 6 even though it incorporated claims 4 and 5 which did not state they were made under the Act. A term in a construction contract that ‘Terms. Payment is due 30 days from date of invoice’ did not amount to a reference date ‘determined by or in accordance with the terms of the contract’ under s 9(2)(a)(ii) of the Victorian Act: ADH Plant Hire Pty Ltd

[page 120] v Construct Co Pty Ltd [2004] VCC 53. Accordingly the claimant’s summary judgment application under s 16 failed (even though no payment schedule was provided) as the relevant payment claims were served before the reference date provided under s 9(2)(b) and ss 15 and 16 were ‘not enlivened’: at [14], [15]. ‘If a party upon whom a payment claim is served does not provide a payment schedule within the time limited, it cannot oppose a summary judgment application on the basis that the payment claim was not a valid claim’: Cooper Morison Pty Ltd v Casa D’Abruzzo Club [2006] VCC 184 at [10] per Shelton J, applying Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) [2005] NSWCA 409 and Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1. Further, Shelton J held that breaches by the claimant under the construction contract are not available as a defence to a claim under the Act under s 16: at [11]. However, see the Fifty Sixth Taljan Pty Ltd v Dattilo Holdings Pty Ltd [2007] VSC 226 decision referred to below. In TS Constructions Pty Ltd v Piecor Pty Ltd [2009] VCC 1045 the respondent defended a summary judgment application on three grounds: that at the time the claimant was not entitled to deliver a payment claim, that it had not provided the required statutory declarations, and that the claimant’s claim was an abuse of process as it was claiming for the same amounts that the claimant’s subcontractor had claimed on it and it had rejected. Because the respondent had failed to serve a payment schedule, Shelton J held that it ‘is now too late to raise these matters’: at [13]. The claimant’s summary judgment application based on the respondent’s failure to provide a payment schedule failed in Fifty Sixth Taljan Pty Ltd v Dattilo Holdings Pty Ltd [2007] VSC 226, the respondent relying in part on a claim to set-off. The decision involved an unusual set of circumstances where the original contract was replaced by a subsequent contract because the claimant had apparently omitted to make sufficient allowance for the cost of structural steel. There was disputed evidence about representations as to the obtaining of alternative finance for the project and the representations leading up to the execution of the new contract: at [19]. In its defence and counterclaim the respondent alleged negligence of the claimant in omitting the steelworks from its original price and alleged that it relied on representations by the claimant that the claimant would not make further progress claims until alternative finance was

obtained by the respondent. The summary judgment application was refused by Williams J who held: … I am not satisfied that the Act operated, as the plaintiff contends, to prevent the defendant from defending the progress payment claim on the basis of an estoppel or its right to set off in respect of a claim against the plaintiff. As was conceded by counsel for the defendant, the situation might well have been different, had s 16(4) mirrored the subsection as it presently stands and the provisions of s 15(4) of the New South Wales legislation considered by Einstein J in [Lucas Stuart Pty Ltd v Council of the City of Sydney [2005] NSWSC 840]. I do not regard Habersberger J’s decision in the summary judgment application in [Abigroup Contractors Pty Ltd v River Street Developments Pty Ltd [2005] VSC 425] as an expression of a contrary view. His Honour did note arguments relating to the availability of an entitlement to set-off, but, referring to the principles applicable to a summary judgment application, said no more: at [73].

Approach to be adopted on hearing of summary judgment application [3.153] In Brady Constructions Pty Ltd v Dominion Lifestyle Tower Apartments Pty Ltd [2006] VCC 1830 at [4] Shelton J, citing Fancourt v Mercantile Credits Ltd (1983) 154 [page 121] CLR 87, held that the approach to be adopted on the hearing of a summary judgment application is: The power to order summary judgment or final judgment is one that should be exercised with great care. It should never be exercised unless it is clear that there is no real question to be tried.

In Fifty Sixth Taljan Pty Ltd v Dattilo Holdings Pty Ltd [2007] VSC 226, Williams J also cited with approval the test in Fancourt v Mercantile Credits Ltd and added that: Further, in such an application, the court should be reluctant to try a case on affidavit where the facts are in dispute. Nevertheless, it must consider whether the defendant’s account is credible in all the circumstances: at [42].

In Abigroup Contractors Pty Ltd v River Street Developments Pty Ltd [2006] VSC 425 the claimant’s summary judgment application based on the respondent’s alleged failure to provide a payment schedule failed before Habersberger J who held that: … I have concluded that it is not possible to say that I am left in no doubt on the whole of the material that there are no real questions to be tried. In particular I consider that each of the issues of “Service”, “The Payment Claim”, “No Payment Schedule” and “A Superseded Payment Claim” definitely raises a real question to be tried. In reaching that conclusion I have borne in mind [counsel for the plaintiff’s] exhortation not to overlook that any judgment, whether summary or not, is only provisional pending the final determination of the rights of the parties: at [81].

Following well established practice on summary judgment procedures, Habersberger J did not provide detailed reasons for his determination but indicated that his reasons were to be found ‘in some of the relevant submissions made by [River Street Developments]’ which were set out in the judgment. See [36]–[48] for the submissions made as to ‘Service’, [49]–[52] for the submissions made on ‘The Payment Claim’, [64]–[72] for the submissions on ‘No Payment Schedule’ and [79]–[80] for the submissions made on ‘A Superseded Payment Claim’. Set-off to summary judgment application and O 13.14 of Supreme Court Rules [3.154] Rule 13.14 of the Victorian Supreme Court Rules cannot be relied on to enable the respondent to plead a set-off to a summary judgment application: AMD Formwork Pty Ltd v Yarraman Construction Group Pty Ltd [2004] VCC 17 at [24] applying LU Simon Builders Pty Ltd v Fowles [1992] 2 VR 189. But see, however, the later decision of Shelton J in Brady Constructions Pty Ltd v Dominion Lifestyle Tower Apartments Pty Ltd [2006] VCC 1830 where, after referring to O 13.14 of the County Court Rules (see below), he held that in the circumstances there was ‘a question to be tried both with respect to the defendant’s claims for liquidated damages and defective work and on the proper construction of the February 2006 Agreement, the March 2006 Agreement, and the Contract, the defendant is not precluded from raising these matters by way of set-off. These claims for damages exceed the plaintiff’s claim … I conclude that the plaintiff is not entitled to summary judgment’: at [54]. Set-off was also raised by the respondent in Abigroup Contractors Pty Ltd v River Street Developments Pty Ltd [2006] VSC 425 as one basis of defence to the claimant’s summary judgment application based on the respondent’s alleged failure to provide a payment schedule. Habersberger J decided that in light of the various matters raised in defence to the summary judgment application, ‘I have concluded that it is not possible to [page 122] say that I am left in no doubt on the whole of the material that there are no real questions to be tried’ although his Honour did not refer specifically to the set-off argument as one of those matters in the material: at [81]. However, in Christos Charisiou Building Group Pty Ltd v Geopec Pty Ltd

[2006] VCC 1831 the respondent’s claim that it had a set-off and/or counterclaim for liquidated damages, incomplete and defective works and a credit for works not done was not sufficient to defeat the summary judgment application based on the respondent’s failure to provide a payment schedule. Shelton J held that ‘Mr Shaw properly submitted that such matters were irrelevant to the plaintiff’s statutory entitlement under the Act’: at [15]. See also the New South Wales cases referred to at: [3.140] Section 15(1)(b) ‘fails to pay’; [3.151] Stay of summary judgment; which should be persuasive authority in Victoria. The New South Wales cases at [3.141], [3.142] and [3.146] were decided under sections of the NSW Act not in the Victorian Act but Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1 was cited with approval by Shelton J in Age Old Builders Pty Ltd v Arvanitis [2006] VCC 1827 at [25]. In Age Old Builders Shelton J rejected the respondent’s argument that the claimant did not make its claim in good faith as the claimant was aware that the respondent had alleged defects and incomplete work: In my view the plaintiff cannot be said to show a lack of good faith by merely using the procedures open to it under the Act to bring matters to a head in an effort to resolve the dispute between the parties: at [26].

VICTORIAN ACT: CONSEQUENCES OF NOT PAYING CLAIMANT WHERE NO PAYMENT SCHEDULE (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 16 Consequences of not paying claimant where no payment schedule (1) This section applies if the respondent — (a) becomes liable to pay the claimed amount to the claimant under section 15(4) as a consequence of having failed to provide a payment schedule to the claimant within the time allowed by that section; and (b) fails to pay the whole or any part of the claimed amount on or before the due date for the progress payment to which the payment claim relates. (2) In those circumstances, the claimant — (a) may —

(i) (ii)

recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction; or make an adjudication application under section 18(1)(b) in relation to the payment claim; and [page 123]

(b)

may serve notice on the respondent of the claimant’s intention — (i) to suspend carrying out construction work under the construction contract; or (ii) to suspend supplying related goods and services under the construction contract. (3) A notice referred to in subsection (2)(b) must state that it is made under this Act. (4) If the claimant commences proceedings under subsection (2)(a)(i) to recover the unpaid portion of the claimed amount from the respondent as a debt — (a) judgment in favour of the claimant is not to be given unless the court is satisfied — (i) of the existence of the circumstances referred to in subsection (1); and (ii) that the claimed amount does not include any excluded amount; and (b) the respondent is not, in those proceedings, entitled — (i) to bring any cross-claim against the claimant; or (ii) to raise any defence in relation to matters arising under the construction contract. Section 16(2)(a)(i) ‘or’ [3.155] Although Shelton J agreed with Schokman v Xception Constructions Pty Ltd [2005] NSWC 297 (that ‘or’ in s 15(2)(a)(1) of the NSW Act is used disjunctively), the claimant in AC Hall Airconditioning Pty Ltd v Schiavello (Vic) Pty Ltd [2008] VCC 1169 could still commence court proceedings seeking summary judgment, as the earlier adjudication application being a nullity meant

that no election under s 16(2)(a) of the Victorian Act had been made by the claimant: at [36]. Section 16(2)(a)(i) ‘court of competent jurisdiction’ and VCAT [3.156] In Professional Floor Services Pty Ltd v Techor Developments Pty Ltd [2009] VCC 0560 where the claimant commenced court proceedings seeking summary judgment under the Act, the respondent argued that as it had commenced Victorian Civil and Administrative Tribunal (VCAT) proceedings, the claim under the Act could be dealt with by VCAT and therefore under the County Court Civil Procedure Rules 2008 r 8.09(9), and sought orders setting the County Court proceeding aside. The respondent relied on s 111 of the Fair Trading Act 1999 (Vic) which provided that: Exclusion of other jurisdiction (1) Once an application has been made to the Tribunal in accordance with the Victorian Civil and Administrative Tribunal Act 1998 in respect of a consumer and trader dispute or in respect of any other matter in respect of which the Tribunal has jurisdiction under this Act, the issues in dispute are not justiciable at any time by a court unless — (a)

the proceeding in that court was commenced before the application to the Tribunal was made and that proceeding is still pending; or

[page 124] (b) (c)

the application to the Tribunal is withdrawn or struck out for want of jurisdiction; or the Tribunal refers to proceeding to that court under section 77 of the Victorian Civil and Administrative Tribunal Act 1998.

(2) Subsection (1) applies to all the issues in dispute, whether as shown in the application or emerging in the course of the proceeding in the Tribunal.

Shelton J held that VCAT is not a ‘court of competent jurisdiction’ as referred to in s 16(2)(a)(i). Accordingly, the application to set the County Court proceeding aside was dismissed. Section 16(4) means VCAT does not have jurisdiction to deal with a claim under the Act [3.157] ‘To imply that VCAT has jurisdiction to deal with [a claim under the Act] is totally inconsistent with s 16(4)’ (Professional Floor Services Pty Ltd v Techor Developments Pty Ltd [2009] VCC 0560 at [22]) and s 47(3) which ‘envisages that a Tribunal such as VCAT might hear disputes under a construction contract separately from proceedings under the Act’: at [23].

Section 16(4)(a)(i) ‘… unless the court is satisfied …’ [3.158] Where no appearance was filed and judgment was entered under the rules of the court s 16(4)(a)(i) does not invalidate the judgment because ‘the court’ has not been ‘satisfied’ as to the matters in s 16(4)(a)(i) — that is because ‘every allegation of fact in the statement of claim is taken to be admitted’: LJH Blue Pty Ltd v AXF Construction Pty Ltd [2010] VCC 0485 at [15]. Section 16(4)(a)(ii) ‘… the claimed amount does not include any excluded amount …’ [3.159] In AC Hall Airconditioning Pty Ltd v Schiavello (Vic) Pty Ltd [2008] VCC 1490 Shelton J granted summary judgment for that portion of the payment claim that did not include ‘excluded amounts’, notwithstanding the requirement in s 16(4)(a)(ii) that the claimed amount did not include ‘any’ excluded amount. Shelton J rejected the respondent’s submission that the section did not allow ‘for the principle of proportionality … to grant a judgment only “to the extent” that it does not constitute an “excluded amount”’: at [37]. Shelton J refused a summary judgment application where the respondent relied on the submission of subsequent lesser invoice amounts to obtain payment from the respondent and a plea of ‘settled amounts’ as those invoices were arguable and there was therefore a real question to be tried: Arrow International Australia Ltd v 77 Bouverie Pty Ltd [2009] VCC 1503 at [15], [16], [18]. In A&M Wilson Building Contractors Pty Ltd v Lavander Pty Ltd [2009] VCC 1504, the respondent’s defences that the name included on the payment claim was wrong and that the claimant had no contractual entitlement to serve a payment claim were rejected by Shelton J as it failed to provide a payment schedule. See the Victorian cases decided under the unamended Victorian Act referred to at: [3.152] Summary judgment application; [3.153] Approach to be adopted on hearing of summary judgment application; [3.154] Set-off to summary judgment application and O 13.14 of Supreme Court Rules; [page 125]

which may be relevant to interpreting the Act as amended but the new s 16(4) (b), which precludes cross-claims and defences in relation to matters arising under the construction contract, could well change the result in some of those cases if decided now. Section 16(4)(b)(i) ‘… raise any defence…’ and misleading and deceptive conduct [3.160] In Geotech Pty Ltd v Drakk Constructions Pty Ltd [2010] VCC 0484, the respondent attempted to defend the summary judgment application where no payment schedule had been provided, on the basis that there were misleading and deceptive representations in breach of s 52 of the Trade Practices Act (now s 18 of the Australian Consumer Law) as to the level of skill, experience and competence of the contractor claimant. Shelton J granted summary judgment for the amount claimed. After reviewing earlier decisions where a defence of misleading and deceptive conduct had succeeded (primarily Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9) Shelton J noted that in Bitannia: The three Judges of Appeal are at pains to limit the decision to misleading or deceptive conduct leading to the failure to provide a payment schedule. Here the alleged misleading or deceptive conduct is, in my view, more correctly categorised as being “under the construction contract” and accordingly the defence failed: at [20].

NSW ACT: CONSEQUENCES OF NOT PAYING IN ACCORDANCE WITH PAYMENT SCHEDULE 16 Consequences of not paying claimant where no payment schedule (1) This section applies if: (a) a claimant serves a payment claim on a respondent, and (b) the respondent provides a payment schedule to the claimant: (i) within the time required by the relevant construction contract, or (ii) within 10 business days after the payment claim is served, whichever time expires earlier, and (c) the payment schedule indicates a scheduled amount that the respondent proposes to pay to the claimant, and (d) the respondent fails to pay the whole or any part of the scheduled amount to the claimant on or before the due date for the progress payment to which the payment claim relates.

(2) In those circumstances, the claimant: (a) may: (i) recover the unpaid portion of the scheduled amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction, or (ii) make an adjudication application under section 17(1)(a)(ii) in relation to the payment claim, and (b) may serve notice on the respondent of the claimant’s intention to suspend carrying out construction work (or to suspend supplying related goods and services) under the construction contract. [page 126] (3) A notice referred to in subsection (2)(b) must state that it is made under this Act. (4) If the claimant commences proceedings under subsection (2)(a)(i) to recover the unpaid portion of the scheduled amount from the respondent as a debt: (a) judgment in favour of the claimant is not to be given unless the court is satisfied of the existence of the circumstances referred to in subsection (1), and (b) the respondent is not, in those proceedings, entitled: (i) to bring any cross-claim against the claimant, or (ii) to raise any defence in relation to matters arising under the construction contract. Section 16(2) only applies if requirements of s 16(2) satisfied [3.161] In Rubana Holdings Ltd v 3D Commercial Interiors Pty Ltd [2008] NSWSC 1405, McDougall J held that the ‘alternatives’ provided for in s 16(2) only applied if the requirements of s 16(1) were satisfied: where a payment schedule indicated a negative amount it did not set out any amount the respondent ‘proposes to pay’ and therefore s 16(2) ‘has not been engaged’: at [27]. Accordingly, McDougall J was prepared to hold that the decision in Schokman v Xception Constructions Pty Ltd [2005] NSWSC 297 concerning s 15(1) could equally apply to s 16(2). On the facts of Rubana Holdings the

claimant was not bound by its initial decision to commence court proceedings and could subsequently issue an adjudication application under s 16(a)(ii). Section 16(2)(a) Claimant can enforce claims concurrently by court proceedings and adjudication [3.162] In Rubana Holdings Ltd v 3D Commercial Interiors Pty Ltd [2008] NSWSC 1405, McDougall J held that the decision in Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2005] NSWCA 49 applied equally to s 16(2)(a) so that a claimant could enforce its claims concurrently by adjudication and court proceedings: at [29], [30]. VICTORIAN ACT: CONSEQUENCES OF NOT PAYING CLAIMANT IN ACCORDANCE WITH PAYMENT SCHEDULE (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 17 Consequences of not paying claimant in accordance with payment schedule (1) This section applies if — (a) a claimant serves a payment claim on a respondent; and (b) the respondent provides a payment schedule to the claimant — (i) within the time required by the relevant construction contract; or (ii) within 10 business days after the payment claim is served — whichever time expires earlier; and [page 127] (c)

the payment schedule indicates a scheduled amount that the respondent proposes to pay to the claimant; and (d) the respondent fails to pay the whole or any part of the scheduled amount to the claimant on or before the due date for the progress payment to which the payment claim relates. (2) In those circumstances, the claimant — (a) may recover the unpaid portion of the scheduled amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction; and

(b)

may serve notice on the respondent of the claimant’s intention to suspend — (i) carrying out construction work under the construction contract; or (ii) supplying related goods and services under the construction contract. (3) A notice referred to in subsection (2)(b) must state that it is made under this Act. (4) Judgment in favour of the claimant is not to be entered unless the court is satisfied of the existence of the circumstances referred to in subsection (1). VICTORIAN ACT: CONSEQUENCES OF NOT PAYING CLAIMANT IN ACCORDANCE WITH PAYMENT SCHEDULE (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 17 Consequences of not paying claimant in accordance with payment schedule (1) This section applies if — (a) a claimant serves a payment claim on a respondent; and (b) the respondent provides a payment schedule to the claimant — (i) within the time required by the relevant construction contract; or (ii) within 10 business days after the payment claim is served — whichever time expires earlier; and (c) the payment schedule indicates a scheduled amount that the respondent proposes to pay to the claimant; and (d) the respondent fails to pay the whole or any part of the scheduled amount to the claimant on or before the due date for the progress payment to which the payment claim relates. (2) In those circumstances, the claimant — (a) may — (i) recover the unpaid portion of the scheduled amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction; or (ii) make an adjudication application under section 18(1)(a)(ii)

in relation to the payment claim; and [page 128] (b)

may serve notice on the respondent of the claimant’s intention to suspend — (i) carrying out construction work under the construction contract; or (ii) supplying related goods and services under the construction contract. (3) A notice referred to in subsection (2)(b) must state that it is made under this Act. (4) If the claimant commences proceedings under subsection (2)(a)(i) to recover the unpaid portion of the scheduled amount from the respondent as a debt — (a) judgment in favour of the claimant is not to be given unless the court is satisfied of the existence of the circumstances referred to in subsection (1); and (b) the respondent is not, in those proceedings, entitled — (i) to bring any cross-claim against the claimant; or (ii) to raise any defence in relation to matters arising under the construction contract. Section 17(2)(a)(i) and s 17(4)(b)(ii) Misleading and deceptive conduct as a defence to summary judgment applications [3.163] Shelton J in Winslow Constructors Pty Ltd v John Holland Rail Pty Ltd [2008] VCC 1491 refused the claimant’s summary judgment application based on the respondent’s payment schedule which indicated the respondent proposed to pay $313,564. The respondent said when it issued the payment schedule it was not aware of misleading and deceptive conduct of the claimant in cancelling bank guarantees and in relation to statutory declarations as to payment of subcontractors. Shelton J applied Bittannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238 and held that the payment claims were ‘tainted with misleading or deceptive or unconscionable conduct’ and if the respondent had been aware of that it would not have issued the same payment schedules: at [17]. However, where the alleged misleading and deceptive conduct was unrelated

to the failure to submit a payment schedule, s 16(4)(b) prevented reliance on the conduct complained of: Geotech Pty Ltd v Drakk Constructions Pty Ltd [2010] VCC 0484 at [20]: see [3.60] above. NSW ACT: ADJUDICATION APPLICATIONS Division 2 — Adjudication of disputes 17 Adjudication applications (1) A claimant may apply for adjudication of a payment claim (an adjudication application) if: (a) the respondent provides a payment schedule under Division 1 but: [page 129] (i)

the scheduled amount indicated in the payment schedule is less than the claimed amount indicated in the payment claim, or (ii) the respondent fails to pay the whole or any part of the scheduled amount to the claimant by the due date for payment of the amount, or (b) the respondent fails to provide a payment schedule to the claimant under Division 1 and fails to pay the whole or any part of the claimed amount by the due date for payment of the amount. (2) An adjudication application to which subsection (1)(b) applies cannot be made unless: (a) the claimant has notified the respondent, within the period of 20 business days immediately following the due date for payment, of the claimant’s intention to apply for adjudication of the payment claim, and (b) the respondent has been given an opportunity to provide a payment schedule to the claimant within 5 business days after receiving the claimant’s notice. (3) An adjudication application: (a) must be in writing, and (b) must be made to an authorised nominating authority chosen by the claimant, and

(c)

in the case of an application under subsection (1)(a)(i) — must be made within 10 business days after the claimant receives the payment schedule, and (d) in the case of an application under subsection (1)(a)(ii) — must be made within 20 business days after the due date for payment, and (e) in the case of an application under subsection (1)(b) — must be made within 10 business days after the end of the 5-day period referred to in subsection (2)(b), and (f) must identify the payment claim and the payment schedule (if any) to which it relates, and (g) must be accompanied by such application fee (if any) as may be determined by the authorised nominating authority, and (h) may contain such submissions relevant to the application as the claimant chooses to include. (4) The amount of any such application fee must not exceed the amount (if any) determined by the Minister. (5) A copy of an adjudication application must be served on the respondent concerned. (6) It is the duty of the authorised nominating authority to which an adjudication application is made to refer the application to an adjudicator (being a person who is eligible to be an adjudicator as referred to in section 18) as soon as practicable.

[page 130] Section 17(1)(a) and (b) and 17(2)(a) [3.164] Section 17(1)(a) applies where the respondent has provided a payment schedule within 10 business days of the payment claim and s 17(1)(b) where the respondent does not so provide a payment schedule within 10 business days but the claimant provides to the respondent the notification referred to in s 17(2)(a). Accordingly the respondent’s contention in Amflo Constructions Pty Ltd v Jefferies [2003] NSWSC 856 that its payment schedule provided after the 10 business day period from the payment claim (which indicated a scheduled amount less than the claimed amount) was made under s 17(1)(a)(i) not s 17(1) (b), failed.

Section 17 Cannot have multiple contracts the subject of an adjudication application [3.165] There ‘can only be one adjudication application for any payment claim’: Rail Corporation of NSW v Nebax Constructions Australia Pty Ltd t/as TrackSyde Constructions [2012] NSWSC 6 at [46]. McDougall J amplified what he held in the Rail Corporation case in his judgment in Class Electrical Services Pty Ltd v Go Electrical Pty Ltd [2013] NSWSC 363, to make it clear that an adjudication application can only have a single construction contract to which the adjudication application relates, not a multiplicity of contracts: at [6]. Section 17(2)(a) and (b) Claimant cannot commence adjudication and then apply for summary judgment [3.166] Once a claimant has provided notification to the respondent under s 17(2)(a) and (b), the claimant cannot rely on the earlier failure by the respondent to provide a payment schedule to apply for judgment under s 15(2)(a)(i) (Rojo Building Pty Ltd v Jillcris Pty Ltd [2006] NSWSC 309; [2007] NSWCA 68), but see the subsequent Rojo decision referred to below. See also Schokman v Xception Constructions Pty Ltd [2005] NSWC 297 referred to above at [3.142] in relation to a similar issue but in the context of s 15(2)(a)(i) and (ii). However, where an adjudication was a nullity because the claimant had failed to comply with the mandatory requirements of s 17(2)(a) (of giving notice to the respondent within 20 business days), the claimant could commence proceedings seeking judgment under s 15(2)(a)(i): Kell & Rigby Pty Ltd v Guardian International Properties Pty Ltd [2007] NSWSC 554 at [25]. ‘Neither the giving of a notice under s 17(2)(a) nor (if it happens) the provision of a payment schedule under s 17(2)(b) constitutes the making of an adjudication application. The claimant is not bound to apply for adjudication after the payment schedule is provided’: Rojo Building Pty Ltd v Jillcris Pty Ltd [2007] NSWSC 880 at [63]. Accordingly, the giving of a notice under s 17(2)(a) is not ‘of itself sufficient to constitute, or to trigger, the making of any election for which s 15(2)(a) provides’ (at [66]) but McDougall J expressed ‘no view as to whether the claimant could retreat to the other statutory alternative given by s 15(2)(a)’: at [63]. Section 17(2)(b) Giving of notice under s 17(2)(b) is not an election [3.167] In Cromer Excavations Pty Ltd v Cruz Concreting Services Pty Ltd

[2011] NSWSC 51 the claimant served a notice on the respondent that it had not received a payment schedule in time and that it intended to proceed to adjudication, and gave the [page 131] claimant five business days to serve a payment schedule. No payment schedule was provided and the claimant did not proceed to adjudication but rather applied for summary judgment. The respondent resisted the summary judgment application on the basis that there was an election by the claimant to go to adjudication under s 17(2) from which it cannot resile. Davies J agreed with Kell & Rigby Pty Ltd v Guardian International Properties Pty Ltd [2007] NSWSC 554 that a distinction must be made between ‘the notice of intention to make the adjudication application and the making of the application itself’: at [44]. Davies J went on to say: It follows, therefore, that the giving of a notice under s 17(2) does not, without anything more, amount to an election between the remedies provided in s 15(2)(a). That is the more so when, as here, there is no evidence that the respondent has acted in any way on the basis that the s 17(2) notice has been served, whether by providing the payment schedule that s 17(2)(b) provides for, or otherwise: at [45].

Section 17(2)(b) ‘after receiving the claimant’s notice’ [3.168] The service of a payment schedule before receiving the claimant’s notice under s 17(2)(a) does not satisfy s 17(2)(b) as it is not served ‘after’ receipt of the notice: Taylor Projects Group Pty Ltd v Brick Dept Pty Ltd [2005] NSWSC 439 at [33]. Section 17(3) Should similar restrictions as in s 20(2B) apply? [3.169] In Minister for Commerce v Contrax Plumbing Pty Ltd [2004] NSWSC 823 McDougall J considered the argument that s 17(3) should have a similar restriction read into it as is in s 20(2B), that is, that the claimant in its adjudication application cannot include any matters not raised in its payment claim. Rejecting this argument, McDougall J held: It would be quite extraordinary if the statutory regime, on its proper construction, prevented an applicant for adjudication from dealing with issues raised by the respondent to adjudication in its payment schedule. Such a construction would mean, in effect, that the applicant would be required to anticipate in its payment claim, and deal with at length, every possible argument that the respondent might rely upon. That would have the effect of increasing enormously the complexity and expense of the statutory procedure: something quite at odds with the statutory objects set out in s 3 and reinforced in the Second Reading Speech: at [60].

But McDougall J (at [57]) appeared to agree with John Holland Pty Ltd v Cardno MBK (NSW) Pty Ltd [2004] NSWSC 258, where Einstein J held that: … a claimant that did not provide sufficient details in its payment claim to enable the respondent to verify or reject (ie, assess) the claim could not include the missing details in its adjudication application. That was because, since the respondent was barred by s 20(2B) from replying to those details (ie, of responding in its adjudication response in a way that did deal with the merits of the claim) the result “may indeed be to abort any determination” …

Section 17(3) claimant knowingly withholding material from adjudicator in its adjudication application may be abuse of process [3.170] The claimant did not put relevant documents before the adjudicator in its adjudication application but the respondent assumed those documents had been provided and made submissions to the adjudicator in support of its response based on its understanding that the documents were before the adjudicator. McDougall J in [page 132] Filadelfia Projects Pty Ltd v EntirITy Business Services Pty Ltd [2010] NSWSC 473 at [9] held that: … [T]aking into account in particular the pressures of time, and other constraints, for which the Act provides in relation to adjudication determinations, it may be arguable that for a claimant knowingly to withhold a material document is akin to an abuse of process. It may be arguable that, given the matters to which I have referred, it is incumbent on a claimant, in much the same way as it is incumbent on an applicant for ex parte relief in this court, to ensure that all material matters are put before the adjudicator.

Section 17(3)(c) ‘… after the claimant receives the payment schedule …’ [3.171] ‘Receive’ does not necessarily require the document to actually come to the attention of the person: it would be sufficient that it arrive at the registered office or ordinary place of business during normal office hours: Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd [2006] NSWCA 259 at [63]. Where a payment schedule was served by one means on a given day and then served by a different means the following day, the 10 business days runs from the first service: ‘I do not think that the process initiated by the service of the payment schedule on 7 December has come to an end because a second copy was served the following day’: JAR Developments Pty Ltd v Castleplex Pty Ltd [2007] NSWSC 737 at [26] per Rein AJ.

A payment schedule is received by the claimant when it arrives at the claimant’s registered office where the claimant is a company: Firedam Civil Engineering Pty Ltd v KJP Construction Pty Ltd [2007] NSWSC 1162, applying Hodgson J’s remarks in Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd [2006] NSWCA 259 at [66]. Section 17(3)(h) ‘Submissions’ and statutory declarations [3.172] The respondent in Austruc Constructions Ltd v ACA Developments Pty Ltd; ACA Developments Pty Ltd v Sarlos [2004] NSWSC 131 alleged denial of natural justice by reason of the adjudicator considering a statutory declaration contained as part of the claimant’s submissions. It was also alleged to be a denial of natural justice that if the adjudicator was going to take into account the statutory declaration he should have given the respondent a reasonable opportunity to reply to it. The respondent argued that ‘submissions’ in s 17(3)(h) did not extend to evidence and therefore did not extend to anything in the nature of a statutory declaration. That argument was rejected by McDougall J who held that a statutory declaration can be considered by the adjudicator. Section 17(3)(h) Submissions to support case, not expand it [3.173] The purpose of the submissions referred to in ss 17(3)(h) and 20(2)(c) is to support the case ‘in the payment claim or payment schedule, but not to expand or vary it’: Energy Australia v Downer Construction (Australia) Pty Ltd [2006] NSWSC 52 at [37]. Section 17(3)(h) Where claimant withdraws adjudication application and makes new application [3.174] Where a claimant under s 26(2) withdraws an adjudication application and makes a new adjudication application the entitlement of the claimant to include such submissions relevant to the application as it chooses to include under s 17(3)(h) does not [page 133] limit the claimant to the submissions contained in the previous application: John Holland Pty Ltd v Made Contracting Pty Ltd [2008] NSWSC 374 at [64]. Section 17(5) 10 business day period does not apply [3.175] Although s 17(5) requires service of the adjudication application on the

respondent, the prescribed period of 10 business days in s 17(3)(c) to make the adjudication application does not apply to service on the respondent: Air Dynamics Control & Services Contracting Pty Ltd v Durham [2005] NSWSC 861 at [31], [32]. Even if service on the respondent was required within the 10 business days, it is not an essential precondition for the existence of an adjudicator’s determination: at [34], [35]. Section 17(5) Failure to serve adjudication application is a denial of natural justice [3.176] Although service of an adjudication application under s 17(5) is not one of the basic and essential requirements under Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2004] NSWCA 394, failure to do so ‘to the extent that the Act requires service would ordinarily be a denial of that measure of natural justice to which a respondent is entitled under the … Act’: Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 13 at [48], [50]. Anti-suit injunction to restrain claimant and authorised nominating authority [3.177] In Australian Remediation Services Pty Ltd v Earth Tech Engineering Pty Ltd [2005] NSWSC 362, the respondent sought an interlocutory injunction restraining the claimant and the authorised nominating authority from proceeding with the adjudication application and appointing an adjudicator. The respondent said it was seeking an anti-suit injunction and relied on Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd [2005] NSWCA 49, but ‘did not explain how what was said there applied, or related to, the relief claimed’: at [5]. (Indeed it is difficult to see how the decision in Falgat would have assisted the respondent). The primary point, however, of the respondent was that an adjudicator did not have power to determine his or her own jurisdiction and that by making determinations on issues such as whether the work was construction work or whether the payment claim complied with s 13, he or she would be doing so. McDougall J refused an injunction in Australian Remediation Services Pty Ltd v Earth Tech Engineering Pty Ltd [2005] NSWSC 362 holding that in light of Brodyn, ‘adjudicators must be understood to have power to consider whether claims, or components of claims, comprised in adjudication applications can, or cannot, be awarded under the Act’: at [12]. McDougall J also said: In circumstances where the legislature has enacted the legislation to provide, as s 3 of the Act makes clear, a scheme to ensure that any person who undertakes to carry out construction work or supply related goods and services is entitled to recover, and is able to recover, progress payments, I think that

this Court should think long and hard before interfering in the implementation, in a particular case, of that statutory scheme: at [14].

In Lifestyle Retirement Projects No 2 Pty Ltd v Parisi Homes Pty Ltd [2005] NSWSC 411, Palmer J applied Australian Remediation Services to also refuse an application for an injunction in similar terms. [page 134] VICTORIAN ACT: ADJUDICATION APPLICATIONS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 18 Adjudication applications (1) If the scheduled amount indicated by a payment schedule is less than the claimed amount indicated in the payment claim, the claimant may apply for adjudication of the progress payment to be made (an adjudication application). (2) An adjudication application — (a) must be in writing; and (b) must state that the adjudication application is made under this Act; and (c) must identify the payment claim and the payment schedule to which it relates; and (d) may contain any submissions relevant to the application that the claimant chooses to include. (3) An adjudication application — (a) must be made — (i) to an adjudicator chosen by agreement between the claimant and the respondent; or (ii) if no adjudicator is agreed on, to an authorised nominating authority chosen by agreement between the claimant and the respondent; or (iii) if no nominating authority is agreed on, to an authorised nominating authority chosen by the claimant; and (b) must be made within 5 business days after the claimant receives the payment schedule.

No agreement between the claimant and the respondent that was made (4) before the claimant received the payment schedule has any effect in relation to the choice of an adjudicator under subsection (3)(a)(i). (5) A copy of the adjudication must be served on the respondent. (6) This section does not limit the operation of any provision of the construction contract in relation to the resolution of disputes between the claimant and the respondent. (7) It is the duty of an authorised nominating authority to which an adjudication application is made to refer the application to an adjudicator as soon as practicable. (8) An adjudicator chosen by agreement between the claimant and the respondent or to whom an application is referred under subsection (7) must be a person who is eligible to be an adjudicator as referred to in section 19. Section 18(3)(a) Claimant may need to seek agreement to adjudicator under s 18(3)(a)(i) before applying to authorised nominating authority [3.178] In Shelford Engineering and Construction Pty Ltd v Rescom Constructions Pty Ltd [2005] VCC 361, summary judgment for an amount of the adjudicator’s [page 135] determination was refused under s 27(2)(a) of the Victorian Act. Shelton J held that it was arguable that the claimant was required to seek agreement to an adjudicator under s 18(3)(a)(i) failing which to seek agreement to an authorised nominating authority under s 18(3)(a)(ii) before making an application under s 18(3)(a)(iii): at [6-9]. As the claimant failed to seek such agreement under s 18(3)(a)(i) or (ii), the respondent had raised an arguable defence to the summary judgment application. Shelton J distinguished Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2004] NSWCA 394 on the basis that s 17 of the NSW Act is worded differently from s 18 of the Victorian Act. Shelton J in Shelford held that it was open to the respondent to oppose the summary judgment application on the basis that all the elements of the statutory cause of action under the Victorian Act had not been proven by the claimant, but left open the question whether O 56 of the Supreme Court (General Civil

Procedure) Rules 1996 provided an avenue of challenge to the determination: at [12], [13]. See also the New South Wales cases referred to at: [3.172] Section 17(3)(h) ‘Submissions’ and statutory declarations; [3.175] Section 17(5) 10 business day period does not apply; [3.177] Anti-suit injunction to restrain claimant and authorised nominating authority; which should be persuasive authority in Victoria. The New South Wales cases at [3.165] were decided under sections of the NSW Act not the Victorian Act so will be of little relevance in Victoria. VICTORIAN ACT: ADJUDICATION APPLICATIONS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 18 Adjudication applications (1) A claimant may apply for adjudication of a payment claim (an adjudication application) if — (a) the respondent provides a payment schedule under Division 1 but — (i) the scheduled amount indicated in the payment schedule is less than the claimed amount indicated in the payment claim; or (ii) the respondent fails to pay the whole or any part of the scheduled amount to the claimant by the due date for payment of the amount; or (b) the respondent fails to provide a payment schedule to the claimant under Division 1 and fails to pay the whole or any part of the claimed amount by the due date for payment of the amount. (2) An adjudication application to which subsection (1)(b) applies cannot be made unless — (a) the claimant has notified the respondent, within the period of 10 business days immediately following the due date for payment, of the claimant’s intention to apply for adjudication of the payment claim; and

[page 136] (b)

the respondent has been given an opportunity to provide a payment schedule to the claimant within 2 business days after receiving the claimant’s notice. (3) An adjudication application — (a) must be in writing; and (b) subject to subsection (4), must be made to an authorised nominating authority chosen by the claimant; and (c) in the case of an application under subsection (1)(a)(i), must be made within 10 business days after the claimant receives the payment schedule; and (d) in the case of an application under subsection (1)(a)(ii), must be made within 10 business days after the due date for payment; and (e) in the case of an application under subsection (1)(b), must be made within 5 business days after the end of the 2 day period referred to in subsection (2)(b); and (f) must identify the payment claim and the payment schedule (if any) to which it relates; and (g) must be accompanied by the application fee (if any) determined by the authorised nominating authority; and (h) may contain any submissions relevant to the application that the claimant chooses to include. (4) If the construction contract to which the payment claim relates lists 3 or more authorised nominating authorities, the application must be made to one of those authorities chosen by the claimant. (5) A copy of the adjudication application must be served on the respondent. [Section 18(6) repealed] (7) It is the duty of an authorised nominating authority to which an adjudication application is made to refer the application to an adjudicator as soon as practicable. (8) An adjudicator to whom an application is referred under subsection (7) must be a person who is eligible to be an adjudicator as referred to in section 19. [3.179] The amended s 18 in Victoria is in almost identical terms to s 17 in New

South Wales, but some of the time periods in Victoria are shorter. Also, in Victoria the claimant can be obliged to choose an authorised nominating authority from a minimum of three listed in the construction contract: s 18(4). In AC Hall Air Conditioning Pty Ltd v Schiavello (Vic) Pty Ltd [2008] VCC 1169 the claimant made two failed attempts to refer a payment claim dispute to adjudication. The first failed because the notification of intention to apply for adjudication under s 18(1)(b) was provided before the commencement of the 10 business day period referred to in s 18(2)(a). Accordingly at [26] Shelton J held the adjudication application to be a nullity, applying Kell & Rigby Pty Ltd v Guardian International Properties Pty Ltd [2007] NSWSC 554. [page 137] See also the New South Wales cases referred to at: [3.164] Section 17(1)(a) and (b) and 17(2)(a); [3.166] Section 17(2)(a) and (b) Claimant cannot commence adjudication and then apply for summary judgment; [3.168] Section 17(2)(b) ‘after receiving the claimant’s notice’; [3.171] Section 17(3)(c) ‘… after claimant receives the payment schedule …’; [3.172] Section 17(3)(h) ‘Submissions’ and statutory declarations; [3.173] Section 17(3)(h) Submissions to support case, not expand it; [3.174] Section 17(3)(h) Where claimant withdraws adjudication application and makes new applications; [3.175] Section 17(5) 10 business day period does not apply; [3.177] Anti-suit injunction to restrain claimant and authorised nominating authority; which should be persuasive authority in Victoria as the relevant parts of s 17 in New South Wales and s 18 in Victoria are almost identical. The cases referred to at [3.169] are not relevant in Victoria as Victoria has no equivalent to s 20(2B) in New South Wales. Section 18(3)(c) ‘… must be made within 10 business days …’ [3.180] Although s 18(3)(c) uses the word ‘must’, non-compliance with s 18(3)

(c) does not render the adjudication application invalid: Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd [2009] VSC 156 at [136], [146]. In 470 St Kilda Road Pty Ltd v Reed Constructions Australia Pty Ltd [2012] VSC 235 at [62], Vickery J held that the time regime in s 18(3) ‘is not a basic and essential requirement resulting in an invalid determination if the … adjudication application is not made within time’. This is because the Act gives jurisdiction to the adjudicator to determine the matter. NSW ACT: ELIGIBILITY CRITERIA FOR ADJUDICATORS 18 Eligibility criteria for adjudicators (1) A person is eligible to be an adjudicator in relation to a construction contract: (a) if the person is a natural person, and (b) if the person has such qualifications, expertise and experience as may be prescribed by the regulations for the purposes of this section. (2) A person is not eligible to be an adjudicator in relation to a particular construction contract: (a) if the person is a party to the contract, or (b) in such circumstances as may be prescribed by the regulations for the purposes of this section. [3.181] There have been no reported decisions dealing with s 18 in New South Wales. [page 138] VICTORIAN ACT: ELIGIBILITY CRITERIA FOR ADJUDICATORS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 19 Eligibility criteria for adjudicators (1) A person is eligible to be an adjudicator in relation to a construction

contract — (a) if the person is a natural person; and (b) if the person has any qualifications, expertise and experience that may be prescribed for the purposes of this section. (2) A person is not eligible to be an adjudicator in relation to a particular construction contract — (a) if the person is a party to the contract; or (b) if the person is an employee of a party to the contract; or (c) in the circumstances that are prescribed for the purposes of this section; or (d) if the person is in a class or person that is prescribed for the purposes of this section. VICTORIAN ACT: ELIGIBILITY CRITERIA FOR ADJUDICATORS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 19 Eligibility criteria for adjudicators (1) A person is eligible to be an adjudicator in relation to a construction contract — (a) if the person is a natural person; and (b) if the person has any qualifications, expertise and experience that may be prescribed for the purposes of this section. (2) A person is not eligible to be an adjudicator in relation to a particular construction contract — (a) if the person is a party to the contract; or (b) if the person is an employee of a party to the contract; or (c) in the circumstances that are prescribed for the purposes of this section; or (d) if the person is in a class of person that is prescribed for the purposes of this section.

[page 139] NSW ACT: ADJUDICATOR’S APPOINTMENT

19 Appointment of adjudicator (1) If an authorised nominating authority refers an adjudication application to an adjudicator, the adjudicator may accept the adjudication application by causing notice of the acceptance to be served on the claimant and the respondent. (2) On accepting an adjudication application, the adjudicator is taken to have been appointed to determine the application. Adjudicator incorrectly determines respondent out of time to submit adjudication response because he/she was wrong about date he/she served notice of acceptance of nomination [3.182] The adjudicator did not serve notice of acceptance on the respondents under s 19 until some seven days after the adjudicator believed he/she had done so and then took the view that the respondents were out of time to lodge an adjudication response. McDougall J held that the respondents were entitled to relief under the Brodyn (Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2004] NSWCA 394) principle either because of failure to comply with basic and essential requirements of the Act or because of the denial of natural justice in failing to allow the respondents to file an adjudication response: Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2005] NSWSC 378 at [40]. Section 19 has no time for reference of application to adjudicator or for adjudicator to accept [3.183] In Veolia Water Solutions & Technologies v Kruger Engineering Australia Pty Ltd [2006] NSWSC 1406 at [26]–[27] McDougall J said that s 19, which deals with the appointment of adjudicators, ‘does not in terms specify any time within which an application is to be referred, or within which the adjudicator is to accept. A time line may be inferred from s 26(1)(a), but that is a section which gives rights to a claimant’. VICTORIAN ACT: APPOINTMENT OF ADJUDICATOR (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 20 Appointment of adjudicator (1) An adjudicator accepts an adjudication application by causing notice of

an acceptance to be served on the claimant and the respondent. (2) The acceptance takes effect when the last of the notices is served under subsection (1). (3) On accepting an adjudication application, the adjudicator is taken to have been appointed to determine the application. (4) An adjudicator must give a copy of a notice of acceptance under subsection (1) to the Building Commission within 10 business days after accepting an adjudication application under subsection (1).

[page 140] VICTORIAN ACT: APPOINTMENT OF ADJUDICATOR (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 20 Appointment of adjudicator (1) An adjudicator accepts an adjudication application by causing notice of acceptance to be served on the claimant and the respondent. (2) The acceptance takes effect when the last of the notices is served under subsection (1). (3) On accepting an adjudication application, the adjudicator is taken to have been appointed to determine the application. (4) An adjudicator must give a copy of a notice of acceptance under subsection (1) to the Authority within 10 business days after accepting an adjudication application under subsection (1). NSW ACT: ADJUDICATION RESPONSES 20 Adjudication responses (1) Subject to subsection (2A), the respondent may lodge with the adjudicator a response to the claimant’s adjudication application (the adjudication response) at any time within: (a) 5 business days after receiving a copy of the application, or (b) 2 business days after receiving notice of an adjudicator’s

acceptance of the application, whichever time expires later. (2) The adjudication response: (a) must be in writing, and (b) must identify the adjudication application to which it relates, and (c) may contain such submissions relevant to the response as the respondent chooses to include. (2A) The respondent may lodge an application response only if the respondent has provided a payment schedule to the claimant within the time specified in section 14(4) or 17(2)(b). (2B) The respondent cannot include in the adjudication response any reasons for withholding payment unless those reasons have already been included in the payment schedule provided to the claimant. (3) A copy of the adjudication response must be served on the claimant. Section 20(1)(a) and (b) ‘lodging’ and ‘receiving’ [3.184] Section 20(1) refers to the respondent lodging an adjudication response within five or two business days of ‘receiving’ the application or adjudicator’s acceptance. In TQM Design & Construct Pty Ltd v Dasein Constructions Pty Ltd [2004] NSWSC 1216 [page 141] McDougall J was ‘inclined to the view’ that the concept of ‘receiving’ should be given its ordinary meaning and was not necessarily the same as ‘served’ in s 17(5): at [5]. In Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2005] NSWSC 378 at [27], McDougall J held that ‘receive’ where used in s 20(1) of the Act must be given its ordinary English meaning which ‘denotes the taking of something into one’s hand or possession, of something given or delivered, or having something delivered or brought to one’. McDougall J went on to say: … This does not mean, in the case of a corporation (at least absent any contractual stipulation to the contrary) a document must come to a particular person within a corporation before it can be received. It means that the document must come into the hand or possession of, or be delivered or brought to, someone on behalf of the corporation; or, perhaps, that otherwise somehow it comes into the hand or possession of, or is delivered or brought to, the corporation: at [27].

In s 20 ‘lodged’ does not require that it actually arrived, so that an adjudication application could be lodged when it was sent to the email address of the authorised nominating authority even if it was caught in the spam filter and not read by the authorised nominating authority: Bauen Constructions Pty Ltd v Sky General Services Pty Ltd [2012] NSWSC 1123 at [71], [75]. Further, because of s 13A of the Electronic Transactions Act 2000 (NSW), when the email got caught in the spam filter it was ‘capable of being retrieved by the addressee at an electronic address’ as referred to in s 13A and therefore it has then been ‘received’ or ‘lodged’: see [76]–[78]. (In Bauen, Sackar J held that although the response had been lodged in time, because it was not considered by the authorised nominating authority ‘it follows that [the respondent] has been denied natural justice, the adjudication having proceeded in the absence of [the respondent] being heard. For this reason … [the adjudication] should be set aside’: at [79].) Section 20(2)(c) Submissions are not to expand or vary the case in payment claim or payment schedule [3.185] The purpose of the submissions referred to in ss 17(3)(h) and 20(2)(c) is to support the case ‘in the payment claim or payment schedule, but not to expand or vary it’: Energy Australia v Downer Construction (Australia) Pty Ltd [2006] NSWSC 52 at [37]. Even before the inclusion of s 20(2B) a respondent was arguably so limited on the basis that ‘the payment claim and payment schedule serve to delimit the issues to which the submissions of a claimant and a respondent may refer’: Parist Holdings Pty Ltd v WT Partnership Australia Pty Ltd [2003] NSWSC 365 at [33]. Operation of s 20(2B) [3.186] Section 20(2B) makes it clear that the respondent is limited in its adjudication response to those reasons set out in its payment schedule for withholding payment. Even before the inclusion of s 20(2B) a respondent was arguably so limited on the basis that ‘the payment claim and payment schedule serve to delimit the issues to which the submissions of a claimant and a respondent may refer’: Parist Holdings Pty Ltd v WT Partnership Australia Pty Ltd [2003] NSWSC 365, at [33]. [page 142]

In John Holland Pty Ltd v Cardno MBK (NSW) Pty Ltd [2004] NSWSC 258, Einstein J held that if a claimant only includes in its payment claim the minimum information necessary to satisfy s 13(2), it may expose itself to an abortive determination where: the claimant in its adjudication application includes the extra information (for example, a new contractual basis for the claim) missing from its payment claim; the adjudicator’s determination relies on the extra information which only appeared in the adjudication application; and the respondent is by s 20(2B) prevented from dealing with that detail in its adjudication response. In those circumstances there could be a denial of natural justice (as the respondent was denied the opportunity of providing submissions on the new information): John Holland at [22], [23], [40], [41]. In Minister for Commerce v Contrax Plumbing Pty Ltd [2004] NSWSC 823 at [66], McDougall J held that notwithstanding s 20(2B) a respondent was entitled to include in its adjudication response submissions on s 34 of the Act that it had not included in its payment schedule. The s 34 issue was only raised for the first time by the claimant in its adjudication application, so if the respondent could not make submissions on the point in its adjudication response this would have operated unfairly on the respondent. Although by s 20(2B) a respondent cannot include new reasons for withholding payment, ‘it would be open to a respondent to argue, either in greater detail or perhaps with more supporting evidence, reasons that had been advanced’: TQM Design & Construct Pty Ltd v Dasein Constructions Pty Ltd [2004] NSWSC 1216 at [30]. Section 20(2B) does not prevent a respondent from asserting that the adjudicator did not have jurisdiction to make a determination, even though that was not a matter raised in the respondent’s payment schedule: Olympia Group (NSW) Pty Ltd v Hansen Yuncken Pty Ltd [2011] NSWSC 165, at [11]. In Leighton v Arogen [2012] NSWSC 1323 the claimant, when submitting its adjudication application, changed the basis of its claim which was in its payment claim. In its adjudication response, the respondent objected to the basis upon which the claim was formulated in the adjudication application because that basis was different from that contained in the payment claim and further stated that ‘if the adjudicator were minded to consider these [matters] … on … the new basis, there were various contractual answers’ (which it provided in its

adjudication response): at [44]. The adjudicator said that s 20(2B) prevented the respondent from relying on those matters because they had not been raised in its payment schedule. McDougall J held that the consequence of an invalid application of s 20(2B) by an arbitrator ‘with the effect … that the respondent is prevented from advancing reasons because the payment claim that is advanced in the adjudication application is different to the one that was advanced in the payment claim and answered in the payment schedule, is to deny the respondent natural justice’: at [84]. Section 20(2B) ‘… reasons for withholding payment’ [3.187] The words ‘reasons for withholding payment’ in s 20(2B) were considered by the Court of Appeal in John Holland Pty Ltd v Roads and Traffic Authority of New South Wales (RTA) [2007] NSWCA 19. Hodgson JA said: [page 143] If a respondent does not propose to pay any amount included in the payment claim for any reasons said to justify non-payment of that amount, then in my opinion that is withholding payment and the reasons are reasons for withholding payment. It does not matter whether the reasons relate to non-performance of work, bad work, set-offs or cross-claims of any kind, contractual provisions limiting the claimant’s right to payment or statutory provisions limiting the claimant’s right to payment, or indeed any other suggested justification. … Indications why the scheduled amount is less, which do not amount to reasons for withholding payment, could be such things as an allegation the payment had already been made, or possibly excuses for nonpayment falling short of alleged justification, such as inability to pay: at [33]–[34].

Hodgson JA held that the submissions made as to jurisdiction were ‘reasons for withholding payment’ within s 20(2B): at [40]. A reason for withholding payment ‘that is precluded by s 20(2B) cannot be a submission duly made in support of the payment schedule for the purposes of s 22(2)(d)’: Broad Construction Services (NSW) Pty Ltd v Vadasz t/as Australasian Piling Co [2008] NSWSC 1057 at [40]. A question about whether an adjudicator had jurisdiction to hear multiple adjudication applications was not a ‘reason for withholding payment’ and therefore was not required to be raised in the payment schedule by s 20(2B): Rail Corporation of NSW v Nebax Constructions Australia Pty Ltd t/as TrackSyde Constructions [2012] NSWSC 6 at [36]. Section 20(2B) must be read with s 22(2) [3.188] See s 22(2) and the cases referred to at [3.203] below: notwithstanding s

20(2B), providing that reasons for withholding payment not included in a payment schedule cannot be included in an adjudication response, the adjudicator may still be obliged to consider such matters under s 22(2)(a) or (b). VICTORIAN ACT: ADJUDICATION RESPONSES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 21 Appointment of adjudicator (1) The respondent may lodge with the adjudicator a response to the claimant’s adjudication application (the adjudication response) at any time within — (a) 5 business days after receiving a copy of the application; or (b) 2 business days after receiving notice of an adjudicator’s acceptance of the application — whichever time expires later. (2) The adjudication response — (a) must be in writing; and (b) must identify the adjudication application to which it relates; and (c) must include the name and address of any relevant principal of the respondent; and (d) may contain any submissions relevant to the respondent that the respondent chooses to include. (3) A copy of the adjudication response must be served on the claimant. [page 144] (4) In this section relevant principal in relation to the respondent, means any person with whom the respondent has entered into a contract for the provision by the respondent of construction work or goods and services if the construction work carried out or the goods and services supplied by the claimant to or for the respondent under the construction contract are, or are part of or incidental to, the construction work or goods and services that the first-mentioned person engaged the respondent to carry out or supply.

[3.189] See the New South Wales cases referred to at: [3.184] Section 20(1)(a) and (b) ‘lodging’ and ‘receiving’; [3.185] Section 20(2)(c) Submissions are not to expand or vary the case in payment claim or payment schedule; which should be persuasive authority in Victoria as the relevant parts of the section in New South Wales considered in those cases is materially the same as Victoria. VICTORIAN ACT: ADJUDICATION RESPONSES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 21 Adjudication responses (1) Subject to subsection (2A), the respondent may lodge with the adjudicator a response to the claimant’s adjudication application (the adjudication response) at any time within — (a) 5 business days after receiving a copy of the application; or (b) 2 business days after receiving notice of an adjudicator’s acceptance of the application — whichever time expires later. (2) The adjudication response — (a) must be in writing; and (b) must identify the adjudication application to which it relates; and (c) must include the name and address of any relevant principal of the respondent and any other person who the respondent knows has a financial or contractual interest in the matters that are the subject of the adjudication application; and (ca) must identify any amount of the payment claim that the respondent alleges is an excluded amount; and (d) may contain any submissions relevant to the response that the respondent chooses to include. (2A) The respondent may lodge an adjudication response only if the respondent has provided a payment schedule to the claimant within the time specified in section 15(4) or 18(2)(b). (2B) If the adjudication response includes any reasons for withholding

payment that were not included in the payment schedule, the adjudicator must serve a notice on the claimant — [page 145] (a) (b)

setting out those reasons; and stating that the claimant has 2 business days after being served with the notice to lodge a response to those reasons with the adjudicator. (3) A copy of the adjudication response must be served on the claimant. (4) In this section relevant principal in relation to the respondent, means any person with whom the respondent has entered into a contract (that is not a construction contract exempted from this Act under section 7(2) (b) or 7(2) (ba)) for the provision by the respondent of construction work or goods and services if the construction work carried out or the goods and services supplied by the claimant to or for the respondent under the construction contract are, or are part of or incidental to, the construction work or goods and services that the first-mentioned person engaged the respondent to carry out or supply. [3.190] The amended Victorian s 21 is similar to s 20 in New South Wales except that: section 21 in Victoria also refers to ‘excluded amounts’; Victoria does not have an equivalent of the s 20(2B) of the NSW Act that prohibits an adjudication response from containing any reasons not in the payment schedule. Victoria has a new procedure where, if there are reasons in the adjudication response not in the payment schedule, the adjudicator must advise the claimant and give it the opportunity to provide a response (s 21(2B)). It would seem, therefore, that a respondent in Victoria can include reasons in an adjudication response that were not included in its payment schedule. See, however, the observations of Vickery J in Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd [2009] VSC 156 at [56] and [57], which suggest that the respondent is limited to the points in its payment schedule; and the Victorian Act also requires the adjudication response to ‘include name and address of any relevant principal’: see s 21(2)(c) and (4).

See the New South Wales cases referred to at: [3.184] Section 20(1)(a) and (b) ‘lodging’ and ‘receiving’, which should be persuasive authority in Victoria as the relevant parts of the section in NSW considered in those cases are materially the same as Victoria. NSW ACT: ADJUDICATION PROCEDURES 21 Adjudication procedures (1) An adjudicator is not to determine an adjudication application until after the end of the period within which the respondent may lodge an adjudication response. (2) An adjudicator is not to consider an adjudication response unless it was made before the end of the period within which the respondent may lodge such a response. [page 146] (3) Subject to subsections (1) and (2), an adjudicator is to determine an adjudication application as expeditiously as possible and, in any case: (a) within 10 business days after the date on which the adjudicator notified the claimant and the respondent as to his or her acceptance of the application, or (b) within such further time as the claimant and the respondent may agree. (4) For the purposes of any proceedings conducted to determine an adjudication application, an adjudicator: (a) may request further written submissions from either party and must give the other party an opportunity to comment on those submissions, and (b) may set deadlines for further submissions and comments by the parties, and (c) may call a conference of the parties, and (d) may carry out an inspection of any matter to which the claim relates. (4A) If any such conference is called, it is to be conducted informally and the parties are not entitled to any legal representation.

(5) The adjudicator’s power to determine an adjudication application is not affected by the failure of either or both of the parties to make a submission or comment within time or to comply with the adjudicator’s call for a conference of the parties. Section 21 Adjudicator’s powers and functions [3.191] Sections 21 (and 22) of the Act prescribe the adjudicator’s powers and functions in respect of the adjudication and determination and these provisions are the source of the adjudicator’s jurisdiction, not the payment claim: Parist Holdings Pty Ltd v WT Partnership Australia Pty Ltd [2003] NSWSC 365 at [31]. Section 21(3)(b) Where the adjudicator requires a very short time for response to request to agree to extend time. [3.192] It is not appropriate for an adjudicator to impose a very short time for response to a request for extension of time and then assume that consent was given if no response was received in time: Allpro Building Services Pty Ltd v Micros Architectural Division Pty Ltd [2010] NSWSC 453 at [4]. Section 21(3) Time for adjudicator’s determination [3.193] If an adjudicator determines an adjudication application before the end of the period that the respondent has to lodge an adjudication response under s 21(3)(a) it vitiates the validity of the determination, even where the determination was made on the last day that the adjudication response may have been served: Emag Constructions Pty Ltd v Highrise Concrete Contractors (Aust) Pty Ltd [2003] NSWSC 903 at [56]. However, see the contrary conclusion reached in MPM Constructions referred to below. In MPM Constructions Pty Ltd v Trepcha Constructions Pty Ltd [2004] NSWSC 103, the adjudicator’s determination was made outside the 10 business days prescribed in [page 147] s 21(3)(a) but McDougall J held that the determination was still valid and enforceable, relying on the object of the Act in ss 3 and 26 which sets out the claimant’s rights where the adjudicator fails to so determine an adjudication application within the 10 business day period (s 21(3)(a)): see [17]–[22] of the

judgment. McDougall J reached the same conclusion in Cranbrook School v JA Bradshaw Civil Contracting Pty Ltd [2013] NSWSC 430. If an adjudicator hands down his or her determination late, it is a valid determination but the adjudicator is not entitled to be paid: Allpro Building Services Pty Ltd v Micros Architectural Division Pty Ltd [2010] NSWSC 453 at [6], affirming MPM Constructions Pty Ltd v Trechpa Constructions Pty Ltd [2004] NSWSC 103. Section 21(4)(a) ‘may request further submissions’ [3.194] The adjudicator is not bound to exercise his or her discretion to request further written submissions from either party: TransGrid v Walter Construction Group Ltd [2004] NSWSC 21 at [65]. Section 21(4)(a) and (b) Additional submissions only to clarify earlier submissions [3.195] In John Holland Pty Ltd v Cardno MBK (NSW) Pty Ltd [2004] NSWSC 258 at [26], Einstein J held that s 21(4)(a) and (b) ‘are to be read as permitting no more than additional submissions that clarify earlier submissions’. No statutory presumption in favour of acceptance of a claimant’s material in an adjudication [3.196] In David Hurst Constructions Pty Ltd v Durham [2008] NSWSC 318 it was submitted that there was a statutory presumption in favour of acceptance of a claimant’s material in an adjudication. McDougall J said ‘I have to say that I see no such presumption or predisposition in the wording of the statute’ (at [71]) and ‘[i]n my view, there is no basis in the statute for speaking of any wider presumption or predisposition in favour of claimants. What is necessary is that the competing material be evaluated and that a decision be reached in good faith on that material’: at [74]. VICTORIAN ACT: ADJUDICATION PROCEDURES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 22 Adjudication procedures (1) An adjudicator is not to determine an adjudication application until after the end of the period within which the respondent may lodge an adjudication response. (2) An adjudicator must serve a written notice on any person who is

included as a relevant principal in the adjudication response advising that the adjudicator has commenced to determine an adjudication application. (3) An adjudicator is not to consider an adjudication response unless it was made before the end of the period within which the respondent may lodge the response. [page 148] (4) Subject to subsections (1) and (3), an adjudicator is to determine an adjudication application as expeditiously as possible and, in any case — (a) within 10 business days after that date on which the acceptance by the adjudicator of the application takes effect in accordance with section 20(2); or (b) within any further time that the claimant and the respondent may agree. (5) For the purposes of any proceedings conducted to determine an adjudication application, an adjudicator — (a) may request further written submissions from either party and must give the other party an opportunity to comment on those submissions; and (b) may set deadlines for further submissions and comments by the parties; and (c) may call a conference of the parties; and (d) may carry out an inspection of any matter to which the claim relates. (6) The adjudicator’s power to determine an application is not affected by the failure of either or both of the parties to make a submission or comment within the time or to comply with the adjudicator’s call for a conference of the parties. [3.197] See the New South Wales cases referred to at: [3.191] Section 21 Adjudicator’s powers and functions; [3.193] Section 21(3) Time for adjudicator’s determination; [3.194] Section 21(4)(a) ‘may request further submissions’; [3.195] Section 21(4)(a) and (b) Additional submissions only to clarify

earlier submissions; [3.196] No statutory presumption in favour of acceptance of a claimant’s material in an adjudication; which should be persuasive authority in Victoria. VICTORIAN ACT: ADJUDICATION PROCEDURES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 22 Adjudication procedures (1) An adjudicator is not to determine an adjudication application until after the end of the period within which the respondent may lodge an adjudication response. (2) An adjudicator must serve a written notice — (a) on any relevant principal and any other person who is included in the adjudication response under section 21(2)(c); and (b) on any other person who the adjudicator reasonably believes, on the basis of any submission received from the claimant or the respondent, [page 149] is a person who has a financial or contractual interest in the matters that are the subject of the adjudication application. (3) An adjudicator is not to consider an adjudication response unless it was made before the end of the period within which the respondent may lodge the response. (4) Subject to subsections (1) and (3), an adjudicator is to determine an adjudication application as expeditiously as possible and, in any case — (a) within 10 business days after the date on which the acceptance by the adjudicator of the application takes effect in accordance with section 20(2); or (b) within any further time, not exceeding 15 business days after that date, to which the claimant agrees. (4A) A claimant must not unreasonably withhold their agreement under subsection (4)(b).

(5) For the purposes of any proceedings conducted to determine an adjudication application, an adjudicator — (a) may request further written submissions from either party and must give the other party an opportunity to comment on those submissions; and (b) may set deadlines for further submissions and comments by the parties; and (c) may call a conference of the parties; and (d) may carry out an inspection of any matter to which the claim relates. (5A) Any conference called under subsection (5)(c) is to be conducted informally and the parties are not entitled to legal representation unless this is permitted by the adjudicator. (6) The adjudicator’s power to determine an application is not affected by the failure of either or both of the parties to make a submission or comment within the time or to comply with the adjudicator’s call for a conference of the parties. [3.198] The amended Victorian s 22 is similar to s 20 in the NSW Act except that in s 22: legal representation at a conference is only permitted by the adjudicator (see s 22A(5A)); the adjudicator is required to serve notice on any person who has financial or contractual interest in the subject of the adjudication (see s 22(2)); and it is up to the claimant to agree to an adjudicator’s request for more time to make his or her determination (see s 22(4)(b) and (4A)). See the New South Wales cases referred to at: [3.191] Section 21 Adjudicator’s powers and functions; [3.193] Section 21(3) Time for adjudicator’s determination; [3.194] Section 21(4)(a) ‘may request further submissions’; [3.195] Section 21(4)(a) and (b) Additional submissions only to clarify earlier submissions; [page 150]

[3.196] No statutory presumption in favour of acceptance of a claimant’s material in an adjudication; which should be persuasive authority in Victoria. NSW ACT: ADJUDICATOR’S DETERMINATION 22 Adjudicator’s determination (1) An adjudicator is to determine: (a) the amount of the progress payment (if any) to be paid by the respondent to the claimant (the adjudicated amount), and (b) the date on which any such amount became or becomes payable, and (c) the rate of interest payable on any such amount. (2) In determining an adjudication application, the adjudicator is to consider the following matters only: (a) the provisions of this Act, (b) the provisions of the construction contract from which the application arose, (c) the payment claim to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the claimant in support of the claim, (d) the payment schedule (if any) to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule, (e) the results of any inspection carried out by the adjudicator of any matter to which the claim relates. (3) The adjudicator’s determination must: (a) be in writing, and (b) include the reasons for the determination (unless the claimant and the respondent have both requested the adjudicator not to include those reasons in the determination). (4) If, in determining an adjudication application, an adjudicator has, in accordance with section 10, determined: (a) the value of any construction work carried out under a construction contract, or (b) the value of any related goods and services supplied under a construction contract,

the adjudicator (or any other adjudicator) is, in any subsequent adjudication application that involves the determination of the value of that work or of those goods and services, to give the work (or the goods and services) the same value as that previously determined unless the claimant or respondent satisfies the adjudicator concerned that the value of the work (or the goods and services) has changed since the previous determination. (5) If the adjudicator’s determination contains: (a) a clerical mistake, or [page 151] (b) (c)

an error arising from an accidental slip or omission, or a material miscalculation of figures or a material mistake in the description of any person, thing or matter referred to in the determination, or (d) a defect of form, the adjudicator may, on the adjudicator’s own initiative or on the application of the claimant or the respondent, correct the determination. Section 22(1) ‘… adjudicator is to determine …’ [3.199] In Halkat Electrical Contractors Pty Ltd v Holmwood Holdings Pty Ltd [2007] NSWCA 32 the adjudicator in his determination stated that he did not have evidence on which he could independently arrive at the value of the completed work: instead he adopted the claimant’s valuation in preference to that of the respondent because of the respondent’s unmeritorious challenges to the validity of the payment claim. The Court of Appeal held that: Section 22 of the Act required that the adjudicator determine an adjudicated amount (s 22(1)) by considering particular matters (s 22(2)). The adjudicator had to make a determination, and he did not make a determination if he arrived at an adjudicated amount by a process wholly unrelated to a consideration of those matters: at [26].

Accordingly: … the adjudicator simply did not perform the task required by the Act, and … did not comply with an essential precondition to the existence of a valid determination: at [27].

In Olympia Group (NSW) Pty Ltd v Hansen Yuncken Pty Ltd [2011] NSWSC 165, an adjudicator responded to the submissions of the respondent that the

adjudicator lacked jurisdiction because the contract dealt with construction work carried out outside New South Wales. The adjudicator’s decision on that point: … was not a determination of the type contemplated by s 22 of the [Building and Construction Industry Security of Payment Act 1999 (NSW)]. Rather, it was a decision whether the SOP Act applied to the claim … having regard to where the relevant construction work was carried out. The adjudicator had to make a decision about that question because it was an essential precondition to the exercise of the powers granted to him by the Act. But it does not follow that, in making that decision, he was exercising a power to make a determination of the type required by s 22: at [14].

Section 22(2) ‘the adjudicator is to consider the following matters only …’ [3.200] The adjudicator is obliged to consider the matters set out in s 22(2) but the reference to considering ‘only’ those matters does not prevent the adjudicator from considering and resolving other disputed issues: It is impossible to accept that the proper exercise of power and discharge of function would not ordinarily require an adjudicator to interpret contractual documents and/or evidence as to the existence of an oral contract or oral terms, and/or to make findings as to the existence and effect

[page 152] of contractual provisions whether express, implied, written or oral: Parist Holdings Pty Ltd v WT Partnership Australia Pty Ltd [2003] NSWSC 365 at [43].

Brereton J in Holmwood Holdings Pty Ltd v Halkat Electrical Contractors Pty Ltd [2005] NSWSC 1129 interpreted the decision in Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2004] NSWCA 394 with respect to failure to have regard to matters specified in s 22(2) as follows: The statement in Brodyn that compliance with the requirements of s 22(2) is not a precondition to the existence of authority to make a decision, and that non-compliance does not result in invalidity if an adjudicator either considers (only) the matters referred to in s 22(2), or bona fide addresses the requirements of s 22(2) as to what is to be considered, appears to proceed on the assumption that s 22(2) requires (though not as a condition of validity), not merely consideration of the matters (and only the matters) identified in that section, but also reaching a legally correct conclusion on those matters: at [46]. … Accordingly it is a condition of validity of a determination that an adjudicator consider the matters specified in s 22(2), although error in considering those matters, so long as they are in fact considered, will not result in invalidity: at [49]. Accordingly … failure by an adjudicator to have regard to a provision of the construction contract which is relevant to the adjudication … is jurisdictional error, resulting in invalidity of the determination: at [51].

On the facts in Holmwood the failure to provide plans and specifications would have made no difference to the outcome as they were not relevant to the

dispute and therefore there was no failure by the adjudicator to have regard to a provision of the contract which was relevant to the adjudication. Where, however, the adjudicator failed to refer at all to the payment terms in the contract and instead applied s 11(1)(b) of the Act, and failed to give any consideration to cl 13(a) regarding retention, it was not just an error in consideration of the contract terms but rather ‘a failure to consider a relevant provision at all’: at [51], [60]. Statutory declarations covered by s 22(2)(c) [3.201] The respondent in Austruc Constructions Ltd v ACA Developments Pty Ltd; ACA Developments Pty Ltd v Sarlos [2004] NSWSC 131 alleged denial of natural justice by reason of the adjudicator considering a statutory declaration contained as part of the claimant’s submissions. The respondent argued that ‘submissions’ in s 17(3)(h) did not extend to evidence and therefore did not extend to anything in the nature of a statutory declaration. That submission was rejected by McDougall J who held that documentation in the nature of a statutory declaration can be taken into account by the adjudicator. Section 22(2)(c) ‘duly made’ [3.202] Where in an adjudication application parts of the claim were put on a different basis to that in the payment claim, those parts should not have been regarded as submissions ‘duly made … in support of the claim’ as referred to in s 22(2)(c). For ‘that reason, [the adjudicator] did not make his determination … in accordance with the condition of, or within the limits of, the jurisdiction given by the Act’ where he considered those matters (and refused to consider matters in response that the respondent raised in its adjudication response that were not (and could not have been) raised in its payment schedule): at [87]. For those reasons, the adjudicator’s determination was [page 153] amenable to the grant of declaratory relief and relief in the nature of certiorari: Leighton v Arogen [2012] NSWSC 1323 at [99]. Notwithstanding s 22(2) an adjudicator can take into account any submissions relevant to construction of the contract or the Act or validity of terms of the contract

[3.203] In Minister for Commerce v Contrax Plumbing (NSW) Pty Ltd [2005] NSWCA 142 at [35]–[36], Hodgson JA considered the operation of s 22(2)(a), (b) and (c): [Paragraphs] (a) and (b) of s 22(2) require the adjudicator to consider the provisions of the Act and the provisions of the construction contract; and … that … requires the adjudicator to take into account any considerations (other than considerations arising from facts and circumstances of the particular case not otherwise before him or her) that he or she thinks relevant to the construction of the Act, the construction of the contract, and the validity of terms of the contract having regard to provisions of the Act. Thus, in my opinion, if an adjudicator comes to know of submissions of a respondent that he or she thinks to be relevant to these questions (not being submissions based on facts and circumstances of the particular case not otherwise before him or her), he or she can take them into account under paras (a) and (b), even if they cannot be considered under para (d). Similarly, in my opinion, an adjudicator could take into account a contention of an applicant that a term of the contract is void by reason of s 34, when considering matters under paras (a) and (b), even if that contention could not be taken into account under para (c).

In Roads and Traffic Authority (RTA) v John Holland Pty Ltd [2006] NSWSC 567 Macready AJ felt bound by the decision of Hodgson JA in Contrax on the point but did so ‘with some concern because it seems to sidestep what was sought to be achieved by the amendment inserting a s 20(2B) in the Act. There will be practical difficulties for adjudicators as they will have to turn their minds to not only whether they should reject a submission made contrary to s 22(2)(d) but whether they should also consider it under s 22(2)(a) or (b) and whether the applicant should be given an opportunity’: at [55]. Therefore, the adjudicator was bound to consider the submission that the Act does not respond to an extension of time claim even though not raised in the payment schedule: at [56]. Because the adjudicator failed to do so, the determination was void: at [66]. On appeal, Macready AJ’s decision was overturned: see below. In John Holland Pty Ltd v Roads and Traffic Authority of New South Wales (RTA) [2007] NSWCA 19, Hodgson JA clarified his decision in Contrax referred to at above and decided that in Contrax what he was saying was that: [T]he adjudicator should not ignore something which he or she is aware of and also believes is of real relevance to issues arising under paras (a) and (b) [of s 22(2)], simply because the matter was not raised in submissions duly made by a respondent. Of course, if the matter has not been so raised, there may be questions of natural justice to the claimant that need to be addressed, perhaps by calling for further submissions or by arranging a conference … However, the requirement for natural justice to the claimant is a further reason why the adjudicator would not be required to consider such matters under paras (a) or (b) unless he or she thought they were really material to issues under those paragraphs: at [48].

Section 22(2)(d) ‘adjudicator is to consider … all submissions (including relevant documentation’: expert reports [3.204] The respondent cannot claim that reliance by an adjudicator on the respondent’s expert report (which was in the respondent’s submission) to prove

an element of the claimant’s claim that was lacking in the claimant’s materials, displayed any partiality [page 154] towards the claimant. McDougall J in Inten Constructions Pty Ltd v Refine Electrical Services Pty Ltd [2006] NSWSC 1282 at [71] held that: The submission appears to be based on the proposition that if an adjudicator, having considered a claimant’s material, decides that the claim is not good, he or she must thereupon dismiss the adjudication without considering the respondent’s material. That proposition finds no support in the Act. On the contrary, an adjudicator is bound to consider all relevant material in accordance with the provisions of s 22(2) of the Act.

Section 22(d)(d) ‘… all submissions … duly made’ [3.205] The Court of Appeal in John Holland Pty Ltd v Roads and Traffic Authority of New South Wales (RTA) [2007] NSWCA 19 considered the meaning of the words ‘duly made’ in s 22(2)(d). Hodgson JA held that ‘the limit in s 22(2) (d) to submissions “duly made” is intended to engage s 20(2B)’: at [31]. Therefore, where a submission is included in an adjudication response which is prohibited by s 20(2B) it is not ‘duly made’ as referred to in s 22(2)(d). Hodgson JA held, however, that ‘the same submission could be duly made if made in response to a request under s 21(4)(a) or in a conference called by an adjudicator under s 21(4)(c)’: at [31]. Similarly, in Broad Construction Services (NSW) Pty Ltd v Vadasz t/as Australasian Piling Co [2008] NSWSC 1057 McDougall J, following John Holland Pty Ltd v Roads and Traffic Authority of New South Wales (RTA) [2007] NSWCA 19, held that where an adjudicator refused to consider an expert report which accompanied an adjudication response because it had not been included in the payment schedule, there was no denial of natural justice as the inclusion of a report in breach of s 20(2B) meant that part of the submission was not ‘duly made’ under s 22(2)(d). Section 22(2)(d) Adjudicator failing to have regard to respondent’s submissions or statutory declaration [3.206] In Errol Investments Pty Ltd v Taylor Projects Group Pty Ltd [2005] NSWSC 1125 Windeyer J held that there will be a denial of natural justice if the adjudicator does not have regard to the respondent’s submissions under s 22(2) (d) or a statutory declaration filed by the respondent. However, just because the

adjudicator expressly referred to the first statutory declaration filed by the respondent but not the second, it was not possible to infer that the adjudicator had failed to take the second statutory declaration into account. Where an adjudicator incorrectly characterised the respondent’s claims for liquidated damages, cost of rectifying defective work and incomplete work claims as ‘set-offs’ he did not further consider the claims or the claimant’s submissions in relation to them (as he decided the respondent could not make any claim for set-off). He therefore ignored s 10(1)(b)(iv) requiring him to value the cost of rectifying defective work. This meant, having regard to the adjudicator’s obligations under s 22(2)(d) to consider submissions, that the respondent was not accorded natural justice: Lanskey Constructions Pty Ltd v Noxequin Pty Ltd (in liq) (t/a Fyna Formwork) [2005] NSWSC 963 at [15]. Adjudicator can consider expert evidence on extension of time claims and make a determination [3.207] Where a claimant put forward expert evidence as to the merits of its extension of time claims before the adjudicator, the adjudicator was entitled to make a determination [page 155] on the extensions of time and the consequential payment amounts: TransGrid v Walter Construction Group Ltd [2004] NSWSC 21 at [66]. Section 22(2) Extent of adjudicator’s duty when respondent does not raise any grounds for denying or reducing payment claim [3.208] On appeal against the decision of McDougall J in Coordinated Construction Co Pty Ltd v JM Hargreaves (NSW) Pty Ltd [2005] NSWCA 228 at [51]–[53], Hodgson JA found that part of McDougall J’s judgment at first instance: … could be read as asserting that, if a respondent to a payment claim does not raise any relevant grounds for denying or reducing the progress claim made by the claimant, then the adjudicator automatically determines the progress claim at the amount claimed by the claimant. My tentative view is that such an assertion would be incorrect. … The adjudicator’s duty is to come to a view as to what is properly payable, on what the adjudicator considers to be the true construction of the contract and the Act and the true merits of the claim. … [M]y tentative view is that, if an adjudicator determined the progress payment at the amount claimed simply because he or she rejected the relevance of the respondent’s material, this could be such a failure to address the task set by the Act as to render the determination void.

Basten JA had a difference of opinion on this point, which was not necessary to resolve for the determination of the case: see [64]–[68]. Brereton J in Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 13 at [82] agreed with Hodgson JA’s view in Coordinated v Hargreaves that: … the adjudicator’s duty is to come to a view as to what is properly payable, on what the adjudicator considers to be the true construction of the contract and the Act and the true merits of the claim, and while the adjudicator may very readily find in favour of the claimant on the merits of the claim in the absence of a payment schedule or adjudication response, or if no relevant material is advanced by the respondent, the absence of such material does not entitle the adjudicator simply to award the amount of the claim without addressing its merits, which as a minimum will involve determining whether the construction work identified in the payment claim has been carried out, and what is its value.

Further, where an adjudicator determines a progress payment at the claimed amount (because he or she rejects the respondent’s submissions) without valuing the work or determining whether it had been performed, it is a failure of a basic and essential requirement and is therefore void: at [86]. The adjudicator in Pacific said that ‘in the absence of any valid submission from the respondent which refutes the claim’ the claimant was entitled to the sum claimed; Brereton J accordingly held the determination void. These principles were applied by Einstein J in JBK Engineering Pty Ltd v Brick & Block Co Pty Ltd [2006] NSWSC 1192. In Shell Refining (Australia) Pty Ltd v AJ Mayr Engineering Pty Ltd [2006] NSWSC 94 at [11] the adjudicator determined that: I am satisfied that the respondent did cause delay and disruption and the respondent thereby breached the contract and caused the claimant to incur some damages of the nature claimed. Had the respondent addressed the claims and come up with a different assessment, then I might have been able to determine an entitlement different to that claimed. As it is, the respondent has not provided information which would enable me to assess the claimant’s damages at a lesser amount than the amount claimed. Consequently, for a payment on account, I am satisfied that the claimed amount should be included in the calculation.

[page 156] Bergin J distinguished the determination from that in Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 13, as the adjudicator in Shell had considered the merits of the claim and concluded it was substantiated and the calculation method was reasonable. The adjudicator’s observation that the respondent had not provided information to enable him to

assess the claim at less than the amount claimed did not mean that the adjudicator failed to address the merits of the claim: at [50], [51]. Section 22(2) Extent of adjudicator’s duty when the adjudication is undefended [3.209] Where the adjudication is undefended (for example, by reason of s 20(2A)) the adjudicator is still required by s 22(2) to give consideration to the matters there stated, that is: the provisions of the Act; the construction contract; the payment claim; and the result of an inspection, if relevant: Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1 at [60], [61] per Palmer J. However that does not mean ‘that the adjudicator must play devil’s advocate on behalf of the absent respondent. The adjudicator is not required to test the payment claim and the adjudication application for all possible defects and noncompliances with all or any of the provisions of the Act and all or any of the terms of the contract’: at [62]. See Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1 at [64] for the matters the adjudicator should address in his or her consideration of the claim and how he or she should go about his task where it is undefended. Section 22(3)(b) Valid determination ordinarily requires reasons [3.210] In Integral Energy Australia v Kinsley & Associates Pty Ltd [2009] NSWSC 64, Hammerschlag J had ‘significant doubt that a fair reading of the judgment of Hodgson J [in Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2004] NSWCA 394] discloses any intention … that there could be a valid determination without reasons’: at [48]. In Integral Energy, the respondent did not challenge the value of the work and did not make any submissions as to value. Accordingly, the adjudicator was not obliged to engage in a valuation process (at [44]) and therefore the adjudicator did not fail to include the reasons as required by s 22(3)(b): at [45]. In Clyde Bergemann Senior Thermal Pty Ltd v Varley Power Services Pty Ltd [2011] NSWSC 1039 at [66] McDougall J said: … The reasons should show that the adjudicator has turned his or her mind to the dispute entrusted to his or her determination, and has addressed the issues raised by the parties in support of or opposition to the payment claim. There is no requirement that they be lengthy, elaborate or detailed. On the contrary, it may be thought, the scheme of the Act tells strongly against any such requirement: in particular, the

extremely compressed time (ten business days following acceptance of the nomination, unless the parties agree to extend time …) …

Section 22(4) ‘determined … the value of any construction work …’ [3.211] In Rothnere Pty Ltd v Quasar Constructions NSW Pty Ltd [2004] NSWSC 1151, payment claims were referred to a first adjudication and an adjudication determination [page 157] was made by the first adjudicator. A subsequent payment claim included some of the same claims and those claims came to be considered by the subsequent adjudicator. McDougall J held that an adjudication determination does not necessarily need to include any determination about the valuation of construction work and s 22(4) only applies where the first determination includes a determination as to the value of construction work: at [44]. The first adjudicator had concluded that the work in question was not a variation: he had not made his determination on any valuation basis and therefore the subsequent adjudicator was not bound by that earlier determination: at [37]. Macfarlan JA agreed with this approach in Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 at [66]. The first adjudicator made determinations in respect of extension of time (EOT) 1 and 2, and a subsequent adjudicator determined claims for damages arising out of EOT 1 and 2, but where such damage was in respect of the period of time after that covered by EOT 1 and 2. McDougall J in Coordinated Construction Co Pty Ltd v JM Hargreaves (NSW) Pty Ltd [2005] NSWSC 77 at [57] held that the second adjudicator had correctly concluded that in those circumstances s 22(4) did not apply. Referring to the Court of Appeal decision in Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2004] NSWCA 394, McDougall J accepted in Rothnere Pty Ltd v Quasar Constructions NSW Pty Ltd [2004] NSWSC 1151 that the list of ‘basic and essential requirements’ referred to in Brodyn might not be exhaustive but that s 22(4) should not be added to that list: at [18]. Further, s 22(4) should not be regarded as a provision which if it was not complied with would undo any purported exercise of power by the adjudicator: at [24]. However, in De Martin & Gasparini Pty Ltd v State Concrete Pty Ltd [2006] NSWSC 31 McDougall J held there to be a ‘denial of natural justice in a

fundamental respect’ (at [25]) where the adjudicator departed from an earlier adjudicator’s valuation of construction work, when neither party had asked him to do so. McDougall J also held that before embarking on such a course an adjudicator should notify the parties of his or her intention and provide the opportunity for them to address the adjudicator on the point: at [24]. For the same reasons, before the adjudicator proceeded to make a determination as to the payments already made when neither party asked him or her to do so, the adjudicator should have given the parties notice of intention to do so and an opportunity to address him or her on the question: at [20]–[21]. The result was the determination was void and the respondent could therefore move to set aside the judgment obtained on the basis of the adjudication certificate: at [27], [28]. See also Baseline Constructions Pty Ltd v Classic Group Painting Pty Ltd [2006] NSWSC 397 at [33]–[34] where the adjudicator in a second adjudication gave work a different value, as he was entitled to do, as he was satisfied the value had changed since the first determination. Section 22(4) Not an exhaustive list of matters determined which are binding on subsequent adjudicator [3.212] In Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 at [67], Macfarlan JA went on: [page 158] I do not consider however that s 22(4) should be regarded as an exhaustive statement of the matters determined by an earlier adjudication which are binding on a subsequent adjudicator … Thus, if questions of entitlement have been resolved by an adjudication determination, those findings may not in my view be reopened upon a subsequent adjudication. Likewise, if no subsequent adjudication occurs but a claimant proceeds (as here) to seek judgment following upon the failure of the other party to serve a Payment Schedule the claimant should be denied judgment to the extent that what it seeks is inconsistent with findings of the adjudicator.

Further, Macfarlan JA held that the principles of issue estoppel could be applicable so that: … if a progress claim were rejected because it was not made in accordance with express requirements of the contract, that determination would be binding on a subsequent adjudicator before whom the same issue arose. Similarly, it would be an abuse of process for the claimant to rely upon a later progress claim in response to which no Payment Schedule was served to obtain judgment on a basis conflicting with issues resolved in the earlier determination: at [69].

Accordingly, Macfarlan JA disagreed with the view of McDougall J in John Goss Projects Pty Ltd v Leighton Contractors Pty Ltd [2006] NSWSC 798:

… that s 22(4) defines the extent to which an adjudicator is bound by an earlier adjudication. The view that the claimant once disappointed by an adjudicator can seek a different determination from another … until a favourable decision is reached would in my view conflict with the policy of the Act to render adjudicators’ determinations final on issues which they resolved, subject only to provisions of the Act conferring limited rights of correction of determinations: at [70].

See also Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd t/as Novatec Construction Systems [2009] NSWSC 416 at [42], where Rein J held that ‘[t]he contention that a party … when the claim is rejected may serve another claim framed in a different way is in my view entirely inconsistent with the object of the Act and the principle of finality … in [Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69]’. In Watpac Construction (NSW) Pty Ltd v Austin Corp Pty Ltd [2010] NSWSC 168 McDougall J considered Dualcorp: 1. The issue of lodgement of successive payment claims McDougall J said: … The prohibition that Allsop P saw on the lodgement of successive payment claims was, as His Honour described it at [13] and [14], on the use of s 8(2)(b) (and, I think, s 13(6)) “to create fresh reference dates by lodging the same claim for the same completed works in successive payment claims” in circumstances where work had been completed, and the claimant had left the site, by the time the anterior payment claim had been lodged. There is nothing in the approach of Allsop P to support the proposition that, where work under a construction contract is ongoing, a fresh payment claim (including a claim for payment for work not covered by previous claims) is invalid simply because it includes work the subject of a previous payment claim which claim had been the subject of adjudication. I accept that what Macfarlan JA said at [53] goes beyond what I understand to have been the approach of Allsop P. However, as I have indicated at [60] above, I have some difficulty with this aspect of the reasoning of Macfarlan JA. In any event, I think, what His Honour said at [53] is not a free-standing conclusion, but an aspect of his Honour’s analysis of the Act that was in itself a step in his reasoning process towards the conclusion that the doctrine of issue estoppel applied to adjudication determinations: at [78]–[79].

[page 159] McDougall J continued: If there is to be found, on the proper construction of the relevant provisions of the Act, some prohibition on the repetition of claims (where that occurs in the context of ongoing work under the construction contract) that have been the subject of earlier claims and adjudication, then that prohibition should in my view be limited to circumstances such as the present. That is to say, it should be limited to circumstances not expressly covered by s 22(4): namely, where the prior adjudicator has considered the claim and, in the course of performing the statutory function of deciding the amount of any progress payment (see s 22(4) of the Act), has determined that there was no entitlement to recover. In my view, there are two possible categories of payment claims that could be described as “invalid” in the sense given at [71] above:

(1) first, that described by Allsop P in Dualcorp at [14]: a repetitious payment claim, being no more than the same claim for the same completed works, resubmitted after work under the construction contract in question had ceased, and resubmitted purely for the purpose of “creating” a fresh reference date. On his Honour’s reasoning, this would be outside the permission given by ss 8(2)(b) and 13(6) of the Act. (2) The second is a payment claim claiming an amount that has been the subject of a prior payment claim and adjudication thereon, in circumstances where the prior adjudicator has determined that there is nothing due by the respondent to the claimant. That might occur in circumstances where (as Macfarlan JA postulated at [71] of Dualcorp) the prior adjudicator had rejected the claim for want of evidence, without considering on its merits. It could also occur where (as here) the prior adjudicator rejected the claim because he concluded that the claimant had not made out any legal entitlement to it, or had not put the claim on a basis that was capable of being the subject of an adjudicator’s determination: at [85]– [86].

2. Issue estoppel McDougall J said: For the reasons that I gave in [Urban Traders v Paul Michael [2009] NSWSC 1072] at [26], it is my view that the ratio of Dualcorp is to be found in the view of Macfarlan JA and Handley AJA that the prior adjudicator’s determination gave rise to an issue estoppel: at [90]. I start with the proposition, which as I have said I regard as established by the ratio on which the majority decided Dualcorp, that the determinations of adjudicators do attract the principles of issue estoppel. I accept, however, that the ratio is limited to issue estoppel in the limited sense, and does not in terms include the extended principle: at [94].

See also [96]–[104] for McDougall J’s reasons on the issue estoppel point. On the facts in Watpac, McDougall J observed: Were it necessary to do so, I would, as I have said, conclude that the extended principle of issue estoppel precluded Austin from re-agitating, in the December payment claim and the January adjudication application, the very same claims (in respect of variations 1–8) that it had agitated in the October payment claim and the November adjudication application, simply by attributing a different legal basis for the entitlement to be paid. It was unreasonable, in all the circumstances and taking into account the scheme and aims of the Act, for Austin to put its claim in respect of variations 1–8 on one basis before the first adjudicator and on another (and inconsistent) basis before the second. It was unreasonable for Austin to seek thus twice to engage the processes of the Act, and to put Watpac to either the trouble and expense of replying on the second occasion, or the risk of an adverse determination if it did not: at [129].

[page 160] 3. Abuse of process It can be an abuse of process ‘to make a claim on one ground then, when it fails, re-make it on another’ (at [138]), at least when the subsequent ground could have been advanced in the first instance: at [139]. 4. Partial validity of determination

Ultimately, McDougall J held the adjudication determination void because of the denial of natural justice. However: … an adjudication determination based on a payment claim that includes impermissibly re-agitated claims is not thereby void. At most, the consequence of a finding of issue estoppel or abuse of process (not extending to the whole of the later payment claim) is that the claimant might be restrained from enforcing its rights under a subsequent determination to the extent to which that subsequent determination allows, in whole or in part, the impermissibly re-agitated claim: Watpac Constructions (NSW) Pty Ltd v Austin Corp Pty Ltd [2010] NSWSC 347 at [12].

See also GMW Urban Pty Ltd v Alexandria Landfill Pty Ltd [2012] NSWSC 237, referred to at [3.109] above, where an adjudicator’s determination was relied on in support of an injunction restraining cashing of bank guarantees. Dualcorp not limited to issue estoppel in respect of subsequent adjudications [3.213] The claimant succeeded in its adjudication application against the respondent, the adjudication certificate was filed as a judgment for a debt in court under s 25(1) and pursuant to the judgment and a garnishee order the claimant obtained payment from the respondent’s bank account. The respondent issued proceedings in the Local Court seeking restitution of the amount paid together with interest and costs on the basis that it was not the party to the construction contract. The magistrate deciding the matter held that the adjudicator’s decision gave rise to an estoppel on the question of who was the relevant party to the construction contract. The magistrate also held that s 32 did not allow the respondent to bring the claim in court because s 32(2) only applies where the respondent was the party to the particular construction contract. On appeal in Nigro v EVS Group Pty Ltd [2012] NSWSC 1545, Hislop J held that: 1. the Dualcorp decision on issue estoppel was not limited to an issue estoppel in respect of subsequent adjudications as in Dualcorp it was held that ‘the policy of the Act [is] to render an adjudicators’ determinations final on issues which they resolved, subject only to provisions of the Act conferring limited rights of correction of determinations’ (at [45]); and 2. because the rights in s 32 were rights of a party ‘to a construction contract’ before a party could exercise the rights afforded by s 32 it requires as an essential prerequisite ‘the existence of a construction contract to which the plaintiff and defendant were parties’. As ‘the foundation of the [respondent’s] case is that he was not a party to a construction contract and has no liability thereunder … the [claimant’s] contention that s 32 has no application is correct … [s]ection 32 provides for revisiting of the initial decision in some circumstances. It has no application in the present circumstances of this case’: at [59], [60], [62], [64].

Accordingly on the facts in Nigro, the respondent could not bring its case for recovery of the amounts paid unless the adjudicator’s determination and the judgment that had been entered were set aside by the Supreme Court in separate proceedings. [page 161] Section 22(5) Clerical mistake or error arising from an accidental slip or omission [3.214] Where an adjudicator failed in his determination to have regard to what was common ground between the parties (the net amount claimed by the respondent following receipt of a payment), it ‘must be characterised for the purposes of s 22(5) as a clerical mistake and/or error arising from an accidental slip or omission’: Procorp Civil Pty Ltd v Napoli Excavations & Contracting Pty Ltd [2006] NSWSC 205 at [31], [32]. Accordingly, the adjudicator had power on his own initiative or on application by a party to correct the determination, even after the claimant had entered judgment in court and the respondent commenced proceedings to set aside the judgment, and so the court adjourned the proceedings to allow the correction to take place. Extraordinarily, the District Court when the adjudication certificate was filed as a judgment made a further error in the amount and it was held that too could be corrected under the slip rule in the District Court: at [37]. VICTORIAN ACT: ADJUDICATOR’S DETERMINATION (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 23 Adjudicator’s determination (1) An adjudicator is to determine — (a) the amount of the progress payment (if any) to be paid by the respondent to the claimant (the adjudicated amount); and (b) the date on which that amount became or becomes payable. Note: The adjudicated amount may be added to under section 45(7).

(2) In determining an adjudication application, the adjudicator is to consider the following matters only — (a) the provisions of this Act and any regulations made under this

Act; (b) the provisions of the construction contract from which the application arose; (c) the payment claim to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the claimant in support of the claim; (d) the payment schedule to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule; (e) the results of any inspection carried out by the adjudicator of any matter to which the claim relates. (3) The adjudicator’s determination must be in writing and must include — (a) the reasons for the determination; and (b) the basis on which any amount or date has been decided — if, before the making of the determination, either the claimant or the respondent requests the adjudicator to include those matters in the determination. (4) An adjudicator must give a copy of any determination that he or she makes to the Building Commission within 5 business days of making that determination.

[page 162]

24 Correcting mistakes in determinations (1) An adjudicator may correct a determination made by him or her if the determination contains — (a) a clerical mistake; or (b) an error arising from an accidental slip or omission; or (c) a material miscalculation of figures or a material mistake in the description of any person, thing or matter referred to in the determination; or (d) a defect of form. (2) The correction may be made — (a) on the adjudicator’s own initiative; or (b) on the application of the claimant or the respondent.

[3.215] The Victorian ss 23 and 24 are similar to the New South Wales s 22 but there are some significant differences: Victoria has no equivalent of s 23(1)(c) of the NSW Act referring to interest; in Victoria the adjudicator is to include reasons where requested by either party (s 23(3)) whereas in New South Wales both parties need to specifically ask the adjudicator not to provide reasons (s 22(3)(b)); Victoria has no equivalent of s 22(4) of the NSW Act making an adjudicator bound by a previous adjudicator’s determination of value. See the New South Wales cases referred to at: [3.191] Section 21 Adjudicator’s powers and functions; [3.200] Section 22(2) ‘the adjudicator is to consider the following matters only’; [3.201] Statutory declarations covered by s 22(2)(c); [3.203] Notwithstanding s 22(2) an adjudicator can take into account any submissions relevant to construction of the contract or the Act or validity of terms of the contract; [3.204] Section 22(2)(d) ‘adjudicator is to consider … all submissions (including relevant documentation’; [3.205] Section 22(d)(d) ‘… all submissions … duly made’; [3.206] Section 22(2)(d) Adjudicator failing to have regard to respondent’s submissions or statutory declaration; [3.207] Adjudicator can consider expert evidence on extension of time claims and make a determination; [3.208] Section 22(2) Extent of adjudicator’s duty when respondent does not raise any grounds for denying or reducing payment claim; [3.209] Section 22(2) Extent of adjudicator’s duty when the adjudication is undefended; [3.211] Section 22(4) ‘determined … the value of any construction work …’; [3.214] Section 22(5) Clerical mistake or error arising from an accidental slip or omission; which should be persuasive authority in Victoria. [page 163]

VICTORIAN ACT: ADJUDICATOR’S DETERMINATION (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 23 Adjudicator’s determination (1) An adjudicator is to determine — (a) the amount of the progress payment (if any) to be paid by the respondent to the claimant (the adjudicated amount); and (b) the date on which that amount became or becomes payable; and (c) the rate of interest payable on that amount in accordance with section 12(2). Note: The adjudicated amount may be added to under section 45(8).

(2) In determining an adjudication application, the adjudicator must consider the following matters and those matters only — (a) the provisions of this Act and any regulations made under this Act; (b) subject to this Act, the provisions of the construction contract from which the application arose; (c) the payment claim to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the claimant in support of the claim; (d) the payment schedule (if any) to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule; (e) the results of any inspection carried out by the adjudicator of any matter to which the claim relates. (2A) In determining an adjudication application, the adjudicator must not take into account — (a) any part of the claimed amount that is an excluded amount; or (b) any other matter that is prohibited by this Act from being taken into account. (2B) An adjudicator’s determination is void — (a) to the extent that it has been made in contravention of subsection (2); (b) if it takes into account any amount or matter referred to in subsection (2A), to the extent that the determination is based on

that amount or matter. (3) The adjudicator’s determination must be in writing and must include — (a) the reasons for the determination; and (b) the basis on which any amount or date has been decided. (4) If, in determining an adjudication application, an adjudicator has, in accordance with section 11, determined — (a) the value of any construction work carried out under a construction contract; or (b) the value of any related goods and services supplied under a construction contract — [page 164] the adjudicator (or any other adjudicator) is, in any subsequent adjudication application that involves the determination of the value of that work or of those goods and services, to give the work or the goods and services the same value as that previously determined unless the claimant or respondent satisfies the adjudicator concerned that the value of the work or the goods and services has changed since the previous determination. [3.216] The amended Victorian s 23 is similar to s 22 in the NSW Act except: in s 23(2A) the adjudicator cannot take into account ‘excluded amounts’; in s 23(2B) it is expressly provided that an adjudicator’s determination is void to the extent it takes into account excluded amounts or, significantly, has been made in contravention of s 23(2); and the adjudicator must include reasons (s 23(3)). Section 23(2B) Adjudication void where adjudicator did not consider the payment claim [3.217] In AC Hall Air Conditioning Pty Ltd v Schiavello (Vic) Pty Ltd [2008] VCC 1169 the adjudicator determined that no moneys were payable only on the basis of s 18(2)(a) being out of time. Shelton J held that as the adjudicator therefore did not consider the payment claim to which the adjudication application relates, pursuant to s 23(2B) the determination was void: at [29], [30].

Section 23(2A)(a) and (2B)(b) Adjudicator’s determination not necessarily void in whole: only to extent of excluded amount [3.218] An adjudicator’s determination is only void to the extent it takes account of excluded amounts, it is not void as a whole: Seabay Properties Pty Ltd v Galvin Construction Pty Ltd [2011] VSC 183 at [64]. See also the New South Wales cases referred to at: [3.199] Section 22(1) ‘adjudicator is to determine …’; [3.200] Section 22(2) ‘the adjudicator is to consider the following matters only’; [3.201] Statutory declarations covered by s 22(2)(c); [3.203] Notwithstanding s 22(2) an adjudicator can take into account any submissions relevant to construction of the contract or the Act or validity of terms of the contract; [3.206] Section 22(2)(d) Adjudicator failing to have regard to respondent’s submissions or statutory declaration; [3.207] Adjudicator can consider expert evidence on extension of time claims and make a determination; [3.208] Section 22(2) Extent of adjudicator’s duty when respondent does not raise any grounds for denying or reducing payment claim; [3.209] Section 22(2) Extent of adjudicator’s duty when the adjudication is undefended; [3.211] Section 22(4) ‘determined … the value of any construction work …’; [page 165] [3.214] Section 22(5) Clerical mistake or error arising from an accidental slip or omission; which should be persuasive authority in Victoria. 23A Adjudication determination to be given to parties and Building Commission The authorised nominating authority to whom the adjudication

application was made must give a copy of the adjudication determination — (a) to the claimant and the respondent, as soon as practicable after it is made; and (b) to the Building Commission within 5 business days after it is made. Section 23A in the amended Victorian Act has no equivalent in the NSW Act. 24 Correcting mistakes in determinations (1) An adjudicator may correct a determination made by him or her if the determination contains — (a) a clerical mistake; or (b) an error arising from an accidental slip or omission; or (c) a material miscalculation of figures or a material mistake in the description of any person, thing or matter referred to in the determination; or (d) a defect of form. (2) The correction may be made — (a) on the adjudicator’s own initiative; or (b) on the application of the claimant or the respondent. (3) If a correction is made to a determination under this section, the authorised nominating authority to whom the adjudication application was made must give a copy of the corrected determination to the claimant and the respondent and the Building Commission as soon as practicable after the correction is made. (4) An adjudicator cannot make a correction of a determination under this section if an application has been made under Division 2A for a review of the determination. Section 24(1) and (2) in the amended Victorian Act are similar to s 22(5) in the NSW Act. Section 24(4) refers to the Victorian only review adjudication procedure in Div 2A. See the New South Wales case referred to at: [3.214] Section 22(5) Clerical mistake or error arising from an accidental slip or omission, which should be persuasive authority in Victoria.

[page 166] NSW ACT: RESPONDENT REQUIRED TO PAY ADJUDICATED AMOUNT 23 Respondent required to pay adjudicated amount (1) In this section: relevant date means. (a) the date occurring 5 business days after the date on which the adjudicator’s determination is served on the respondent concerned, or (b) if the adjudicator determines a later date under section 22(1)(b) — that later date. (2) If an adjudicator determines that a respondent is required to pay an adjudicated amount, the respondent must pay that amount to the claimant on or before the relevant date. [3.219] It would seem that if under s 22(1)(b) an adjudicator determines a date for payment earlier than the five business days in s 23(1)(a), then that earlier date will not be enforceable. Adjudicator’s determination relied on in support of injunction restraining cashing of bank guarantee [3.220] In GMW Urban Pty Ltd v Alexandria Landfill Pty Ltd [2012] NSWSC 237 an injunction was granted restraining the respondent proprietor from calling bank guarantees. McDougall J granted the injunction even though the proprietor had a superintendent’s certificate in its favour for liquidated damages because: 1. the same liquidated damages claim was rejected by the adjudicator who found in favour of the claimant contractor; 2. the principles of ‘issue estoppel’ have been held to apply to adjudications, citing Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69; and 3. the attempt to enforce the claim to liquidated damages by the proprietor by calling the bank guarantees was an attempt ‘to dispute the limited finality of the issue which was considered and resolved by the adjudicator’: at [25].

VICTORIAN ACT: OBLIGATION TO PAY ADJUDICATED AMOUNT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) [3.221] Unlike New South Wales, the Victorian Act does not contain an express obligation on the respondent to pay the amount of an adjudicator’s determination by the ‘relevant date’. This is, however, the obligation of the respondent when read with s 27(1) and (2): see [3.228] below. It would seem that if under s 27(6) an adjudicator determines a date for payment earlier than the four business days in s 27(6)(a), that earlier date will not be enforceable. [page 167]

25 Respondent’s obligations following adjudicator’s determination (1) If an adjudicator determines an adjudication application by determining that the respondent must pay an adjudicated amount to the claimant, the respondent — (a) must pay that amount to the claimant; or (b) must give security for payment of that amount to the claimant pending the final determination of the matters in dispute between them. (2) The respondent may only give security under subsection (1)(b), if the respondent has commenced proceedings (including arbitration proceedings or other dispute resolution proceedings) against the claimant in relation to a dispute under the construction contract. (3) The security given by a respondent may be in any of the following forms — (a) a written unconditional undertaking by a recognised financial institution to pay the claimant, on demand, the adjudicated amount; (b) payment of the adjudicated amount into a designated trust account; (c) any other form that may be agreed between the claimant and the respondent. (4) If the respondent is the Crown or a public authority representing the

Crown, the security may be in the form of a written statement by the Department Head of the relevant Government Department or by the public authority to the effect that sufficient money will be legally available for payment of any amount up to the adjudicated amount if an when that amount becomes payable. (5) Except for the consent of the parties, it is unlawful for the claimant to enforce any security given under this section until at least 2 business days after any matters in dispute between them in connection with the progress payment to which the security relates have been finally determined. (6) For the purposes of subsection (5), a determination becomes final — (a) in the case of a determination from which there is no right of appeal or review, when the determination is made; or (b) in the case of a determination from which there is a right of appeal or review — (i) when the right of appeal or review expires; or (ii) if the determination becomes subject to appeal or review proceedings, when those proceedings have been finally disposed of. Rights of parties finally determined by a court or an arbitrator [3.222] Byrne J in Belmadar Constructions Pty Ltd v Environmental Solutions International Ltd [2005] VSC 241 observed that although an adjudication under the Victorian Act fixes the amount the claimant expects to be paid, the rights of the parties are finally determined by a court or arbitrator, and then payments made as a result of the adjudication need to be allowed for: at [3], [18]. [page 168] Section 25(1)(a) Respondent’s right of set-off against an adjudication determination [3.223] In Brady Constructions Pty Ltd v Dominion Lifestyle Tower Apartments Pty Ltd [2006] VCC 1830 the claimant sought summary judgment in court on the basis of an adjudication determination in its favour. The respondent argued that it had an entitlement to liquidated damages from the claimant and Shelton J held that it was at least arguable that the respondent did have a claim for

liquidated damages in an amount in excess of the amount claimed by the claimant in the summary judgment application. The respondent also claimed it had a claim against the claimant in respect of defective work of the claimant. After referring to r 13.14 of the County Court Rules, Shelton J held that in the circumstances there was: … a question to be tried both with respect to the defendant’s claims for liquidated damages and defective work and on the proper construction of the February 2006 Agreement the March 2006 Agreement and the Contract, the defendant is not precluded from raising these matters by way of set-off. These claims for damages exceed the plaintiff’s claim … I conclude that the plaintiff is not entitled to summary judgment …: at [54].

Section 25(1)(b)–(6) Dissatisfied respondent to provide security [3.224] Section 25(1)(b)–(6) in the Victorian Act provides a regime for a respondent dissatisfied with an adjudication determination to provide security for the amount of the adjudication determination and have the matters in dispute finally determined under the construction contract. After the 2002 amendments there is no longer any equivalent New South Wales provision as a dissatisfied respondent can commence proceedings to have the matters finally determined but in the meantime must actually pay the amount of the adjudicator’s determination. Arpic Pty Ltd v Austin Australia Pty Ltd [2004] NSWSC 83 was decided under the earlier version of the NSW Act which is in terms almost identical to s 25(1)(b) and s 25(3)–(6) of the Victorian Act: see s 23(1)(b)–(5) of the NSW Act prior to the 2002 NSW Amending Act. Section 25(2) of the Victorian Act (which requires the commencement of proceedings by the respondent for it to be entitled to give security and so avoid paying the adjudicated amount in relation to the dispute) is unique to Victoria — it was never in the NSW Act. Under s 25(3)(a) of the Victorian Act the undertaking must be unconditional. This obviously poses risks for the respondent: see Arpic Pty Ltd v Austin Australia Pty Ltd [2004] NSWSC 83, especially at [10] (form of undertaking provided in that case), [13]–[15] and [31]–[35] (setting out the history of the case where the claimant in breach of s 25(5) cashed the undertaking prior to any final determination, submitted to orders that the claimant repay the cashed amount to a Westpac account, then had administrators appointed and where the respondent was faced with a real possibility of Westpac setting off against that account moneys separately owed to Westpac by the claimant). Prynew Pty Ltd v Piling Contractors (Qld) Pty Ltd [2005] NSWSC 1211 was also decided under the original version of the NSW Act and so is relevant to the

Victorian Act. In that case the respondent, which had provided to the claimant a bank guarantee in the amount of the determination of an adjudicator, sought an injunction restraining the claimant from taking steps to cash the bank guarantee. [page 169] The claimant sought to cash the guarantee arguing that as there had been no appeal or review of the adjudicator’s determination, for the purpose of s 23 of the original NSW Act the determination was therefore final. There were, however, still proceedings on foot in court commenced by the respondent by way of statement of liquidated claim, claiming amounts which arose out of the same building contract. Lloyd AJ held that the words ‘matters in dispute between them’ in s 23(1)(b) may refer to matters outside the matters in the adjudication (at [13]), so that until the court proceedings commenced by the respondent were finally determined there was no ‘final determination of the matters in dispute between the parties’: at [15]. Accordingly, in those circumstances it was held that the respondent had no entitlement to the moneys held in security until the conclusion of the court proceedings and an injunction was granted restraining the cashing of the bank guarantee (at [16]), and an order made that the respondent pay the claimant’s costs of the injunction application: at [17]. In Siemens Ltd v Vaughan Constructions Pty Ltd [2006] VSC 452 the respondent to an adjudication determination provided a bank guarantee for the adjudicated amount to the claimant, enclosed a notice of dispute under the contract and asserted that it was not required to pay the adjudicated amount, relying on s 27(1)(b) and s 25(2). Kaye J held that in s 25(2) the reference to ‘proceedings (including arbitration proceedings or other dispute resolution proceedings)’ required: … that, whatever process is adopted, that process must involve the determination or adjudication of a dispute by an independent person or persons adhering to the fundamental tenets of procedural fairness. In other words, there must be a process the purpose of which is that some person or persons, independent to the parties to the dispute, decides that dispute by an impartial consideration of the competing merits of both sides of the dispute: at [23].

The notice of dispute served by the respondent did not constitute the commencement of ‘proceedings’ because it involved reference of a dispute to a ‘Dispute Committee’ which contemplated a dispute resolution process by means of conciliation rather than any adjudication or determination of the dispute by an

independent person. Accordingly, the notice of dispute served did not operate to commence any such ‘proceedings’ under s 25(2): at [26], [28]. The further consequence was that because the respondent had not commenced any such dispute resolution proceedings under s 25(2) the claimant was entitled to cash the bank guarantee to obtain payment of the amount due under the adjudication determination: at [29]. In Van Ek Contracting Pty Ltd v Roads Corporation [2007] VSC 336 there was a reference of disputes to arbitration clause and then a separate clause dealing with adjudication under the Act. Clause 19.4 of the adjudication clause provided that: An adjudication response served by the Corporation under the Security of Payment Act shall be deemed to be a notice of a dispute under the Contract for the purpose of clause 45 of the General Conditions of Contract. When the Contractor receives the adjudication response, the Contractor shall within 30 business days … submit the detailed particulars of the matter at issue to the Corporation to be the subject of a mediation the terms of which … shall be agreed in writing between the parties within 10 business days, failing which the mediation, but not the dispute process, shall be at an end: at [10].

[page 170] Habersberger J agreed with Kaye J’s determination in Siemens that a mediation would not be a ‘proceeding’ within the meaning of s 25(2) (at [22]), however, because the adjudication response served by the respondent commenced an arbitration it was ‘irrelevant that further steps in the arbitration … could be delayed by the time limits allowed for the mediation … I consider that merely because there may be a mediation, does not mean that an arbitration has not commenced’: at [23]. Accordingly, the respondent had ‘commenced proceedings’ within the meaning of s 25(2). Section 25(1)(b) Obligation to provide security does not apply where respondent seeks judicial review of determination [3.225] In Phoenix International Group Pty Ltd v Resources Combined No 2 Pty Ltd [2009] VSC 459 the claimant applied for judgment under s 27 of the old Act because the respondent had not paid the amount of the adjudicator’s determination or provided security; because the respondent had established an arguable case the determinations of the adjudicator were null and void. Vickery J held that s 25 of the old Act ‘cannot be invoked in an application for security in a case such as this’: at [29]. ‘The facility to provide security in lieu of payment

under s 25 of the Old Act, in my opinion, has no application to a case such as the present where the foundation of the proceeding to be instituted by a party in the position of the respondents in this case, is a challenge to the validity of the adjudicator’s determination by judicial review’: at [33]. An appeal against Vickery J’s determination was unsuccessful: Phoenix International Group Pty Ltd v Resources Combined No 2 Pty Ltd [2009] VSCA 309. VICTORIAN ACT: OBLIGATION TO PAY ADJUDICATED AMOUNT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 28M Respondent required to pay adjudicated amount (1) Subject to sections 28B and 28N, if an adjudicator determines that a respondent is required to pay an adjudicated amount, the respondent must pay that amount to the claimant on or before the relevant date. (2) In this section relevant date means — (a) the date that is 5 business days after the date on which a copy of the adjudication determination is given to the respondent under section 23A; or (b) if the adjudicator determines a later date under section 23(1)(b), that later date.

28N Payment after review determination (1) If the respondent is required by a review determination to pay an amount to the claimant, the respondent must pay that amount on or before the date for that payment determined by the review adjudicator under section 28I(6)(f). [page 171] (2) If the claimant is required by a review determination to pay an amount to the respondent, the claimant must pay that amount on or before the date for that payment determined by the review adjudicator under section 28I(6)(f).

[3.226] Section 28M in Victoria is similar to s 23 in the NSW Act except that the references in the Victorian Act to ss 28B and 28N pick up the exceptions where there is a review adjudication under Div 2A. Section 28N is a Victoria only provision and deals with the payment obligations subsequent to the Victorian Review Adjudication procedure in Div 2A of the Victorian Act. It also provides for a possible payment by a claimant to a respondent (presumably of an amount paid pursuant to the original adjudication which the review adjudication has revised or reduced). NSW ACT: CONSEQUENCES OF NOT PAYING ADJUDICATED AMOUNT 24 Consequences of not paying claimant adjudicated amount (1) If the respondent fails to pay the whole or any part of the adjudicated amount to the claimant in accordance with section 23, the claimant may: (a) request the authorised nominating authority to whom the adjudication application was made to provide an adjudication certificate under this section, and (b) serve notice on the respondent of the claimant’s intention to suspend carrying out construction work (or to suspend supplying related goods and services) under the construction contract. (2) A notice under subsection (1)(b) must state that it is made under this Act. (3) An adjudication certificate must state that it is made under this Act and specify the following matters. (a) the name of the claimant, (b) the name of the respondent who is liable to pay the adjudicated amount, (c) the adjudicated amount, (d) the date on which payment of the adjudicated amount was due to be paid to the claimant. (4) If any amount of interest that is due and payable on the adjudicated amount is not paid by the respondent, the claimant may request the authorised nominating authority to specify the amount of interest payable in the adjudication certificate. If it is specified in the adjudication certificate, any such amount is to be added to (and becomes part of) the adjudicated amount.

(5) If the claimant has paid the respondent’s share of the adjudication fees in relation to the adjudication but has not been reimbursed by the respondent for that amount (the unpaid share), the claimant may request the authorised nominating authority to specify the unpaid share in the adjudication [page 172] certificate. If it is specified in the adjudication certificate, any such unpaid share is to be added to (and becomes part of) the adjudicated amount. Section 24(1) Injunction restraining issue of adjudication certificate [3.227] Campbell J in Glen Eight Pty Ltd v Home Building Pty Ltd (in liq) [2005] NSWSC 907 granted an interlocutory injunction restraining the claimants from requesting the authorised nominating authority to issue an adjudication certificate under s 24(1) where the respondent gave the usual undertaking as to damages and undertaking to take steps to obtain a prompt final hearing of the matter. The claimant was also required to pay into court the amount of the disputed adjudication determination plus the estimated interest the claimant would be entitled to if the adjudication determination stands. Campbell J held in Australian Remediation Services Pty Ltd v Earth Tech Engineering Pty Ltd [2005] NSWSC 715 that there was a serious question to be tried as to whether the adjudicator’s determination was void. An injunction restraining the claimant from requesting an adjudication certificate or filing any certificate under s 24(1)(a) and s 25(1)(a) was granted upon: 1. the respondent providing the usual undertaking as to damages; and 2. the respondent providing a bank guarantee for the amount in dispute and to secure the undertaking as to damages. See [20] of the judgment for the form of order providing for the injunction and bank guarantee provisions. In Grindley Constructions Pty Ltd v Painting Masters Pty Ltd [2012] NSWSC 234 the respondent established an arguable case to relief (based on jurisdictional error and breach of natural justice by the adjudicator). The court found the balance of convenience in favour of granting the injunction on the basis of:

1. the risk that if judgment was recorded it would affect the respondent’s reputation; and 2. the evidence that the claimant had no assets (including a letter sent by the managing director of the claimant to employees and others apologising for not making payments to them and advising he personally had no assets to sell ‘to rectify this problem’): at [29]–[30]. See [3.265] for authority that the respondent should make any such application for an injunction promptly. See also [3.273] for cases dealing with injunctions restraining a claimant from entering judgment. VICTORIAN ACT: CONSEQUENCES OF NOT COMPLYING WITH ADJUDICATOR’S DETERMINATION (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 27 Consequences of not complying with adjudicator’s determination (1) This section applies if, on or before the relevant date, a respondent fails to do one or other of the following — [page 173] (a)

to pay the whole or any part of the adjudicated amount to a claimant; (b) to give security for payment of the whole or any part of the adjudicated amount to a claimant. (2) In those circumstances, the claimant — (a) may recover from the respondent, as a debt due to the claimant, in any court of competent jurisdiction — (i) the unpaid, or unsecured, portion of the adjudicated amount; and (ii) interest at the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 on the adjudicated amount calculated from the relevant date until judgment is entered in respect of the debt; and (b) may serve notice on the respondent of the claimant’s intention — (i) to suspend carrying out construction work under the

(3) (4)

(5) (6)

construction contract; or (ii) to suspend supplying related goods and services under the construction contract. A notice referred to in subsection (2)(b) must state that it is made under this Act. Judgment in favour of the claimant is not to be entered unless the court is satisfied of the existence of the circumstances referred to in subsection (1). Nothing in this section affects the operation of any Act requiring the payment of interest in respect of a judgment debt. In this section, relevant date means — (a) the date occurring 4 business days after the date in which the relevant determination is made under section 23; or (b) if the adjudicator determines a later date under section 23(1)(b), that later date.

[3.228] The New South Wales and Victorian sections are materially different in a number of ways: Victoria does not have the New South Wales procedure of the authorised nominating authority issuing an adjudication certificate; the Victorian Act refers to the provision of security in lieu of payment of the adjudication determination in s 27(1)(b), which is not in the NSW Act after the 2002 NSW Amending Act. Section 27(2)(a) Summary judgment for adjudicator’s determination [3.229] In Shelford Engineering and Construction Pty Ltd v Rescom Constructions Pty Ltd [2005] VCC 361 summary judgment for an amount of the adjudicator’s determination was refused under s 27(2)(a) of the Victorian Act. Shelton J held that it was arguable that the claimant was required to seek agreement to an adjudication under s 18(3)(a)(i) failing which to an authorised nominating authority under s 18(3)(a)(ii) before making an application under s 18(3)(a)(iii): at [6]–[9]. As the claimant failed to seek such agreement under s 18(3)(a)(i) or (ii), the respondent had raised an arguable defence to the summary [page 174] judgment application. Shelton J distinguished Brodyn Pty Ltd t/a Time Cost and

Quality v Davenport [2004] NSWCA 394 on the basis that s 17 of the NSW Act is worded differently from s 18 of the Victorian Act. Shelton J in Shelford held that it was open to the respondent to oppose the summary judgment application on the basis that all the elements of the statutory cause of action under the Victorian Act had not been proven by the claimant, but left open the question whether O 56 of the Supreme Court (General Civil Procedure) Rules 1996 ‘provided an avenue of challenge to the determination’: at [12], [13]. Section 27 of the Victorian Act was considered in Performance Builders (Vic) Pty Ltd v Southern Restaurants Vic Pty Ltd [2004] VCC 4; [2004] VCC 116. The claimant sought to enforce the adjudicator’s determination it had in its favour. Cohen J gave summary judgment for the claimant holding that no arguable defence had been established as: 1. There was no evidence that the payment claim was in fact a claim for final payment and was properly characterised as a progress claim (even though the date of practical completion had passed by the time of the payment claim): at [6]–[9]. 2. Section 27 does not open up for the court’s consideration the merits of the claim considered by the adjudicator: what the court needs to be satisfied of on an application under s 27 is that what was before the adjudicator was by its nature a claim for progress payment and the claimant had so satisfied the court: at [3]. In Performance, Cohen J had considerable hesitation about the adjudicator filing an affidavit in support of the claimant’s summary judgment application. Cohen J would not encourage such a practice in future applications. In Phoenix International Group Pty Ltd v Resources Combined No 2 Pty Ltd (No 2) [2009] VSC 459 the claimant sought judgment under s 27 of the old Act. Vickery J refused judgment and held that: … The entry of judgment pursuant to s 27 of the old Act is not … merely an administrative process. … the court retains a discretion as to whether or not to enter judgment. The discretion is not excluded by the terms of the Old Act. The discretion is to be exercised judicially and in the interests of justice: at [17], [18].

Vickery J also held that the appropriate approach by the court in considering an application under s 27 for judgment is to ‘approach the matter by applying the closely analogous procedure for entry of a summary judgment pursuant to O 22 of the Rules of Court’: at [21]. Vickery J held that the respondents had demonstrated an arguable case that the determinations of the adjudicator were null and void and therefore he refused the application for judgment under s 27: at

[27]. Vickery J also held that in those circumstances any obligation for the respondent to provide security under s 25 did not apply. Ultimate determination of parties’ rights needs to allow for adjudication [3.230] Byrne J in Belmadar Constructions Pty Ltd v Environmental Solutions International Ltd [2005] VSC 241 observed that although an adjudication under the Victorian Act fixes the amount the claimant expects to be paid the rights of the parties are finally determined by a court or arbitrator, when payments made as a result of the adjudication need to be allowed for: at [3], [18]. [page 175] VICTORIAN ACT: CONSEQUENCES OF NOT COMPLYING WITH ADJUDICATOR’S DETERMINATION (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 28O Consequences of respondent not paying adjudicated amount (1) If the respondent fails to pay the whole or any part of an adjudicated amount in accordance with section 28M or 28N, the claimant may — (a) request the authorised nominating authority to whom the adjudication application or the adjudication review application was made to provide an adjudication certificate under section 28Q; and (b) serve notice on the respondent of the claimant’s intention — (i) to suspend carrying out construction work under the construction contract; or (ii) to suspend supplying related goods and services under the construction contract. (2) A notice under subsection (1)(b) must state that it is made under section 28O(1) of this Act. [3.231] Section 28O(1) and (2) are very similar to s 24(1) and (2) in New South Wales but in light of the Victoria only review adjudication procedures in Div 2A of the Victorian Act it remains to be seen if the Victorian courts will follow the New South Wales cases referred to at [3.227].

28P Consequences of claimant not paying adjudicated amount If the claimant fails to pay the whole or part of the amount payable by the claimant under a review determination in accordance with section 28N, the respondent may request the authorised nominating authority to which the adjudication review application was made to provide an adjudication certificate under section 28Q. Section 28P is a Victoria only provision as it is only in Victoria that there is a review adjudication procedure that could result in the claimant having to pay the review determination adjudicated amount. 28Q Adjudication certificates (1) An adjudication certificate provided by an authorised nominating authority on a request under this Division must state that it is made under this Act and specify the following matters — (a) the name of the person requesting the certificate; (b) the name of the person who is liable to pay the adjudicated amount; (c) the amount payable under section 28M or 28N; (d) the date on which payment of that amount was due to be paid to the person requesting the certificate. [page 176] (2) If any amount of interest that is due and payable on the amount payable under section 28M or 28N is not paid by the respondent, the person requesting the adjudication certificate may request the authorised nominating authority to specify the amount of interest payable in the adjudication certificate. (3) If an amount of interest is specified in the adjudication certificate to be paid by the respondent, the amount is to be added to, and becomes part of, the adjudicated amount. (4) If the claimant has paid the respondent’s share of the adjudication fees in relation to the adjudication or the adjudication review fees in relation

to any adjudication review (as the case requires) but has not been reimbursed by the respondent for that amount (the unpaid share), the claimant may request the authorised nominating authority to specify the unpaid share in the adjudication certificate. (5) If the respondent has paid the claimant’s share of the adjudication review fees in relation to any adjudication review but has not been reimbursed by the claimant for that amount, the respondent may request the authorised nominating authority to specify that share of the fees in the adjudication certificate. (6) If the unpaid share is specified in the adjudication certificate it is to be added to, and becomes part of, the adjudicated amount. (7) In this section adjudicated amount includes an amount payable by the respondent or the claimant under a review determination. Section 28Q is similar to s 24(3)–(5) in the NSW Act. NSW ACT: FILING ADJUDICATION CERTIFICATE AS JUDGMENT DEBT AND CHALLENGING ADJUDICATOR’S DETERMINATIONS 25. Filing of adjudication certificate as judgment debt (1) An adjudication certificate may be filed as a judgment for a debt in any court of competent jurisdiction and is enforceable accordingly. (2) An adjudication certificate cannot be filed under this section unless it is accompanied by an affidavit by the claimant stating that the whole or any part of the adjudicated amount has not been paid at the time the certificate is filed. (3) If the affidavit indicates that part of the adjudicated amount has been paid, the judgment is for the unpaid part of that amount only. (4) If the respondent commences proceedings to have the judgment set aside, the respondent: (a) is not, in those proceedings, entitled: (i) to bring any cross-claim against the claimant, or [page 177] (ii)

to raise any defence in relation to matters arising under the

(b)

construction contract, or (iii) to challenge the adjudicator’s determination, and is required to pay into the court as security the unpaid portion of the adjudicated amount pending the final determination of those proceedings.

A. The Brodyn principles and the ‘basic and essential requirements’ Challenging adjudicator’s determinations: the Brodyn principles [3.232] The Court of Appeal considered whether relief in the nature of certiorari was available against an adjudicator’s determination in Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2004] NSWCA 394. Hodgson JA with whom Mason P and Giles JA agreed, held certiorari was not available as ‘it would not accord with the legislature intention … that these provisional determinations be made and given effect with minimum delay and minimum court involvement’: at [58]. However, see now Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190, below at [3.274], where the Court of Appeal held relief in the nature of certiorari was available. Note that McDougall J in Cardinal Project Services Pty Ltd v Hanave Pty Ltd [2010] NSWSC 1367 observed that the decision in Chase ‘does not suggest that the grounds of review established by the decision in Brodyn are no longer applicable. On the contrary, it confirms that those grounds go to jurisdiction, and hence are relevant to the question of review under s 69. Further, there is nothing in the decision in Chase to suggest that the consequences of want of jurisdiction or denial of natural justice are other than as described by Hodgson JA in Brodyn’: at [21]. It was held in Brodyn that for an adjudicator’s determination to have the effect provided by the Act: … it must satisfy … the conditions laid down by the Act as essential for there to be such a determination. If it does not … It will be void and not merely voidable. A court of competent jurisdiction could in those circumstances grant relief by way of declaration or injunction, without the need to quash the determination by means of an order of the nature of certiorari’: at [52]. The basic and essential requirements include the following: 1. the existence of a construction contract between the claimant and the respondent, to which the Act applied (ss 7, 8);

2. the service by the claimant on the respondent of a payment claim (s 13); 3. the making of an adjudication application by the claimant to an authorised nominating authority (s 17); 4. the reference of the application to an eligible adjudicator, who accepts the application (ss 18, 19); and 5. the determination by the adjudicator of the application (ss 19(2), 21(5)), by determining the amount of the progress payment, the date on which it [page 178] becomes or became due and the rate of interest payable (s 22(1)) and the issue of a determination in writing (s 22(3)(a)): at [53]. The relevant sections contain more detailed requirements, for example, s 13(2) as to the content of payment claims; s 17 as to the time when an adjudication application can be made and as to its contents; s 21 as to the time when an adjudication application may be determined; and s 22 as to the matters to be considered by the adjudicator and the provision of reasons (at [54]), but ‘the legislature did not intend that exact compliance with all the more detailed requirements was essential to the existence of determination’: at [55]. ‘… What was intended to be essential was compliance with the basic requirements (and those set out above may not be exhaustive), a bona fide attempt by the adjudicator to exercise the relevant power relating to the subject matter of the legislation and reasonably capable of reference to this power … and no substantial denial of the measure of natural justice that the Act requires to be given’: at [55]. ‘… I do not think that compliance with the requirements of s 22(2) are made such pre-conditions … The matters in s 22(2), especially in paras (b), (c) and (d), could involve extremely doubtful questions of fact or law: for example, whether a particular provision, say an alleged variation, is or is not a provision of the construction contract; or whether a submission is “duly made” by a claimant, if not contained in the adjudication application (s 17(3)(b)), or by a respondent, if there is a dispute as to the time when a relevant document was received (ss 20(1), 22(2)). In my opinion, it is

sufficient to avoid invalidity if an adjudicator either does consider only the matters referred to in s 22(2), or bona fide addresses the requirements of s 22(2) as to what is to be considered’: at [56]. ‘The circumstances that the legislation requires notice to the respondent and an opportunity to the respondent to make submissions (ss 17(1) and (2), 20, 21(1), 22(2)(d)) confirms that natural justice is to be afforded to the extent contemplated by these provisions; and in my opinion, such is the importance generally of natural justice that one can infer a legislative intention that this is essential to validity, so that if there is a failure by the adjudicator to receive and consider submissions, occasioned by breach of these provisions, the determination will be a nullity’: at [57]. ‘… [I]n cases such as this where there is a disclosed legislative intention to make a particular measure of natural justice a pre-condition of validity, failure to afford that measure of natural justice does make the determination void’: at [57]. ‘If there is fraud of the claimant in which the adjudicator is also involved, the determination will be void because the adjudicator has not bona fide attempted to exercise the power. If the determination is induced by fraud of the claimant in which the adjudicator is not involved, then I am inclined to think that the determination is not void but voidable; and it is liable to be set aside by proceedings of the kind appropriate to judgments obtained by fraud’: at [60]. ‘Where the adjudicator’s determination is void for one of the reasons discussed above, then until it is filed as a judgment, proceedings can appropriately be brought in a court with jurisdiction to grant declarations and injunctions to establish that it [page 179] is void and to prevent it being filed. However, once it has been filed, the resulting judgment is not void. An application can be made to set aside the judgment; and … it is not contrary to s.25(4)(a)(iii) to do so on the basis that there is in truth no adjudicator’s determination’: at [61]. Judicial summary of the authorities as to challenging adjudicator’s determinations under the Brodyn principles [3.233] Hammerschlag J in Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd

[2007] NSWSC 941 at [30] summarised the relevant principles as follows: (a) the Act seeks to facilitate speedy resolution of claims to progress payments without excessive formality or intervention by the Court and the scope for invalidity for non-jurisdictional error is limited: Downer Construction (Australia) Pty Ltd v Energy Australia [2007] NSWCA 49 at [81]; (b) an adjudicator’s determination is reviewable for jurisdictional error where the determination is not a determination within the meaning of the Act because of non-satisfaction of some pre-condition which the Act makes essential for the existence of such a determination: Brodyn Pty Ltd t/a Time Cost and Quality v Davenport (2004) 61 NSWLR 421 at 441; Transgrid v Siemens Ltd (2004) 61 NSWLR 521 at 539; (c) whether a failure by an adjudicator to meet a requirement imposed by the Act makes the determination void depends on whether that requirement was intended by the legislature to be an essential pre-condition for the existence of an adjudicator’s determination: Transgrid v Siemens Ltd at 539 to 540; Brodyn Pty Ltd t/a Time Cost and Quality v Davenport at 441; (d) the existence or otherwise of essential pre-conditions to a valid claim, as well as determination of the parameters of the payment claim, are matters for the adjudicator, not for objective determination by a court: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; Downer Construction (Australia) Pty Ltd v Energy Australia; (e) an erroneous decision by an adjudicator that an essential pre-condition has been satisfied, when in truth it has not, can be a jurisdictional error making the determination reviewable. When there is present such jurisdictional error the determination is void and relief by way of declaration and injunction is available: Transgrid v Siemens Ltd at 539; (f)

ss 13, 17, 18, 19, 21 and 22 of the Act contain certain basic requirements as well as more detailed requirements. The legislature did not intend exact compliance with all of the more detailed requirements to be essential to the existence of a determination. What was intended to be essential was compliance with the basic requirements, a bona fide attempt by the adjudicator to exercise the relevant power relating to the subject matter of the legislation and reasonably capable of reference to that power, and no substantial denial of the measure of natural justice that the Act requires to be given: Brodyn Pty Ltd t/a Time Cost and Quality v Davenport at 442; Transgrid v Siemens Ltd at 540;

(g) if the basic requirements of the Act are not complied with, or if a purported determination lacks a bona fide attempt by the adjudicator to exercise the relevant power, or if there is a substantial denial of the measure of natural justice required, a purported determination will be void because then there will not be satisfaction of a requirement that the legislature has indicated to be essential to the existence of a determination: Brodyn Pty Ltd t/a Time Cost and Quality v Davenport at 442; Transgrid v Siemens Ltd at 540; Reiby St Apartments Pty Ltd v Winterton Constructions Pty Ltd [2006] NSWSC 375 at [73]–[75]; Lansky Constructions Pty Ltd v Noxequin Pty Ltd (in liq) t/a Fyna Formwork [2005] NSWSC 963 at [20]; Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 at [90]–[92];

[page 180] (h) the requirement of good faith is not a reference to dishonesty or its opposite but to the necessity for there to have been an effort to understand and deal with the issues in the discharge of the statutory function: Timwin Construction Pty Ltd v Façade Innovations Pty Ltd [2005] NSWSC 548 at [38]; (i)

an adjudicator is only required to consider submissions which are “duly made” under s 22(2)(d).

A submission which is included in an adjudication response contrary to the requirements of s 20(2B) of the Act is not duly made within s 22(2)(d), although it could be duly made if made in response to a request under s 21(4)(a) or in a conference by an adjudicator under s 21(4)(c): John Holland Pty Ltd v Roads & Traffic Authority of New South Wales [2007] NSWCA 19 at [31] and [51]; (j)

s 14(2) provides that the payment schedule must identify the payment claim to which it relates and must indicate the amount of the payment (if any) that the recipient of the payment claim proposes to make. Section 14(3) requires the respondent to indicate why payment in full is withheld and the reasons for doing so. The joinder of issue thus achieved sets the parameters for the matters that may be contested if an adjudication under the Act ensues: Clarence St Pty Ltd v Isis Projects Pty Ltd (2005) 64 NSWLR 448 at 455;

(k) both ss 22(2)(c) and (d) make reference to “submissions (including relevant documentation)”. The parenthesised words show that the legislature had in mind that the word submissions was not to be construed narrowly and that the submissions may include relevant documentation in support: Austruc Constructions Ltd v ACA Developments Pty Ltd [2004] NSWSC 131 at [68]–[69]; (l)

under s 22(2) the adjudicator is required to consider the provisions of the Act, the provisions of the contract and submissions duly made. If an adjudicator does consider the provisions of the Act and the contract which he or she believes to be relevant, and considers those of the submissions that he or she believes to have been duly made, an accidental or erroneous omission to consider a particular provision of the Act or a particular provision of the contract, or a particular submission is not sufficient to invalidate the determination. This is either because an accidental or erroneous omission does not amount to a failure to comply with s 22(2) so long as the specified classes of consideration are addressed or because the intention of the legislature cannot have been to invalidate the determination for this kind of mistake: John Holland Pty Ltd v Roads & Traffic Authority of New South Wales at [55]; and

(m) the legislature entrusts to the adjudicator the role of determining whether submissions are or are not duly made and if the adjudicator addresses that question and comes to the conclusion that a submission was not duly made, a failure to take account of that submission is not a failure to afford the measure of natural justice contemplated by the Act: John Holland Pty Ltd v Roads & Traffic Authority of New South Wales at [63] and [71]; Co-ordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229.

Hammerschlag J also held that: It is … necessary to consider the nature, gravity and effect of the errors, if any, made by the adjudicator, and to assess, in the context of the purpose and operation of this particular statute, whether the adjudicator breached a basic and essential requirement of the Act by not considering submissions duly made or by failing to make a bona fide attempt to exercise his powers under the Act, or whether the plaintiff was denied natural justice to a degree sufficient to void the adjudication: at [33].

On the facts of the case Hammerschlag J held that if the adjudicator was making a bona fide attempt to make an assessment of the claim for liquidated damages it was not possible for the adjudicator to find (as he did) that the ‘respondent had not advised its asserted date of Practical Completion nor adjustments for extensions of time when, in [page 181]

his own adjudication, he made reference to the date so advised by the [respondent]’ (at [82]) and ‘[i]t is open to articulate what the adjudicator did as both a failure, bona fide, to attempt to exercise the relevant power with respect to the liquidated damages claim, and a failure to afford the level of natural justice required by the Act … Either way, his error rendered the whole of the determination void’: at [85]. Compliance with s 13(1) and ‘good faith’ by claimant under the Brodyn principles [3.234] There is no requirement that the claimant have a bona fide belief that it is entitled to the amount claimed for the payment claim to be valid under s 13: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238. Further, any alleged lack of good faith involves elements that the payment claim was without merit and that the claimant was aware of that, but such matters are for determination by the adjudicator: Bitannia at [71]. Compliance with s 13(2) and the Brodyn principles [3.235] In Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1 at [41] Palmer J summarised the law as to compliance with s 13(2) and Brodyn and Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) [2005] NSWCA 409: …

(ii)

(iii)

there are some non-compliances with the requirements of s 13(2) of the Act which will result in the nullity of a payment claim for all purposes under the Act; there are other noncompliances which will not produce that result; a payment claim which does not, on its face, purport in a reasonable way to: – identify the construction work to which the claim relates; or – indicate the amount claimed; or – state that it is made under the Act

fails to comply with an essential and mandatory requirement of s 13(2) so that it is a nullity for the purposes of the Act;

(iv)

(v)

a payment claim which, on its face, purports reasonably to comply with the requirements of s 13(2) will not be a nullity for the purposes of engaging the adjudication and enforcement procedures of Pt 3 of the Act; in the case of a payment claim which purports reasonably on its face to comply with s 13(2):

–

(vi)

if the respondent wishes to object that it does not in fact comply so that it is a nullity for the purposes of the Act, the respondent must serve a payment schedule under s 14(4) and an adjudication response under s 20, in which that objection is taken; – if the respondent does not serve a payment schedule within the time limited under the Act and the claimant ultimately seeks the entry of judgment under s 15(4), the respondent may not resist summary judgment on the ground that the payment claim was not a valid payment claim by reason of noncompliance with the requirements of s 13: the respondent has only one chance to take that objection, namely, in a timeously served payment schedule; in the case of a payment claim which was never served on the respondent or which does not purport reasonably on its face to comply with the requirements of s 13(2): – the payment claim is a nullity for the purposes of the Act; [page 182] –

–

an adjudication founded upon that payment claim is a nullity, regardless of whether the objection to the validity of the payment claim was taken in a timeously served payment schedule; an application under s 15(4) for judgment for the statutory debt created by s 14(4) may be defeated on the ground that there was no payment claim in existence for the purposes of s 15(1)(b).

Compliance with s 13(4) and the Brodyn principles [3.236] In Lifestyle Retirement Projects No 2 Pty Ltd v Parisi Homes Pty Ltd [2005] NSWSC 705 Campbell J held that: [P]recise compliance with s 13(4) [is not] a basic requirement which is essential to a purported determination under the Act. Rather, s 13(4) is one of the “more detailed requirements”, which Hodgson JA held exist in the Act. When there has been a document which purports to be a payment claim served, the fact … that the construction work … was last carried out more than 12 months before the payment claim was served does not mean that the “basis and essential requirement” of “service … of a payment claim (s 13)” has not been complied with: at [19].

The 12-month time limit in s 13(4)(a) is not a basic and essential requirement under the Brodyn principles, so non-compliance does not result in invalidity of an adjudication determination: Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 13 at [35], [36]. But see now the decision in Bauen Constructions Pty Ltd v Sky General Services Pty Ltd [2012] NSWSC 1123 referred to at [3.276] below, where the adjudicator’s determination was quashed because he incorrectly determined the payment claim was made within the 12-month period. Defence on basis of s 13(4) or (5) must be raised in payment schedule [3.237] Palmer J further held in Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1 that if a defence is raised on the basis of s 13(4) or (5) it must be raised in a payment schedule, otherwise it cannot be relied upon to set aside or restrain enforcement of an adjudication determination: at [48]. Compliance with s 14(3) and the Brodyn principles [3.238] ‘Even if the Adjudicator had … erred in the proper construction of the requirements of s 14(3), such error did not render the present determination a nullity’: Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd t/a Novatec Construction Systems [2008] NSWSC 858 at [44]. Compliance with s 17(2) and the Brodyn principles [3.239] Section 17(2) is to be included as one of the basic and essential requirements under the Brodyn principles: Springs Golf Club Pty Ltd v Profile Golf Pty Ltd [2006] NSWSC 344 at [20] per Rein J, agreeing with Einstein J in Schokman v Xception Construction Pty Ltd [2005] NSWSC 297; but where a document purports to be a payment schedule then there has been no breach of a basic and essential requirement and it is up to the adjudicator to decide if it complies totally with s 14: at [24]. Kell & Rigby Pty Ltd v Guardian International Properties Pty Ltd [2007] NSWSC 554 was distinguished by Hammerschlag J in Bucklands Convalescent Hospital v Taylor Projects Group Pty Ltd [2007] NSWSC 1514. In Kell & Rigby it was held that s 17(2) of [page 183] the Act imposed a mandatory condition and in the absence of fulfilment of the

condition, the adjudication application upon which it depended was a nullity. In Bucklands Convalescent Hospital the dispute was whether the payment schedule was a payment schedule because of an argument about whether the superintendent had authority to deliver it or make it on behalf of the respondent and Hammerschlag J decided that the question was a matter for the adjudicator to determine. It was only if ‘he fails to comply with the basic requirement of the Act in determining it or to afford natural justice or makes no bona fide attempt to determine it, the court will intervene’: at [26]. Where adjudicator considered submissions as to service of payment claim, no nullity even if adjudicator gets it wrong [3.240] Where the adjudicator considered the submissions made to him and came to a decision on the question of whether or not service of the payment claim occurred on a particular date, Macready AJ in Reid Constructions Pty Ltd v Eire Contractors Pty Ltd [2009] NSWSC 678 determined (applying JAR Developments Pty Ltd v Castleplex Pty Ltd [2007] NSWSC 737) that given that the adjudicator had plainly considered the submissions that were put to him, there was no nullity even if the adjudicator got it wrong: at [47]. Compliance with s 17(3) and the Brodyn principles [3.241] A failure to comply with the relevant time limit in s 17(3) does not vitiate a determination on the basis of failure to comply with a basic and essential precondition of validity: Multipower Corp Pty Ltd v S&H Electrics Pty Ltd [2006] NSWSC 757 at [40]. Multipower was followed by Rein J in JAR Developments Pty Ltd v Castleplex Pty Ltd [2007] NSWSC 737. Compliance with s 21(4) and the Brodyn principles [3.242] Nothing in the Act suggests that s 21(4) is one of the basic and essential requirements laid down in Brodyn: David Hurst Constructions Pty Ltd v Durham [2008] NSWSC 318 at [58]–[60]. Compliance with s 22(2) and the Brodyn principles [3.243] Where an adjudicator failed to consider the matters in s 22(2) it can make the determination void: see Holmwood Holdings Pty Ltd v Halkat Electrical Contractors Pty Ltd [2005] NSWSC 1129 at [49]; and Roads and Traffic Authority (RTA) v John Holland Pty Ltd [2006] NSWSC 567 at [66]. In Halkat Electrical Contractors Pty Ltd v Holmwood Holdings Pty Ltd [2007] NSWCA 32 the adjudicator in his determination stated that he did not

have evidence on which he could independently arrive at the value of the completed work: instead he adopted the claimant’s valuation in preference to that of the respondent because of the respondent’s unmeritorious challenges to the validity of the payment claim. The Court of Appeal held that: … Section 22 of the Act required that the adjudicator determine an adjudicated amount (s 22(1)) by considering particular matters (s 22(2)). The adjudicator had to make a determination, and he did not make a determination if he arrived at an adjudicated amount by a process wholly unrelated to a consideration of those matters: at [25] per Giles JA.

[page 184] Accordingly, ‘the adjudicator simply did not perform the task required by the Act, and … did not comply with an essential precondition to the existence of a valid determination’: at [27] per Giles JA. The Court of Appeal considered compliance with the requirements of s 22(2) in John Holland Pty Ltd v Roads and Traffic Authority of New South Wales (RTA) [2007] NSWCA 19. Hodgson JA held that: The relevant requirement of s 22(2) is that the adjudicator consider the provisions of the Act, the provisions of the contract and submissions duly made. If an adjudicator does consider the provisions of the Act and the contract which he or she believes to be relevant, and considers those of the submissions that he or she believes to have been duly made, I do not think an accidental or erroneous omission to consider a particular provision of the Act or a particular provision of the contract, or a particular submission, could either wholly invalidate a determination, or invalidate it as regards any part affected by the omission: at [55].

See also the decision of McDougall J in Broad Construction Services (NSW) Pty Ltd v Vadasz t/as Australasian Piling Co [2008] NSWSC 1057 which followed John Holland. McDougall J held that ‘it is a matter for the adjudicator to decide, in terms of s 22(2)(d), whether a submission has been “duly made”’: at [37]. Error in determining amount and the Brodyn principles [3.244] In Transgrid v Siemens Ltd [2004] NSWCA 395 judgment was delivered by the Court of Appeal on the same day as Brodyn and Hodgson JA held, applying the Brodyn principles, that error by an adjudicator in not determining an amount calculated in accordance with the contract, is an ‘error of law, and not such as to render the determination invalid’: at [34]. Adjudicator incorrectly determines respondent out of time to submit adjudication response and the Brodyn principles

[3.245] In Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2005] NSWSC 378 the adjudicator did not serve notice of acceptance on the respondents under s 19 until some seven days after he believed he had done so and then took the view that the respondents were out of time to lodge an adjudication response. McDougall J held that the respondents were entitled to relief under the Brodyn principles either because of failure to comply with basic and essential requirements of the Act or because of the denial of natural justice in failing to allow the respondents to file an adjudication response: at [40]. Failure to determine the claim made and the Brodyn principles [3.246] In an adjudication application, the claimant identified significantly greater areas and in some cases different areas, said to be subject to latent conditions compared to the areas identified in the payment claim. Barrett J held in Energy Australia v Downer Construction (Australia) Pty Ltd [2005] NSWSC 1042 that there was a serious question to be tried as to whether there was ‘a failure to follow and implement the statutory scheme so that the … conditions for … a valid adjudicator’s determination … exist’: at [20]–[23], [34]. Barrett J, however, on the balance of convenience refused to order the injunction sought by the respondent preventing the claimant from obtaining and filing an adjudication certificate: at [46] and see also [36]–[45]. [page 185] A subsequent application was brought by the respondent challenging the validity of the adjudication determination pursuant to which judgment in excess of $6 million was entered against it under s 25. Nicholas J in Energy Australia v Downer Construction (Australia) Pty Ltd [2006] NSWSC 52 held that the adjudicator had failed to determine the claim made by the claimant in its payment claim: in the payment claim it was a claim that the bedding shears were a latent condition but the adjudicator determined a claim of latent conditions of excessive water ingress: at [107]. The determination therefore lacked ‘a basic and essential requirement for its existence as it was not the adjudication of the payment claim’ and accordingly the adjudication determination was void: at [114]. On appeal, Nicholas J’s determination in Energy Australia was overturned. In Downer Construction (Australia) Pty Ltd v Energy Australia [2007] NSWCA 49 at [87], Giles JA (with whom Santow and Tobias JJA agreed) held that:

[D]etermination of the parameters of the payment claim is a matter for the adjudicator, and a reasonable but erroneous decision by the adjudicator does not invalidate the determination. In the present case, in determining the amount of the progress payment (if any) to be made it was for the adjudicator to decide whether the water ingress fell within latent conditions for the purpose of the contract, and the parameters of the payment claim in that respect. He did so. As to both, it could not be said that the adjudicator’s decision was without foundation and if the adjudicator addressed the matters and came to his decisions, even if other decisions could have been come to, he did what the Act required – he determined the adjudicated amount. As was stated in Minister for Commerce v Contrax Plumbing (NSW) Pty Ltd [2005] NSWCA 142 at [49]: … an error of fact or law, including an error in interpretation of the Act or of the contract, or as to what are the valid and operative terms of the contract, does not prevent a determination from being an adjudicator’s determination within the meaning of the Act.

Giles JA concluded: Accordingly, I am unable to agree with the trial judge’s conclusion that the adjudicator failed to determine Downer’s payment claim, but instead determined a different claim. The adjudicator determined the payment claim, and the court should not by judicial review engage with the questions decided by him in doing so: at [89].

In Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] NSWCA 279, it was argued by the respondent that the adjudicator did not determine the claim made. The adjudicator (erroneously) relied on the provisions in the AS4000-1997 contract which deemed the progress claim to be the progress certificate when the superintendent did not respond within the contractual period of 14 days. The adjudicator found in favour of the claimant in the amount of the deemed certificate. The respondent argued that this approach was not open to the adjudicator. The Court of Appeal held that ‘[t]here may have been a legal error but that did not mean that the adjudicator did not fulfil his statutory task in s 22’: at [32]. Allsop P (with whom Giles and Hodgson JJA agreed) said: … He adjudicated upon the payment claim put forward by s 17(1). He dealt with every submission put to him by the parties. He came to the view that he was not required to examine the payment schedule line by line in answer (as would have been required under s 9(b)) because of his (erroneous on this hypothesis) view of the operation of … s 9(a): at [31].

[page 186] Failure to value work or determine whether work performed and the Brodyn principles [3.247] Where an adjudicator determines a progress payment at the claimed amount (because he rejects the respondent’s submissions) without valuing the work or determining whether it had been performed, it is a failure of a basic and

essential requirement and is therefore void: Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 13 at [86]. The adjudicator in Pacific said that ‘in the absence of any valid submission from the respondent which refutes the claim’ the claimant was entitled to the sum claimed and accordingly Brereton J held the determination void: at [26]. In Shell Refining (Australia) Pty Ltd v AJ Mayr Engineering Pty Ltd [2006] NSWSC 94 the adjudicator determined that: I am satisfied that the respondent did cause delay and disruption and the respondent thereby breached the Contract and caused the claimant to incur some damages of the nature claimed. Had the respondent addressed the claims and come up with a different assessment, then I might have been able to determine an entitlement different to that claimed. As it is, the respondent has not provided information which would enable me to assess the claimant’s damages at a lesser amount than the amount claimed. Consequently, for a payment on account, I am satisfied that the claimed amount should be included in the calculation: at [11].

Bergin J distinguished the determination from that in Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 13 as the adjudicator in Shell Refining had considered the merits of the claim and concluded it was substantiated and the calculation method was reasonable. The adjudicator’s observation that the respondent had not provided information to enable him to assess the claim at less than the amount claimed did not mean that the adjudicator failed to address the merits of the claim: at [50], [51]. Where there was no construction contract and the Brodyn principles [3.248] Brereton J (without reference to Okaroo Pty Ltd v Vos Constructions and Joinery Pty Ltd [2005] NSWSC 45) held in Fifty Property Investments Pty Ltd v O’Mara [2006] NSWSC 428 that there was no construction contract between the claimant (the subcontractor) and the respondent (the principal) and the available evidence suggested the contract was between the claimant and the head contractor. Accordingly, a basic and essential requirement of jurisdiction was not satisfied and the adjudication determination was therefore void: at [41], [42], [59]. In Smith v Coastivity Pty Ltd [2008] NSWSC 313 at [3], McDougall J said: It was common ground that the first and second issues [as to whether under the contract the claimant undertook to supply related goods and services for another party, and whether the consideration for such related goods and services that the claimant might have undertaken to supply was to be calculated other than by reference to the value of those goods and services] raised questions as to one of the basic and essential requirements for the existence of a valid adjudication determination: namely, the existence of a construction contract to which the Act applied.

Where an adjudicator determined that there was a construction contract and where the court was satisfied that there was no construction contract between the claimant and respondent, Bergin J in Berem Interiors Pty Ltd v Shaya

Constructions (NSW) Pty Ltd [2007] NSWSC 1340 held that ‘a basic and essential requirement as a prerequisite to a valid determination has not been satisfied. I am satisfied that the Adjudicator fell into error and that it was a jurisdictional error. The Determination is void’: at [33]. [page 187] Where the construction contract is between more parties than just the claimant and respondent and the Brodyn principles [3.249] McDougall J held in Levatedes Pty Ltd v Iberian Artisans Pty Ltd [2009] NSWSC 641 at [50] and [51] that where there was an ‘arrangement’ (as that term is used in the definition of ‘construction contract’ in the Act) between A (the claimant) and B (a third party) on terms that C (the respondent) ‘would be liable to make payment’, then the basic and essential requirement under the Brodyn principles of the existence of a construction contract was satisfied. Adjudicator incorrectly decides that extrinsic material could not be incorporated by reference, and the Brodyn principles [3.250] In Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2009] NSWCA 157 at [67] Giles JA (with whom McColl and Young JJA agreed) said: [W]hat a payment schedule indicates as the reasons for the scheduled [amount] being less than the claimed amount and for withholding payment is also a matter for the adjudicator, and if the adjudicator makes an error in that respect it does not invalidate the determination.

So where the adjudicator incorrectly determined that extrinsic material could not be incorporated by reference into a payment schedule (and therefore did not consider the reasons for withholding payment contained therein) it did not invalidate the determination: at [67]. Adjudicator’s error does not invalidate determination unless material to result under the Brodyn principles [3.251] Even if an essential precondition for a valid determination has not been satisfied, such an adjudicator’s error ‘does not invalidate the determination unless it is material to the result’: Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2009] NSWCA 157 at [84].

B. The Brodyn principles and natural justice Denial of natural justice under the Brodyn principles

[3.252] Where: 1. the adjudicator only was provided with material (including submissions) by the claimant, which were not communicated to the respondent, and where some of the material provided was relied on by the adjudicator in coming to his determination; and 2. the adjudicator did not have regard to the adjudication response as was required by s 22(2) there was a denial of natural justice for both reasons and therefore the determination was void: TQM Design & Construct Pty Ltd v Dasein Constructions Pty Ltd [2004] NSWSC 1216 at [26]–[31]. In Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2005] NSWSC 378 the adjudicator did not serve notice of acceptance on the respondents under s 19 until some seven days after he believed he had done so and then took the view that the respondents were out of time to lodge an adjudication response. McDougall J held that the respondents were entitled to relief under the Brodyn principles either because of failure to comply with basic and essential requirements of the Act or because of the denial of natural justice in failing to allow the respondents to file an adjudication response: at [40]. [page 188] McDougall J in Timwin Construction Pty Ltd v Façade Innovations Pty Ltd [2005] NSWSC 548 found in favour of the respondent on the basis that in disregarding the respondent’s submissions it denied it natural justice: at [44]. In Reiby Street Pty Ltd v Winterton Constructions Pty Ltd [2005] NSWSC 545 there was found to be a reasonable apprehension of bias and Macready M held that amounted to a substantial denial of natural justice, sufficient for a declaration that the determination was void under the Brodyn principles: at [33]– [35]. The facts were that the respondent had in a previous adjudication disputed the adjudicator’s entitlement to be paid under s 29(4) alleging that the adjudicator’s earlier determination was made outside the time allowed under s 21(3). That dispute between the respondent and adjudicator was still being agitated when the adjudicator was nominated as adjudicator in the subsequent adjudication. In Tolfab Engineering Pty Ltd v Tie Fabrications Pty Ltd [2005] NSWSC 326

at [45], Macready AJ held that the measure of natural justice required by the Act: 1. does not extend to giving of reasons under s 23; 2. but does extend to ‘a failure to consider submissions under s 22(2)(d) of the Act’. Under the Brodyn principles ‘any breach of natural justice must take into account whether or not the [respondent] was given a copy of the adjudication application as required under’ s 17(5): Falgate Constructions Pty Ltd v Masterform Pty Ltd [2005] NSWSC 728 at [32]. In Falgate the service of the claimant’s notice under s 17(2) did not comply with s 17(2) as the claimant by that time had already lodged its adjudication application. Therefore the s 17(2) notice could not ‘notify the respondent … of the claimant’s intention to apply for adjudication’ as it had already done so: at [35]–[37]. The adjudication application was therefore not made ‘within 10 business days after the end of the 5 day period’ in s 17(2)(b), in breach of s 17(3)(e). The failure of the respondent to comply with ‘the timetable of the Act constitutes a substantial breach of the measure of natural justice expressly afforded by the Act in accordance with the decision in Brodyn’: at [42]. Although service of an adjudication application under s 17(5) is not one of the basic and essential requirements under Brodyn, failure to do so ‘to the extent the Act requires service would ordinarily be a denial of that measure of natural justice to which a respondent is entitled under the Act’: Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 13 at [48], [50]. Where an adjudicator had decided to determine that the amount already paid at a figure less than that agreed by the parties, he should before making the determination advise the parties and give them the opportunity to address him on the matter. There was accordingly a fundamental denial of natural justice and the determination was void: De Martin & Gasparini Pty Ltd v State Concrete Pty Ltd [2006] NSWSC 31 at [20]–[23]. There was also a denial of natural justice in De Martin as the adjudicator departed from a valuation of construction work made by a previous adjudicator; if the adjudicator was going to exercise the power in s 22(4) he should have notified the parties accordingly and given them the opportunity to address him on the point: at [24]–[25]. Each of the parties before the adjudicator in John Goss Projects Pty Ltd v Leighton Contractors Pty Ltd [2006] NSWSC 798 proceeded on the basis that certain parts of McDougall J’s decision in Rothnere v Quasar [2004] NSWSC 1151 relevant to the

[page 189] matters in issue were correct but in his determination the adjudicator decided aspects of the decision in Rothnere were wrong and determined the adjudication application in John Goss accordingly without giving the parties the opportunity to address him on the matter of the view he took of the correctness of the decision in Rothnere. In John Goss, McDougall J determined that in deciding the way he did the adjudicator denied the applicant natural justice (at [54]), and accordingly the adjudication determination was void. There is no denial of natural justice where an adjudicator fails to take into account submissions which were not ‘duly made’ as referred to in s 22(2): John Holland Pty Ltd v Roads and Traffic Authority of New South Wales (RTA) [2007] NSWCA 19 at [63]. Hodgson JA said: … Even if the correct view was that the submission was duly made, I would still not find a denial of natural justice. The legislature plainly entrusts to the adjudicator the role of determining whether submissions are or are not duly made, and thus of determining whether a submission contained in an adjudication response is one that should not be there because of the effect of s 20(2B). If an adjudicator addresses that question and comes to a conclusion that the submission was not duly made, I cannot see that the adjudicator has then failed to afford the measure of natural justice contemplated by the Act: at [63].

However, where an adjudicator excluded consideration of the respondent’s submissions in the payment schedule and adjudication response because of incorrect findings that the respondent ‘had not provided a payment schedule within the specified time, a finding based upon the errors of law … [the] consequence, according to Brodyn, is that the adjudicator’s determination is void’: Firedam Civil Engineering Pty Ltd v KJP Construction Pty Ltd [2007] NSWSC 1162 at [83]. In Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] NSWCA 279, however, the Court of Appeal reserved the question of the correctness of the reasoning (but not the result) in Firedam: see [37], [57]– [58]. Relief based on a denial of natural justice may be refused if it can be shown that such ‘denial of natural justice could not possibly have made a difference to the outcome’: Shorten v David Hurst Constructions Pty Ltd [2008] NSWSC 546 at [23]. In Shorten there was evidence that the adjudication application served by the claimant was incomplete and was prepared and served without any index and in loose-leaf form, that is, not stapled or bound. The claimant argued that even if the court had found that an incomplete copy of the adjudication application was served, any denial of natural justice would not result in a respondent suffering any material prejudice and therefore relief should be denied. Einstein J held that:

If there be any suggested difficulties for the [respondents] in their endeavour to prove with absolute precision what documents they actually received, the Court can rely upon the presumption against wrongdoers in order to resolve doubtful questions against the party whose actions have caused the difficulties: at [71].

Further: There was a clear discrepancy between the number of pages which [the respondent] claims to have received in comparison with the number of pages in the adjudication application. In the unusual circumstances which obtained, this is in fact evidence of materiality to outcome. Quite obviously the plaintiffs were entitled to a full copy of the adjudication application and did not receive it. The

[page 190] whole of the circumstances of the sorry state of affairs may be sheeted home to the relevant conduct of the [claimant] who cannot profit by his own wrongdoing: at [73].

In Trysams Pty Ltd Pty Ltd v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399 McDougall J qualified his decision in John Goss that any failure by an adjudicator to ask for submissions on a matter not raised by the parties will amount to denial of natural justice: At the very least, the point must be … “germane to [the] decision”. In addition, perhaps, it must be at least arguable that meaningful submissions could have been put if an opportunity to put them had been afforded: i.e. that there was something to be put that might well persuade the adjudicator to change his or her mind”: at [45].

In Watpac Construction (NSW) Pty Ltd v Austin Corp Pty Ltd [2010] NSWSC 168 at [147], McDougall J held that: I accept, however, that the court should not be too ready to find that a denial of natural justice was immaterial; that it had no real or practical effect; or that (in the present context) there was nothing that could have been put on the point in question. But it remains the case, I think, that the denial of natural justice must be material, and that submissions that could have been put might have had some prospect of changing the adjudicator’s mind on the point.

In Allpro Building Services Pty Ltd v Micros Architectural Division Pty Ltd [2010] NSWSC 453 the adjudicator accepted his appointment, though he was in dispute with the respondent in a separate arbitration. McDougall J held that there was a serious issue to be tried that there was a denial of natural justice because of this appearance of bias: at [1], [2]. See the subsequent decision of Einstein J in Allpro Building Services Pty Ltd v Micros Architectural Division Pty Ltd [2010] NSWSC 474 confirming there was a breach of the rules of natural justice by the adjudicator. In Agusta Industries Pty Ltd v Niclad Constructions Pty Ltd [2010] NSWSC 925 Gzell J held that there was no denial of natural justice where the respondent received part of the adjudication application by facsimile before the transmission

failed and the respondent asked the claimant to post a copy of the adjudication application but it was never received. The respondent ‘could have reacted at any of these times. Indeed, it is arguable that upon receipt of the adjudicator’s acceptance it had two business days in which it could have lodged an adjudication response under s 20(1)(b) of the Security Act’: at [48]. An adjudicator dealt with alleged ‘global’ or ‘total cost’ claims, and certain other smaller claims with the combined value of under $100,000. In respect of the global claims the adjudicator determined that ‘I don’t see any point in using the label “global claim” or “total cost claim”. I don’t find the authority cited by the respondent of any assistance’: at [88]. McDougall J held that it was incumbent on the adjudicator to deal with the respondent’s defence based on the global claim issue — it was not sufficient for the adjudicator to disregard the principles in the authorities that were referred to him and merely say that he didn’t ‘see any point in using the label “global claim”’: at [87], [88]; see also [89]–[92]. Accordingly, the adjudicator did not sufficiently ‘consider’ those matters. ‘It follows inevitably that the adjudicator denied natural justice to [Laing O’Rourke]. It cannot be said that the denial was insignificant or immaterial’ (at [113]): Laing O’Rourke Australia Construction Pty Ltd v H&M Engineering & Construction Pty Ltd [2010] NSWSC 818. [page 191] Where a party to an adjudication provided different documents (going to the issue of whether there was a construction contract) to the adjudicator and the other party, there was a denial of natural justice, but Ball J in Filadelphia Projects Pty Ltd v EntirITy Business Services Pty Ltd (No 2) [2011] NSWSC 116 refused relief. That was because the provision of different documents was not intentional and although there was a denial of natural justice in relation to the adjudication determination, there was no denial of natural justice in relation to the issue that the adjudicator had to determine. An adjudicator failed to consider expert reports provided as part of an adjudication response because he wrongly considered them to either raise new reasons not included in the payment schedule, or because he thought s 20(2B) prohibited ‘additional submissions’. He therefore failed to comply with his statutory obligations (in s 22(2)) and accordingly failed to afford procedural fairness to the respondent: Owners Strata Plan 61172 v Stratabuild Pty Ltd [2011] NSWSC 1000 at [50]–[54].

In Clyde Bergemann Senior Thermal Pty Ltd v Varley Power Services Pty Ltd [2011] NSWSC 1039 at [84] McDougall J held: [Both] the requirement to consider in good faith and the requirement to afford natural justice must take into account the magnitude of the task and the way that the parties have put the task before the adjudicator. In particular, it is inappropriate for a party, who has not done what it can to clarify the dispute and guide the adjudicator to the relevant material, to complain, nonetheless, that there was material, that might have borne on the adjudicator’s conclusions, that could have led to a different result.

The respondent’s arguments that an adjudicator denied him natural justice by relying on an expert report of the claimant, which had a disclaimer on it, failed. Hammerschlag J in Hanave Pty Ltd v Nahas Construction (NSW) Pty Ltd [2011] NSWSC 1476 held that the disclaimer only conveyed to the reader that the author did not accept responsibility for reliance on it by the third parties: at [17]– [20]. Where the adjudicator determined that there were 25 separate contracts, but neither party had taken that approach, and he did not give either party notice that he was going to so determine, there was to be a material denial of natural justice which renders the determination void: Rail Corporation of New South Wales v Nebax Constructions Pty Ltd t/as TrackSyde Constructions [2012] NSWSC 6 at [51], [59]. A party cannot take advantage of confusion created by its own wrongdoing, to allege denial of natural justice [3.253] In Veolia Water Solutions & Technologies (Australia) Pty Ltd v Kruger Engineering Australia Pty Ltd (subject to a Deed of Company Arrangement) [2007] NSWSC 46 the respondent included in its payment schedule extensive material prompting McDougall J to refer to its ‘tendentious, repetitive and unfocused approach to the task of setting out its position in the payment schedule’. McDougall J held that the respondent should not ‘be able to take advantage of any confusion created’ (at [53]) by that approach and dismissed the respondent’s challenge to the adjudicator’s determination on the basis of the alleged failure to accord the respondent the natural justice the Act required. See also the decision in Shorten v David Hurst Constructions Pty Ltd [2008] NSWSC 546 referred to at [3.252] above. [page 192]

C. The Brodyn principles and good faith

Failure to act in good faith under the Brodyn principles [3.254] In its payment schedule in Timwin Construction Pty Ltd v Façade Innovations Pty Ltd [2005] NSWSC 548 the respondent said it did not pay the claim ‘because the amounts claimed in the payment claim as variations are amounts that should have been carried out pursuant to the contract’. In its adjudication application the claimant made detailed responses to that component of the payment schedule referring to written variation authorisations, verbal agreements to variations by the respondent and other responses including arguments about waiver by the respondent. The adjudicator in his determination said the respondent’s reason for not paying in its payment schedule ‘does not make sense’ and in its adjudication response it ‘has raised a number of additional reasons for withholding payment of the variations. Section 20(2B) of the Act precludes the raising in the adjudication response of reasons which were not raised in the payment schedule. Therefore, I have not had regard to additional reasons such as that particular variations were not approved’: at [14]. It appeared that the adjudicator had not read the claimant’s submissions because if he had, he would have understood the reason for not paying that was in the payment schedule, as the claimant’s submissions made it clear that the claimant understood what the reason meant. McDougall J considered the Brodyn requirement of good faith in this context and held that: Clearly, I think, his Honour was not referring to dishonesty or its opposite. I think he was suggesting that, as is well understood in the administrative law context, there must be an effort to understand and deal with the issues in the discharge of the statutory function: at [38].

McDougall J concluded: In the present case, I think that an available, and better, inference is that the adjudicator did not consider, in the sense that I have just explained, the submissions for the parties in which the ambit of the dispute that was intended to be raised in relation to variations was explained. Had he turned his mind to those submissions, he would have known what it was the parties understood the dispute to be; what it was that they were arguing. Because he did not, as it appears, turn his mind to those submissions, he did not deal with the real dispute. It is of course apparent that the adjudicator turned his mind to the submissions for Timwin. However, did he so in the context of dismissing them (on this issue) because of s 20(2B). Had he read, and given consideration to, the submissions for Façade, he could not reasonably have done this. That, to my mind, supports rather than denies the drawing of the inference that the adjudicator did not have regard to, or consider, the relevant submissions. I therefore conclude that the adjudicator did not attempt in good faith to exercise the power given to him by the Act because he did not attempt in good faith to consider the submissions put by the parties to understand what, in relation to variations, the real dispute was: at [41]–[43].

In Energy Australia v Downer Construction (Australia) Pty Ltd [2006] NSWSC 52 the dispute as defined in the payment claim was about the existence of latent conditions particularly ‘bedding plane shears’ and resulting water

ingress. The adjudicator, however, determined the claim as a latent condition of excessive water ingress. The determination was void as it was not the result of a bona fide exercise of power as the failure to deal with the claim for bedding shears indicated ‘a fundamental failure to attempt to exercise the basis of the claim’: at [115]. [page 193] In David Hurst Constructions Pty Ltd v Durham [2008] NSWSC 318 McDougall J held that ‘it seems to me to be a very long bow to draw, to suggest that an adjudicator who might have exercised, but did not exercise, the s 21(4) powers thereby fails to act in good faith. Again, the discretionary language in which the subsection is cast seems to me to work against the submission’: at [62].

D. Stay of judgment entered under s 25(1) Stay of judgment entered under s 25(1) (where claimant would be unable to repay judgment amount on ultimate determination) [3.255] In Grosvenor Constructions (NSW) Pty Ltd (in admin) v Musico [2004] NSWSC 344 the plaintiff was successful in its adjudication and filed the adjudication certificate as a judgment for a debt in accordance with s 25 of the NSW Act. The claimant was placed under external administration and the evidence was the unsecured creditors were only likely to receive a few cents in the dollar. The respondent had commenced court proceedings to have the matters in dispute between the claimant and respondent finally resolved and sought a stay of execution of the judgment debt arising from the filing of the adjudication certificate as it would suffer irreparable prejudice as payment of the judgment debt could never be recovered. The respondent had provided a bank guarantee in favour of the claimant for an amount exceeding the judgment debt amount so that the claimant was protected in the event of a stay of proceedings on the judgment debt. Einstein J held that the Supreme Court has the power on terms to stay the execution of a judgment or order by virtue of Pt 44 r 5 of the Supreme Court Rules which power is exercisable whenever the requirements of justice so demand and is in addition to the court’s inherent powers: at [14]. Granting the stay, Einstein J held that: [T]here is no reason why … a stay cannot be ordered in circumstances such as the present. … Whilst payments under the Act are interim, it nonetheless is the policy of the Act that successful claimants be

paid. For that reason, there is a sound reason for making stays less readily available in relation to debts arising under the Act, in contrast to the position in relation to appeals arising from curial proceedings. For example, in cases such as the present, the court might require more than a “real risk that [a respondent] will suffer prejudice or damage, if a stay is not granted” (Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737 at 741–742) … However I accept that in a case such as the present, where there is a certainty that the defendants’ rights will be otherwise rendered nugatory, and that it will suffer irreparable prejudice, the proper and principled exercise of the Courts discretion is to grant a stay. This is especially so given that the plaintiff’s entitlement to the adjudicated amount is apparently fully protected by the unconditional bank guarantee referred to: at [31]–[33].

In Springs Golf Club Pty Ltd v Profile Gold Pty Ltd [2006] NSWSC 395 at [25] Einstein J, relying on Grosvenor, held that: There is no doubt but that where a respondent is able to satisfy the Court that on the evidence, payment by it of moneys which a determination requires to be paid to the claimant, would mean that the claimant will not be in a position to repay those moneys should it ultimately fail when the party’s legal rights inter se are finally adjudicated, or that the risk is very high, the Court will intervene.

[page 194] Stay of judgment entered under s 25(1) (where claimant subject to deed of company arrangement) [3.256] In Paul Michael Pty Ltd v Urban Traders Pty Ltd [2010] NSWSC 1246, the claimant obtained an adjudication determination in its favour and then a judgment in court. The respondent argued that as the claimant subsequently was subject to a deed of company arrangement, execution of the judgment should be stayed. White J held that if the respondent did not provide adequate security, the plaintiff should be entitled to enforce the judgment notwithstanding the entry of a deed of company arrangement. Stay of judgment (where respondent’s challenge to adjudication determination fails (and judge at first instance orders payment out to claimant of moneys paid in by the respondent under s 25(4)(b))) [3.257] McDougall J in Timwin Construction Pty Ltd v Façade Innovations Pty Ltd [2005] NSWSC 548 ordered that the money paid into court by the respondent as the price of obtaining the initial injunction restraining the claimant from enforcing its judgment based on its adjudication determination, be paid out to it where he declared the adjudication determination void: at [51]. However, Hodgson JA in the Court of Appeal (Façade Innovations Pty Ltd v Timwin Constructions Pty Ltd [2005] NSWCA 197) stayed that order until the judgment

under s 25 was set aside as McDougall J’s determination did not set aside the s 25 judgment as that judgment was in separate proceedings. Hodgson JA in the Court of Appeal refused the wider stay sought (until the hearing of the appeal against McDougall J’s decision) as: … I do not think a case is made out for a stay simply on the basis that there is a reasonable appeal and there might be problems in enforcing the judgment if the money is not retained in court. I am not inclined to the view that considerations associated with the policy of the Act in general and s 25 in particular would justify a stay by reason of the existence of a reasonable appeal: at [15].

In Shell Refining (Australia) Pty Ltd v AJ Mayr Pty Ltd [2006] NSWSC 154 the respondent challenged the adjudicator’s determination in court and when it failed before the judge at first instance it sought a stay of the judgment to approach the Court of Appeal. Bergin J granted a short stay on the basis that that part of the moneys paid into court by the respondent which were not subject to the challenge be paid out to the claimant. It was submitted that Bergin J had no jurisdiction to order part of the money be paid out as no moneys could be paid out under s 25(4)(b) until the proceedings were fully determined. Bergin J held that s 25(4)(b) could not be construed as fettering a ‘judge’s discretion to order that such part of the amount paid into court that was not in issue could be paid out, if the dictates of justice required such order’: at [19]. Court may order stay of judgment even where the adjudicator’s determination is not impugned [3.258] In Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2004] NSWCA 394, Mason P, Giles and Hodgson JJA of the Court of Appeal held that: A court in which judgment for recovery of money has been given can stay execution of that judgment. A party against whom there was a substantial judgment could apply for a stay of execution on the grounds that it had a greater claim against the judgment creditor, for which it would shortly obtain judgment, and that, if the judgment money was paid, it would be irrecoverable; and the court could in its discretion grant a stay, on terms if it thought appropriate. I see no reason why a judgment

[page 195] under s.25 of the Act could not be stayed on that kind of basis, although the policy of the Act that progress payments be made would be a discretionary factor weighing against such relief: at [85].

See also [86]–[88] in the judgment. In Roseville Bridge Marina Pty Ltd v Bellingham Marine Australia Pty Ltd [2009] NSWSC 320 at [59], Brereton J held that: [A] principal who has suffered an adverse adjudication and pays the adjudicated amount (whether or not the adjudication is registered as a judgment) may bring proceedings for restitution of the sum paid and

re-agitate all the issues that were argued before the adjudicator. If the principal has a sufficiently arguable case and the discretionary considerations otherwise favour that course, enforcement of an adjudication registered as a judgment may be stayed or restrained on an interlocutory basis. Restitutionary remedies are available as a final remedy if payment has already been made, and preventative remedies such as injunctive relief are within the scope of “such other orders as [the court] considers appropriate having regard to the decision in those proceedings” if payment has not yet been made [see s 32(3)(b)]. It follows that if the principal succeeds on a final basis, enforcement of an adjudication registered as a judgment may be permanently stayed or restrained: at [59].

Application of s 25(4) to claim for a stay in separate proceedings of the judgment entered under s 25 [3.259] In Shellbridge Pty Ltd v Rider Hunt Sydney Pty Ltd [2005] NSWSC 1152 Barrett J observed that the s 25(4) limitations do not apply to an application for a stay (as part of relief sought in separate proceedings commenced to advance the claims of the respondent that may have been rejected by the adjudicator) of a judgment that s 25 had created: at [37]. The respondent has the right to commence those proceedings unaffected by the adjudication determination as s 32 makes it clear that the adjudication determination does not curtail contractual and other rights arising from the performance of the work by the claimant: at [37].

E. Section 25(4)(b) and payment into and out of court of security Where s 25(4)(b) does not apply can court still order payment into court of amount of adjudication determination? [3.260] Where s 25(4)(b) of the Act does not apply (because the adjudication certificate has not been filed as a judgment in the court) then unless there is evidence that the respondent is of doubtful solvency or that there could otherwise be difficulties in enforcement of a judgment as a result of an adjudication determination, where the respondent seeks an injunction challenging the jurisdiction of the adjudicator, it is not appropriate to order the payment into court of the amount claimed: Digital City Pty Ltd v QX Australia Pty Ltd [2004] NSWSC 933. In Filadelfia Projects Pty Ltd v EntirITy Business Services Pty Ltd [2010] NSWSC 473 at [11] McDougall J held that: In the ordinary way injunctive relief would be granted on condition that the amount in dispute, including the cost of the adjudication and some allowance for interest, be paid into court pending a final resolution of the dispute. That is generally done firstly where s 25(4) of the Act applies, simply because that is a requirement of the section. Where (as here) s 25(4) does not apply in terms (and it does not apply in terms because there has been no adjudication certificate, and hence no judgment for a debt) the court nonetheless, taking into account the clear objects of the Act and its underlying policy, generally orders payment into court by analogy with s 25(4).

[page 196] In Filadelfia Projects the respondent could not pay the moneys into court and it offered an undertaking to the court in substance not to dispose of its assets or otherwise charge or deal with them, to reduce the net amount available below an amount sufficient to secure the adjudicated amount, costs and interest. McDougall J was prepared to grant interlocutory relief on the basis of that undertaking and also the undertaking to the court that it would keep the claimant informed of the progress of the sales of the units in the development and the disposition of the proceeds of those sales: at [15], [16]. Section 25(4)(b) Obligation to pay into court — does it apply where the respondent seeks a bare declaration that the adjudication is void? [3.261] The respondent said it didn’t need to pay into court the unpaid amount of the adjudication determination as it had not made ‘application to have the determination set aside’ and only had sought a bare declaration that the determination was void. The claimant’s application to dismiss or stay the respondent’s proceeding which sought the declaration, on the basis that no amount was paid into court, failed: Jem Developments Pty Ltd v Hansen Yuncken Pty Ltd [2006] NSWSC 1087. Section 25(4)(b) Obligation to pay into court – does it apply where the respondent’s application is for an injunction prohibiting the claimant from taking any action to enforce a judgment and not an application to have the judgment set aside? [3.262] Where the respondent issues proceedings seeking an injunction prohibiting the claimant from taking any action to enforce the judgment, s 25(4) does not apply as the real proceedings are not to have the judgment set aside. However, ‘[i]f the Court is satisfied that such an application is for the purpose of getting around … the provisions of the Act then an order may be made staying the proceedings [ie, the proceedings seeking the injunction] on the condition that such stay will remain unless money is paid into Court’: Tombleson v Dancorell Constructions Pty Ltd [2007] NSWSC 1169 at [17], [19]. Section 25(4)(b) ‘… final determination of the proceedings’ and return of security [3.263] The words ‘final determination of the proceedings’ in s 25(4)(b) only refer to the final determination of first instance, not final determination of an

appeal from a first instance decision: JBK Engineering Pty Ltd v Brick & Block Company Pty Ltd [2006] NSWSC 1301 at [8], [9]. See General Homes Pty Ltd v Caelli t/a JC Electrical [2007] NSWSC 463 where the respondent who sought declarations that an adjudicator’s determination was void was ordered to pay the amount of the determination into court ‘pending the determination of the proceedings’. Administrators were then appointed to the respondent, before the respondent had made the payment into court. Subsequently, orders were made that the proceeding be ‘struck out’. Bergin J held that the proceedings had not been ‘determined’ by the order striking out the proceeding (at [40]), and accordingly the order requiring payment into court ‘still stands’: at [41]. Ultimately, Bergin J ordered that the application ‘dismissing the proceedings should not be made until after the [claimant] has had the opportunity’ to enforce the order requiring the respondent to pay moneys into court: at [48]. See [43]–[47] for the unusual history of the case which explain the orders made. In Veolia Water Solutions & Technologies (Australia) Pty Ltd v Kruger Engineering Australia Pty Ltd (No 3) [2007] NSWSC 459 the claimant recovered judgment in respect of an adjudication determination pursuant to s 25(1). The respondent contended that [page 197] it had a claim against the claimant (which had then entered into a deed of company arrangement) arising out of the contract for a significantly larger amount than the judgment. The respondent sought orders that execution of the judgment be permanently stayed and the security given by the respondent under s 25(4)(b) (as the price to obtain the initial stay up to the date of the application) be returned to the Respondent. McDougall J determined that the respondent was not presently entitled to the return of the security given by it (at [32]), and distinguished Brodyn Pty Ltd t/as Time Cost and Quality v Dasein Constructions Pty Ltd [2004] NSWSC 1230. In Brodyn v Dasein, Young CJ held that the debt owed (established by the judgment) was ‘extinguished’ by s 553C of the Corporations Act 2001 (Cth) and accordingly ordered that the security should be discharged. In Veolia, McDougall J held that the amount due to the respondent on its cross-claim had not been extinguished and accordingly there was no present entitlement in the respondent to have its security discharged. McDougall J also ordered that upon the claimant

providing a bank guarantee in the respondent’s favour, the stay of the judgment procured by the claimant be refused as that result ‘balances in an appropriate way the legislative policy of the Act requiring prompt payment of progress claims against the undoubted interest of [the respondent] in preserving, in a real … sense, the value of its cross-claim’: at [91]. The respondent in Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2007] NSWSC 1298 sought orders that the adjudicator’s determination was void and ultimately succeeded. Prior to obtaining those orders the respondent paid into court the amount of the adjudicator’s determination plus interest and obtained an injunction against the claimant restraining it from proceeding to request the issue of an adjudication certificate or file that as a judgment. After the orders were made that the adjudicator’s determination was void the claimant sought payment out of court to it of the amount of the adjudicator’s determination less the parts of the adjudicator’s determination that supported the finding that the determination was void. Hammerschlag J ordered that the whole of the moneys paid into court should be paid out to the respondent together with interest. Hammerschlag J doubted in those circumstances whether there was any discretion to attach conditions to the grant of the declaratory relief but even if there was a discretion in the court to do so his Honour was not prepared to exercise that discretion partly on the basis that since Brodyn there is no notion of partial invalidity: at [16]. Hammerschlag J held that: In the present case the moneys were paid into Court to secure the [respondent’s] position in the event that the [claimant’s] challenge to the adjudication failed. But the challenge succeeded. There is no longer any statutory underpinning for the [claimant’s] claim and the machinery of the Act to ensure early payment to it of the moneys claimed has not been successfully invoked by it: at [17].

Other issues in relation to payment out of security [3.264] In Procorp Civil Pty Ltd v Napoli Excavations and Contracting Pty Ltd [2006] NSWSC 358, receivers were appointed by a secured creditor of the respondent to distribute property of the respondent. The receivers in ‘very unusual circumstances’ (see [30]–[38]) paid into court the unpaid portion of the adjudicated amount. When the respondent’s challenge to the adjudication determination failed, the claimant sought an order that the moneys be paid out to it. The receivers argued that the moneys were not paid into court on behalf of Procorp to comply with s 25(4)(b), and therefore the moneys [page 198]

should instead be paid out to the receivers. Einstein J dismissed the receivers’ application and ordered the money be paid out to the claimant, subject only to a short stay to allow the respondent to approach the Court of Appeal: at [43], [44], [65], [66]. See also [45]–[62] for the factors taken into account in an analysis of the financial position of the claimant to decide if the respondent has been able to establish that the claimant will not be in a position to repay the moneys paid out to it, should the claimant ultimately fail when there is a final determination of the parties’ rights. Where the respondent is able to establish that, the court will intervene (at [5]), but otherwise the court will treat the money paid into court as the property of the claimant: at [62]. In Springs Golf Club Pty Ltd v Profile Golf Pty Ltd [2006] NSWSC 395 where the respondent failed in its challenge to the adjudication determination and it proposed to ask for an order that the moneys paid into court under s 25(4)(b) ‘be withheld on the basis that the [claimant] would, if unsuccessful upon the determination of the parties’ final legal rights, be unable to repay these funds’ then speed is of the essence in the preparation by such a party of such an application: at [33]. The respondent filed an affidavit in support of its application in terms that: I believe the defendant is not a substantial organisation and that if the moneys are distributed to the defendant the plaintiff is unlikely, if the moneys are so paid out, to recover its damages if successful in any proceedings: at [30].

Einstein J held that such a statement was not ‘of sufficient substance to amount to satisfaction of … a prima facie basis for resisting the payment out’: at [39]. Further, Einstein J set aside the respondent’s notice to produce which sought to compel the claimant to produce its bank statements, loan statements and bank records, tax returns and the like in an endeavour to establish its claim that the claimant would be unable to pay any amount that it was ordered to pay in the final determination of the parties’ rights: at [35].

F. Other issues arising where application to set aside judgment Delay in seeking injunction restraining filing of adjudication certificate, and the Brodyn principles [3.265] In Co-ordinated Construction Co Pty Ltd v JM Hargreaves Pty Ltd [2004] NSWSC 1206 Palmer J was critical of the respondent in delaying bringing an application for an injunction to restrain the claimant from filing an adjudication certificate as a judgment under s 25(1). Palmer J observed that postBrodyn a party may apply to the court to set aside a judgment that has already been entered under s 25(1) and accordingly if an ex parte application for such an

injunction is sought late the court may refuse it out of hand and the respondent will be left to set aside the judgment if it can: at [9], [10]. See the cases at [3.227] where injunctions were granted. After execution of judgment, no action to set aside judgment [3.266] In Air Dynamics Control & Services Contracting Pty Ltd v Durham [2005] NSWSC 861 not only did the claimant obtain an adjudication certificate and file it in court but it also executed the judgment by way of garnishee order and obtained payment and then sought a declaration that the adjudication was void and of no effect. Malpass AJ suggested that in those circumstances there could be no action taken to set [page 199] aside the judgment; rather the respondent retains its contractual rights (as preserved by s 32): at [38]–[40]. Payment of that portion of adjudication unaffected by error [3.267] As the grant of relief in the nature of prerogative relief is discretionary, McDougall J in Emergency Services Superannuation Board v Davenport [2004] NSWSC 697 decided that if he was to grant relief against the adjudicator’s determination it would be on condition that the respondent pay the amount of the determination unaffected by the relevant error because if the determination was to be quashed the claimant would be deprived of the benefit of the entire determination including that part which was not affected by any error: at [72]– [74]. However, see now the Anderson Street decision, below. In Anderson Street Banksmeadow Pty Ltd v Helcon Contracting Australia Pty Ltd [2013] NSWSC 657 the court decided that an adjudicator had committed a jurisdictional error which affected only one half of the determination amount. The claimant submitted that the court should exercise its discretion to not declare the whole determination void, but rather should direct that the claimant obtain out of the moneys paid into court by the respondent that amount of the determination which was not affected by the jurisdictional error and that the balance of the moneys paid into court be repaid to the respondent. Stevenson J refused to make those orders because of what was said in the court of appeal in Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2004] NSWCA 394 that a determination made in breach of the rules of natural justice was void, not

merely voidable. Stevenson J held that McDougall J’s approach in Emergency Services Superannuation Board v Davenport [2004] NSWSC 697 (where McDougall J indicated that unless the respondent agreed to pay the claimant the amount unaffected by the jurisdictional error, he would withhold relief) was no longer available in light of Brodyn. Stevenson J also declined to follow the more recent decision of BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd (No 2) [2013] QSC 67. Court can only determine whole of adjudicator’s determination void [3.268] Affirming Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, Macready AJ in Lanksey Constructions Pty Ltd v Noxequin Pty Ltd (in liq) t/a Fyna Formwork [2005] NSWSC 963, held that a court can only declare the whole, not part, of an adjudicator’s determination as void, but suggested there may be circumstances where if the value of the error was only a very small proportion of the total claim a court in the exercise of its discretion may refuse relief: at [22]. If a case is made out that an adjudication determination is void, does the court have a discretion whether or not to grant declaratory relief? [3.269] In Smith v Coastivity Pty Ltd [2008] NSWSC 313 at [87], McDougall J held that: [W]hilst I do not conclude that there is no discretion attending the grant of a declaration of right once the basis for the grant has been made out, I think that the relevant discretionary considerations are severely limited; and that they do not include the discretionary considerations traditionally thought to attend the grant or refusal of purely equitable relief.

Distinguishing Barrett J’s decision in Shellbridge Pty Ltd v Rider Hunt Sydney Pty Ltd [2005] NSWSC 1152, McDougall J held that: [page 200] It is difficult to conclude that a sum of money is so trifling as not to warrant the intervention of the Court if a ground for intervention is made out. … Thus, I think, the Court should be slow to withhold relief simply because of an impression that, viewed objectively, the amount at stake is small. I do not think that the question is one that can be resolved purely in objective terms: at [89].

Where payment is obtained in pursuance of an adjudicator’s determination which is ultimately quashed, then the court has no discretion but to grant the relief to the respondent that the money it paid to the claimant is to be repaid to the respondent: ‘the entire consideration for the payment has failed and a common money count lies’: Go Electrical Pty Ltd v Class Electrical Services

Pty Ltd [2013] NSWSC 517 at [20] citing John Holland Pty Ltd v Roads and Traffic Authority of New South Wales (2006) 66 NSWLR 624 at 634. To come within s 25(4)(b) the proceedings to set aside the judgment could be in a different court [3.270] In Cooper v Veghelyi [2005] NSWSC 602 the respondent commenced proceedings in the Supreme Court to have the judgment entered in the Local Court set aside under s 25(4). Patten AJ held that to come within s 25(4) the ‘proceedings … to have the judgment set aside’ did not need to be in the same court that entered judgment: ‘If the legislature had wanted to restrict the operation of s 25(4) to proceedings within the Local Court itself, it could easily have said so’: at [18]. Accordingly, the respondent was required under s 25(4)(b) to pay into court the amount of the judgment debt in the Local Court as security pending the final determination of the Supreme Court proceedings: at [19], [24]. Relief to be granted to respondent in respect of second payment claim that includes some of the same claims as in the first payment claim that the respondent challenges [3.271] The service of a payment claim and then subsequently service of a further payment claim (even though the later payment claim replicates the earlier payment claim) is a procedure authorised by s 13(6) of the Act where the two payment claims were served in respect of different reference dates: Veolia Water Solutions & Technologies v Kruger Engineering Australia Pty Ltd [2006] NSWSC 1406 at [10]. However, it was held in Veolia that where there is a challenge in court as to the adjudicator’s determination in respect of the first payment claim, there is a prima facie case for some relief to be granted to the respondent that challenges the first adjudication application in terms of an order restraining the claimant from lodging an adjudication application or taking any further step under the act in respect of the second payment claim until the issues for determination in respect of the first payment claim have been decided by the court. That is because of the argument that any subsequent determination would necessarily proceed in accordance with s 22(4) in respect of the overlapping work as between the two payment claims: at [13], [14], [18]. Payment by respondent to subcontractor of claimant of the adjudicated amount [3.272] In Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] NSWSC 753, the respondent paid a subcontractor of the claimant a part of the adjudicated amount and said that by its payments to the subcontractor it had

discharged the obligations of the claimant to the subcontractor, which satisfied therefore the adjudication determination [page 201] (and the court judgment obtained consequent upon the determination under s 25(1)) that it pay the claimant. The respondent’s arguments failed before Hammerschlag J, as: [T]he [respondent] on its own version was a voluntary and unrequested payer of the [claimant’s] debt to [the subcontractor]. The [respondent] accepted that on equitable principles the [claimant] is entitled only to a restitutionary claim to reimbursement if the debtor (here the [claimant]) adopts the payment by the third party (here the [respondent]) in discharge of the debt. This was expressed by Brereton J in Brasher v O’Hehir [2005] NSWSC 1194 at [37] in the following terms: While a voluntary and unrequested payer of a debt has no common law restitutionary claim to reimbursement, equity recognises such a claim arising through subrogation to the creditors rights, if the debtor validly applies the money advanced to the discharge of its debt [Re Cleadon Trust Ltd [1939] Ch D 286 at 302 (Lord Greene MR), 316 (Scott LJ), 322–324 (Clauson LJ)]. If a debtor adopts the payment by the third party by applying it in discharge of the debt, then the debtor’s conscience is bound by the knowledge that the payer made the payment not as a gift, but with the intention of being repaid, even though unsupported by a promise express or implied, because adoption of the payment with knowledge of the payee’s intent creates an equity to reimbursement [Re Cleadon Trust Ltd, and see generally the discussion by I M Jackman in The Varieties of Restitution, Federation Press, 1998, pp 90–95]: at [71].

Injunctions to restrain claimant entering judgment [3.273] The claimant and respondent agreed that the respondent had made payments directly to the claimant’s subcontractors with the claimant’s knowledge and authorisation but the adjudicator did not reduce the amount payable by the respondent for the direct payments. An injunction was granted restraining the claimant from entering judgment to the extent of the direct payments made by the respondent: Holdmark (Aust) Pty Ltd v Melhemcorp Pty Ltd [2009] NSWSC 305. Where the adjudicator wrongly refused to correct his determination under s 22(5) the court granted an injunction restraining the claimant from registering a judgment for the adjudicated amount to the extent of the mistake that he refused to correct: Holdmark (Aust) Pty Ltd v Melhemcorp Pty Ltd [2009] NSWSC 305. In Co-ordinated Construction Co Pty Ltd v Hargreaves Pty Ltd [2004] NSWSC 1206 Palmer J was critical of the respondent in delaying bringing an application for an injunction to restrain the claimant from filing an adjudication certificate as a judgment under s 25(1). Palmer J observed that post-Brodyn a

party may apply to the court to set aside a judgment that has already been entered under s 25(1) and accordingly if an ex parte application for such an injunction is sought late the court may refuse it out of hand and the respondent will be left to set aside the judgment if it can: at [9], [10]. See the cases at [3.227] where injunctions were granted.

G. Brodyn decided to be in error in part: certiorari available Court of Appeal decides certiorari is available to quash an adjudicator’s decision [3.274] In Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190, the New South Wales Court of Appeal did not follow Brodyn. Chase held that: The Supreme Court, in exercise of its supervisory jurisdiction: (a) has power to determine that — (i) an adjudication application has not been made in compliance with s 17(2)(a) of the Building and Construction Industry Security of Payment Act 1999 (NSW); [page 202] (ii)

the determination of the adjudicator, made in the absence of a valid adjudication application, was invalid; and (iii) there was non-compliance in the present case; and (b) has power to grant relief in the nature of certiorari and set the determination aside. To the extent that Brodyn decided that: (a) the Supreme Court of New South Wales was not required to consider and determine the existence of jurisdictional error by an adjudicator in reaching a determination under the Act; (b) an order in the nature of certiorari was not available to quash or set aside a decision of an adjudicator under the Act; and (c) the Act expressly or impliedly limited the Supreme Court of New South Wales’ power to consider and quash a determination for jurisdictional error by an adjudicator in reaching a determination under the Act, it was in error.

The Act contains no limitation on the power of the Supreme Court, to review an adjudicator’s determination for jurisdictional error, so determinations by adjudicators are in principle subject to orders in the nature of certiorari for jurisdictional error. (See the judgment of Basten JA with whom Spiegelman CJ agreed.) Basten JA also held: an adjudicator in determining the amount of a progress payment and the date on which it becomes payable would have a duty to act judicially (see [84]); it is far from clear that a claimant who has not been paid the adjudicated amount and who has served a notice of intention to suspend work, and then takes that step, will be liable for any loss or damage from which the claimant would otherwise be protected by s 27(3), in circumstances where the adjudicator’s determination is later set aside by the Supreme Court in its supervisory jurisdiction (see [95]). McDougall J held that the claimant would still have its rights to apply for summary judgment based on the respondent’s earlier failure to provide a payment schedule: at [216], [217]. In Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWSC 1167, McDougall J considered the final orders to be made consequent upon the Court of Appeal’s decision. The claimant argued that because, on the basis of the Court of Appeal’s decision, it could now proceed to claim a debt under s 15(2)(a)(i) that the court in exercise of its discretion should deny the relief including denying the relief or return to the respondent of moneys paid in to court. McDougall J agreed that the court has a discretion but that relief should be granted and also ordered that the money previously paid into court by the respondent should be paid out to the respondent as: The money was paid into court pursuant to a general practice that developed, where respondents sought to challenge determinations of adjudicators, designed to protect the interests of claimants who, prima facie, were entitled to the fruits of their success before the adjudicator. The practice took into account, by analogy, the requirements of s 25(4)(b) of the Act. The whole purpose of the requirement to pay into court, which was the price of restraining enforcement on the determination,

[page 203] was to ensure that the claimant was able to recover if the challenge to the determination failed. In the circumstances where the challenge to the determination had succeeded, it seems to me that the purpose for requiring payment in has been exhausted: at [15].

Brodyn grounds of review still available, after Chase [3.275] McDougall J in Cardinal Project Services Pty Ltd v Hanave Pty Ltd [2010] NSWSC 1367 at [21] observed that the decision in Chase: … does not suggest that the grounds of review established by the decision in Brodyn are no longer applicable. On the contrary, it confirms that those grounds go to jurisdiction, and hence are relevant to the question of review under s 69. Further, there is nothing in the decision in Chase to suggest that the consequences of want of jurisdiction or denial of natural justice are other than as described by Hodgson JA in Brodyn.

Halkat Electrical Contractors Pty Ltd v Holmwood Holdings Pty Ltd [2007] NSWCA 32 was considered in Bauen Constructions Pty Ltd v Westwood Interiors Pty Ltd [2010] NSWSC 1359 where McDougall J noted that in Halkat: [A]s appears from the reasons of Giles JA, (with whom Santow and Tobias JJA agreed) at [14], the adjudicator had before him, as the adjudicator here had before him, assessment versus assessment, or assertion versus assertion, in each case unsupported by evidence that would enable him independently to determine the outcome. The adjudicator preferred one party’s assertion to the other because, in another respect, quite unrelated, that other party had put propositions which the adjudicator described as “unmeritorious challenges”, and had asserted “completely unjustified deductions”. In those circumstances, Giles JA said that the adjudicator did not carry out the task given to him by the Act. The reasons that the adjudicator gave did not support the conclusion, and thus there was a failure to perform the statutory function: at [38]–[39]. In those circumstances, it seems to me, this is again a case of jurisdictional error, because on the face of the reasons, and by application of what was said in Halkat, the adjudicator did not perform his statutory function; and of denial of natural justice: at [41]. In my view, what Giles J said in Halkat is applicable under the Chase regime, at least insofar as it deals with the obligations of adjudicators to carry out the powers entrusted to them by the Act in accordance with the Act and in having regard to the purposes for which those powers are conferred: at [43].

Jurisdictional error decisions after Chase [3.276] Bauen Constructions Pty Ltd v Westwood Interiors Pty Ltd [2010] NSWSC 1359 concerned a claim by a respondent for the value of defective works to be taken into account in determining the amount of the payment claim. The adjudicator in his determination said he had ‘examined the adjudication response to see if it contains anything to support an allegation of defective work’. McDougall J held that: In this case, the proper inference to draw from what the adjudicator said at para 8 of his reasons, coupled with his failure to indicate anywhere else that he examined, or in the language of s 22(2)(d) “considered” the payment schedule for the purpose stated in para 8, is that he examined only the adjudication response to see if the “defence” of defective works had been made good. This suggests that the adjudicator did not carry out the statutory function entrusted to him, in so far as considering the payment schedule is an element of that function: at [25].

[page 204]

McDougall J went on to say: For the same reasons, I think that in relation to the issue with which I am presently concerned, the adjudicator failed to exercise the jurisdiction given to him by the Act. That is why I said, earlier, that there is jurisdictional error in the approach taken: at [28].

In Steel Building Systems Pty Ltd v Beks Constructions (NSW) Pty Ltd [2010] NSWSC 1404, the claimant served a payment claim by facsimile to a facsimile number recorded on a website where it was not clear that that website was owned by the respondent. The respondent gave evidence that it had not for some considerable time used that fax number. Macready AJ held that on the evidence before him: [T]he payment claim and the notices required by s 17(2)(a) were not served on the plaintiff. Accordingly, the plaintiff was not given an opportunity to provide a payment schedule to the claimant pursuant to s 17(2)(b) of the Act. Following the Court of Appeal’s reasoning in Chase Oyster Bar the court is not bound by the adjudicator’s decision … that the requirements of s 17(2)(a) had been met: at [33].

In HM Australia Holdings Pty Ltd v Edelbrand Pty Ltd t/as Domus Homes [2011] NSWSC 604, Einstein J observed: Following Chase, it is now open to the court to quash an adjudicator’s determination on the basis of a jurisdictional error, including a jurisdictional fact. … While a decision maker has to decide whether or not facts which are essential preconditions of jurisdiction exist, he or she cannot give himself or herself additional jurisdiction by making a wrong decision on the collateral question as to the existence of such facts: Fifty Properties Investments Pty Ltd v O’Mara (2007) 23 BCL 35. Brodyn and Chase further support the proposition that where there are preconditions that underpin the existence of valid adjudication, the existence of those preconditions is a jurisdictional fact. Thus an adjudicator’s finding that certain preconditions have been met so as to found his jurisdiction is open to judicial review: at [19]–[22].

Where matters are entrusted to an adjudicator for decision, a decision involving an error of law is not, for that reason alone, a decision beyond jurisdiction: Clyde Bergemann Senior Thermal Pty Ltd v Varley Power Services Pty Ltd [2011] NSWSC 1039 at [43] per McDougall J. McDougall J, in Power Serve Pty Ltd v Powerline’s Clearing Group Pty Ltd [2011] NSWSC 1180 referring to s 22(2) and the obligation for adjudicators to consider the five listed matters in determining an adjudication application, held that: In my view, bearing in mind that the matters to be considered as listed in s 22(2) include not only the provisions of the Act but also the provisions of the contract and the submissions made by the parties, it cannot be said that the jurisdiction is only exercised if they are considered in a way which leads to the legally, or technically, correct answer. At least insofar as the provisions of the contract are concerned, that is inconsistent with the authorities to which I referred in [Clyde Bergemann Senior Thermal Pty Ltd v Varley Power Services Pty Ltd [2011] NSWSC 1039], in particular at [35]–[53]. I see no reason why

any different answer should be returned where what is to be considered is the Act itself rather than the contract. Both are essential ingredients of the right given. Both are required to be considered as part of the determinative process. In each case, in my view, absent any statutory indication to the contrary, the jurisdiction given to adjudicators, which requires them to consider those matters, contemplates or permits that from time to time they may get it wrong when they do so: at [19].

[page 205] In the adjudication application referred to in St Hilliers Contracting Pty Ltd v Dualcorp Civil Pty Ltd [2010] NSWSC 1468 the defendant submitted that it was delayed by variations brought about by the plaintiff and was entitled to make claims for extensions of time. The plaintiff responded in the adjudication saying that the defendant had not demonstrated that it was delayed, that it had not provided a contract program or demonstrated any impact on the critical path. The adjudicator determined that the claimant was delayed seemingly on the basis that the plaintiff offered ‘no alternative explanation for the fact that, on the [defendant’s] case, the works were not complete almost one year after the Date for Practical Completion’. Hammerschlag J held: This approach discloses no logical or rational reasoning process for the conclusion that the delay was at least in part attributable to variations and in my view reflects a failure by the adjudicator to make a bona fide attempt to carry out the function with which she was charged. … In my view, in approaching the matter as she did, the adjudicator did not carry out the task given to her by the Act and fell into jurisdictional error: at [37].

Accordingly an order of the nature of certiorari quashing the adjudication was made. Jurisdictional error ‘will occur where the claim is not a claim that is made in accordance with the Act’: Grindley Constructions Pty Ltd v Painting Masters Pty Ltd [2012] NSWSC 234 at [19]. Where in an adjudication application parts of the claim were put on a different basis to that in the payment claim, those parts should not have been regarded as submissions ‘duly made … in support of the claim’ as referred to in s 22(2)(c). McDougall J in Leighton v Arogen [2012] NSWSC 1323 at [87] said ‘[f]or that reason, [the adjudicator] did not make his determination … in accordance with a condition of, or within the limits of, the jurisdiction given by the Act’ where he considered those matters (and refused to consider matters in response that the respondent raised in its adjudication response that were not (and could not have been) raised in its payment schedule). For those reasons, the adjudicator’s determination was amenable to the grant of declaratory relief and relief in the nature of certiorari: at [99].

The adjudicator determined that a payment claim was valid under s 13 because it was made ‘within 12 months of the end of the defects liability period’. However, it was not made within 12 months of the last construction work being carried out as required by s 13(4)(b). In Bauen Constructions Pty Ltd v Sky General Services Pty Ltd [2012] NSWSC 1123, Sackar J held that the adjudicator ‘was distracted … by the defects liability period and miscalculated the relevant timeframe for the purposes of the Act. It follows the adjudicator committed a jurisdictional error and the adjudication should be quashed’: at [63]. Where a payment claim simply resubmitted claims that had been made earlier and rejected, it was made in contravention of s 13(5): Trustees of Roman Catholic Church for Diocese of Lismore v TF Woollam & Son [2012] NSWSC 1559. McDougall J held that notwithstanding what may have been determined in Brodyn, the decisions in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWSC 1167 and Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190 support the view that if more than one payment claim is served in respect of a reference date, ‘then a payment claim, or more accurately purported payment claim, served in contravention of that prohibition, cannot form any foundation for the exercise of an adjudicator’s power to determine’: [page 206] at [44]. Accordingly, it followed that the adjudicator lacked jurisdiction to determine the application and the adjudication determination should be quashed. In Williams v Concreting Services Pty Ltd [2013] NSWSC 366 the respondent sought a declaration that the adjudicator’s determination was void on the basis that he had no jurisdiction under the Act to make the determination as the relevant construction contract was not between the claimant and the respondent but rather the claimant and a different counterparty. McDougall J held that the counterparty to the contract was not the respondent and for that reason, the adjudicator had no jurisdiction under the Act to make the determination. The decision in Nigro v EVS Group Pty Ltd [2012] NSWSC 1545 (see [3.342] below) should be contrasted with that in Williams. Where the court decided that an adjudicator had committed a jurisdictional error which affected only one half of the determination amount, the claimant submitted that the court should exercise its discretion to not declare the whole determination void, but rather should direct that the claimant obtain out of the moneys paid into court by the respondent that amount of the determination

which was not affected by the jurisdictional error and that the balance of the moneys paid into court be repaid to the respondent. Stevenson J in Anderson Street Banksmeadow Pty Ltd v Helcon Contracting Australia Pty Ltd [2013] NSWSC 657 refused to make those orders because of what was said in the Court of Appeal in Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2004] NSWCA 394 that a determination made in breach of the rules of natural justice was void, not merely voidable. Stevenson J held that McDougall J’s approach in Emergency Services Superannuation Board v Davenport [2004] NSWSC 697 (where McDougall J indicated that unless the respondent agreed to pay the claimant the amount unaffected by the jurisdictional error, he would withhold relief) was no longer available in light of Brodyn. Stevenson J also declined to follow the more recent decision of BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd (No 2) [2013] QSC 67. Where payment is obtained in pursuance of an adjudicator’s determination which is ultimately quashed, then the court has no discretion but to grant the relief to the respondent that the money it paid to the claimant is to be repaid to the respondent: ‘the entire consideration for the payment has failed and a common money count lies’: Go Electrical Pty Ltd v Class Electrical Services Pty Ltd [2013] NSWSC 517 at [20] citing John Holland Pty Ltd v Roads and Traffic Authority of New South Wales (2006) 66 NSWLR 624 at 634. Where there are a number of construction contracts (not just one contract) to which the adjudication application and determination relate, then the adjudication determination can not stand: Class Electrical Services Pty Ltd v Go Electrical Pty Ltd [2013] NSWSC 363 at [6]. See also Rail Corporation of NSW New South Wales v Nebax Constructions Australia Pty Ltd t/as TrackSyde Constructions [2012] NSWSC 6 at [44]. Issues permitted to be raised before Court of Appeal even though not raised before adjudicator or single judge [3.277] On appeal to the Court of Appeal, even though a particular issue was not raised by the respondent before the adjudicator or single judge it was still permitted before the Court of Appeal: see Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd [2012] [page 207] NSWCA 31 at [75], where the Court of Appeal held that no prejudice was

caused by allowing the issue to be raised. As certiorari is a discretionary remedy, the court may refuse the remedy where the jurisdictional argument was not raised before the adjudicator [3.278] In Oppedisano v Micos Aluminium Systems Pty Ltd [2012] NSWSC 53, McDougall J indicated that where a respondent which knew the facts relevant to a jurisdiction argument did not raise the point before the adjudicator and only did so after the other party had incurred substantial expense, it may be appropriate for the court, in exercise of its discretion, to refuse an order for certiorari: see [43]–[45]. Denial of natural justice after Chase [3.279] In IWD No 2 Pty Ltd v Level Orange Pty Ltd [2012] NSWSC 1394 the respondent sought to amend its summons to include a claim that the determination was void by reason of the failure of the adjudicator to afford natural justice to the respondent. After considering the effect of the case management principles established by the Civil Procedure Act 2005 (NSW) and the Uniform Civil Procedure Rules on the application for leave to amend (where the amendment application was made late, where there was no good reason why the point was not raised earlier and where the amendment would likely make would cause delay), because of the serious nature of a likely denial of natural justice, Stevens J allowed the amendment to be made but subject to the condition that the respondent pay the costs of the claimant on an indemnity basis for a portion of the hearing of the claimant’s application. The claimant when submitting its adjudication application changed the basis of its claim which was in its payment claim. In its adjudication response, the respondent objected to the basis upon which the claim was formulated in the adjudication application because that basis was different to that contained in the payment claim and further stated that ‘if the adjudicator were minded to consider these [matters] … on the new basis, there were various contractual answers’ (which it provided in its adjudication response). The adjudicator said that s 20(2B) prevented the respondent from relying on those matters because they had not been raised in its payment schedule. McDougall J in Leighton v Arogen [2012] NSWSC 1323 held that the consequence of an invalid application of s 20(2B) by an arbitrator: … with the effect … that the respondent is prevented from advancing reasons because the payment claim that is advanced in the adjudication application is different to the one that was advanced in the payment claim and answered in the payment schedule, is to deny the respondent natural justice: at [84].

In s 20 ‘lodged’ does not require that it actually arrived, so that an

adjudication application could be lodged when it was sent to the email address of the authorised nominating authority even if it was caught in the spam filter and not read by the authorised nominating authority: Bauen Constructions Pty Ltd v Sky General Services Pty Ltd [2012] NSWSC 1123 at [71], [75]. Sackar J held that although the response had been lodged in time, because it was not considered by the authorised nominating authority ‘it follows that [the respondent] has been denied natural justice, the adjudication having proceeded [page 208] in the absence of [the respondent] being heard. For this reason … [the adjudication] should be set aside’: at [79]. Where a respondent says that the value of the work undertaken was less than the amount claimed, it is incumbent upon the respondent to submit a reason for the lower value or if the respondent says the value is nil, the reason for that. In the circumstances where the respondent does not provide submissions as to why the value should be lower or why it should have been valued at nil, then an adjudicator is not ‘for the purposes of ensuring natural justice or procedural fairness, required independently to assess the value of the work. There was either an entitlement to be paid or there was not’: Maxstra NSW Pty Ltd v Blacklabel Services Pty Ltd [2013] NSWSC 406 at [87] per Rothman J. See also [84]–[88]. VICTORIAN ACT: FILING ADJUDICATION CERTIFICATE AS JUDGMENT DEBT: CHALLENGING ADJUDICATOR’S DETERMINATIONS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) [3.280] Victoria has no equivalent of the NSW Act s 25. Therefore at least part of what is contained in Brodyn and subsequent authorities dealing with Brodyn will not apply in Victoria, but the basic principles in Brodyn as to when an adjudicator’s determination can be set aside may be followed by the Victorian courts. In Shelford Engineering and Construction Pty Ltd v Rescom Constructions Pty Ltd [2005] VCC 361, Shelton J of the County Court refused to give summary judgment for the claimant of the adjudicator’s determination as it was arguable that the respondent could oppose judgment on the basis that the claimant ‘had not proven all the necessary elements giving rise to the statutory cause of action under the Act’: at [13]. Shelton J also referred at [13] to the

possibility that a respondent could make application to the Supreme Court under O 56 (Judicial Review) but noted that Brodyn held that ‘relief in the nature of certiorari was not available with respect to an adjudicator’s determination’: at [13]. VICTORIAN ACT: FILING ADJUDICATION CERTIFICATE AS JUDGMENT DEBT: CHALLENGING ADJUDICATOR’S DETERMINATIONS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 28R Proceedings to recover amount payable under section 28M or 28N (1) If an authorised nominating authority has provided an adjudication certificate to a person under section 28Q, the person may recover as a debt due to that person, in any court of competent jurisdiction, the unpaid portion of the amount payable under section 28M or 28N. (2) A proceeding referred to in subsection (1) cannot be brought unless the person with the adjudication certificate in the court — (a) the adjudication certificate; and (b) an affidavit by that person stating that the whole or any part of the amount payable under section 28M or 28N has not been paid at the time the certificate is filed. [page 209] (3) If the affidavit indicates that part of the amount payable under section 28M or 28N has been paid, judgment may be entered for the unpaid portion of that amount only. (4) Judgment in favour of a person is not to be entered under this section unless the court is satisfied that the person liable to pay the amount payable under section 28M or 28N has failed to pay the whole or any part of that amount to that first-mentioned person. (5) If a person commences proceedings to have the judgment set aside, that person — (a) subject to subsection (6), is not, in those proceedings, entitled — (i) to bring any cross claim against the person who brought the proceedings under subsection (1); or

(ii)

to raise any defence in relation to matters arising under the construction contract; or (iii) to challenge an adjudication determination or a review determination; and (b) is required to pay into the court as security the unpaid portion of the amount payable under section 28M or 28N pending the final determination of those proceedings. (6) Subsection (5)(a)(iii) does not prevent a person from challenging an adjudication determination or a review determination on the ground that the person making the determination took into account a variation of the construction contract that was not a claimable variation. (7) A claimant may not bring proceedings under this section to recover an adjudicated amount under an adjudication determination if the claimant has made an adjudication review application in respect of that determination and that review has not been completed. (8) Nothing in this section affects the operation of any Act requiring the payment of interest in respect of a judgment debt. [3.281] Section 28R is similar to the NSW Act s 25 in several respects except it also refers to the Victoria-only review adjudication procedures in the new Div 2A. Specifically in s 28R(6) it is provided that s 28R(5) does not prevent a person from challenging an adjudication determination (or a review determination) on the ground that the adjudicator took into account a variation that was not a claimable variation. Because of the reference to a review determination this right of challenge would appear to be in addition to the review determination procedures in Div 2A but restricts that right of challenge to the sole issue of the adjudicator taking into account any variation was not a claimable variation. Proceedings under s 28R to recover the adjudicated amount where the claimant has made an adjudication review application cannot be brought until determination of the review adjudication. Section 28R(1) is similar but different to s 25(1) in the NSW Act as in New South Wales the claimant’s entitlement is to file the adjudication certificate ‘as a judgment for [page 210]

a debt in any court of competent jurisdiction’. In Victoria s 28R(1) does not refer to any expedited procedure of filing the adjudication certificate as a judgment for debt but rather refers to the claimant being able to ‘recover as a debt due to the person, in any court of competent jurisdiction, the unpaid portion of the amount payable’. However, Vickery J in Phoenix International Group Pty Ltd v Resources Combined No 2 Pty Ltd [2009] VSC 425 held that: In Victoria, in my opinion, the procedure reflected in s 28R of the New Act is the same as that set out in s 25 of the NSW Act, save that in Victoria, the reference to “proceeding” in s 28R(2) requires the commencement of a proceeding under the rules of the court of competent jurisdiction in which the judgment is sought under s 28R(1): at [36]. … The procedure in my view is clearly designed to enable a court to enter judgment “on the papers” on the basis of the documents provided under s 28R(2), upon being satisfied of the matters referred to in s 28R(4), namely that the respondent has failed to pay the whole or any part of the adjudicated amount to the claimant. This will be able to be readily gleaned from the papers if they are in proper form: at [37].

Procedure to obtain judgment under s 28R [3.282] In Phoenix International Group Pty Ltd v Resources Combined No 2 Pty Ltd [2009] VSC 425 at 38, Vickery J held that: In the Supreme Court of Victoria, the appropriate process which most closely approximates the New South Wales procedure and gives effect to the intended operation of the New Act in Victoria, is the issue of an originating motion in Form 5D pursuant to O 5.02 Supreme Court (General Civil Procedure) Rules 2005. An originating motion in Form 5D is the proper form where there is no defendant: O 4.05(a). In my opinion, it is not intended by the legislation in its amended form that any process to enter judgment pursuant to s 28R should be undertaken on notice to the party which has not paid the full sum comprised in the adjudicated amount. The terms of s 28R(5) underline this construction by providing a specific facility for the party which is subject to a judgment entered under the section, to have that judgment later set aside, other than on the grounds excluded by s 28R(5). Upon issue of the Form 5D originating motion, judgment may be immediately entered on application to an Associate Justice. Judgment may be entered “on the papers” comprising the s 28R(2)(a) adjudication certificate and the s 28R(2)(b) affidavit, without the necessity for any appearance, upon the court being satisfied of the matters referred to in s 28R(4).

Further, Vickery J held: Given the objects and purposes of the legislation, the special procedure provided for in O 45.05 Supreme Court (General Civil Procedure) Rules 2005 would be appropriate to the entry of judgment pursuant to s 27 of the Old Act. This procedure may be invoked, inter alia, “to save time and expense for the parties”: r 45.05(3)(b). A proceeding by originating motion appropriate to be dealt with under r 45.05 is brought by originating motion in Form 5C. A summons in the Form 45A must also be issued: r 45.05(6) … Orders under rr 45.05(2) and (4) must also be made under this procedure. These orders may be made by the Associate Judge before whom the application for entry of judgment is made and at the same time. The originating motion, the summons and the affidavit or affidavits in support should be all served upon the respondent to the application for judgment, who is the defendant in the proceeding, in a reasonable time prior to the application for entry of judgment being made. An Associate Judge must hear and determine the application. An order may be made for the entry of judgment in the presence of the other party, or if the other party is absent, upon the Associate Judge being satisfied of service of the originating motion and summons and the material in support by an affidavit of service: at [52].

[page 211] Injunctions restraining enforcement of adjudication determination [3.283] Vickery J in Grocon Constructors Pty Ltd v Planit Cocciardi Joint Venture [2009] VSC 339 granted an interlocutory injunction restraining the claimant from seeking to enforce an adjudication determination in its favour. The respondent sought a review of the adjudicator’s determination and the review adjudicator confirmed the original adjudicator’s determination. Vickery J found the balance of convenience favoured the status quo being preserved pending hearing of the respondent’s application for judicial review. Where an adjudication determination was found to be partly valid (and partly void) the respondent sought a permanent stay of the operation of the declaration that the adjudication determination was partly valid on the basis of the alleged impecuniosity of the claimant. Vickery J in Asian Pacific Building Corporation Pty Ltd v Aircon Duct Fabrication Pty Ltd (No 2) [2010] VSC 340 refused the injunction as: 1. an order by way of a declaration as to existing rights cannot by stayed (at [14]); 2. although, pending an appeal, a stay of a declaratory order may be open to be granted, once the declaration has been made, the rights and obligations of the parties are, subject to appeal, settled: at [17]. In the case under consideration by Vickery J, there was no application for a stay on the basis that an appeal was pending and that a stay was necessary (for example, to preserve the subject matter of the appeal); 3. the case under consideration was different from Grosvenor Constructions (NSW) Pty Ltd (in administration) v Musico [2004] NSW SC 344. In Grosvenor Constructions the claimant had obtained an adjudication certificate and filed the certificate as a judgment for a debt and it was the judgment debt which was sought to be stayed. In the present case no judgment had been entered; 4. rules 66.16 and 64.25 in Victoria were also not relevant because they deal respectively with stay of execution of a judgment and stay of execution of proceedings pending an appeal which were not the facts in the present case; 5. the respondent’s attempt to found the injunction on the basis of s 37 in the Supreme Court Act 1986 (Vic) also failed as Vickory J held that it was

‘fundamental that an injunction will not be granted to restrain acts which injure all or would injure the plaintiff unless there is a cause of action’: at [32]. Vickery J also referred to the Court of Appeal of Queensland decision in RJ Neller Building Pty Ltd v Ainsworth [2008] QCA 397, where the court envisaged possible circumstances where the staying of a warrant of execution based on the registration of an adjudication certificate may be appropriate which included where the claimant had engaged in tactics calculated to delay the ultimate determination and the rights and liabilities of the parties or the builder restructured its financial affairs (see [39]). In the Asian Pacific Building Corporation case although Vickery J was satisfied that the respondent was in a precarious financial position he was not satisfied that it would not be in a position to repay the amount of the determination and refused any injunction on that basis as well: at [42], [43]. [page 212] Application of Brodyn in Victoria [3.284] In Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd [2009] VSC 156 Vickery J held that he was unable to adopt the Brodyn principles ‘having undertaken a close examination of the Victorian Act and by application of relevant provisions of the Constitution Act 1975 (Vic)’: at [73]. See also [75], [81], [82]. Vickery J found that accordingly ‘certiorari would lie’, see [82], [83]– [90]. However, as the plaintiff did not seek relief by certiorari Vickery J adopted the approach taken in Brodyn: see [92]; see also [3.290]. Vickery J held that the adjudicator’s determination was not void as: although s 18(3)(c) uses the word ‘must’, non-compliance with s 18(3)(c) does not render it invalid: at [136]. See also [146]; even if there was a technical defect in the making of the payment claim, the defect complained of ‘falls far short of that which could possibly be described as a “basic requirement” of the Act’ (at [154]); even if more than one payment claim was served in respect of a reference date this ‘would not have rendered the ultimate determination of the adjudicator void’ (at [161]); and ‘The submissions made by Hickory to which I have referred, smack of excessive technicality. The legislature did not intend, in my view, that

precise compliance with all of the more detailed requirements of the Act is essential to the existence of a valid determination. To approach the matter in the manner suggested by Hickory would not accord with the legislative intention disclosed in the Act that adjudication determinations should be made and given effect to with minimum delay and therefore should be approached with minimal technicality and court involvement’: at [162]. Certiorari is available in Victoria [3.285] In Grocon Constructors Pty Ltd v Planit Cocciardi Joint Venture (No 2) [2009] VSC 426, Vickery J confirmed his decision in Hickory Developments that ‘an adjudication determination is susceptible to the writ of certiorari because it affects rights in the relevant sense and thereby satisfies the “legal rights test”. It follows that, prima facie, the determinations of adjudicators are amenable to the writ of certiorari’: at [49]. To that extent, Vickery J felt he was unable to follow Brodyn (at [102]) after considering whether an implied ouster of certiorari was precluded by the Victorian Constitution (finding that relief in the nature of certiorari was not excluded either expressly or by implication under the Act). Vickery J examined the grounds of the judicial review advanced by the respondent including: jurisdictional error (see [103]–[106]); error on the face of the record (see [118]–[121]); errors of fact (see [122]–[126]); and the duty of an adjudicator to provide procedural fairness (natural justice) (see [127]–[144]). Vickery J held that the function of the court on judicial review ‘is to review the decision of the adjudicator and to consider whether the impugned decision should be quashed on one or more of the well recognised grounds. In an appropriate case, having [page 213] found one or more of the grounds exist for quashing the decision, the court can then proceed to exercise its discretion to so order’: at [147]. Where relief in the nature of certiorari is sought, the court on hearing the application ‘can, subject to applicable procedural and evidentiary rules, take account of any relevant material placed before it, notwithstanding that it was not

before the adjudicator’: Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 at [62]. In such an application for judicial review it is up to the party seeking review ‘to establish an excess of jurisdiction, and must do so by clear proof if it is to be granted relief’: Metacorp Australia at [66]. [3.286] Where a progress claim contained no breakdown or explanation of the work apart from a calculation which was referable to the ‘contract value’ and ‘payments to date’ Vickery J held it was ‘impossible to determine the basis of the claim … the claim lacked the necessary content to identify the work to which the progress payment related’: Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 at [117]. Accordingly, the requirements of s 14(3)(a) were not satisfied. However, on the question of the invalidity of the payment claim, Vickery J further held that: A failure to comply with a requirement of the Act will not necessarily result in a non-complying payment claim being invalid. It is a question of the character of the legislative requirement and the degree of non-compliance. A failure to satisfy a basic and essential requirement of the legislation in a substantial and material way will result in the invalidity of the errant payment claim. However, payment claims which, in spite of a technical defect being exposed, fall short of meeting this test, will not usually be considered as invalid. Further, whether a court is in a position to determine the question of invalidity will depend upon whether the payment claim, on its face, satisfies the test to which I have referred. Where the validity of a payment claim is brought under challenge and the question turns upon questions of fact, or mixed fact and law, generally that will be for an adjudicator to decide, in keeping with the intent of the legislation. … However, in this case I am satisfied that the payment claims, to the extent that I have found them to be invalid, failed to satisfy a basic and essential requirement of the legislation in a substantial and material way, and further that the failures were manifest on the face of the documents. To the extent that the payment claims were invalid, the adjudicator had no power to determine the adjudication applications. There was therefore jurisdictional error to the extent which I have found: at [129]–[132].

The requirement for timely service under the Act ‘is not a basic and essential precondition to the adjudicator having jurisdiction under the Act. Therefore, even if I had found that the payment schedule had in fact not been served in time, the adjudicator’s determination that it had been served in time would not be overturned’: Maxstra Constructions Pty Ltd v Active Crane Hire Pty Ltd [2013] VSC 177 at [37]. Adjudicator’s determination void for failure to discharge the adjudicator’s function [3.287] In Asian Pacific Building Corporation Pty Ltd v Aircon Duct Fabrication Pty Ltd [2010] VSC 300, Vickery J held that:

The absence of relevant material from the respondent, or the presentation of material in an incoherent fashion, does not entitle an adjudicator to simply award the amount of the claim without

[page 214] addressing its merits, namely, as a minimum, determining whether the construction work identified in the payment claim has been carried out, and what is its value. Accordingly, there will not be a valid adjudication of a payment claim, within the meaning of the Act, if all the adjudicator does is reject the respondent’s contentions: at [22]–[23].

Vickery J went on to say: Thus, putting the matter in terms of jurisdiction, the authority to validly adjudicate a payment claim is an authority which only may be exercised if the basic and essential functions required by the Act are undertaken by an adjudicator, namely and as a minimum, determining whether the construction work identified in the payment claim has been carried out, and what is its value (or determining whether the goods and services identified in the payment claim have been supplied and their value): at [25].

On the facts in Asian Pacific Building Corporation, the material that the claimant provided was not sufficient to enable the adjudicator to perform his task of valuing the work done. The claimant could have done this by provision of a signed statement by an officer who has knowledge of the matter or an independent quantity surveyor or by other sufficient means. The adjudicator fell into error: (a) In concluding from his finding “the Claimant would have earned some percentage complete during the months of August 2009, September 2009 and October 2009” that the total value of the work undertaken by Aircon during that period was the full amount claimed by it, namely $543,686.65. There appears to have been no assessment undertaken by the Adjudicator of the actual percentage of the work completed during the months in question; and (b) In concluding that “… given that I have a choice of the Claimant amounts or $Nil I favour the Claimant’s submissions. I find in favour of the Claimant”, the Adjudicator did little more than succumb to a position where, having determined that the Respondent’s submissions should be disregarded, he should simply adopt the amount specified by the Claimant in the payment claim. He therefore failed to undertake the basic and essential task of valuing the work claimed by Aircon to have been completed: at [43].

Vickery J in Asian Pacific Building Corporation also held that what the adjudicator should have done in those circumstances is exercise his discretion under s 22(5) and requested more information, or if time did not permit further information be requested and provided, the adjudicator should simply have not determined the application and in the time allowed by s 22(4), pointed out to the parties the deficiency in material provided by the claimant and invited the claimant to make a new adjudication application under s 18 on properly presented material, as could have been done pursuant to s 28: see [44], [45]. Accordingly, the determination was void.

In Claude Neon Pty Ltd v Rhino Signmakers Pty Ltd [2010] VSC 619 Vickery J held that an adjudicator was entitled to adopt the valuation of work made by the claimant in the circumstances. One of the circumstances was that there was no contraverting material provided by the respondent. The adjudicator had before him a summary description of the work, a statutory declaration and annexed breakdown as to the things that the claimant did to undertake the work, being the provision of labour and materials, rental of additional space, engagement of a subcontractor and the provision of management. They combined to provide the adjudicator with a valuation of construction work which he was able to assess: see [45]. Where under s 7(2)(b) the adjudicator concluded that the Director of Housing was ‘in the business of building residences’, he erred ‘as to a jurisdictional question’ and [page 215] therefore certiorari may be issued: Director of Housing (Vic) v Structx Pty Ltd t/a Bizibuilders [2011] VSC 410 at [19], [41]. In Director of Housing (Vic) v Structx Pty Ltd: 1. as there was ‘no probative evidence’ to support the arbitrator’s finding that the principal’s architect was not authorised to issue a payment schedule (even though there was no evidence that he was authorised to do so); 2. as the adjudicator failed to take the payment schedule into account, as s 23(2)(d) required, and; 3. as the adjudicator failed to afford the respondent natural justice by failing to take account of the payment schedule; in each case an order in the nature of certiorari should be made (see [54], [56], [59], [61], [62], [64]) and the adjudication determination quashed. In Republic of Turkey v Mackie Pty Ltd [2012] VSC 309 where an adjudicator decided he had jurisdiction on the basis that s 7(2)(b) of the Act did not apply, that was a mixed question of fact and law, and applying the approach in Director of Housing (Vic) v Structx, ‘the decision of the adjudicator to the effect that he had jurisdiction in all circumstances, is open to review by way of certiorari. That issue goes to an essential and fundamental foundation for the jurisdiction of the adjudicator. … Accordingly, the adjudication determination must be quashed and set aside’: at [42]–[43]; see also [40]–[43].

What is ‘the record’? [3.288] Vickery J in Grocon Constructors Pty Ltd v Planit Cocciardi Joint Venture (No 2) [2009] VSC 426 also considered what constitutes ‘the record’ under the Act and held that even though the respondent had elected to proceed by way of judicial review pursuant to O 56 of the Rules of Court and not under the Administrative Law Act 1978 (Vic), nevertheless: An adjudicator was a ‘tribunal’ in the meaning of the Administrative Law Act and ‘the reasons for the decision of the adjudicator made under the Act, by reason of s 10 [of the Administrative Law Act], are part of the record which may be examined on an application for a judicial review pursuant to O 56’: at [158]. The documents ‘initiating and assigning the matter for adjudication under the Act also comprise a payment claim made under s 14 of the Act and any payment schedule provided by the respondent under s 15 … Added to this is the decision of the adjudicator which defines the outcome of the proceeding before him. Further, in certain circumstances the whole or part of the submissions filed by the parties may constitute part of the record in so far as they assist to define the issues in the adjudication’: at [159]. ‘Other material placed before the adjudicator, such as documentary evidence, or any record of oral evidence, does not compromise the “record” for the purposes of certiorari. However, such other material may be used for the purpose of impugning a decision on a basis other than that founded on an error on the face of the record, for example, jurisdictional error or a failure to afford procedural fairness’: at [160]. [page 216] However, where relief in the nature of certiorari is sought, the court on hearing the application ‘can, subject to applicable procedural and evidentiary rules, take account of any relevant material placed before it, notwithstanding that it was not before the adjudicator’: Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 at [62]. In such an application for judicial review it is up to the party seeking review ‘to establish an excess of jurisdiction, and must do so by clear proof if it is to be granted relief’: Metacorp at [66]. Error in finding of fact and ‘error on the face of the record’

[3.289] In 470 St Kilda Road Pty Ltd v Reed Constructions Australia Pty Ltd [2012] VSC 235, Vickery J referred to his decision in Grocon Constructors Pty Ltd v Planit Cocciardi (No 2) (2009) 26 VR 172 and the circumstances where an error in the finding of fact may result in an error on the face of the record in respect of which certiorari may lie: on the facts in 470 St Kilda Road Pty Ltd, Vickery J held that although the adjudicator may have made a wrong finding of fact (and it was open for him to arrive at a different conclusion on the issue), ‘equally there was some evidence upon which the adjudicator could have arrived at the finding of fact which he did [that the claimant had complied with its obligations as to a statutory declaration and] … for this reason, the submission … on the point must fail’: at [83]–[85]. Application of Brodyn [3.290] The respondent in Grocon Constructors Pty Ltd v Planit Cocciardi (No 2) (2009) 26 VR 172 also sought the grant of a declaration, and Vickery J held that: [F]or the purpose of addressing this aspect of the claim, I will follow the Court of Appeal in Brodyn where it was held that is was open to challenge an adjudicator’s determination and obtain a remedy by way of declaration of invalidity (and an injunction), but only if:

(a) (b) (c)

the basic and essential requirements of the Act for a valid determination are not satisfied; the purported determination is not a bona fide attempt to exercise the power granted under the Act; or there is a substantial denial of the measure of natural justice required under the Act: at [166].

Relief refused: approach to be taken by court on judicial review [3.291] Vickery J in Grocon Constructors Pty Ltd v Planit Cocciardi (No 2) (2009) 26 VR 172 went on to consider the 10 grounds for review of the adjudicator’s determination and the same 10 grounds were relied on by the respondent in its challenge to the review adjudicator’s determination and a further six grounds specific to the review adjudicator’s determination. Vickery J held that none of the grounds relied on by the respondent for either the first adjudicator’s determination or the review adjudicator’s determination had been made out on the basis that there was no jurisdictional error, there was no error of law on the face of the record, it could not be said that in making the findings the basic and essential requirements of the Act for a valid determination were not satisfied and the adjudicator had committed no substantial breach of the rules of

procedural fairness ‘sufficient to amount to a denial of the standard required by the Act, and thus the intervention of certiorari’: at [250]. [page 217] In considering whether there has been any jurisdictional error and considering each of the grounds raised as giving rise to a jurisdictional error, Vickery J held: It is ‘necessary to determine whether, in each case, an adjudicator was conferred with the power under the Act to determine the facts which establish his or her jurisdiction, such that, if an adjudicator errs in deciding the jurisdictional fact, the adjudicator still stays within his or her jurisdiction’: at [107]. ‘In undertaking this exercise, I take into account that the main purpose of the Act is to ensure that any person who carries out construction work, or provides related goods or services, is able to promptly recover progress payments’: at [110]. ‘The Act also manifests another central aspiration, that of freedom from excessive legal formality. … If the Victorian Act became prone to challenges founded on fine legal points, an important object of the Act would be defeated by the twin adversaries of cost and time’: at [112]. Applying those principles, Vickery J held that: With the exception of the case where the basic and essential requirements of the Act for a valid determination are not satisfied, or where the purported determination is not a bona fide attempt to exercise the power granted under the Act, if the Act does make the jurisdiction of an adjudicator contingent upon the actual existence of a state of facts, as distinguished from the adjudicator’s determination that the facts do exist to confer jurisdiction, in my opinion the legislation would not work as it was intended to. Unnecessary challenges to the jurisdiction of an adjudicator appointed under the Act would expose the procedures to delay, cost and expense. The very purpose of the Act would be compromised: at [115].

Further: For these reasons, in my opinion, in order to serve the purposes of the Act, the intention of the legislation is to confer upon an adjudicator the capacity to determine the facts which go to his or her jurisdiction, subject to exceptions of the type to which I have referred. It follows that, in making those determinations, the Act confers on adjudicators jurisdiction to make an incorrect decision in relation to such jurisdictional facts which will not be overturned by certiorari: at [116].

Procedural fairness [3.292] Vickery J in Grocon Constructors Pty Ltd v Planit Cocciardi (No 2) (2009) 26 VR 172 held that:

[I]n approaching the question of procedural fairness in the decision-making of an adjudicator under the Act, not too fine a point should be taken in relation to what is done. The shortcomings of the statutory procedure provided for in the Act point to the need for a large measure of practicality, flexibility and common sense being observed to make it work. … The legislative intention, in my opinion, points strongly to the position that, in approaching his or her task, an adjudicator’s determination will only be brought into question if there has been a substantial denial of the measure of procedural fairness required under the Act: at [143]–[144].

Natural justice [3.293] Where a respondent challenges the adjudicator’s determination on the basis of failure to afford natural justice ‘it is a matter of realistically balancing the objects and purposes of the Act, the nature of the procedure it prescribes and its consequences, with the need to ensure an adequate measure of fairness in undertaking the processes [page 218] contemplated, and the consequences for a party if they are not’: Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 at [243]. In Metacorp, the adjudicator under s 21(2B) invited the claimant to provide further submissions pursuant to s 21(2B). The claimant provided the further submissions in response to the adjudicator’s invitation but also raised a new issue before the adjudicator for the first time. The respondent requested the right to respond but the adjudicator did not agree and proceeded to make his adjudication determination without receiving any such further submissions from the respondent. Vickery J held that there was a breach of the rules of procedural fairness as a result. The new issue was a matter which was material to the way the adjudicator decided the application, and, ‘being principally a factual matter, submissions and evidence could have been advanced by the respondent which might have had some prospect of changing the adjudicator’s mind on the point’: at [279]. Section 21(2B) does not ‘in its terms oblige an adjudicator to give the other party an opportunity to comment on the submissions supplied by a claimant pursuant to the statutory notice, [but] there may be circumstances where the common law rules of procedural fairness, which sit alongside the Act, demand that this occur’: at [277]. The mandatory requirement in s 22(5)(a) of the Act to

give the other party an opportunity to comment on further requested submissions does not apply to a request of the adjudicator under s 21(2B): at [275]. Vickery J held that the requirements for procedural fairness can arise from specific provisions in the Act giving the parties to an adjudication application an opportunity to be heard, for example, ss 21(2D) and 22(5)(a). The common law also ‘operates alongside the statutory requirements for procedural fairness provided by the Act, and is not excluded or curtailed by its provisions’: Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd (No 2) [2010] VSC 255 at [13], [14]. Further, Vickery J found that: If there is a substantial denial of the measure of natural justice required to be given by an adjudicator … whether by not following the procedural requirements of the Act, or by not adhering to the principles of procedural fairness recognised by the common law, the decision will be a nullity: at [16].

A court could simply declare the purported adjudication determination void but: [T]he more conventional and appropriate course, in my view, is to grant the plaintiff’s claim to relief to quash the adjudication determination. The writ of certiorari is the ordinary remedy for giving effect to that objective. Once quashed, the matter is open to be remitted back to the original tribunal to be determined in accordance with law, which is both available and appropriate in the present case: at [18].

In Asian Pacific Building Corporation Pty Ltd v Aircon Duct Fabrication Pty Ltd [2010] VSC 300, Vickery J referred to his decision in Grocon Constructors Pty Ltd v Planit Cocciardi Joint Venture (No 2) [2009] VSC 426 and his observations there in relation to the requirements of natural justice. To those comments Vickery J added that ‘A mere breach of natural justice does not necessarily invalidate the decision’: at [89]. The two circumstances where a decision will not necessarily be invalidated because of breach of natural justice are where ‘there is an incontrovertible fact or point of law which provides a discrete basis for the decision which cannot be affected by the procedural [page 219] unfairness’ and ‘secondly, even where the subject of the procedural unfairness touched upon an issue in dispute that was material to the decision, relief may be refused if the respondent can demonstrate that it would be futile to hold a further trial because the result would inevitably be the same’: at [89]. Summary of availability of judicial review [3.294] In Maxstra Constructions Pty Ltd v Gilbert t/as AJ Gilbert Concrete

[2013] VSC 243 at [14], Vickery J summarised the availability of judicial review and associated remedies thus: (a) an Adjudication Determination made pursuant to the Act is amenable to the writ of certiorari on all the grounds available under that writ, including as a result of jurisdictional error or error on the face of the record; (b) a declaration of invalidity of an Adjudication Determination is only available if: (i)

the basic and essential requirements of the Act for a valid determination are not satisfied,

(ii)

the purported determination is not a bona fide attempt to exercise the power granted under the Act, or

(iii) there is a substantial denial of the measure of natural justice required under the Act; (c) what amounts to the “basic requirements” of the Act or the “essential pre-conditions for the existence of an Adjudicator’s Determination” may be equated to jurisdictional error; and (d) the granting of an order in the nature of certiorari and the granting of a declaration are subject to discretionary considerations.

On the facts of Maxstra Constructions where the adjudicator did not consider the matters which arose for determination under s 11(1)(b)(iv) (because of the incorrect construction given by him to s 10B(2)(c)) the adjudicator ‘fell into error and did not satisfy a basic and essential requirement of the Act for a valid determination, resulting in jurisdictional error’: see [69]–[71]. Vickery J quashed the decision of the adjudicator and remitted the matter back in its entirety for reconsideration and a fresh determination. Severance of ‘invalid part’ of adjudicator’s determination? [3.295] Vickery J noted in Maxstra Constructions, above, that severance of part of the determination ‘which is valid from part which is determined to be invalid so as to preserve that part which is valid, is technically possible in some cases’ but Vickery J decided it was ‘not the case for such relief’: at [77]. VICTORIAN ACT ONLY: REVIEW OF ADJUDICATION (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) Division 2A — Review of Adjudication 28A Threshold for review This Division applies in respect of an adjudication determination if the adjudicated amount exceeds the higher of — (a) $100 000; or (b) the amount prescribed for the purposes of this section.

[page 220] 28B Application for review by respondent (1) Subject to this section, a respondent may apply for a review of an adjudication determination (an adjudication review). (2) An application under this section may only be made if the respondent provided a payment schedule to the claimant within the time specified in section 15(4) or 18(2). (3) An application under this section may only be made on the ground that the adjudicated amount included an excluded amount. (4) An application under this section may only be made if the respondent has identified that amount as an excluded amount in the payment schedule or the adjudication response. (5) An application under this section may only be made if the respondent has paid to the claimant the adjudicated amount other than the amounts alleged to be excluded amounts. (6) An application under this section may only be made if the respondent has paid the alleged excluded amounts into a designated trust account. 28C Application for review by claimant (1) Subject to this section, a claimant may apply for a review of an adjudication determination (an adjudication review). (2) An application under this section may only be made on the ground that the adjudicator failed to take into account a relevant amount in making an adjudication determination because it was wrongly determined to be an excluded amount. 28D Procedure for making application (1) An adjudication review application must be made to the authorised nominating authority to which the adjudication application was made. (2) An adjudication review application must be made within 5 business days after the respondent or claimant (as the case requires) receives a copy of the adjudication determination. (3) An adjudication review application — (a) must be in writing in the prescribed form (if any); and (b) must contain the prescribed information (if any); and (c) must be accompanied by the application fee (if any) determined by the authorised nominating authority.

(4) The applicant must give a copy of the adjudication review application to the other party to the adjudication review within one business day after the application is made. (5) The authorised nominating authority must as soon as practicable after receiving an adjudication review application give a copy of the application to — (a) the adjudicator who made the adjudication determination that is the subject of the adjudication review; and (b) the Authority. [page 221] 28E Right to make submissions A party to an adjudication review may make a submission to the authorised nominating authority in response to the application for review within 3 business days after being given a copy of the adjudication review application. 28F Designated trust account (1) On paying money into a designated trust account in accordance with section 28B, the respondent must give the claimant notice of that payment together with particulars identifying the account and the recognised financial institution with which the account is kept. (2) Subject to subsection (3), money held in a designated trust account (including any interest accruing to that money) is taken to be held on the following trusts — (a) to the extent to which the money is required to satisfy the claimant’s entitlements, the money is to be applied in satisfaction of those entitlements; (b) to the extent to which any of the money remains in the account after the claimant’s entitlements have been fully satisfied, the money is to be paid to the respondent. (3) If the respondent withdraws the adjudication review application in accordance with section 28K, any money held in a designated trust account (including any interest accruing to that money) is to be paid to the claimant. (4) Subject to subsections (2) and (3), the regulations may make provision

for or with respect to the establishment and operation of designated trust accounts. (5) In this section, claimant’s entitlements, in relation to money held in a designated trust account, means the amount (if any) to which the claimant becomes entitled under a review determination. 28G Appointment of review adjudicator (1) The authorised nominating authority must, within 5 business days after receiving an application for review, appoint a review adjudicator in accordance with this section (the review adjudicator) to conduct the review. (2) A review adjudicator must be a person who is eligible to be an adjudicator as referred to in section 19. (3) The authorised nominating authority may not appoint an adjudicator who has been involved directly or indirectly with the adjudication determination that is the subject of the adjudication review. (4) The authorised nominating authority must give each party to the review and the Building Commission written notice of the appointment of a review adjudicator. (5) The notice under subsection (4) must include the date of the appointment. [page 222] 28H Adjudication review procedures (1) The adjudication review commences upon acceptance by the review adjudicator of his or her appointment as the review adjudicator. (2) The authorised nominating authority must provide the following information to the review adjudicator as soon as practicable after the appointment of the review adjudicator — (a) a copy of the adjudication review application; and (b) a copy of any submission made by a party to the adjudication review in accordance with section 28E; and (c) a copy of the adjudication determination that is the subject of the adjudication review; and (d) a copy of the payment claim that relates to that adjudication determination; and

(e) (f) (g)

a copy of each submission considered by the adjudicator who made that adjudication determination; and a copy of the payment schedule (if any) considered by the adjudicator who made that adjudication determination; and any other information that the adjudicator who made the adjudication determination considered in making that determination.

28I Adjudication review determination (1) A review adjudicator is not to determine an adjudication application until after the end of the period within which any party to the adjudication review may make a submission in accordance with section 28E. (2) In determining an adjudication review application, the review adjudicator must consider the following matters and those matters only — (a) the provisions of this Act and any regulations made under this Act; and (b) the provisions of the construction contract from which the application arose; and (c) the information provided by the authorised nominating authority under section 28H. (3) In determining an adjudication review application, the review adjudicator must not take into account — (a) any excluded amount; or (b) any other matter that is prohibited by this Act from being taken into account. (4) A review adjudicator’s determination is void — (a) to the extent that it has been made in contravention of subsection (2); or (b) if it takes into account any amount or matter referred to in subsection (3), to the extent that the determination is based on that amount or matter. (5) After conducting an adjudication review, a review adjudicator may — [page 223]

(a)

(6)

(7) (8)

(9)

(10)

(11)

substitute a new adjudication determination (the review determination) for the determination that is the subject of the adjudication review; or (b) confirm the determination that is the subject of the adjudication review. In determining an adjudication review, the review adjudicator must — (a) specify if the review determination varies the adjudication determination and how it varies the adjudication determination; and (b) specify any amounts paid to the claimant by the respondent in respect of the adjudication determination; and (c) determine any further amount that is to be paid by the respondent to the claimant; and (d) determine any amount that is to be repaid by the claimant to the respondent; and (e) determine any interest payable in accordance with section 12(2) on an amount referred to in paragraph (c); and (f) specify the date on which an amount under paragraph (c), (d) or (e) becomes payable. A review determination must be in writing and set out the reasons for the review determination in that determination. A review adjudicator who makes a review determination may, if he or she thinks it appropriate, include a statement in the review determination that in his or her opinion the application for the adjudication review was not made in good faith. The date for payment referred to in subsection (6)(f) must be 5 business days after the respondent or claimant (as the case requires) is given a copy of the review determination. The review adjudicator must complete the adjudication review and provide a copy of the review determination to the authorised nominating authority that appointed him or her — (a) within 5 business days after his or her appointment; or (b) within any further time, not exceeding 10 business days after that appointment, to which the applicant for the adjudication review agrees. An applicant must not unreasonably withhold their agreement under subsection (10)(b).

28J Authorised nominating authority must notify persons of review

determination The authorised nominating authority must, as soon as practicable, provide a copy of the review determination to — (a) each party to the adjudication review; and (b) the adjudicator who made the adjudication determination that is the subject of the adjudication review; and (c) the Authority. [page 224] 28K Withdrawal of adjudication review application An applicant may withdraw an adjudication review application at any time before the review adjudicator has made a review determination under section 28I by serving a notice of withdrawal on — (a) the review adjudicator; and (b) the authorised nominating authority that appointed the review adjudicator; and (c) the other party to the adjudication review. 28L Correcting mistakes in review determinations Section 24 applies to review determinations as if a reference in that section — (a) to an adjudicator were a reference to a review adjudicator; and (b) to a determination made by an adjudicator were a reference to a review determination. [3.296] Division 2A which provides for a procedure of review of the first adjudicator’s determination where it exceeds (currently) $100,000 is unique to Victoria — there is no New South Wales equivalent. What the new Div 2A (and s 28R) did not make clear is the grounds that a party can rely on in an application to have a judgment based on an adjudication certificate set aside as referred to in s 28R(5): see now the cases referred to at [3.284] and [3.290] as to the availability of judicial review and the application of the Brodyn principles in Victoria. Note also that Vickery J held in Grocon Constructors Pty Ltd v Planit

Cocciardi Joint Venture (No 2) [2009] VSC 426 at [256] that: [A]n adjudication review is not an appeal. The procedure should not be used as such. In particular, an adjudication review should not be used as a basis for a re-evaluation of the findings of fact made by the adjudicator at first instance which were used by the adjudicator in reasoning towards making a finding as to the ultimate fact in question on a review, namely whether or not the payment claim included an excluded amount. On a review, the review adjudicator is bound by the findings of fact made by the adjudicator. The task on review is to determine, on the basis of the facts as found by the adjudicator at first instance, whether the payment claim includes an excluded amount. However, it is not open for a review adjudicator to overturn any of the other findings of fact as found by the adjudicator at first instance, because to do so would introduce a further and impermissible ground of review, namely that the adjudicator at first instance erred in making the findings in relation to those other facts.

NSW ACT: NEW ADJUDICATION APPLICATION 26 Claimant may make new application in certain circumstances (1) This section applies if: (a) a claimant fails to receive an adjudicator’s notice of acceptance of an adjudication application within 4 business days after the application is made, or (b) an adjudicator who accepts an adjudication application fails to determine the application within the time allowed by section 21(3). [page 225] (2) In either of those circumstances, the claimant: (a) may withdraw the application, by notice in writing served on the adjudicator or authorised nominating authority to whom the application was made, and (b) may make a new adjudication application under section 17. (3) Despite section 17(3)(c), (d) and (e), a new adjudication application may be made at any time within 5 business days after the claimant becomes entitled to withdraw the previous adjudication application under subsection (2). (4) This Division applies to a new application referred to in this section in the same way as it applies to an application under section 17. Section 26(1)(b) ‘fails to determine the application’

[3.297] Palmer J considered the operation of cl 26 in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 at [102]–[103] and held that: An adjudicator may fail to determine an adjudication application for the purposes of s 26(1)(b) for a number of reasons. The adjudicator may become incapable of making the determination within the time required or may for some reason refuse to do so or become disqualified from doing so. But, in my opinion, an adjudicator may also fail to determine an adjudication within time for the purposes of the subsection if the determination is purportedly delivered within time but is not given according to law. … When an adjudication under the Act is quashed pursuant to judicial review, in my opinion the claimant becomes entitled to withdraw its adjudication application under s 26(2) upon and from the date upon which the quashing order is made …

This approach was followed in Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd [2004] NSWSC 116 at [38]. The approach was also followed in McDougall J’s obiter comments in Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399 at [79], [80]. McDougall J also observed in obiter comments that the court does have the power where it declares that an adjudicator’s determination was void to order the adjudicator to ‘reconsider an application and make a determination according to law’ (at [89]), but that ‘undoubtedly, there may arise cases where it would be inappropriate to make such an order, and more appropriate to leave the dissatisfied claimant to its rights under s 26(2)’: at [90]. Such relief would be relief under s 19 of the Supreme Court Act 1970 (NSW): at [86]. Only a claimant can withdraw an adjudication application under s 26 and only after the specified period in s 26(1): John Holland Pty Ltd v Made Contracting Pty Ltd [2008] NSWSC 374 at [30]. In John Holland the adjudicator did not determine the application within the time in s 26(1) because he believed the claimant could and did withdraw its adjudication application. Although the claimant could not withdraw the adjudication at the time it purported to do so, after the time in s 26(1) expired without an adjudication determination being provided, the claimant could rely on s 26(2) and then withdraw the adjudication application, and make a fresh adjudication application: at [44]. [page 226] Section 26(1)(b) applies where adjudicator’s determination is declared void [3.298] Where an adjudicator’s determination is declared void, then s 26(1)(b) is enlivened as the adjudicator has failed ‘to determine the application within the time allowed by s 21(3)’: Cardinal Project Services Pty Ltd v Hanave Pty Ltd

[2010] NSWSC 1367 at [24] per McDougall J. (McDougall J observed that he was only deciding the circumstance where a determination is declared void, not where a determination is quashed under s 69 of the Supreme Court Act 1970 (NSW).) The right to withdraw the application and make a fresh application arises on expiry of the five business day time limit in s 26(3) and therefore usually when the declaration is made it is too late to bring a fresh application (see Cardinal Project Services at [31]–[36]). McDougall J did not therefore agree with Palmer J’s contrary reasoning in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 which determined that the five business day time limit ran from the date the quashing order was made. However: it would be different if the determination was merely voidable as then the five business day time limit runs from the ‘conclusive determination setting it aside’ (at [33]); and the claimant can still serve a fresh payment claim as ‘there could be no estoppel or abuse of process, on the principles discussed in cases such as Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 and Watpac Constructions v Austin Corp [2010] NSWSC 168’: at [37]. Section 26(2) Where claimant withdraws adjudication application and makes new adjudication application [3.299] Where a claimant under s 26(2) withdraws an adjudication application and makes a new adjudication application the entitlement of the claimant to include such submissions relevant to the application as it chooses to include under s 17(3)(h) does not limit the claimant to the submissions contained in the previous application: John Holland Pty Ltd v Made Contracting Pty Ltd [2008] NSWSC 374 at [64]. Section 26 Where adjudicator determines he did not have jurisdiction [3.300] Where an adjudicator determined that he did not have jurisdiction to determine the adjudication application, the claimant may under s 26(2) make a new adjudication application under s 17. However ‘the court would not permit it to do so unless the court was satisfied that an adjudicator had jurisdiction to determine the claim’: Olympia Group (NSW) Pty Ltd v Hansen Yuncken Pty Ltd [2011] NSWSC 165 at [21]. NSW ACT ONLY: DIVISION 2A CLAIMANT’S RIGHTS AGAINST PRINCIPAL CONTRACTOR

26A Principal contractor can be required to retain money owed to respondent (1) A claimant who has made an adjudication application for a payment claim can require a principal contractor for the claim to retain sufficient money to cover the claim out of money that is or becomes payable by the principal contractor to the respondent. [page 227] (2) Such a requirement is made by serving on the principal contractor a request (a payment withholding request) in the form approved by the Director-General of the Department of Services, Technology and Administration. (3) A payment withholding request must include a statement in writing by the claimant in the form of a statutory declaration declaring that the claimant genuinely believes that the amount of money claimed is owed by the respondent to the claimant. (4) A principal contractor for a claim is a person by whom money is or becomes payable to the respondent for work carried out or materials supplied by the respondent to the person as part of or incidental to the work or materials that the respondent engaged the claimant to carry out or supply. (5) A person who is served with a payment withholding request must, within 10 business days after receiving the request, notify the claimant concerned if the person is not (or is no longer) a principal contractor for the claim. Maximum penalty: 5 penalty units. Note: A person may no longer be a principal contractor as a result of money owed to the respondent having been paid by the person before the payment withholding request was served.

26B Obligation of principal contractor to retain money owed to respondent (1) A principal contractor who has been served with a payment withholding request must retain, out of money owed to the respondent, the amount of money to which the payment claim relates (or the amount owed by the principal contractor to the respondent if that amount is less than the amount to which the payment claim relates). (2) The amount is only required to be retained out of money that is or

becomes payable by the principal contractor to the respondent for work carried out or materials supplied by the respondent to the principal contractor as part of or incidental to the work or materials that the respondent engaged the claimant to carry out or supply. (3) The obligation to retain money under this section remains in force only until whichever of the following happens first: (a) the adjudication application for the payment claim is withdrawn, (b) the respondent pays to the claimant the amount claimed to be due under the payment claim, (c) the claimant serves a notice of claim on the principal contractor for the purposes of section 6 of the Contractors Debts Act 1997 in respect of the payment claim, (d) a period of 20 business days elapses after a copy of the adjudicator’s determination of the adjudication application is served on the principal contractor. (4) A part payment of the amount claimed to be due under the payment claim removes the obligation under this section to retain money to the extent of the payment. [page 228] (5) When the claimant’s adjudication application is determined, the claimant must serve a copy of the adjudicator’s determination on the principal contractor within 5 business days after the adjudicator’s determination is served on the claimant. Maximum penalty: 5 penalty units. 26C Contravention of requirement by principal contractor (1) If a principal contractor discharges the principal contractor’s obligation to pay money owed under a contract to the respondent in contravention of a requirement under this Division to retain the money, the principal contractor becomes jointly and severally liable with the respondent in respect of the debt owed by the respondent to the claimant (but only to the extent of the amount of money to which the contravention relates). (2) The principal contractor can recover as a debt from the respondent any amount that the claimant recovers from the principal contractor pursuant to a right of action conferred by this section.

26D Protections for principal contractor (1) An obligation under this Division to retain money owed by a principal contractor to the respondent operates (while the obligation continues) as a defence against recovery of the money by the respondent from the principal contractor. (2) Any period for which a principal contractor retains money pursuant to an obligation under this Division is not to be taken into account for the purposes of reckoning any period for which money owed by the principal contractor to the respondent has been unpaid. (3) A claimant who has served a payment withholding request on a principal contractor in connection with an adjudication application must, if the adjudication application is withdrawn, give the principal contractor written notice of the withdrawal of the application within 5 business days after it is withdrawn. Maximum penalty: 10 penalty units. (4) The principal contractor is entitled to rely in good faith on a statement in writing by the respondent in the form of a statutory declaration that: (a) a specified amount claimed to be due under an adjudication application has been paid, or (b) an adjudication application has been withdrawn. 26E Respondent to provide information about principal contractor (1) An adjudicator may, in connection with an adjudication application and at the request of the claimant, direct the respondent to provide information to the claimant as to the identity and contact details of any person who is a principal contractor in relation to the claim. [page 229] (2) A respondent must comply with a direction of an adjudicator under this section. Maximum penalty: 10 penalty units. (3) A respondent must not, in purported compliance with a direction of an adjudicator under this section, provide information that the respondent knows is false or misleading in a material particular. Maximum penalty: 10 penalty units.

26F Other rights of claimant not affected This Division (including any action taken by a claimant under this Division) does not limit or otherwise affect the taking of any other action by a claimant to enforce a payment claim or adjudication determination. [3.301] See Appendix ‘Useful Links’ for link to the Payment Witholding Request form approved by the Director General, Department of Services, Technology and Administration (or successor) for the purposes of s 26A(2). Sections 26A and 26C When does a principal contractor contravene the requirements? [3.302] In Hanave Pty Ltd v Nahas Construction (NSW) Pty Ltd [2012] NSWSC 888 a subcontractor commenced an adjudication against the contractor and then served a payment withholding request under s 26A on the ‘principal contractor’, that is, the principal with whom the contractor had its contract. The principal was served with an adjudication application by the contractor and the contractor succeeded in the adjudication application. The principal issued a challenge to the adjudication application and paid the amount outstanding under the adjudication determination in to court. Subsequently, the principal’s challenge to the adjudication determination failed and the court ordered that the moneys paid into the court were to be forthwith paid out to the contractor. The subcontractor then alleged that the principal became jointly and severally liable with the contractor in respect of the debt owed by the contractor to the subcontractor because the principal had ‘discharged its obligation to [the contractor] in contravention of a requirement under Div 2A of the Act to retain the money’: at [15]. The contravention was said to occur when the money in court was paid to the contractor pursuant to the court’s order after it had discharged the principal’s challenge to the adjudication determination. Hammerschlag J dismissed the subcontractor’s claim because the principal was powerless to stop the moneys from being paid over to the contractor as that happened under compulsion of an order of the court: ‘It did not occur as a result of anything done voluntarily (or perhaps at all) by [the principal] after receipt of the notice’ from the subcontractor under s 26A: at [21]. See also [22]. Section 26A Service of a payment withholding request does not create a charge [3.303] A payment withholding request under s 26A does not create a charge as the two essential elements of a charge (a right in the claimaint to have resort to

the money withheld, and an obligation on the principal contractor to pay the money held to the claimant) are not created by s 26A: see NSW Land and Housing Corporation v DJ’s [page 230] Home and Property Maintenance Pty Ltd (in liq) [2013] NSWSC 1167 at [60]– [68]. In contrast, the service of notice of claim under the Contractor’s Debts Act 1997 (NSW) does create a charge: at [65]. VICTORIAN ACT: NEW ADJUDICATION APPLICATION (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 28 Claimant may make new application if previous application refused or not determined (1) This section applies if — (a) a claimant fails to receive an adjudicator’s notice of acceptance of an adjudication application within 4 business days after the application is made; or (b) an adjudicator who accepts an adjudication application fails to determine the application within the time allowed by section 22(4). (2) In either of those circumstances, the claimant — (a) may withdraw the application, by notice in writing served on the adjudicator or the authorised nominating authority to whom the application was made; and (b) may make a new adjudication application under section 18. (3) Despite section 18(3)(b), a new adjudication application may be made at any time within 5 business days after the claimant becomes entitled to withdraw the previous adjudication application under subsection (2). (4) This Division applies to a new application referred to in this section in the same way as it applies to an application under section 18. [3.304] See the New South Wales cases referred to at [3.297] as the section is materially the same in Victoria.

VICTORIAN ACT: NEW ADJUDICATION APPLICATION (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 28 Claimant may make new application if previous application refused or not determined (1) This section applies if — (a) a claimant fails to receive an adjudicator’s notice of acceptance of an adjudication application within 4 business days after the application is made; or (b) an adjudicator who accepts an adjudication application fails to determine the application within the time allowed by section 22(4). (2) In either of those circumstances, the claimant — (a) may withdraw the application, by notice in writing served on the adjudicator or the authorised nominating authority to whom the application was made; and [page 231] (b) may make a new adjudication application under section 18. (3) Despite sections 18(3)(c), 18(3)(d) and 18(3)(e), a new adjudication application may be made at any time within 5 business days after the claimant becomes entitled to withdraw the previous adjudication application under subsection (2). (4) This Division applies to a new application referred to in this section in the same way as it applies to an application under section 18. [3.305] See the New South Wales cases at [3.297] as the section is materially the same in Victoria. NSW ACT: RIGHT TO SUSPEND WORK Division 3 — Claimant’s right to suspend construction work 27 Claimant may suspend work

(1) A claimant may suspend the carrying out of construction work (or the supply of related goods and services) under a construction contract if at least 2 business days have passed since the claimant has caused notice of intention to do so to be given to the respondent under section 15, 16 or 24. (2) The right conferred by subsection (1) exists until the end of the period of 3 business days immediately following the date on which the claimant receives payment for the amount that is payable by the respondent under section 15(1), 16(1) or 23(2). (2A) If the claimant, in exercising the right to suspend the carrying out of construction work or the supply of related goods and services, incurs any loss or expenses as a result of the removal by the respondent from the contract of any part of the work or supply, the respondent is liable to pay the claimant the amount of any such loss or expenses. (3) A claimant who suspends construction work (or the supply of related goods and services) in accordance with the right conferred by subsection (1) is not liable for any loss or damage suffered by the respondent, or by any person claiming through the respondent, as a consequence of the claimant not carrying out that work (or not supplying those goods and services) during the period of suspension. Section 27(2) ‘receives payments’ and s 27(3) ‘period of the suspension’ [3.306] In Beckhaus Civil Pty Ltd v Brewarrina Shire Council (No 2) [2004] NSWSC 1160 the claimant suspended work as it was entitled to do under s 27(1) and under s 27(3) the claimant was not liable to the respondent for liquidated damages for the period of the suspension. The further question was when did the benefit of s 27(3) come to an end? On 18 November 2002 the amount of the progress claim was paid to the claimant but on condition of the provision of a bank guarantee by the claimant to the respondent, which could be drawn upon by the respondent, if the ultimate result of the appeal process was that the decision to give judgment on the unanswered payment claim was set aside. [page 232] Macready M in Beckhaus held that the claimant did not ‘receive payment’ on 18 November as referred to in s 27(2) (and therefore under s 15(1)(b) the

respondent had still failed ‘to pay’) as the claimant was unable to receive the benefit of the payment because of the conditions of the provision of a bank guarantee and the security it needed to provide to procure the bank guarantee. Accordingly, the entitlement to suspend the works (and the benefit of s 27(3)) continued until the time of the hearing of the appeal: at [8], [83], [84]. The decision of Macready M in Beckhaus on this point was affirmed on appeal (Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2005] NSWCA 248 at [216]–[219]) except the Court of Appeal held that the suspension continued until termination of the contract in the circumstances of the case: at [219]. Section 27(2A) Inclusion of component for lost income does not invalidate determination [3.307] After referring to s 27(2A) and Co-ordinated Construction Co Pty Ltd v JM Hargraves (NSW) Pty Ltd [2005] NSWCA 228, Brereton J in Parkview Constructions Pty Ltd v Sydney Civil Excavations Pty Ltd [2009] NSWSC 61 held that ‘[t]he principle for which the cases stand is not that an award can never under any guise include an amount which is in substance in the nature of damages, but that damages for breach of contract are usually not within the concept of a progress payment for construction work’: at [16]. Although in Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd [2004] NSWSC 116 Barrett J held that under the Act the ‘relevant concepts do not extend to damages for breach of contract’ (at [34]), Brereton J in Parkview Constructions held that ‘[n]one of those observations was directed to the inclusion in a payment claim, pursuant to s 13(3)(a), of the amount of an asserted liability under s 27(2A)’: at [17]. ‘Accordingly, inclusion in the award of a component in respect of lost income under s 27(2A) does not invalidate the adjudicator’s determination’: at [19]. After referring to the decision of Hargraves, Pacific General Securities v Soliman & Sons Pty Ltd [2006] NSWSC 13 and Shell Refining (Australia) Pty Ltd v AJ Mayr Engineering Pty Ltd [2006] NSWSC 94, Brereton J in Parkview Constructions held: ‘A claim under s 27(2A) does not require validation of the work done to permit quantification but it does require assessment of the amount of the relevant loss and determination that it was incurred in the circumstances to which s 27(2A) refers’: at [36]. A claim for loss of profit on the work removed under s 27(2A) was allowed to proceed by McDougall J in Urban Traders Pty Ltd v Paul Michael Pty Ltd [2009] NSWSC 1072 at [76]–[80].

VICTORIAN ACT: RIGHT TO SUSPEND WORK (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 29 Claimant may suspend work (1) A claimant may suspend the carrying out of construction work or the supply of related goods and services under a construction contract if at least 2 business days have passed since the claimant has caused a notice of intention to do so to be given to the respondent under section 16, 17 or 27. [page 233] (2) The right conferred by subsection (1) exists for so long as the respondent fails to comply with the requirements referred to in section 16(1), 17(1) or 27(1), as the case may be. (3) The suspension in accordance with this section by a claimant of the carrying out of construction work or the supply of goods and services under a construction contract does not constitute a breach by the claimant of that contract. [3.308] Although dealing with the same subject matter, s 27 of the NSW Act is far more expansive than the Victorian s 29 and provides more protection to a claimant who suspends work. The New South Wales case of Beckhaus Civil Pty Ltd v Brewarrina Shire Council (No 2) [2004] NSWSC 1160 referred to at [3.306] turns on the words ‘receives payment’ in s 27(2), which words are not in s 29(2) of the Victorian Act so might not be followed in Victoria. VICTORIAN ACT: RIGHT TO SUSPEND WORK (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 29 Claimant may suspend work (1) A claimant may suspend the carrying out of construction work or the supply of related goods and services under a construction contract if at least 3 business days have passed since the claimant has caused a notice

(2)

(3)

(4)

(5)

of intention to do so to be given to the respondent under section 16, 17 or 28O. The right conferred by subsection (1) exists until — (a) if the construction contract provides for a period of at least 1 business day for a return to work after the claimant receives payment from the respondent of an amount referred to in section 16(1), 17(1), 28M or 28N, the end of that period; or (b) in any other case, the end of the period of 3 business days immediately following the date on which the claimant receives payment from the respondent of an amount referred to in section 16(1), 17(1), 28M or 28N. The suspension in accordance with this section by a claimant of the carrying out of construction work or the supply of goods and services under a construction contract does not constitute a breach by the claimant of that contract. If the claimant, in exercising the right to suspend the carrying out of construction work or the supply of related goods and services, incurs any loss or expenses as a result of the removal by the respondent from the contract of any part of the work or supply, the respondent is liable to pay the claimant the amount of any such loss or expenses. A claimant who suspends construction work or the supply of related goods and services in accordance with the right conferred by subsection (1) is [page 234] not liable for any loss or damage suffered by the respondent, or by any person claiming through the respondent, as a consequence of the claimant not carrying out the work or not supplying those goods and services during the period of suspension.

[3.309] The Victorian Act is now in terms similar to the NSW Act and so the cases referred to at [3.306] and [3.307] should be persuasive authority in Victoria. Validity of payment claim is relevant to the exercise of power to suspend [3.310] In Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd [2009] VSC

156 at [47] Vickery J observed that ‘the decision to exercise the right to suspend is critically dependent on the validity of the payment claim’. NSW ACT: AUTHORISED NOMINATING AUTHORITIES Division 4 — General 28 Nominating authorities (1) Subject to the regulations, the Minister: (a) may, on application made by any person, authorise the applicant to nominate adjudicators for the purposes of this Act, and (b) may withdraw any authority so given. (1A) The Minister may: (a) limit the number of persons who may, for the time being, be authorised under this section, and (b) refuse an application under subsection (1) if authorising the applicant would result in any such number being exceeded. (2) A person: (a) whose application for authority to nominate adjudicators for the purposes of this Act is refused (otherwise than on the ground referred to in subsection (1A)(b)), or (b) whose authority to nominate adjudicators is withdrawn, may apply to the Administrative Decisions Tribunal for a review of the Minister’s decision to take that action. (3) An authorised nominating authority may charge a fee for any service provided by the authority in connection with an adjudication application made to the authority. The amount that may be charged for any such service must not exceed the amount (if any) determined by the Minister. (4) The claimant and respondent are: (a) jointly and severally liable to pay any such fee, and (b) each liable to contribute to the payment of any such fee in equal proportions or in such proportions as the adjudicator to whom the adjudication application is referred may determine. (5) An authorised nominating authority must provide the Minister with such information as may be requested by the Minister in relation to the activities

[page 235] of the authority under this Act (including information as to the fees charged by the authority under this Act). VICTORIAN ACT: AUTHORISED NOMINATING AUTHORITIES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 42 Authorised nominating authorities (1) The Building Commission — (a) may, on application made by any person, authorise the applicant to nominate adjudicators for the purposes of this Act; and (b) may withdraw any authority so given. (2) Before giving an authority under this section, the Building Commission must have regard to any guidelines issued by the Minister under section 44. Note: An applicant can appeal to the Building Appeals Board under section 144A of the Building Act 1993 against a decision to the Building Commission to refuse an application or withdraw an authority under section 42.

43 The Building Commission may impose conditions The Building Commission may, in accordance with the guidelines issued by the Minister under section 44 — (a) impose conditions on an authority given under section 42; and (b) at any time, vary or revoke any conditions previously imposed on that authority. Note: An applicant can appeal to the Building Appeals Board under section 144A of the Building Act 1993 against the imposition or variation of a condition under section 43.

44 Ministerial guidelines (1) The Minister may from time to time issue guidelines relating to the giving, variation or withdrawal of authorities under this Division. (2) The guidelines may provide for — (a) the procedures for making applications; (b) the information to be provided with applications; (c) the qualifications and experience that are relevant to the carrying out of the functions of an authorised nominating authority;

(d)

the financial resources necessary for carrying out the functions of an authorised nominating authority; (e) any other matters relating to the capacity of applicants to carry out the functions of an authorised nominating authority; (f) the conditions that may be imposed on an authority, including conditions relating to the processes to be followed by an authorised nominating authority in nominating adjudicators for the purposes of this Act. (3) Any guidelines issued by the Minister under subsection (1) must be published in the Government Gazette.

[page 236] VICTORIAN ACT: AUTHORISED NOMINATING AUTHORITIES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 42 Authorised nominating authorities (1) The Authority — (a) may, on application made by any person, authorise the applicant to nominate adjudicators for the purposes of this Act; and (b) may withdraw any authority so given. (2) Before giving an authority under this section, the Authority must have regard to any guidelines issued by the Minister under section 44. Note: An applicant can appeal to the Building Appeals Board under section 144A of the Building Act 1993 against a decision of the Authority to refuse an application or withdraw an authority under section 42.

43 The Authority may impose conditions The Authority may, in accordance with the guidelines issued by the Minister under section 44 — (a) impose conditions on an authority given under section 42; and (b) at any time, vary or revoke any conditions previously imposed on that authority. Note: An applicant can appeal to the Building Appeals Board under section 144A of the Building Act 1993 against the imposition or variation of a condition under section 43.

43A Functions of an authorised nominating authority The functions of an authorised nominating authority are — (a) to nominate adjudicators for the purposes of this Act; and (b) to receive and refer adjudication applications to adjudicators; and (c) to receive adjudication review applications and submissions in response to those applications and to appoint review adjudicators; and (d) to serve copies of adjudication determinations, adjudication review applications and review determinations on certain persons; and (e) to provide information to review adjudicators; and (f) to provide adjudication certificates; and (g) to provide information to the Authority in accordance with this Division; and (h) to generally carry out any other function or duty given to an authority, or imposed on an authority, by this Act. 43B Authorised nominating authority to provide information (1) An authorised nominating authority must provide the Authority with such non-identifying information as may be reasonably requested by the Authority in relation to the activities of the authority under this Act. (2) Information requested under subsection (1) may include information regarding — (a) the nomination of adjudicators and appointment of review adjudicators; and [page 237] (b) the assessment of the eligibility of persons to be adjudicators; and (c) the fees charged by the authorised nominating authority; and (d) the fees charged by adjudicators. (3) In this section non-identifying information means information — (a) that does not identify any person or disclose their address or location; or (b) from which any person’s identity, address or location cannot reasonably be determined.

43C Authorised nominating authority fees (1) An authorised nominating authority may charge a fee for any service provided by the authority in connection with an adjudication application or an adjudication review application made to the authority. (2) In deciding on a fee under subsection (1), an authorised nominating authority must have regard to the guidelines regarding such fees issued by the Minister under section 44. 44 Ministerial guidelines (1) The Minister may from time to time issue guidelines relating to — (a) the giving, variation or withdrawal of authorities under this Division; and (b) appropriate fees that may be charged by an authorised nominating authority, an adjudicator or a review adjudicator. (2) The guidelines may provide for — (a) the procedures for making applications; (b) the information to be provided with applications; (c) the qualifications and experience that are relevant to the carrying out of the functions of an authorised nominating authority; (d) the financial resources necessary for carrying out the functions of an authorised nominating authority; (e) any other matters relating to the capacity of applicants to carry out the functions of an authorised nominating authority; (f) the conditions that may be imposed on an authority, including conditions relating to the processes to be followed by an authorised nominating authority in nominating adjudicators for the purposes of this Act. (3) Any guidelines issued by the Minister under subsection (1) must be published in the Government Gazette. NSW ACT: ADJUDICATOR’S FEES 29 Adjudicator’s fees (1) An adjudicator is entitled to be paid for adjudicating an adjudication application:

[page 238] (a)

(2) (3)

(4)

(5)

such amount, by way of fees and expenses, as is agreed between the adjudicator and the parties to the adjudication, or (b) if no such amount is agreed, such amount, by way of fees and expenses, as is reasonable having regard to the work done and expenses incurred by the adjudicator. The claimant and respondent are jointly and severally liable to pay the adjudicator’s fees and expenses. The claimant and respondent are each liable to contribute to the payment of the adjudicator’s fees and expenses in equal proportions or in such proportions as the adjudicator may determine. An adjudicator is not entitled to be paid any fees or expenses in connection with the adjudication of an adjudication application if he or she fails to make a decision on the application (otherwise than because the application is withdrawn or the dispute between the claimant and respondent is resolved) within the time allowed by section 21(3). Subsection (4) does not apply: (a) in circumstances in which an adjudicator refuses to communicate his or her decision on an adjudication application until his or her fees and expenses are paid, or (b) in such other circumstances as may be prescribed by the regulations for the purposes of this section.

Section 29(3) ‘in such proportions as the adjudicator may determine …’ [3.311] Brambles Australia Ltd v Davenport [2004] NSWSC 120 considered s 29(3) and ‘in such proportions as the adjudicator may determine’ and held that if the parties want to put submissions to the adjudicator on the payment of the adjudicator’s fees and expenses they need to be included in the payment claim, payment schedule, adjudication application or adjudication response. Einstein J held that, in the absence of any submissions: … the adjudicator may proceed to exercise … his/her discretion to determine the issue … [and] may take into account such matters as to the adjudicator appear relevant to the exercise. Whilst the discretion is not entirely at large, almost every matter which relates to the circumstances in which, and manner in which, the adjudication application has come forward and then been dealt with by the parties, may be taken into account: at [58].

Section 29(4) ‘an adjudicator is not entitled to be paid …’

[3.312] If an adjudicator hands down his or her determination late, it is a valid determination but the adjudicator is not entitled to be paid: Allpro Building Services Pty Ltd v Micros Architectural Division Pty Ltd [2010] NSWSC 453 at [6], affirming MPM Constructions Pty Ltd v Trepcha Constructions Pty Ltd [2004] NSWSC 103. [page 239] VICTORIAN ACT: ADJUDICATOR’S FEES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 45 Adjudicator’s fees (1) An adjudicator is entitled to be paid for adjudicating an adjudication application — (a) the amount, by way of fees and expenses, that is agreed between the adjudicator and the parties to the adjudication; or (b) if no amount is agreed, the amount, by way of fees and expenses, that is reasonable having regard to the work done and expenses incurred by the adjudicator. (2) The claimant and respondent are jointly and severally liable to pay the adjudicator’s fees and expenses. (3) As between themselves, the claimant and respondent are each liable to contribute to the adjudicator’s fees and expenses in equal proportions or, if the adjudicator determines that the adjudication application or the adjudication response was wholly unfounded, in such proportions as the adjudicator may determine. (4) An adjudicator is not entitled to be paid any fees or expenses in connection with the adjudication of an application if he or she fails to make a decision on the application (otherwise than because the application is withdrawn or the dispute between the claimant and respondent is resolved) within the time allowed by section 22(4). (5) Subsection (4) does not apply — (a) in circumstances in which an adjudicator refuses to communicate his or her decision on an adjudication application until his or her fees and expenses are paid; or (b) in such other circumstances as may be prescribed for the purposes

of this section. (6) If a respondent refuses to pay his or her required contribution to the amount of the fees and expenses that are payable to the adjudicator, the claimant may elect to pay both the respondent’s contribution and the claimant’s contribution to the adjudicator. (7) If a claimant elects under subsection (6) to pay the respondent’s contribution to the adjudicator, the adjudicator must determine that that amount is to be added to the adjudicated amount determined under section 23 and the total of those amounts is then to be taken to be the adjudicated amount for the purposes of this Act. Section 45(3) ‘in such proportions as the adjudicator may determine …’ [3.313] See the New South Wales case referred to at [3.311] above which may be persuasive authority in Victoria but note that in Victoria under s 45(3) it is only where the adjudication application or response was ‘wholly unfounded’ that the adjudicator can determine unequal proportions. [page 240] VICTORIAN ACT: ADJUDICATOR’S FEES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 45 Adjudicator’s and review adjudicator’s fees (1) In this section — adjudicator includes a review adjudicator; adjudication application includes an adjudication review application. (2) An adjudicator is entitled to be paid for determining an adjudication application — (a) the amount, by way of fees and expenses, that is agreed between the adjudicator and the parties to the adjudication; or (b) if no amount is agreed, the amount, by way of fees and expenses, that is reasonable having regard to the work done and expenses incurred by the adjudicator. (3) The claimant and respondent are jointly and severally liable to pay the

(4)

(5)

(6)

(7)

(8)

adjudicator’s fees and expenses. As between themselves, the claimant and respondent are each liable to contribute to the adjudicator’s fees and expenses in equal proportions or in such proportions as the adjudicator may determine. An adjudicator is not entitled to be paid any fees or expenses in connection with the determination of an application if he or she fails to make a decision on the application (otherwise than because the application is withdrawn or the dispute between the claimant and respondent is resolved) within the time allowed by section 22(4) or 28I(10) (as the case requires). Subsection (5) does not apply — (a) in circumstances in which an adjudicator refuses to communicate his or her decision on an adjudication application until his or her fees and expenses are paid; or (b) in such other circumstances as may be prescribed for the purposes of this section. If a party refuses to pay his or her required contribution to the amount of the fees and expenses that are payable to the adjudicator, the other party may elect to pay both parties’ contribution to the adjudicator. If a party elects under subsection (7) to pay the other party’s contribution to the adjudicator, the adjudicator, as the case requires — (a) must determine that that amount is to be added to the adjudicated amount determined under section 23 and the total of those amounts is then to be taken to be the adjudicated amount for the purposes of this Act; or (b) must determine that that amount is to be added to the amount payable (if any) by the other party under the review determination and the total of those amounts is then to be taken to be the amount payable by the other party under the review determination for the purposes of this Act.

[page 241] [3.314] The Victorian Act in s 45(1)–(6) is materially the same as s 29(1)–(5) in New South Wales, so the case referred to in [3.311] should be persuasive authority in Victoria. Section 45(7) and (8) in the Victorian Act are not in the NSW Act.

NSW ACT: LIABILITY OF ADJUDICATORS AND AUTHORISED NOMINATING AUTHORITIES 30 Protection from liability for adjudicators and authorised nominating authorities (1) An adjudicator is not personally liable for anything done or omitted to be done in good faith: (a) in exercising the adjudicator’s functions under this Act, or (b) in the reasonable belief that the thing was done or omitted to be done in the exercise of the adjudicator’s functions under this Act. (2) No action lies against an authorised nominating authority or any other person with respect to anything done or omitted to be done by the authorised nominating authority in good faith: (a) in exercising the nominating authority’s functions under this Act, or (b) in the reasonable belief that the thing was done or omitted to be done in the exercise of the nominating authority’s functions under this Act. [3.315] Section 30(1) of the amended NSW Act does not exclude judicial review of an adjudicator’s determination: see Abacus Funds Management Ltd v Davenport [2003] NSWSC 935. VICTORIAN ACT: LIABILITY OF ADJUDICATOR (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 46 Liability of adjudicator An adjudicator is not personally liable for anything done or omitted to be done in good faith — (a) in the exercise of a power or the discharge of a duty under this Act or the regulations; or (b) in the reasonable belief that the act or omission was in the exercise of a power or the discharge of a duty under this Act or regulations. VICTORIAN ACT: LIABILITY OF ADJUDICATOR (AS APPLYING TO

CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 46 Liability of adjudicator An adjudicator (including a review adjudicator) is not personally liable for anything done or omitted to be done in good faith — [page 242] (a) (b)

in the exercise of a power or the discharge of a duty under this Act or the regulations; or in the reasonable belief that the act or omission was in the exercise of a power or the discharge of a duty under this Act or the regulations.

[3.316] The Victorian Act in s 46 is similar to s 30(1) in the NSW Act. NSW ACT: NOTICES AND SERVICE 31 Service of notices (1) Any notice that by or under this Act is authorised or required to be served on a person may be served on the person: (a) by delivering it to the person personally, or (b) by lodging it during normal office hours at the person’s ordinary place of business, or (c) by sending it by post or facsimile addressed to the person’s ordinary place of business, or (d) in such other manner as may be prescribed by the regulations for the purposes of this section, or (e) in such other manner as may be provided under the construction contract concerned. (2) Service of a notice that is sent to a person’s ordinary place of business, as referred to in subsection (1)(c), is taken to have been effected when the notice is received at that place. (3) The provisions of this section are in addition to, and do not limit or

exclude, the provisions of any other law with respect to the service of notices. Service on solicitors [3.317] Einstein J in Emag Constructions Pty Ltd v Highrise Concrete Contractors (Aust) Pty Ltd [2003] NSWSC 903 decided under the NSW Act that: Save for (1) such provision for the purposes of the section as the regulations may prescribe or (2) particular provisions under the relevant construction contract or (3) the application of any other legislation with respect to the service of notices, it appears clear that in essence, service must be personal (s 31(1)(a)) or by being lodged during normal office hours at or sent by post or facsimile addressed to the ordinary place of business of the person to be served. There is no dispensation for service upon a solicitor: cf Pt 9 r 7, Supreme Court Rules: at [33]. Service being effected in accordance with the Act is critical as it governs the commencement of the time limitations following such service. The consequence of non-compliance with the time limitation periods is harsh. As was submitted to the court by counsel for the plaintiff, the Act exhibits “zero tolerance” for delay: at [38]. In my view the character of the subject legislation is such that general principles of actual or ostensible authority in solicitors to receive service of copies of relevant notices must yield to the strictures of the strict requirement to prove service: at [59].

[page 243] Service by solicitors [3.318] Einstein J held in Taylor Projects Group Pty Ltd v Brick Dept Pty Ltd [2005] NSWSC 571 that a letter from the respondent’s solicitor could not amount to a payment schedule as it was not provided by the respondent (at [37]), and ‘provision of a payment schedule by a respondent’s agent does not comply with the “strictures” of s 20(2A) which requires provision by the respondent’: at [39]. However, in Holmwood Holdings Pty Ltd v Halkat Electrical Contractors Pty Ltd [2005] NSWSC 1129 Brereton J held that the adjudicator ‘legitimately’ rejected a defence to a payment claim that it had been served by the claimant’s solicitor rather than the claimant personally (the payment claim was presumably still the claimant’s document, only service was effected by its solicitor). Also in Tolfab Engineering Pty Ltd v Tie Fabrications Pty Ltd [2005] NSWSC 326 no objection appears to have been raised where the payment schedule was written by the respondent’s solicitor.

In Baulderstone Hornibrook Pty Ltd v Queensland Investment Corporation [2006] NSWSC 522 the payment claim and the payment schedule was signed ‘for Queensland Investment Corporation’ (the respondent) but signed by a solicitor for the respondent. Einstein J held that the requirements of s 14(1) were satisfied as: (i)

There are no requirements in s 14 of the Act that in order for a document to be a “payment schedule” it must be signed in a particular manner or by a particular person.

(ii) Indeed, there are no requirements that the payment schedule be signed at all. (iii) The only relevant requirement is that the payment schedule be provided by the respondent (being the person on whom the payment claim has been served) to the claimant (s 14(1)). (iv) The question as to whether the payment schedule has been provided to the claimant by the respondent is a question of fact: at [36].

It was not necessary therefore for the respondent to adduce any evidence as to the authority of its solicitors to sign the payment schedule but it nevertheless did so by producing the letter of retainer from its solicitors which was in terms that: The work we are to do is draft documentation for the delivery of design and construction services for extensions to Westpoint (including, if appropriate, tender documents), finalise documents with the selected contractor and deal with other matters as they arise in relation to the Westpoint Extensions Project.

Einstein J held that the bringing into existence of the payment schedule fell within the words ‘deal with other matters as they arise in relation to the Westpoint Extensions Project’ or fell within the implied authority to do all things incidental to the object of the retainer (at [46]) and therefore the solicitors were authorised by the respondent to prepare the payment schedule: at [47]. On appeal in Baulderstone Hornibrook Pty Ltd v Queensland Investment Corporation [2007] NSWCA 9 the decision of Einstein J was affirmed and the appeal by the claimant dismissed: It would be erroneous to find in the present case that the document headed “Payment Schedule” was not provided by the respondent to the appellant because its preparation and service upon the appellant by [the respondent’s solicitors] on Mr Douglas’ instructions constituted an unauthorised

[page 244] frolic on their part. Such a proposition makes no commercial sense given the history of the payment claims/payment schedules between the parties for a period in excess of a year: at [68] per Tobias JA.

Baston JA in Baulderstone distinguished the judgment of Einstein J in Taylor Projects Group Pty Ltd v Brick Dept Pty Ltd [2005] NSWSC 439 at [37]–[39] which was to the effect that the document relied upon as a ‘payment schedule’ in

that case having been provided not by the respondent, but by its solicitor, did not comply with s 14(1): at [150], [153]. Section 31(1) ‘notice … by or under this Act …’ [3.319] A payment claim is a ‘notice’ within the meaning of s 31 (Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259 at [58]) and so too is a payment schedule: Firedam Civil Engineering Pty Ltd v KJP Construction Pty Ltd [2007] NSWSC 1162 at [51]. In the context of s 31, ‘provide’ as applying to a payment schedule means ‘serve’: Firedam at [51]. Section 31(1) ‘… served on a person’ [3.320] The word ‘served’ in s 31 does not mean anything different from ‘provide’ so that s 31 applies to ‘provision’ as well as ‘service’. Mail delivered to a registered office or place of business is ‘received’ when put in the mail box ‘without the necessity of anyone actually seeing it’: Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259 at [61], [63]. Section 31(1)(b) and (c) ‘… ordinary place of business’ [3.321] Even though the respondent was not carrying on any business, the fact that it responded with a payment schedule which had on the letterhead of the respondent an address was sufficient to make that address the ordinary place of business: Olympia Group Pty Ltd v Tyrenian Group Pty Ltd [2010] NSWSC 319 at [29]. In Firedam Civil Engineering Pty Ltd v KJP Construction Pty Ltd [2007] NSWSC 1162, Austin J considered in the context of a company what was its ordinary place of business as referred to in s 31(1)(c): see [57]–[58] of the judgment. The defendant had business operations Australia wide and in its Melbourne office the defendant’s business management support services, the office of the CEO and the CFO and safety and environment management services were located — the Melbourne office was held to be its ‘ordinary place of business’. Hammerschlag J held that ‘“ordinary” in the phrase “ordinary place of business” connotes “usual” and that “the ordinary place of a person’s business” includes any place at or from which the person usually engages in activities which form a not insignificant part of the person’s business’: Parsons Brinckerhoff Australia Pty Ltd v Downer EDI Works Pty Ltd [2010] NSWSC 1295 at [16]. Hammerschlag J was also prepared to find that the Defendant’s Broadmeadows office (a site office for the purposes of undertaking of a certain project, not related to the project the subject of the litigation) was also the defendant’s

‘ordinary place of business’ as there can be more than one ordinary place of business and there is no requirement that there be a direct connection between the transaction, the subject of the payment claim and the place which is the defendant’s ordinary place of business: see [21]. [page 245] The Court of Appeal (Downer EDI Works Pty Ltd v Parsons Brinckerhoff Australia Pty Ltd [2011] NSWCA 78) affirmed the decision at first instance and held that: 1. There is no warrant to confine ‘ordinary place of business’ to the place of business with the closest connection to the relevant works: at [30]. 2. However, ‘it may be that s 31(1)(c) is to be read down by a requirement that the place of business have at least some relationship with the construction contract. For example, if the business operations of the intended recipient of the notice include construction work and retail sales of clothes, and the operations for each are conducted at different places, it may well be that its ordinary place of business for the purposes of the Act is one at or from which it conducts the former business operations’: at [34]. Even though the director of the company may have been unaware of the principal place of business of the company as recorded with the Australian Securities and Investments Commission, service at that address was good service of a payment claim under the Act: DJ’s Home and Property Maintenance Pty Ltd v Dujkovic [2012] NSWSC 870. A company’s registered office is not the same as its ‘ordinary place of business’: Hill (as Trustee for the Ashmore Superannuation Benefit Fund) v Halo Architectural Design Services Pty Ltd [2013] NSWSC 865; see [3.327] below. Section 31(1)(b) and (c) ‘during normal office hours’ [3.322] The fact that s 31(1)(b) requires service under that mode to be effected during normal office hours means that service under other modes in s 31(1) does not have that limitation: Taylor Projects Group Pty Ltd v Brick Dept Pty Ltd [2005] NSWSC 571 at [20]–[21]. McDougall J in Zebicon Pty Ltd v Remo Constructions Pty Ltd [2008] NSWSC 1408 agreed with the decision in Taylor Projects and held that service by facsimile is not required during ordinary business hours: at [31].

Section 31(1)(e) ‘as may be provided under the construction contract’ [3.323] In Pacific General Securities Pty Ltd v Soliman & Sons Pty Ltd [2005] NSWSC 378 a contract provided: 21 Notices 21.1 Any notice required to be given under this Agreement is deemed to have been given should any of the following events have occurred: 21.1.1 If the notice is posted by ordinary pre-paid mail; 21.1.2 If the notice is sent by facsimile transmission to the party’s address outlined in this Agreement OR the last known address of that party if the address has changed.

McDougall J held that the clause on its face only related to notices under the contract and not notices under the Act and so s 31(1)(e) was not applicable: at [38]. Alternatively, McDougall J held that the service provisions in the Act would need to prevail under s 34: at [39]. However, in Pacific General Securities Pty Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 13 there was a notices clause which referred to notices ‘required to be given under this agreement’. It did not refer to notices under the Act yet Brereton J allowed the claimant to rely on the notices clause for service of the adjudication application. [page 246] Section 31(1)(e) ‘as may be provided under the construction contract’ — service by email [3.324] Where a contract specifically permitted service by email by the annexure to the contract specifying a particular email address, the question to be considered was where a payment claim is provided by email, when does the claimant ‘serve a payment claim on a respondent’ as referred to in s 14(4)(a). In Reed Constructions Pty Ltd v Eire Contractors Pty Ltd [2009] NSWSC 678 Macready AJ referred to s 13(3) and (4) of the Electronic Transactions Act 2000 (NSW). Those sections provide: 13(3) For the purposes of a law of this jurisdiction, if the addressee of an electronic communication has designated an information system for the purpose of receiving electronic communications, then, unless otherwise agreed between the originator and the addressee of the electronic communication, the time of receipt of the electronic communication is the time when the electronic communication enters that information system. 13(4) For the purposes of a law of this jurisdiction, if the addressee of an electronic communication has not designated an information system for the purpose of receiving electronic communications, then,

unless otherwise agreed between the originator and the addressee of the electronic communication, the time of receipt of the electronic communication is the time when the electronic communication comes to the attention of the addressee.

Specifically, Macready AJ considered the question of whether ‘receipt’ as defined in the Electronic Transactions Act equates to service and held that: Sections 13(3) and 13(4) draw the distinction between electronic communications sent to a designated information system and those that are not. Section 13(3) provides that if an information system has been designated, it can be inferred that receipt into that information system equates to service. If no information system has been identified, then under s 13(4), receipt occurs when the communication comes to the attention of the addressee. Therefore, if s 13(3) applies, evidence must be adduced of when the email entered the information system, not when the email came to the attention of the addressee, meaning that the read receipt is not relevant. Evidence of the time an email entered a mail server would presumably be adduced through some kind of email exchange log generated by that server. The evidence does not indicate whether this is data that is regularly logged by mail servers and if so, whether there may be a question as to the length of time this information is stored: at [31].

Macready AJ went on to say: If a destination mail server is very busy or if an email has been incorrectly addressed, a “bounced” message is usually returned to sender with details of the problem. However, if a sending mail server can locate a domain it is trying to contact but cannot for some reason dispatch the communication to the designated user account, it may hold onto the communication for some time in order to try again. Alternatively a destination mail server may be off-line for some reason. Therefore, in the absence of evidence to assist me, I would be reluctant to infer that the recipient server received the email on the same date that it was sent: at [35].

Payment claim is required to be received [3.325] In Firedam Civil Engineering Pty Ltd v KJP Construction Pty Ltd [2007] NSWSC 1162 the respondent instructed the claimant to submit all correspondence and invoices to the site office and provided a fax number. The faxing of a payment claim to the fax number was held to be service of the payment claim authorised by s 31(1)(e) because the instruction formed part of the contract between the parties: at [36]. Although s 109X of the Corporations Act 2001 (Cth) and s 29 of the Acts Interpretation Act 1901 [page 247] (Cth) are relevant to service of documents on a company and under s 109X(1)(a) all that is required is the documents to be posted to the company’s registered office, Austin J in Firedam held that there was a qualification, namely that upon proof that the envelope although ‘posted, was not delivered to the registered office may have the effect that service is ineffective. … [I]f non-delivery is shown, then the presumption under s 29 of the Acts Interpretation Act, that

service was effected at the time when the letter would be delivered in the ordinary course of post, is rebutted’: at [55]. Section 31(2) requires a payment claim to be received: evidence only of posting or sending by facsimile might not be sufficient proof of service: Ontrac v BHCF [2008] NSWDC 76 at [33] per Sidis DCJ. When a payment claim is ‘received by the respondent’ if sent by facsimile is when received into the memory of the respondent’s fax machine: Zebicon Pty Ltd v Remo Constructions Pty Ltd [2008] NSWSC 1408 at [25]. It is not necessary that the document be printed out. In Zebicon no evidence was adduced by the respondent as to whether, notwithstanding an ‘ok’ transmission report from the claimant’s fax machine, it was possible that the transmission may not have been received into the memory of the respondent’s machine: McDougal J suggested that if such evidence had been adduced then service might not have been established: at [27]. Section 31(2) Does not require notice to come to knowledge of person served [3.326] Section 31(2) does not require the notice to come to the knowledge of the person served, even if the server is aware of that: Taylor Projects Group Pty Ltd v Brick Dept Pty Ltd [2005] NSWSC 571 at [23]. Although under s 31(2) service is taken to have been effected when the notice was ‘received at that place’ that does not mean that ‘service under s 31(1)(c) is effected only when the posted article comes into the hand or possession of the person to whom it is directed or that person’s agent. This is because mail delivered to a registered office or place of business is “received at that place” when it is put into the mail box of the registered office or place of business, without the necessity of anyone actually seeing it’: Firedam Civil Engineering Pty Ltd v KJP Construction Pty Ltd [2007] NSWSC 1162 at [59]. In Kittu Randhawa t/as Mystery of Spice v Serrato t/as Innova Design Solutions [2009] NSWSC 170 the issue was whether the adjudicator’s notice of acceptance of his appointment was served on the principal. The principal’s evidence was: On 28 February 2008 I received an application for adjudication from the [contractor]. This was delivered by courier. The next I heard of the adjudication was on 17 March 2008, which stated that the matter had already been determined by the adjudicator. I rang the [authorised nominating authority] to question why I had not been informed of the date of the hearing. I was advised that they had faxed the documentation over to me. I advised them that I did not own a fax machine, therefore it was impossible for me to have received the documentation.

The contractor, however, produced evidence from Australia Post that it

‘presumed that the notice of acceptance was delivered some time on 5 March 2008’ from its records. The Evidence Act 1995 (NSW) and the Acts Interpretation Act 1901 (Cth) contain rebuttable presumptions that there is delivery of a letter to the designated address when posted. It was held by Hammerschlag J that under the Security of Payment legislation [page 248] all that was needed to be established was delivery to the principal’s address, not proof of actual receipt by her: in this case the presumption of delivery contained in the Evidence Act and Interpretation Act was sufficient — the evidence of the principal that she did not receive the notice was not enough to rebut the presumption of delivery by post. Service on a company [3.327] In Pacific General Securities Pty Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 13, Brereton J held that s 31 did not exclude other methods of service which bring a document to the actual attention of a company, so delivery of an adjudication application to a sole director would be good service: at [58]. See also Firedam Civil Engineering Pty Ltd v KJP Construction Pty Ltd [2007] NSWSC 1162 at [56]. Just because a company redirects its mail to some address other than its registered office, does not mean that service by post on its registered office is not good service under s 109 of the Corporations Act 2001 (Cth) and such service was service to the company’s ordinary place of business under s 31 of the NSW Act: Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259 at [66]–[68] and [1]. In Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2005] NSWSC 378, McDougall J held that a notice of acceptance of appointment of adjudicator was not received by the respondent until a considerable time after the date shown on the fax log of the sending machine. In that case McDougall J acted upon the evidence of an officer of the respondent as to the system in place to ensure that correspondence was brought to the attention of that officer and the fact that he made enquiries of all the employees of the company and that none of them had received the notice of acceptance prior to the later date. In Tsoukatos v Mustafa [2007] NSWSC 614, notwithstanding evidence by an

officer of the respondent that it never received the adjudication documents sent by express post by the claimant, Hall J held that the onus lies upon the respondent in those circumstances to ‘adduce evidence sufficient to establish a cogent explanation which would discharge the onus in establishing that none of the correspondence or other documents was received by him’: at [40]. That was in the circumstances where the officer of the respondent had a ‘previous history of denying receipt of the letter of particulars … in relation to which there was affirmative evidence of delivery having been effected’: at [57]. See also Firedam Civil Engineering Pty Ltd v KJP Construction Pty Ltd [2007] NSWSC 1162 at [72]. In Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd [2012] NSWCA 31 the Court of Appeal held that service of the payment claim by email was valid even though it was not emailed to the director who was the ‘guiding mind’ of the respondent (see [58]–[59]) (but the payment claim was copied to the director). Even though the director of the company may have been unaware of the principal place of business of the company as recorded with the Australian Securities and Investments Commission, service at that address was good service of a payment claim under the Act: DJ’s Home and Property Maintenance Pty Ltd v Dujkovic [2012] NSWSC 870. In Hill (as Trustee for Ashmore Superannuation Benefit Fund) v Halo Architectural Design Services Pty Ltd [2013] NSWSC 865 where a contract had a mandatory service of notices provision requiring notices to be served at a particular address and by a [page 249] particular means of service, that was not a contracting out which would be declared void by reason of s 34(2). So, if the claimant in question had served the payment claim on the ‘ordinary place of business’ as referred to in s 31 that would have been permissible service under s 31. However, the claimant served the payment claim on the respondent’s registered office which was not its ordinary place of business and was not the address that the notices clause in the construction contract mandated. Stevenson J held that in those circumstances, the service was not effective because: it was not the ‘ordinary place of business’ that s 31 refers to; it was not the place mandated by the notices clause for service to be

effected; and as the notices clause required service on a particular address, the claimant could not rely on s 109X of the Corporations Act 2001 (Cth) to serve it at the registered office and ‘s 31(3) of the Act, which states that the provisions of s 31 are in addition to, and do not limit or exclude any other law with respect to service of notices, takes the matter no further. That subsection does not have the effect that the parties “may” (no matter what the relevant agreement provides) serve documents in the manner provided “by any other law”’: at [52]. Service on receiver and manager [3.328] Where a receiver and manager was appointed to the respondent, that did not require service on the receiver and manager as s 109X(1) of the Corporations Act 2001 (Cth) dealing with service only refers to liquidators and administrators, not receiver and managers: Pacific General Securities Pty Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 13 at [59]–[62]. Service by email or fax [3.329] Where the respondent admitted in his affidavit that he actually received the payment claim by email the respondent was not released from its statutory obligation (to serve a payment schedule) even though service by email was not specifically allowed by the construction contract: Kingston Building Pty Ltd v McKay [2009] NSWDC 204 at [21]. See also Reed Constructions Pty Ltd v Eire Contractors Pty Ltd [2009] NSWSC 678 in which Macready AJ considered the effect of the Electronic Transactions Act 2000 (NSW) on the question of service of a payment claim by email: see [27]–[35]. Although not actually determining that the legislation authorised service by email for the purposes of the Security of Payment legislation some of Macready AJ’s observations could be useful for any subsequent consideration of the issue. Olympia Group Pty Ltd v Tyrenian Group Pty Ltd [2010] NSWSC 319 at [26] applied Zebicon Pty Ltd v Remo Constructions Pty Ltd [2008] NSWSC 1408 and held that receipt of a payment claim in the memory of a fax machine of the respondent is receipt by the respondent of the claim under the Act even if it is only printed out later. In s 20 ‘lodged’ does not require that it actually arrived, so that an adjudication application could be lodged when it was sent to the email address of the authorised nominating authority even if it was caught in the spam filter and

not read by the authorised nominating authority: Bauen Constructions Pty Ltd v Sky General Services Pty Ltd [2012] NSWSC 1123 at [71], [75]. Further, because of s 13A of the Electronic Transactions Act 2000 (NSW), when the email got caught in the spam filter it was ‘capable of being [page 250] retrieved by the addressee at an electronic address’ as referred to in s 13A and therefore it has then been ‘received’ or ‘lodged’: see [76]–[78]. Service on superintendent [3.330] In The Owners Strata Plan 56587 v Consolidated Quality Projects Pty Ltd [2009] NSWSC 1476, McDougall J held that service on the superintendent was good service under the Act even though not expressly authorised by the contract as: the superintendent clause in the contract could be construed that way (at [31], [32]); and there was an ‘arrangement’ between the parties to that effect: at [34]–[36]. Service by post and s 160 of Evidence Act [3.331] The Evidence Act 1995 (NSW) s 160 provides that it is presumed unless evidence sufficient to raise doubt about the presumption is adduced, that a postal article sent by prepaid post addressed to a person at a specified address in Australia was received at that address on the fourth working day after having been posted. In Agusta Industries Pty Ltd v Niclad Constructions Pty Ltd [2010] NSWSC 925 Gzell J held that s 160 is not affected by the presumption in s 29 of the Acts Interpretation Act 1901 (Cth) referred to in Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259 so that s 160 of the Evidence Act continued to apply: see [38], [39]. VICTORIAN ACT: SERVICE OF NOTICES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 50 Service of notices (1) Any notice or document that by or under this Act is authorised or required to be given to or served on a person may be given to or served

on the person — (a) by delivering it to the person personally; or (b) by lodging it during normal office hours at the person’s ordinary place of business; or (c) by sending it by post or facsimile addressed to the person’s ordinary place of business; or (d) in such manner as may be prescribed for the purposes of this section. (2) The giving of, or service of, a notice or document that is sent to a person’s ordinary place of business, as referred to in subsection (1)(c), is taken to have been effected — (a) in the case of posting — 2 business days after the day on which the notice of document was posted; (b) in the case of a facsimile — at the time the facsimile is received. (3) If a facsimile is received after 4.00 p.m. on any day, it must be taken to have been received on the next business day. Other methods of service [3.332] Section 50 in the Victorian Act is more harsh on a party serving documents under the Act than in New South Wales: there is no equivalent of s 31(1)(e) of the [page 251] NSW Act (allowing service as provided in the construction contract) or s 31(3) (providing that the provisions of the section do not limit or exclude the provisions of any other law with respect to service of notices). Particularly if Einstein J’s finding in Emag Constructions Pty Ltd v Highrise Concrete Constructors [2003] NSWSC 903 (see [3.317]), essentially that ‘may’ in s 31 is to be read as ‘must’, is followed in the interpretation of s 50 of the Victorian Act, nothing other than service strictly in accordance with s 50 will suffice. See also the New South Wales cases referred to at: [3.317] Service on solicitors; [3.318] Service by solicitors; [3.319] Section 31(1) ‘notice … by or under this Act …’; [3.320] Section 31(1) ‘… served on a person’;

[3.322] Section 31(1)(b) and (c) ‘during normal office hours’; [3.325] Payment claim is required to be received; [3.321] Section 31(1)(b) and (c) ‘… ordinary place of business’; [3.326] Section 31(2) Does not require notice to come to knowledge of person served; [3.328] Service on receiver and manager; which should be persuasive authority in Victoria. The New South Wales cases at [3.323] and [3.327] were decided on the NSW Act wording which is not in the Victorian Act and so are of no relevance in Victoria. VICTORIAN ACT: SERVICE OF NOTICES (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 50 Service of notices (1) Any notice or document that by or under this Act is authorised or required to be given to or served on a person may be given to or served on the person — (a) by delivering it to the person personally; or (b) by lodging it during normal office hours at the person’s ordinary place of business; or (c) by sending it by post or facsimile addressed to the person’s ordinary place of business; or (d) in such manner as may be prescribed for the purposes of this section; or (e) in any other manner specified in the relevant construction contract. (2) The giving of, or service of, a notice or document that is sent to a person’s ordinary place of business, as referred to in subsection (1)(c), is taken to have been effected — (a) in the case of posting — 2 business days after the day on which the notice or document was posted; (b) in the case of a facsimile — at the time the facsimile is received. (3) If a facsimile is received after 4.00 pm on any day, it must be taken to have been received on the next business day.

[page 252] [3.333] Although there are similarities between the New South Wales and Victorian notice and service provisions, there are some significant differences such as: the Victorian Act has deemed times for service in the case of post and facsimile (s 50(2) and (3)); and the NSW Act has a provision that the section does not limit or exclude the provisions of any other law with respect to service of notices: s 31(3). See also the New South Wales cases referred to at: [3.317] Service on solicitors; [3.318] Service by solicitors; [3.319] Section 31(1) ‘notice … by or under this Act …’; [3.320] Section 31(1) ‘… served on a person’; [3.323] Section 31(1)(e) ‘as may be provided under the construction contract’; [3.325] Payment claim is required to be received; [3.322] Section 31(1)(b) and (c) ‘during normal office hours’; [3.321] Section 31(1)(b) and (c) ‘… ordinary place of business’; [3.326] Section 31(2) Does not require notice to come to knowledge of person served; [3.328] Service on receiver and manager; which should be persuasive authority in Victoria. Use of email for making adjudication application [3.334] Email can be used to make an adjudication application: Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd [2009] VSC 156: see [124]– [132], [133], [138], [140], [146] for a detailed examination of relevant issues as to email communications. At [138] Vickery J held that: … I do not accept that the service provision of the Act, s 50, operates to preclude the making of an adjudication application by email. Although electronic service is not mentioned in s 50, it is well accepted that provisions such as this are facultative, and do not usually provide for a prescriptive code or exclude the possibility that service may validly be effected in some other way. Certainly, this is not the position in this case. I do not construe s 50 to exclude the making of an adjudication application under s 18(3)(c) electronically by email.

The evidentiary burden is on the respondent who alleges that the making of an

adjudication application was not in accordance with the Act: Hickory Developments at [137]. Use of email for serving payment claim [3.335] Even though the contract did not specifically allow service of documents by email under the contract, Vickery J in Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 held service of a payment claim by email to be in accordance with the requirements of the contract and the Act: at [168]. Vickery J held that s 50 of the Act was not mandatory given the words ‘may be given to or served’. ‘The service provisions under s 50 of the Act are in addition to and do not limit or exclude the common law or the provisions of any other applicable legislation with respect of the service of notices, for example s 109X of the Corporations Act 2001’: at [162]. [page 253] Section 15(4) When a payment claim is served if served by email [3.336] In the case of service of a payment claim by email addressed to a director of the respondent, the director: … had to take a number of steps before it could be said that he had received the payment claim. [The director] would have to observe on his computer the notification of the email sent from his email server; he would then have to gain access to the email on his computer; and then open its attachment which comprised Payment Claim 15. At least until these steps had been taken by [the director], it could not be said that the email and its attachment had been “received” at the place of business of the Superintendent and the email remained merely accessible to the intended recipient: Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 at [93].

Section 15(4)(b)(ii) Where a payment claim is served before the reference date, when does the 10 business days start to run? [3.337] Distinguishing Walter Construction Group Pty Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266 (as the section of the Act in NSW is different) and refusing to follow FK Gardner & Sons Pty Ltd v Dimin Pty Ltd [2007] 1 Qd R 10, Vickery J followed his earlier decision in Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199 that premature service of a payment claim does not render it invalid unless the premature service means it was not made bona fide: Seabay Properties Pty Ltd v Galvin Construction Pty Ltd [2011] VSC 183 at [131], [134], [136]. In 2004 Shelton J in the County Court had earlier decided in ADH Plant Hire Pty Ltd v Construct Co Pty Ltd

[2004] VCC 53; [2004] VCC 159 that a summary judgment application failed where the relevant payment claim was served before the reference date as then ss 15 and 16 were ‘not enlivened’: see [3.51] above. The 10 business day period referred to in s 15(4)(b)(i) in the case of service prior to the reference date does not commence until the reference date: see [134] in Seabay citing Metacorp. Respondent who admits service by particular date, cannot subsequently rely on deeming provisions in s 50(2)(a) [3.338] Where a respondent served a payment schedule which accepted that the dates of service of the payment claims were within 10 business days of the date of service of the payment schedule, the respondent cannot subsequently rely on the deeming provisions for service under s 50(2)(a) to allege that there was no payment schedule served within 10 business days: Maxstra Constructions Pty Ltd v Active Crane Hire Pty Ltd [2013] VSC 177 at [29]–[31]. NSW ACT: EFFECT ON CIVIL PROCEEDINGS 32 Effect of Part on civil proceedings (1) Subject to section 34, nothing in this Part affects any right that a party to a construction contract: (a) may have under the contract, or (b) may have under Part 2 in respect of the contract, or (c) may have apart from this Act in respect of anything done or omitted to be done under the contract. [page 254] (2) Nothing done under or for the purposes of this Part affects any civil proceedings arising under a construction contract, whether under this Part or otherwise, except as provided by subsection (3). (3) In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal: (a) must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order or award it makes in those proceedings, and (b) may make such orders as it considers appropriate for the

restitution of any amount so paid, and such other orders as it considers appropriate, having regard to its decision in those proceedings. A respondent’s rights are preserved [3.339] Section 14 was relied on by the claimant in Tooma Constructions Pty Ltd v Eaton & Sons Pty Ltd [2002] NSWSC 514, subsequently followed in Oxbara Pty Ltd v Geotech Pty Ltd [2002] ACTSC 116 to say there could be no ‘genuine dispute’ under s 459G of the Corporations Act 2001 (Cth) where the statutory demand was served based on the unpaid amount of the payment claim where no payment schedule was served. Macready M held that even if the respondent was not entitled to dispute the payment claim under the Act, that would not affect the entitlement to allege a genuine dispute under s 459G of the Corporations Act, as s 32 of the Act makes it clear that the parties’ rights under the construction contract are preserved. By reason of s 32: It is possible for the person who pays the amount of money which an adjudication has found due to seek to reclaim that money, in court proceedings which decide what the ultimate legal rights of the parties are. An evident purpose of the Act is that, if there is to be such litigation, it will start from a position where the claimant has been paid the amount which the adjudication process has decided should be paid: Amflo Constructions Pty Ltd v Jefferies [2003] NSWSC 856 at [25].

In deciding an application to restrain the applicant from enforcing an adjudication determination Bergin J held that, even if there had been a serious issue to be tried as to jurisdictional error by the adjudicator, s 32 would be enough to warrant refusal of the application on a discretionary basis: Lucchitti t/a Palluc Enterprises v Tolco Pty Ltd [2003] NSWSC 1070. This was because of the interim nature of the process under the Act. In John Holland Pty Ltd v Roads and Traffic Authority of New South Wales [2006] NSWSC 874, McDougall J explained the operation of s 32 thus: I do not think that it is correct to speak of s 32 as creating a restitutionary right. Its place in the scheme of the Act is to reinforce the interim nature of adjudication determinations, and to provide that parties’ legal rights (as decided by a court or tribunal) are given full effect notwithstanding what may have been determined by an adjudicator and what may have been done in pursuance of, or obedience to, that determination: at [33]. The legislature intended the process of dealing with progress claims to be speedy. In many human activities, speed and error are natural companions. Section 32 is the legislative recognition of the potential application of that truism to the scheme of adjudication of disputes: at [37].

[page 255]

In Ettamogah Pub (Rouse Hill) Pty Ltd v Consolidated Constructions Pty Ltd (in liq) [2006] NSWSC 1450, White J held that where the claimant properly obtained summary judgment because of the respondent’s failure to secure a payment schedule: Whilst there can be no dispute that the plaintiff is indebted to the defendant for the amount claimed in the summary demand, the plaintiff will nonetheless have an offsetting claim equal to the amount of that debt if there is a genuine dispute that the defendant was not contractually entitled to the amount claimed in the payment claims made under s 13 of the Security of Payment Act: at [12]. … under the contract, the defendant was entitled to be paid the amounts as assessed by the architect in the progress certificate. It was not entitled to progress payments merely on the issue of its progress claims. On this ground alone, the plaintiff has what is at least a seriously arguable claim to relief pursuant to s 32 of the Security of Payment Act in an amount at least equal to the amounts claimed in the statutory demand: at [15].

On appeal to the Court of Appeal (Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] NSWCA 279) no attack was made to Hammerschlag J’s reasoning at first instance (see [3.372] above) on the point of the payment to the claimant’s subcontractor. Noting that the determination therefore ‘may be seen to lead to an unusual result whereby the [claimant] has judgment for a sum … referable to a debt to “the claimant’ subcontractor that has been paid by the respondent, the court held that s 32 gives a mechanism for the respondent to agitate its assertion that the [claimant] has been overpaid’: at [48], [49]. Further, Hodgson JA held that in those circumstances (particularly where any payment made is likely to be irrecoverable) the respondent may be able to get a stay of judgment or injunction against enforcement: at [59]. Where claimant initially commenced court proceedings then served a payment claim [3.340] In Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2005] NSWCA 49 the claimant initially commenced District Court proceedings under the contract, but subsequently (after it was ordered to provide security for costs in the proceedings) served a payment claim under the Act. The District Court granted an anti-suit injunction under s 46 of the District Court Act on the grounds that: 1. The builder’s statutory claim was vexatious and oppressive. 2. The statutory adjudication would frustrate the District Court’s task. 3. The builder had elected to submit the dispute to the jurisdiction of the District Court and should be held to its election. 4. On the proper construction of the Act, any statutory proceedings should be completed before court proceedings are commenced: at [7].

The Court of Appeal dissolved the injunction holding the District Court

judge’s conclusions did not ‘follow if the [claimant’s] statutory remedies for interim relief supplement his contractual rights, subject to a final determination of those rights in court proceedings’ (at [11]), and s 32 of the Act essentially has that effect: see [21] of the judgment of Handley JA. Handley JA also held that the ‘power under s 32(3)(b) to make such other orders as it considers appropriate would probably allow the court to set aside or vary any judgment entered under s 25’: at [22]. Accordingly, the Court of Appeal disagreed with each of the four grounds upon which the District Court judge based the injunction, but noted that it may have been [page 256] different where claims under the Act were prosecuted close to the trial of the common law proceedings: at [26], [27]. Costs award when respondent in civil proceedings obtains a judgment effectively refunding the amount of an adjudicator’s determination [3.341] Where a respondent commences civil proceedings to effectively claim back the amount of an adjudicator’s determination that it paid, the usual rule that costs follow the event ordinarily applies so that the respondent who ‘claws back’ the adjudicated amount should get its costs: Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1423 at [28], [29], [36]. Particular circumstances can justify a departure from the usual rule: see [30], [31], [52]. Rights under s 32 where respondent says it is not a party to the construction contract [3.342] The claimant succeeded in its adjudication application against the respondent, the adjudication certificate was filed as a judgment for a debt in court under s 25(1) and pursuant to the judgment and a garnishee order the claimant obtained payment from the respondent’s bank account. The respondent issued proceedings in the Local Court seeking restitution of the amount paid together with interest and costs on the basis that it was not the party to the construction contract. The magistrate deciding the matter held that the adjudicator’s decision gave rise to an estoppel on the question of who was the relevant party to the construction contract. The magistrate also held that s 32 did not allow the respondent to bring the claim in court because s 32(2) only applies

where the respondent was the party to the particular construction contract. On appeal in Nigro v EVS Group Pty Ltd [2012] NSWSC 1545, Hislop J held that: 1. the decision in Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 on issue estoppel was not limited to an issue estoppel in respect of subsequent adjudications as in Dualcorp it was held that ‘the policy of the Act [is] to render an adjudicators’ determinations final on issues which they resolved, subject only to provisions of the Act conferring limited rights of correction of determinations’ (at [45]); and 2. because the rights in s 32 were rights of a party ‘to a construction contract’ before a party could exercise the rights afforded by s 32 it requires as an essential prerequisite ‘the existence of a construction contract to which the plaintiff and defendant were parties’: at [59]. As ‘the foundation of the [respondent’s] case is that he was not a party to a construction contract and has no liability thereunder … the [claimant’s] contention that s 32 has no application is correct … Section 32 provides for revisiting of the initial decision in some circumstances. It has no application in the circumstances of this case’: at [60], [64]. Accordingly on the facts in Nigro, the respondent could not bring its case for recovery of the amounts paid unless the adjudicator’s determination and the judgment that had been entered were set aside by the Supreme Court in separate proceedings. See also Williams v Concreting Services Pty Ltd [2013] NSWSC 366, referred to in [3.276] above, where the dissatisfied respondent instead of relying on s 32 sought an order that the adjudicator’s determination was void. [page 257] VICTORIAN ACT: EFFECT ON CIVIL PROCEEDINGS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 47 Effect of Part on civil proceedings (1) Subject to section 48, nothing in this Part affects any right that a party to a construction contract — (a) may have under the contract; or (b) may have under Part 2 in respect of the contract; or

(c) (2)

(3)

(4)

(5)

may have apart from this Act in respect of anything done or omitted to be done under the contract. Nothing done under or for the purposes of this Part affects any proceedings arising under a construction contract (including any arbitration proceedings or other dispute resolution proceedings), whether under this Part or otherwise, except as provided by subsections (3) and (4). In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal — (a) must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order, determination or award it makes in those proceedings; and (b) may make such orders as it considers appropriate for the restitution of any amount so paid and such other orders as it considers appropriate, having regard to its decision in those proceedings. In any arbitration proceedings or other dispute resolution proceedings under the construction contract, the person determining the arbitration or dispute must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order or determination or award the person makes in those proceedings. Nothing in this Part affects any right that a principal may have under any contract except as expressly provided for in this Act.

[3.343] Section 47 means a respondent’s rights to bring a cross-claim are preserved but such matters cannot be relied on to defeat a summary judgment application where no payment schedule is served: AMD Formwork Pty Ltd v Yarraman Construction Group Pty Ltd [2004] VCC 117; [2004] VCC 128. See also the New South Wales cases at [3.339]–[3.340] which should be persuasive authority in Victoria. VICTORIAN ACT: EFFECT ON CIVIL PROCEEDINGS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 47 Effect of Part on civil proceedings (1) Subject to section 48, nothing in this Part affects any right that a party to

a construction contract — [page 258] (a) (b) (c) (2)

(3)

(4)

(5)

may have under the contract; or may have under Part 2 in respect of the contract; or may have apart from this Act in respect of anything done or omitted to be done under the contract. Nothing done under or for the purposes of this Part affects any proceedings arising under a construction contract (including any arbitration proceedings or other dispute resolution proceedings), whether under this Part or otherwise, except as provided by subsections (3) and (4). In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal — (a) must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order, determination or award it makes in those proceedings; and (b) may make such orders as it considers appropriate for the restitution of any amount so paid, and such other orders as it considers appropriate, having regard to its decision in those proceedings. In any arbitration proceedings or other dispute resolution proceedings under the construction contract, the person determining the arbitration or dispute must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order or determination or award the person makes in those proceedings. Nothing in this Part affects any right that a Principal may have under any contract except as expressly provided for in this Act.

[3.344] Section 47 means a respondent’s rights to bring a cross-claim are preserved but such matters cannot be relied on to defeat a summary judgment application where no payment schedule is served: AMD Formwork Pty Ltd v Yarraman Construction Group Pty Ltd [2004] VCC 17; [2004] VCC 128. See also the New South Wales cases at [3.339]–[3.340] which should be persuasive authority in Victoria.

Section 47(3) envisages that Victorian Civil and Administrative Tribunal can hear construction contract disputes, but not proceedings under the Act [3.345] ‘To imply that VCAT [the Victorian Civil and Administrative Tribunal] has jurisdiction to deal with [a claim under the Act] is totally inconsistent with s 16(4)’: Professional Floor Services Pty Ltd v Techor Developments Pty Ltd [2009] VCC 0560 at [22]. Section 47(3) ‘envisages that a Tribunal such as VCAT might hear disputes under a construction contract separately from proceedings under the [Security of Payment] Act’: at [23]. Section 47(3) does not authorise court to make rectification of amounts paid for adjudicator’s fees [3.346] Section 47(3) does not authorise the court to make restitution of amounts paid by a party for an adjudicator’s fees: Dura (Australia) Constructions Pty Ltd v Hue Boutique [page 259] Living Pty Ltd [2012] VSC 155. However, the decision suggests adjudicator’s fees paid could be claimed under the contract in question or as damages in the court proceedings, but in Dura they were not so claimed (see [24]). NSW ACT: ACT BINDS THE CROWN 33 Act binds Crown This Act binds the Crown in right of New South Wales and, in so far as the legislative power of Parliament permits, the Crown in all its other capacities. VICTORIAN ACT: ACT BINDS THE CROWN (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 8 Act binds the Crown This Act binds the Crown in right of Victoria and, so far as the legislative power of the Parliament permits, the Crown in all its other capacities.

[3.347] The Victorian Act is materially the same as the equivalent provision in New South Wales. VICTORIAN ACT: ACT BINDS THE CROWN (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 8 Act binds the Crown This Act binds the Crown in right of Victoria and, so far as the legislative power of the Parliament permits, the Crown in all its other capacities. [3.348] The Victorian Act is materially the same as the equivalent provision in New South Wales. NSW ACT: NO CONTRACTING OUT 34 No contracting out (1) The provisions of this Act have effect despite any provision to the contrary in any contract. (2) A provision of any agreement (whether in writing or not): (a) under which the operation of this Act is, or is purported to be, excluded, modified or restricted (or that has the effect of excluding, modifying or restricting the operation of this Act), or (b) that may reasonably be construed as an attempt to deter a person from taking action under this Act, is void.

[page 260] Section 34 Should be construed purposively [3.349] In Barclay Mowlem Construction Ltd v Tesrol Walsh Bay Pty Ltd [2004] NSWSC 716, McDougall J accepted the principle that ‘s 34 should be construed purposively, so as to assist in giving effect to the objects of the Act as stated in

section 3. Those objects include ensuring that a person who undertakes to carry out construction work is entitled to receive, and able to recover, progress payments in relation to that work’: at [21]. Clauses held void under s 34 [3.350] In Minister for Commerce v Contrax Plumbing Pty Ltd [2004] NSWSC 823, McDougall J held clauses void which provided that: In aggregate, payment claims shall not exceed the Contract Price [cl 42.1)]. … In valuing work, regard shall not be had to the value of variations which value has not been incorporated into the Contract Price [cl 42.2]: at [7].

In Minister for Commerce v Contrax Plumbing Pty Ltd [2004] NSWSC 823, the contract price was the originally specified amount, adjusted by amounts agreed between the contractor and the principal or as determined under an expert determination process. To go through the process required to adjust the contract price could have taken up to 200 days. The provisions in question were held to be void under s 34 as they had the effect of excluding, modifying or restricting the effect of the Act as: 1. they defer the entitlement under s 8(1) of the NSW Act to be paid until after the contractual processes are worked through so that the amounts would only be payable after a much later reference date; 2. cl 42.1 denies an entitlement to progress payments once the contract price as it stands has been exceeded; and 3. cl 42.2 excludes an entitlement to be paid for variations that have not been included in the contract price. Applying the reasoning in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, McDougall J held that the adjudicator had power to determine that s 34 rendered those provisions void. Court of Appeal expresses different views on s 34 [3.351] On appeal (Minister for Commerce v Contrax Plumbing (NSW) Pty Ltd [2005] NSWCA 142) the Court of Appeal determined the appeal on a basis that did not require determination of the s 34 issue. Nevertheless, two judges expressed (different) views on the s 34 issue. Hodgson JA was of the view (at [51]–[54]) that the relevant parts of cl 42 would be invalidated under s 34 on two bases: 1. those parts of the clause ‘preclude the payment of progress payments calculated in accordance with the terms of the contract’ (at [52]); and 2. ‘a provision of a contract as to the determination of reference dates, or as

to the calculation of the amount of progress payments, could be such as to restrict the operation of the Act within the meaning of s 34, even though the Act in s 8(2)(a) and s 9(a) expressly defers to such provisions. For example, if a contract provided for yearly reference dates, or provided that progress payments should be calculated on the basis of 1% of the value of work done, in my opinion such provisions could be so inimical to s 3(1), s 3(2) and s 8(1) as to be avoided by s 34’: at [52]. [page 261] Bryson JA did not agree with Hodgson J’s views on the operation of s 34 or that parts of cl 42 would be invalidated by the section. He expressed the view that the ‘avoidance provisions should be applied according to their terms and no more widely’: at [58]. Restricting claimant’s entitlements to superintendent’s determination may be void under s 34 [3.352] Hodgson JA in Transgrid v Siemens Ltd [2004] NSWCA 395 expressed the view that an attempt to restrict a claimant’s entitlements to the amount of the superintendent’s determination under the contract might not be consistent with the provisions against contracting out in s 34: at [35]. Hammerschlag J in Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] NSWSC 753 at [50] cited with approval Hodgson JA in John Holland Pty Ltd v Roads and Traffic Authority of New South Wales [2007] NSWCA 19: [C]ontractual provisions denying progress payments for construction work otherwise than as certified by a superintendent or in accordance with review procedure provided by the contract could in my opinion have the effect of restricting the operation of the Act, and thus be made void by s 34.

Arbitration clause cannot displace adjudication [3.353] Section 34(2)(a) was considered briefly by White J in Australian Remediation Services Pty Ltd v Earth Tech Engineering Pty Ltd [2005] NSWSC 805, who held that the section would render void a provision of a contract which authorised the giving of a notice for the purposes of reference of disputes to arbitration ‘which would in any way modify the operation of the adjudication procedures under the Act’: at [12], [13]. In Siemens Ltd v Origin Energy Uranquinty Power Pty Ltd [2011] NSWSC 195 the respondent applied for a stay of the claimant’s summary judgment proceedings in court. Ball J refused the stay, holding that neither matters referred

to adjudication nor a summary judgment application under s 15(2)(a)(i) can be referred to arbitration: see [43], [45]. Ball J held: [Section] 15(2)(a)(i) specifically says that the claimant may bring proceedings in any court of competent jurisdiction. In doing so, it gives the claimant a right. Section 34 of the SOP [Security of Payment] Act makes it clear that the claimant cannot contract out of that right. … In my opinion, a provision of an arbitration agreement that prevents a party from exercising a right under s 15(2)(a)(i) to bring proceedings in a court of competent jurisdiction is, to that extent, void under s 34 of the SOP Act: at [45].

Cannot bargain away right to progress payments [3.354] In Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391, Mason P observed: ‘The right to a progress payment cannot be bargained away entirely (see s 34 which precludes contracting out)’: at [49]. Are time bar provisions void under s 34? [3.355] In John Goss Projects Pty Ltd v Leighton Contractors Pty Ltd [2006] NSWSC 798 McDougall J considered again s 34, this time in the context of a time bar clause that provided: Notwithstanding any other provision of the Works Contract to the contrary, Leighton will not be liable upon any claim by the Contractor in respect of any matter arising out of the Works Contract or otherwise including but not limited to variations to the work under the Works Contract and claims for damages unless [certain times for submission of claims were complied with]: at [66].

[page 262] Although it was the case that the clause in question operated to bar claims if the notice provisions were not followed, McDougall J held that ‘it does not follow that cl 45 is thereby inconsistent with the rights given under the Act’: at [81]. The time bar clause was held not to be inconsistent with the right in s 13(4) to bring a payment claim within 12 months after ceasing work and accordingly the time bar was not void under s 34. There is, however, a suggestion in McDougall J’s decision that the result may have been different if the time bar was one with which it could not possibly comply: at [83]. See, however, Inten Constructions Pty Ltd v Refine Electrical Services Pty Ltd [2006] NSWSC 1282 where an adjudicator determined that time bars in the following terms: 16.0 Barring of Claims 16.1 INTEN will not be liable upon any claim by the Subcontractor in respect of any matter arising out of or connected with the Subcontract, including but not limited to a breach of the Subcontract or

negligence, unless within 5 working days after the first day upon which the Subcontractor could reasonably have been aware of the first of any breach, act, omission, direction, approval, circumstance or other fact or facts on which the claim is based the Subcontractor has given written notice to INTEN of the claim, or its intention to make a claim, stating in either case that it is a notice under this clause 16. … 20.0 Final Statement 20.1 Within 5 working days after the Subcontractor received INTEN notice of Substantial Completion of the Works in relation to each Site the Subcontractor must submit to INTEN a statement (“Final Statement”) in the form of the proforma Final Statement annexed hereto: at [32].

could not operate to bar a progress claim brought under the Act, relying on s 34. The determination was not challenged on the grounds of the reliance on s 34: at [44], [45]. While not determining the issue, McDougall J in Power Serve Pty Ltd v Powerline’s Clearing Group Pty Ltd [2011] NSWSC 1180 expressed the view that it was strongly arguable an adjudicator’s decision that a clause in a contract which completely barred claims not made within a specified time was void under s 34, was correct: at [4], [8], [9], [20]. Final determination of rights under contractual provisions not void under s 34 [3.356] In John Holland Pty Ltd v Roads and Traffic Authority of New South Wales [2006] NSWSC 874 the claimant contractor submitted that the contractual entitlement of the principal to retain retention moneys if it determines it is ‘just and equitable’ to do so was void under s 34 as it could allow the principal to retain moneys to secure the repayment of adjudication moneys. The argument was that: [I]t necessarily undermines the scheme of adjudication that is established by the Act. It would permit a principal which has suffered an adverse adjudication determination to reverse the result of that determination without pursuing the procedure envisaged by the Act, namely, commencing proceedings in which an order for restitution of adjudication monies may be made under s 32(3)(b) of the Act. Instead, a principal could have recourse to security … It could, as in the present case, refuse to reduce the amount of security — notwithstanding that the Contractor’s obligations of performance under the Contract have been discharged and Practical Completion has been achieved: at [43].

[page 263] The contractor’s argument was rejected, McDougall J holding that: That leaves for consideration s 34(2)(b). If the submission is to be made good in respect of that paragraph, it must necessarily mean that a contractor in John Holland’s position might be deterred from taking action under the Act (ie, claiming a progress payment) by the prospect of being required to repay

it, and of having its security retained until such repayment was made. The obvious answer to that is that John Holland was not. It entered into this contract, and made progress claims, knowing that at least one half of its security must be held (and, perhaps, the whole might be held) until the issue of a final payment schedule and the satisfaction of obligations certified by it: at [65].

In John Holland Pty Ltd v Roads and Traffic Authority of New South Wales [2007] NSWCA 140 the appeal against McDougall J’s determination was dismissed, Giles JA (with whom Tobias and McColl JJA agreed) holding: It is not correct that retention of security “undoes” an adjudicator’s determination, or that a superintendent who in performing his contractual function comes to a determination negates a statutory right to retain an adjudicated amount. The adjudicator’s determination remains, and brings payment of the adjudicated amount, but that is interim and subject to a different position being established in relation to payment for the relevant work or related goods and services, contractually or in proceedings: at [62].

Contractual provisions that have the effect of denying a claimant’s entitlement to a retention fund because no final certificate has been issued may be void under s 34 [3.357] In Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399 McDougall J decided that where provisions in a contract had the effect of denying the contractor’s entitlement to a retention fund because no particular certificate had been issued: It might well be correct to say that those provisions restricted, or had the effect of restricting, the operation of the Act in relation to a final payment claim that included a claim for the retention sum. Clearly the legislature intended that adjudicators should have powers to determine such claims. Equally clearly, adjudicators deciding such claims are not to be bound by the decision (or absence of decision) of a superintendent to issue (or not issue) a final … certificate: at [65].

Accordingly, McDougall J held that the adjudicator’s determination that the contractual provisions so relied on were void by operation of s 34 was not necessarily inconsistent with authority: at [65]. In s 34 ‘void’ means ‘void for all purposes’ [3.358] In Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399 McDougall J held that in s 34 ‘void’ means ‘void for all purposes’ citing Hammerschlag J in the earlier decision of Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2007] NSWSC 941 at [16] (which paragraph reference appears to be a mistake when reference is made to the earlier Trysams decision). McDougall J also referred to his article ‘Prohibition on Contracting out of the Building and Construction Industry Security of Payment Act (NSW)’ (2006) 22 Building and Construction Law 246 at 255–6: see [72] in McDougall J’s decision in Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399.

[page 264] Question of whether s 34 will invalidate a time bar is not a simple matter [3.359] Macready AJ in Siemens v Tolco [2007] NSWSC 257 at [45] observed that: The question as to whether s 34 will invalidate a particular provision of the contract is not a simple matter … [O]ne can … see the debate in Minister for Commerce v Contrax Plumbing [2004] NSWSC 823 at [31]–[43] at first instance and on appeal in Minister for Commerce v Contrax Plumbing [2005] NSWCA 142. A decision in any case requires a careful consideration of the Act and the effect of the particular provisions on the operation of the Act: at [45].

A binding agreement whereby a claimant is not entitled to recover payment for certain additional works is not avoided by s 34 [3.360] In Roseville Bridge Marina v Bellingham Marine Australia Pty Ltd [2009] NSWSC 320 an agreement was entered into between a principal and a contractor whereby in respect of certain variations there was a compromise of those variation claims so as to preclude further claims in respect of additional works in the nature of variations. Notwithstanding that agreement the contractor (claimant) served a payment claim including in respect of variations and ultimately got an adjudicator’s determination in its favour. The principal (respondent) asserted that the agreement, to the extent it precluded a claim in respect of variations, was void by operation of s 34. Brereton J held that the agreement was not void: The purpose of s 34 is to prohibit the exclusion or modification of the right to receive the contractual remuneration by progress payments; it does not prohibit the exclusion or modification of the contractual remuneration simpliciter. An agreement between the parties to a construction contract that some “extras” or “variations” will not entitle the builder to additional remuneration, or that a specified sum will be accepted for such works, forms part of the contractual regime according to which their rights under the Act as well as at law are regulated, and it is not inconsistent with the rights given by the Act to claim a progress payment. The 14 July Agreement is part of the contractual regime between the parties. It had the effect that $441,424.50 was the whole of the remuneration to which [the contractor] was entitled for work done to date, and $36,315.40 was the whole of the remuneration to which it was entitled for the remaining works required by the construction contract. It did not exclude [the contractor’s] right to receive that contractual remuneration by progress payments in accordance with the Act, and it was therefore not avoided by s 34: at [64].

Accordingly, the principal was not liable for the adjudicated amount and injunctive relief to restrain enforcement of the adjudication was felt to be appropriate: at [67]. A further agreement between the principal and the contractor, if it could be construed as an agreement that the contractor would not exercise its rights to claim a progress payment under the Act, would be void under s 34 as a provision

excluding or modifying the operation of the Act as it would be excluding the right to a progress payment in respect of contractual remuneration: see [45]–[50] in the Roseville Bridge Marina decision. A broad set-off entitlement is not necessarily void under s 34 [3.361] In Watpac Constructions (NSW) Pty Ltd v Austin Corporation Pty Ltd [2010] NSWSC 168 at [169]–[172], McDougall J observed: Section 34 is extremely wide in its operation. By s 2(a), it avoids a provision of any agreement that excludes, modifies or restricts the operation of the Act, or purports to do so, or has the effect of doing so. It is not hard to understand why an untrammelled power to set off, against amounts otherwise due to a subcontractor, any amounts claimed by the head contractor to be due for backcharges might fall foul of s 34.

[page 265] However … it is at least arguable that the power to set off backcharges that cl 14.5 gives to Watpac is constrained by both express and implied considerations of reasonableness. The basis for implying constraints (over and above what might flow from the use of the words “a reasonable estimate”) could include that the known background to the making of the subcontract included the terms of the Act, and the known consequences of an untrammelled power to make set-offs could well include that the whole of cl 14.5 is void. The parties did not address as to whether cl 14.5 was in fact void, by operation of s 34, and I do not propose to go where the parties did not. It is however necessary to consider whether there were reasonable arguments that could be put against that conclusion. [Counsel for the plaintiff] emphasised that cl 14.5 did not authorise arbitrary or unreasonable estimates, and did not impose any condition precedent or subsequent on Austin’s entitlement to a progress payment. It bore: at most, on the proper quantification of that entitlement. As [counsel for the plaintiff] submitted, it has not been held that a clause in terms similar to cl 14.5 was avoided by the operation of s 34. As I said in John Goss at 715 [38], a determination of the amount due in respect of a payment claim would require attention to relevant provisions of the contract that justify deductions or set-offs for, among other things, “retention payments or conceded back charges for defective or incomplete work”. (I was not intending to give an exhaustive list of legitimate off sets, and [counsel for the defendant] did not submit otherwise.)

Clause 14.5 provided that: 14.5 Set-Off Without limiting the Builder’s right under the Subcontract the Builder may deduct from any money due to the Subcontractor: (a) any money due, or a reasonable estimate of amounts which the Builder asserts will become due, from the Subcontractor to the Builder whether under or in connection with the Subcontract or otherwise; and (b) all losses, costs, charges, damages or expenses which the Builder has incurred or paid and for which the Subcontractor is or may be liable to make reimbursement to the Builder or to any

corporation which is a subsidiary of or related to the Builder within the meaning of the Corporations Act 2001 (Cth), but has failed to pay or reimburse, and if those moneys are insufficient the Builder may have recourse to any Bank Guarantees and retention under the Subcontract: at [41].

Service of notices provision not void under s 34 [3.362] Where a contract had a mandatory service of notices provision requiring notices to be served at a particular address and by a particular means of service, that was not a contracting out which would be declared void by reason of s 34(2). So, if the claimant in question had served the payment claim on the ‘ordinary place of business’ as referred to in s 31 that would have been permissible service under s 31. However, the claimant served the payment claim on the respondent’s registered office which was not its ordinary place of business and was not the address that the notices clause in the construction contract mandated. Stevenson J held that in those circumstances, the service was not effective because: it was not the ‘ordinary place of business’ that s 31 refers to; it was not the place mandated by the notices clause for service to be effected; and because the notices clause required service on a particular address, the claimant could not rely on s 109X of the Corporations Act 2001 (Cth) to serve it at the registered office and ‘s 31(3) of the Act, which states that the provisions of [page 266] s 31 are in addition to, and do not limit or exclude any other law with respect to service of notices, takes the matter no further. That subsection does not have the effect that the parties “may” (no matter what the relevant agreement provides) serve documents in the manner provided “by any other law”’: Hill (as Trustee for Ashmore Superannuation Benefit Fund) v Halo Architectural Design Services Pty Ltd [2013] NSWSC 865 at [52]. VICTORIAN ACT: NO CONTRACTING OUT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 48 No contracting out

A provision of any agreement (whether in writing or not) under which the operation of this Act is excluded, modified or restricted, or which has the effect of excluding, modifying or restricting the operation of this Act is void. [3.363] The Victorian s 48 is not as expansive as s 34 of the NSW Act but to similar effect, and the New South Wales cases at [3.349]–[3.362] should be persuasive authority in Victoria. In Van Ek Contracting Pty Ltd v Roads Corporation [2007] VSC 336 cl 45 of the construction contract had a procedure for disputes to be resolved by arbitration and cl 19.4 dealt with adjudication in the following terms: An adjudication response served by the Corporation under the Security of Payment Act shall be deemed to be a notice of a dispute under the Contract for the purpose of clause 45 of the General Conditions of Contract. When the Contractor receives the adjudication response, the Contractor shall within 30 business days … submit the detailed particulars of the matter at issue to the Corporation to be the subject of a mediation the terms of which … shall be agreed in writing between the parties within 10 business days, failing which the mediation, but not the dispute process, shall be at an end: at [10].

Habersberger J said: I reject the submission [that] clause 19.4 somehow infringed the prohibition contained in s.48 of the Act on contracting out of the operation of the Act because any participation by VicRoads in an adjudication process would automatically mean that an arbitration had been commenced. That is not excluding, modifying or restricting the operation of the Act. It is simply one way of utilising the provisions of s 25 of the Act to challenge the adjudicator’s determination, having commenced the required proceedings and given the required security: at [25].

VICTORIAN ACT: NO CONTRACTING OUT (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 48 No contracting out (1) The provisions of this Act have effect despite any provision to the contrary in any contract. (2) A provision of any agreement, whether in writing or not — (a) under which the operation of this Act is, or is purported to be, excluded, modified or restricted, or that has the effect of excluding, modifying or restricting the operation of this Act; or [page 267]

(b)

that may reasonably be construed as an attempt to deter a person from taking action under this Act — is void. [3.364] The Victorian Act is now in terms materially the same as the NSW Act, and so the cases referred to at [3.349]–[3.362] should be persuasive authority in Victoria. See also the Victorian Supreme Court decision referred to at [3.363], decided under the Victorian Act prior to the 2006 amendments. NSW ACT: REGULATIONS 35 Regulations (1) The Governor may make regulations, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act. (2) The regulations may, either unconditionally or subject to conditions, exempt: (a) any specified person or class of persons, or (b) any specified matter or class of matters, from the operation of this Act or of any specified provision of this Act. (3) The commencement of a regulation referred to in section 5, 6 or 7 does not affect the operation of this Act with respect to construction work carried out, or related goods and services supplied, under a construction contract entered into before that commencement. VICTORIAN ACT: REGULATIONS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) 52 Regulations (1) The Governor in Council may make regulations for or with respect to any matter or thing required or permitted by this Act to be prescribed or necessary to be prescribed to give effect to this Act. (2) Regulations made under this Act may provide in a specified case or

class of cases for the exemption of persons or things or a class of persons or things from any of the provisions of the Act whether unconditionally or on specified conditions and either wholly or to such an extent as is specified. (3) The commencement of a regulation referred to in section 5, 6 or 7 does not affect the operation of this Act with respect to construction work carried out, or related goods and services supplied, under a construction contract entered into before that commencement.

[page 268] VICTORIAN ACT: REGULATIONS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 52 Regulations (1) The Governor in Council may make regulations for or with respect to — (a) prescribing forms for any purpose of this Act; (b) prescribing information to be provided under this Act; (c) any other matter or thing required or permitted by this Act to be prescribed or necessary to be prescribed to give effect to this Act. (2) Regulations made under this Act — (a) may provide in a specified case or class of cases for the exemption of persons or things or a class of persons or things from any of the provisions of this Act whether unconditionally or on specified conditions and either wholly or to such an extent as is specified; and (b) may differ according to differences in time, place and circumstance. (3) The commencement of a regulation referred to in section 5, 6 or 7 does not affect the operation of this Act with respect to construction work carried out, or related goods and services supplied, under a construction contract entered into before that commencement. [3.365] The Victorian Act is materially the same as the equivalent provision in

New South Wales. NSW ACT: SAVINGS AND TRANSITIONAL PROVISIONS 37 Savings and transitional provisions Schedule 2 has effect. [3.366] Schedule 2 is reproduced on pp 269–70. VICTORIAN ACT: SAVINGS AND TRANSITIONAL PROVISIONS (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO PRIOR TO 30/3/07) [3.367] There is no Victorian equivalent to Sch 2. VICTORIAN ACT: TRANSITIONAL PROVISION (AS APPLYING TO CONSTRUCTION CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) 53 Transitional provision — Building and Construction Industry Security of Payment (Amendment) Act 2006 This Act as amended by the Building and Construction Industry Security of Payment (Amendment) Act 2006 (the 2006 Act) does not apply to or in respect of a payment claim for a progress payment to which a person is entitled under a construction contract entered into before the commencement of section [page 269] 42 of the 2006 Act and any such payment claim is to be dealt with in accordance with this Act as if the 2006 Act had not been enacted. [3.368] The commencement of s 42 of the 2006 Act was 30 March 2007. NSW ACT: REVIEW OF ACT

38 Review of Act (1) The Minister is to review this Act to determine whether the policy objectives of the Act remain valid and whether the terms of the Act remain appropriate for securing those objectives. (2) The review is to be undertaken as soon as possible after the period of 3 years from the date of assent to this Act. (3) A report on the outcome of the review is to be tabled in each House of Parliament within 3 months after the end of the period of 3 years. (4) A further review of this Act (as amended by the Building and Construction Industry Security of Payment Amendment Act 2002) is to be undertaken by the Minister as soon as possible after the period of 12 months from the commencement of Schedule 1 [29] to that Act. (5) A report on the outcome of the further review is to be tabled in each House of Parliament within 3 months after the end of that period of 12 months. VICTORIAN ACT: REVIEW OF ACT (AS APPLYING TO CONTRACTS ENTERED INTO PRIOR TO 30/3/07) [3.369] There is no Victorian equivalent to s 38. VICTORIAN ACT: REVIEW OF ACT (AS APPLYING TO CONTRACTS ENTERED INTO ON OR AFTER 30/3/07) [3.370] There is no Victorian equivalent to s 38. NSW ACT: SCHEDULE 2 Schedule 2 — Savings and transitional provisions Part 1 — Preliminary 1 Savings and transitional regulations (1) The regulations may contain provisions of a savings or transitional nature consequent on the enactment of the following Acts: Building and Construction Industry Security of Payment Act 1999 Building and Construction Industry Security of Payment Amendment Act 2002

Building and Construction Industry Security of Payment Amendment Act 2010 [page 270] (2) Such a provision may, if the regulations so provide, take effect from the date of assent to the Act concerned or a later day. (3) To the extent to which such a provision takes effect from a date that is earlier than the date of its publication in the Gazette, the provision does not operate so as: (a) to affect, in a manner prejudicial to any person (other than the State or an authority of the State), the rights of that person existing before the date of that publication, or (b) to impose liabilities on any person (other than the State or an authority of the State) in respect of anything done or omitted to be done before the date of that publication. Part 2 — Provisions consequent on enactment of Building and Construction Industry Security of Payment Act 1999 2 Certain construction contracts not affected A provision of this Act does not apply to a construction contract entered into before the commencement of that provision. Part 3 — Provisions consequent on enactment of Building and Construction Industry Security of Payment Amendment Act 2002 3 Application of amendments An amendment made to this Act by the Building and Construction Industry Security of Payment Amendment Act 2002 does not apply to or in respect of a payment claim served before the commencement of the amendment and any such payment claim is to be dealt with in accordance with this Act as if the amendment had not been made. Part 4 — Provisions consequent on enactment of Building and Construction Industry Security of Payment Amendment Act 2010 4 Application of amendments An amendment made to this Act by the Building and Construction Industry

Security of Payment Amendment Act 2010 extends to matters arising before the commencement of the amendment (including an adjudication application made before that commencement and pending on that commencement). Date of the contract in question is all that is relevant [3.371] Hawkins Construction (Australia) Pty Ltd v Mac’s Industrial Pipework Pty Ltd [2001] NSWSC 815 (affirmed on appeal: Hawkins Construction (Australia) Pty Ltd v Mac’s Industrial Pipework Pty Ltd [2002] NSWCA 136) considered Sch 2 Pt 2 and held that it did not matter that the parties had in respect of the project in question entered into other contracts before the commencement date: provided the contract pursuant to which the payment claim was served was entered into after that date then the Act applied. A further argument in Hawkins that the contract was in fact a variation to an earlier contract that pre-dated the Act, also failed on the facts, the court finding that the ‘second contract was independent and not a variation of the first’: at [6]. [page 271] It also does not matter that the head contract pre-dates the Act if the subcontract under which the payment claim was served was entered into after the commencement date of the Act: Hawkins Construction (Australia) Pty Ltd v Mac’s Industrial Pipework Pty Ltd [2002] NSWCA 136. The decision of the Supreme Court of Queensland (Byrne J) in Pioneer Sugar Mills Pty Ltd v United Group Infrastructure Pty Ltd [2005] QSC 354 interpreted the equivalent Queensland Act provision (s 3(1)). The construction contract was entered into in March 2004 and under the Queensland Act it did not apply to construction contracts except those entered into after 1 October 2004. Subsequent to entering into the construction contract the parties entered into negotiations for additional work to be performed by the respondent which was the subject of a variation agreement brought into existence on 14 October 2004. Byrne J in Pioneer Sugar Mills held that the Act contained indications that ‘it was not intended to comprehend variations which of themselves fall within a literal interpretation of “construction contract”’ after considering the provisions of s 14(1)(b)(iii) of the Queensland Act (NSW Act s 10(1)(b)(ii)) and s 15(1) of the Queensland Act (NSW Act s 11(1)). Therefore, the Act was restricted to the principal contract, and not to mere variations of it, even where the nature of the

variations is such that they would fall within a literal interpretation of the expression ‘construction contract’. Byrne J indicated, however, that if the variation agreement in question evinced an intention to abandon or rescind the original construction contract and then enter into a new one on the terms set out in the variation agreement then that could have constituted a construction contract entered into after the relevant date. In New South Wales the facts in Pioneer Sugar Mills might be decided differently in light of the broad definition given to ‘construction contract’ in Okaroo Pty Ltd v Vos Construction and Joinery Pty Ltd [2005] NSWSC 45 (see [3.10]), so that the variation could be a construction contract as defined therefore attracting the operation of the Act: at least with respect to the construction works the subject of the variation. VICTORIAN ACT ONLY: RECOVERY FROM PRINCIPAL (AS APPLYING TO CONTRACTS ENTERED INTO PRIOR TO 30/3/07) Division 4 — Recovery from principal 30 Application This Division applies if — (a) an adjudicator has determined that an adjudicated amount is payable by a respondent to a claim in respect of a construction contract; and (b) on or before the relevant date, the respondent fails to do one or other of the following — (i) to pay the whole or any part of the adjudicated amount to the claimant; (ii) to give security for payment of the whole or any part of the adjudicated amount to the claimant; and [page 272] (c)

the claimant has obtained judgment for the adjudicated amount or part of the adjudicated amount as a debt in a court of competent jurisdiction.

31 Recovery from principal

(1) If the circumstances set out in section 30 apply, the claimant may obtain payment of the adjudicated amount or part of that amount in accordance with this Division out of money that is payable or becomes payable to the respondent by some other person (the Principal) for construction work or goods and services that the Principal engaged the respondent to carry out or supply under a construction contract. (2) However, the claimant can obtain payment from the Principal under this Division only if the construction work carried out or the goods and services supplied by the claimant to or for the respondent under the construction contract are, or are part of or incidental to, the construction work or goods and services that the Principal engaged the respondent to carry out or supply. [3.372] Section 31 is similar to s 5 of the Contractors Debts Act 1997 (NSW). 32 Procedure for obtaining payment (1) The following procedure must be followed to obtain payment of the money owed — (a) firstly, a debt certificate must have been issued for the money owed (as provided by section 33); and (b) secondly, the claimant must serve a notice of claim on the principal. (2) A notice of claim is a notice in the prescribed form together with a copy of the debt certificate. Section 32 is almost identical to s 6 of the Contractors Debts Act 1997 (NSW). 33 Certification of debt by court (1) When judgment is given or entered in proceedings for the recovery of an adjudicated amount as a debt, the court may, by order made on the application of the claimant, issue a certificate (a debt certificate) in respect of the debt under this section. (2) A debt certificate is to be in a prescribed form. (3) In this section, judgment includes a default judgment.

Section 33 is similar to s 7(1), (4) and (5) of the Contractors Debts Act 1997 (NSW). [page 273]

34 Notice of claim operates as assignment of debt (1) The service of a notice of claim on the principal operates to assign to the claimant the obligation of the principal to pay the money owed under the contract to the respondent. (2) The assignment is limited to the claimant’s certified debt. (3) The assignment is subject to any prior assignment under this Division that is binding on the principal and the respondent. Section 34 is almost identical to s 8 of the Contractors Debts Act 1997 (NSW). In Golf Links Estate Blackheath Pty Ltd v LJ Williams Earthmoving Pty Ltd [2001] NSWSC 603 Macready M held that service of the notice of claim on the principal operated so that the debt was due to the claimant rather than the respondent: at [5]. See also NSW Land and Housing Corporation v DJ’s Home and Property Maintenance Pty Ltd (in liq) [2013] NSWSC 1167 at [65] which held that service of a notice of claim does create a charge. 35 Payment of respondent’s debt by principal (1) After a notice of claim is served on a principal in accordance with this Division, the principal must pay to the claimant the money that the principal owes to the respondent under the contract with the respondent. (2) The Principal must make the payments to the claimant as they become payable under the contract with the respondent until whichever of the following first occurs — (a) the principal receives a discharge notice or discharge notices, indicating that the certified debt has been fully discharged; or (b) the payments are no longer payable under the contract between the principal and the respondent. Section 35 is almost identical to s 9 of the Contractors Debts Act 1997 (NSW).

36 Priority of assignments (1) The priority of assignments under this Division is to be determined by the order of service of notices of claim on the principal. (2) All notices of claim in respect of debts owed by the same respondent that are served on the principal within the period of 7 days after the first notice of claim in respect of the respondent is served on the principal are taken to be served at the same time and, accordingly, take equal priority. (3) Despite section 35, the principal is not to make any payment to a claimant who serves a notice of claim until that 7 day period has elapsed. (4) If assignments take equal priority, the principal is to make the payments by distributing the money payable between the claimants who have equal priority pro rata in proportion to the amount of their respective certified debts. [page 274] (5) The principal must continue to make those payments to each claimant until whichever of the following first occurs — (a) the principal receives a discharge notice, or discharge notices, indicating that each certified debt has been fully discharged; or (b) the payments are no longer payable under the contract. Section 36 is almost identical to s 10 of the Contractors Debts Act 1997 (NSW). 37 Stay of payments (1) If — (a) a notice of claim is served on a principal under this Division in relation to the payment of money owed to a respondent under a contract; and (b) before the notice was served, the principal had commenced proceedings in a court against the respondent in relation to that contract —

the principal may apply to the court for a stay of payments under this Division in respect of the notice of claim. (2) The court may grant a stay applied for under subsection (1) and make any ancillary orders it considers necessary. (3) Despite anything to the contrary in this Division, if a stay is granted under this section the principal is not required to make payments under this Division for the period of the stay. Section 37 does not have an equivalent section in the Contractors Debts Act 1997 (NSW). 38 Right of recovery if principal fails to pay (1) An assignment effected by operation of this Division is valid at law. (2) Accordingly, if the principal fails to make any payment required to be made by this Division, the claimant may sue for and recover the debt assigned to the claimant, in the claimant’s own name. (3) Proceedings for recovery of the debt may be taken in any manner in which the respondent might have taken them if there had been no assignment. (4) A claimant’s right of recovery under this section is subject to any defence that the principal would have had against recovery of the debt by the respondent had there been no assignment, other than a defence based on something done by the principal after the notice of claim was served by the claimant. Example If the principal continues to make contract payments to the respondent, rather than the claimant, after having been served with a notice of claim, the claimant is still entitled to recover the money from the principal. Section 38 is almost identical to s 11 of the Contractors Debts Act 1997 (NSW). [page 275]

39 When assignment ceases to operate

(1) If a certified debt is discharged, or the judgment that resulted in a debt certificate being issued in respect of the certified debt is set aside by a court, any assignment effected by operation of this Division in connection with that debt ceases to operate. (2) If only part of the certified debt is discharged, the assignment effected in respect of that part of the certified debt ceases to operate. (3) This section does not affect any payment or dealing that is made by a principal in good faith before the principal receives notice, and sufficient evidence of, the discharge or setting aside of the debt. To the extent necessary to give effect to that payment or dealing, the assignment effected by operation of this Division is taken to continue in force. Note: If a principal makes a payment to a claimant (as required by section 35), instead of paying the respondent, without knowing that the debt owed to the claimant has been discharged by the respondent, this section protects the principal from being required by the respondent to make payment to the respondent.

Section 39 is similar to s 12 of the Contractors Debts Act 1997 (NSW). 40 Claimant to provide discharge notice (1) If a principal or the respondent makes a payment to the claimant in partial or full discharge of a certified debt, the claimant must, on the request of the person making the payment, give the person a discharge notice in respect of the payment. (2) A discharge notice must — (a) be in the prescribed form; and (b) acknowledge the payment of the amount paid; and (c) be signed by the claimant. (3) If the claimant does not give the notice within 7 days of the payment and request, the claimant is to forfeit and pay to the person who made the payment a sum equal to the amount paid. (4) The person who made the payment may recover the forfeited amount in any court of competent jurisdiction as a debt due to the person. Section 40 is similar to s 13 of the Contractors Debts Act 1997 (NSW). 41 Respondent to give information about principal

(1) If an adjudication determination has been made under this Part in respect of a construction contract, the respondent must, on the demand of the claimant, supply to the claimant a notice in the prescribed form that sets out the name of any person from whom the claimant may be able to recover the adjudicated amount or part of the adjudicated amount under this Division. [page 276] (2) A person who gives or purports to give a person a notice under this section knowing that it is false or misleading in a material particular is guilty of an offence and liable to a penalty of up to 60 penalty units. Section 41 is almost identical to s 15 of the Contractors Debts Act 1997 (NSW). Contractors Debts Act (NSW) 1997 [3.373] See Re Summit Design & Construction Pty Ltd [1999] NSWSC 1136 for a useful discussion of the operation of the Contractors Debts Act (NSW) 1997 and the interaction between that Act and ss 471B, 472, 555, 556 and 559 of the Corporations Act 2001 (Cth). The Contractors Debts Act is in terms similar to ss 30–41 of the Building and Construction Industry Security of Payment Act 2002 (Vic) (BCISPA), the major difference being that under the Contractors Debts Act the recovery from principal provisions are not restricted to claims under the BCISPA. Austin J determined that the Contractors Debts Act should not prevail over the Corporations Act provisions and in particular the sections that amount to the principle of rateable distribution. In Modcol Pty Ltd v National Buildplan Group Pty Ltd [2013] NSWSC 380 at [25]–[26], McDougall J said that the operation of the Contractors Debts Act: … in the case of insolvent contractors, could (and most likely would, I think) give the unpaid person priority over other creditors. That does not seem to me to be consistent with the general scheme of the Corporations Act providing for the administration of companies under Pt 5.3A. It is certainly not consistent with the provisions of the Corporations Act relating to the liquidation of companies.

In Modcol the respondent did not serve a payment schedule and shortly before the claimant issued proceedings to recover the unpaid amount as a debt in court, the respondent had administrators appointed to it. Section 440D of the Corporations Act in those circumstances required the claimant to obtain leave of

the court to commence the proceedings against the respondent in administration. McDougall J refused the grant of leave as: … whichever way one approaches the s 440D discretion, the answer seems to me to be the same: to exercise the discretion in favour of Modcol, on the facts as they are known, would be subversive of the objects of Pt 5.3A. Whatever may be said about the limits or otherwise on the discretion, an exercise which had the effect of subverting that Part of the Corporations Act in which the section conferring the discretion appears does not appear to me to involve an appropriate and principled approach to the power that is given: at [43].

Interaction of Div 4 and Corporations Act [3.374] See Belmadar Constructions Pty Ltd v Environmental Solutions International Ltd [2005] VSC 24 for an analysis of Div 4 of the Victorian Act and the interaction of the Division with s 444E(3) of the Corporations Act 2001 (Cth). Byrne J approached the case in the same way as did Austin J in Re Summitt Design and refused an appeal against the decision of the Master to refuse the subcontractor’s application for leave to proceed against the head contractor (Environmental Solutions International) which had receivers and managers and administrators appointed to it. The appellant subcontractor had an adjudication determination in its favour but was seeking leave to proceed against [page 277] the head contractor, not to enforce against the head contractor but only ultimately against the principal, a water authority. It was the appointment of the administrators under Pt 5.4A of the Corporations Act 2001 (Cth) which stayed the proceeding by the subcontractor to enforce its adjudication determination. Byrne J held that Div 4 of the Victorian Act (like the Contractors Debts Act (NSW) 1997) did not give rise to any trust or property until the required steps had been taken by the subcontractor. Byrne J contrasted the position of a subcontractor under the Victorian Act with a subcontractor under the Subcontractors Charges Act 1974 (Qld) where under the Queensland Act the giving of notices by the subcontractor crystallised a pre-existing floating charge so that under the Queensland Act the subcontractor/chargee’s rights were not affected by a subsequent Pt 5.3A administration. See also the New South Wales Modcol decision referred to in [3.373] above. VICTORIAN ACT ONLY: RECOVERY FROM PRINCIPAL (AS APPLYING TO CONTRACTS ENTERED INTO ON OR AFTER 30/3/07)

29A Definitions In this Division — adjudicated amount includes an amount payable under a review determination; adjudication determination includes a review determination. 30 Application This Division applies if — (a) an adjudicator or a review adjudicator has determined that an adjudicated amount or part of an adjudicated amount is payable by a respondent to a claimant in respect of a construction contract; and (b) the respondent fails to pay the whole or any part of the adjudicated amount to the claimant in accordance with section 28M or 28N; and (c) the claimant has obtained judgment for the adjudicated amount or part of the adjudicated amount as a debt in a court of competent jurisdiction. 31 Recovery from principal (1) If the circumstances set out in section 30 apply, the claimant may obtain payment of the adjudicated amount or part of that amount in accordance with this Division out of money that is payable or becomes payable to the respondent by some other person (the principal) for construction work or goods and services that the principal engaged the respondent to carry out or supply under a contract. (2) However, the claimant can obtain payment from the principal under this Division only if the construction work carried out or the goods and services supplied by the claimant to or for the respondent under the construction contract are, or are part of or incidental to, the construction work or goods and services that the Principal engaged the respondent to carry out or supply. [page 278] (3) Subsection (1) does not apply to allow the claimant to obtain payment

from a person who has engaged the respondent to carry out construction work or to supply goods and services under a construction contract exempted from this Act under section 7(2)(b) or 7(2)(ba). 32 Procedure for obtaining payment (1) The following procedure must be followed to obtain payment of the money owed — (a) firstly, a debt certificate must have been issued for the money owed (as provided by section 33); and (b) secondly, the claimant must serve a notice of claim on the Principal. (2) A notice of claim is a notice in the prescribed form together with a copy of the debt certificate. 33 Certification of debt by court (1) When judgment is given or entered in proceedings for the recovery of an adjudicated amount as a debt, the court may, by order made on the application of the claimant, issue a certificate (a debt certificate) in respect of the debt under this section. (2) A debt certificate is to be in a prescribed form. (3) In this section, judgment includes a default judgment. 34 Notice of claim operates as assignment of debt (1) The service of a notice of claim on the principal operates to assign to the claimant the obligation of the principal to pay the money owed under the contract to the respondent. (2) The assignment is limited to the claimant’s certified debt. (3) The assignment is subject to any prior assignment under this Division that is binding on the principal and the respondent. 35 Payment of respondent’s debt by principal (1) After a notice of claim is served on a principal in accordance with this Division, the principal must pay to the claimant the money that the principal owes to the respondent under the contract with the respondent. (2) The principal must make the payments to the claimant as they become payable under the contract with the respondent until whichever of the following first occurs — (a) the principal receives a discharge notice or discharge notices, indicating that the certified debt has been fully discharged; or

(b)

the payments are no longer payable under the contract between the principal and the respondent.

36 Priority of assignments (1) The priority of assignments under this Division is to be determined by the order of service of notices of claim on the principal. [page 279] (2) All notices of claim in respect of debts owed by the same respondent that are served on the principal within the period of 7 days after the first notice of claim in respect of the respondent is served on the principal are taken to be served at the same time and, accordingly, take equal priority. (3) Despite section 35, the principal is not to make any payment to a claimant who serves a notice of claim until that 7 day period has elapsed. (4) If assignments take equal priority, the principal is to make the payments by distributing the money payable between the claimants who have equal priority pro rata in proportion to the amount of their respective certified debts. (5) The principal must continue to make those payments to each claimant until whichever of the following first occurs — (a) the principal receives a discharge notice, or discharge notices, indicating that each certified debt has been fully discharged; or (b) the payments are no longer payable under the contract. 37 Stay of payments (1) If — (a) a notice of claim is served on a principal under this Division in relation to the payment of money owed to a respondent under a contract; and (b) before the notice was served, the principal had commenced proceedings in a court against the respondent in relation to that contract — the principal may apply to the court for a stay of payments under this Division in respect of the notice of claim.

(2) The court may grant a stay applied for under subsection (1) and make any ancillary orders it considers necessary. (3) Despite anything to the contrary in this Division, if a stay is granted under this section the principal is not required to make payments under this Division for the period of the stay. 38 Right of recovery if principal fails to pay (1) An assignment effected by operation of this Division is valid at law. (2) Accordingly, if the principal fails to make any payment required to be made by this Division, the claimant may sue for and recover the debt assigned to the claimant, in the claimant’s own name. (3) Proceedings for recovery of the debt may be taken in any manner in which the respondent might have taken them if there had been no assignment. (4) A claimant’s right of recovery under this section is subject to any defence that the principal would have had against recovery of the debt by the respondent had there been no assignment, other than a defence based on something done by the principal after the notice of claim was served by the claimant. Example If the principal continues to make contract payments to the respondent, rather than the claimant, after having been served with a notice of claim, the claimant is still entitled to recover the money from the principal. [page 280] 39 When assignment ceases to operate (1) If a certified debt is discharged, or the judgment that resulted in a debt certificate being issued in respect of the certified debt is set aside by a court, any assignment effected by operation of this Division in connection with that debt ceases to operate. (2) If only part of the certified debt is discharged, the assignment effected in respect of that part of the certified debt ceases to operate. (3) This section does not affect any payment or dealing that is made by a principal in good faith before the principal receives notice, and sufficient evidence of, the discharge or setting aside of the debt. To the extent necessary to give effect to that payment or dealing, the

assignment effected by operation of this Division is taken to continue in force. Note: If a principal makes a payment to a claimant (as required by section 35), instead of paying the respondent, without knowing that the debt owed to the claimant has been discharged by the respondent, this section protects the principal from being required by the respondent to make payment to the respondent.

40 Claimant to provide discharge notice (1) If a principal or the respondent makes a payment to the claimant in partial or full discharge of a certified debt, the claimant must, on the request of the person making the payment, give the person a discharge notice in respect of the payment. (2) A discharge notice must — (a) be in the prescribed form; and (b) acknowledge the payment of the amount paid; and (c) be signed by the claimant. (3) If the claimant does not give the notice within 7 days of the payment and request, the claimant is to forfeit and pay to the person who made the payment a sum equal to the amount paid. (4) The person who made the payment may recover the forfeited amount in any court of competent jurisdiction as a debt due to the person. [3.375] Division 4 (ss 30–41) of the Victorian Act is in materially the same terms as applied prior to the 2006 Amending Act: see the commentary and cases referred to at [3.372]–[3.374]. VICTORIAN ACT: OTHER SECTIONS NOT IN THE NSW ACT (AS APPLYING TO CONTRACTS ENTERED INTO PRIOR TO 30/3/2007) 49 Confidentiality The Building Commission, the Building Commissioner and any member of staff of the Building Commission must not use or disclose any information received by the Building Commission under section 20(4) or section 23(4) except for the purpose of monitoring the operation of this Act. [page 281]

51 Supreme Court — limitation of jurisdiction It is the intention of section 46 to alter or vary section 85 of the Constitution Act 1975. 53 Amendment of Building Act 1993 — New section 144A inserted After section 144 of the Building Act 1993 insert — “144A Appeals — Building and Construction Industry Security of Payment Act 2002 (1) A person may appeal to the Building Appeals Board against a decision of the Building Commission under section 42 of the Building and Construction Industry Security of Payment Act 2002 — (a) to refuse an application by the person for an authority to nominate adjudicators for the purposes of that Act; or (b) to withdraw the person’s authority to nominate adjudicators for the purposes of that Act. (2) A person may appeal to the Building Appeals Board against a decision of the Building Commission under section 43 of the Building and Construction Industry Security of Payment Act 2002 — (a) to impose a condition on the person’s authority to nominate adjudicators for the purposes of that Act; or (b) to vary a condition of the person’s authority to nominate adjudicators for the purposes of that Act.” 54 Amendment of Commercial Arbitration Act 1984 After section 3(7) of the Commercial Arbitration Act 1984 insert —“(8) Nothing in this Act affects the operation of Part 3 of the Building and Construction Industry Security of Payment Act 2002.” VICTORIAN ACT: OTHER SECTIONS NOT IN THE NSW ACT (AS APPLYING TO CONTRACTS ENTERED INTO ON OR AFTER 30/3/2007) [3.376] Refer to the following: for ss 28A–28L see [3.295]; for ss 28M and 28N see [3.225]; for ss 28O–28Q see [3.231]; for s 28R see [3.280].

47A Functions of the Authority The functions of the Authority under this Act are — (a) to keep under regular review the administration and effectiveness of this Act and the regulations; and (b) to keep a register of authorised nominating authorities in accordance with section 47B; and [page 282] (c) (d) (e)

to keep records of adjudication determinations and review determinations in accordance with section 47C; and to publish adjudication determinations and review determinations in accordance with section 47C; and generally to carry out any other function or duty given to it, or imposed on it, by this Act.

47B Register of authorised nominating authorities (1) The Authority must keep a register containing details of authorised nominating authorities including the names of the principals and the contact details of those authorities. (2) The Authority must make the register available for inspection without charge to any person at the business address of the Authority during normal business hours. 47C Recording and publishing of determinations (1) The Authority must keep a record of any adjudication determinations or review determinations that it receives. (2) The Authority may publish information in a determination received under section 23A or 28J if — (a) the information does not identify any person or body referred to in the determination or disclose the address or location of that person or body; and (b) the identity, address or location of any person or body referred to in the determination cannot reasonably be determined from the information. 49 Confidentiality

The Authority, a Commissioner (within the meaning of the Building Act 1993), the chief executive officer of the Authority and any member of staff of the Authority must not use or disclose any information received by the Authority under this Act except to the extent necessary for the performance of any functions or duties or the exercise of any powers of the Authority under this Act. 51 Supreme Court — limitation of jurisdiction (1) It is the intention of section 46 to alter or vary section 85 of the Constitution Act 1975. (2) It is the intention of section 28R to alter or vary section 85 of the Constitution Act 1975. 53 Transitional provision — Building and Construction Industry Security of Payment (Amendment) Act 2006 This Act as amended by the Building and Construction Industry Security of Payment (Amendment) Act 2006 (the 2006 Act) does not apply to or in [page 283] respect of a payment claim for a progress payment to which a person is entitled under a construction contract entered into before the commencement of section 42 of the 2006 Act and any such payment claim is to be dealt with in accordance with this Act as if the 2006 Act had not been enacted.

1

Cf Hodgson JA in Minister for Commerce v Contrax Plumbing (NSW) Pty Ltd [2005] NSWCA 142 at [54] where he expressed the opinion that a contractual provision that provided for yearly reference dates would be avoided by s 34.

2

See, however, Macready AJ’s decision in Falgate Constructions Pty Ltd v Masterform Pty Ltd [2005] NSWSC 728 at [27] where it was held that a payment claim does not need to specify the percentage complete provided it specifies the amount the claimant claims is due.

3

See note 3 above.

4

See the references to [76]–[78] in Multiplex at [3.124] below.

5

Einstein J in Barclay Mowlem Construction Ltd v Estate Property Holdings Pty Ltd [2004] NSWSC 649 affirmed the Leighton decision on this point: at [23], [24].

[page 285]

Chapter 4 Commonwealth Legislation Considered in the Context of the Security of Payment Legislation AUSTRALIAN CONSTITUTION [4.1] In Brodyn Pty Ltd t/a Time Cost and Quality v Dasein Constructions Pty Ltd [2004] NSWSC 1230 the claimant made a successful adjudication application and ultimately obtained judgment under s 25(1) of the NSW Act. Subsequently, the respondent commenced separate court proceedings under the contract claiming an amount in excess of the judgment. The claimant then went into administration and became subject to a deed of company arrangement. The respondent lodged a proof of debt which the deed administrator rejected. The respondent made application under s 1321 of the Corporations Act 2001 (Cth), which provides a person aggrieved by an administrator’s decision under a deed of company arrangement with a right of appeal, claiming it had a right of set-off under s 553C of the Corporations Act, against the judgment under s 25(1) of the Building and Construction Industry Security of Payment Act 1999 (NSW). Section 553C provided: Where there have been mutual credits, mutual debts or other mutual dealings between an insolvent company that is being wound up and a person who wants to have a debt or claim admitted against the company: (a) an account is to be taken of what is due from the one party to the other in respect of those mutual dealings; and (b) the sum due from the one party is to be set off against any sum due from the other party; and (c) only the balance of the account is admissible to proof against the company, or is payable to the company, as the case may be.

There was therefore a conflict between ss 25 and 553C which Young CJ resolved under s 109 of the Australian Constitution, where the Commonwealth Act prevailed. Young CJ also found in favour of the respondent on the perhaps

more controversial basis that the Act ‘only intends to operate when the head contractor and the subcontractor are going concerns. Once the [claimant] ceased to be a going concern, it no longer needs cash flow and the mischief to be covered by the Act is not present’: at [87]. See also Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238 at [105]–[119] as to s 109 of the Australian Constitution. CORPORATIONS ACT Section 109 of Corporations Act [4.2] Where a receiver and manager was appointed to the respondent, that did not require service on the receiver and manager of an adjudication application, as s 109X(1) of [page 286] the Corporations Act 2001 (Cth) dealing with service only refers to liquidators and administrators, not receivers and managers: Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 13 at [59]–[62]. Just because a company redirects its mail to some address other than its registered office, does not mean that service by post on its registered office is not good service under s 109 of the Corporations Act and such service is service to the company’s ordinary place of business under s 31 of Building and Construction Industry Security of Payment Act 1999 (NSW): Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd [2006] NSWCA 259 at [66]–[68] and [1]. Section 445D of Corporations Act [4.3] In Parkview Constructions Pty Ltd v Tayeh [2009] NSWSC 186, the respondent to an adjudication determination sought orders under s 445D of the Corporations Act 2001 (Cth) setting aside a deed of company arrangement (DOCA) that the claimant company entered into after obtaining the adjudication determination in its favour. The respondent had issued separate court proceedings to prosecute its claims for defective work against the claimant: the respondent said the DOCA had the effect of turning the adjudicator’s interim determination into de facto final judgments, as one consequence of the DOCA was to extinguish creditors’ claims against the claimant. Accordingly, the

respondent would not be able to prosecute its offsetting claims for defective work against the claimant. The respondent’s application failed but this caused Barrett J ‘considerable disquiet … [as] I have the general impression that there is merit in the criticisms [the respondent] makes of the overall scheme’: at [78]. Section 459 of Corporations Act [4.4] In Tooma Constructions Pty Ltd v Eaton & Sons Pty Ltd [2002] NSWSC 514 the respondent did not provide a payment schedule. Because the Act makes it clear that the parties retain their rights arising under the contract apart from the Act, ‘even if it were the case that the plaintiff were not entitled to dispute the payment claim under the provisions of the Act, that would not affect their entitlement in law to assert a genuine dispute under s 459G’ (at [16]), and accordingly the respondent’s application to have the statutory demand set aside under s 459G was successful. Section 25(2)(a) of the original NSW Act is in terms materially similar to s 27(2)(a) of the Victorian Act. Section 25(2)(a) was considered in Oxbara Pty Ltd v Geotech Pty Ltd [2002] ACTSC 116. Connolly M held that the operation of s 25(2) does not prevent the respondent from asserting the existence of a genuine dispute in an application to set aside a statutory demand under s 459(a) of the Corporations Act 2001 (Cth), applying similar reasoning to Macready M in Tooma Constructions Pty Ltd v Eaton & Sons Pty Ltd [2002] NSWSC 514. In Parist Holdings Pty Ltd v Thiessen Architects Pty Ltd [2003] NSWSC 2070/03 (unreported, Bergin J, 30 May 2003) the claimant served the respondent with a statutory demand under s 459E of the Corporations Act 2001 (Cth) based on its payment claim under the NSW Act and presumably (it is not clear from the judgment) the respondent’s failure to provide a payment schedule. Bergin J refused the respondent’s application under s 459G to have the statutory demand set aside, and held that: [page 287] The definition of “offsetting claim” in s 459H(5) refers to a claim by way of counter claim, set off, or cross demand and, as has been said by others, it is clearly contemplated by the section as a whole, that the claim must be one capable of being quantified in money terms. It has also been said that a genuine offsetting claim for the purposes of s 459H means a claim on a good cause of action, advanced in good faith for an amount claimed in good faith. It has to be demonstrated to the Court what the claim is, how the loss is calculated and, if there is no such evidence, then the Court could not find that there is a genuine offsetting claim for the purposes of s 459H: at [11], [12].

In Karimbla Construction Services Pty Ltd v Alliance Group Building Services Pty Ltd [2003] NSWSC 617, the respondent failed to serve a payment schedule as required by the Building and Construction Industry Security of Payment Act 1999 (NSW) and the claimant served a statutory demand under the Corporations Act. The respondent made an application under s 459G for an order setting aside the statutory demand first on the basis that there was a genuine dispute about the existence of the debt (s 459H(1)(a)) and second, that under s 459(H)(5) the respondent had an ‘offsetting claim’ (against the claimant (s 459H(1)(b)). Barrett J held that the respondent’s alleged offsetting claims were in an amount that ‘could, without descent into the fanciful (which is a relevant test), be attached to a claim advanced’ by the respondent against the claimant on the basis of the breaches of the terms of the contract identified by the respondent and therefore under s 459H(3) the statutory demand was set aside: at [29], [30]. The respondent’s claim in Karimbla that the statutory demand should also be set aside because of a genuine dispute about the existence of the debt under s 459H(1)(a) did not succeed because of the ‘Graywinter principle’, as the affidavit in support of the application did not disclose the respondent’s primary contention that a document served by the respondent was relied on as a payment schedule: at [17]. In Max Cooper & Sons (Builders) Pty Ltd v M & E Booth & Sons Pty Ltd [2003] NSWSC 929, the claimant proceeded to adjudication and received a determination in its favour. The claimant served a statutory demand under the Corporations Act 2001 (Cth) and the respondent made application under s 459G of the Corporations Act to set aside the statutory demand on the basis that there was an offsetting claim. Macready M set aside the statutory demand, holding that: Even before the passage of the Amendment Act it was the intent of the legislature that cross claims or defences could not be brought in proceedings under the Act. The new provisions tighten this but they do not dispense with the parties’ right to bring separate legal proceedings in reliance upon their contractual entitlements and therefore … they cannot prevent action to set aside a statutory demand under s 459G: at [28].

See also Demir Pty Ltd v Graf Plumbing Pty Ltd [2004] NSWSC 553 which was also in the context of a statutory demand served where the claimant had an adjudication determination in its favour. The respondent was only able to establish an offsetting claim for part of the amount of the statutory demand and accordingly Campbell J reduced the amount of the statutory demand and declared the demand to have effect as reduced, the respondent being required to pay the reduced amount: at [24], [25]. See also Greenaways Australia Pty Ltd v CBC Management Pty Ltd [2004]

NSWSC 1186 where the claimant obtained an adjudication determination in its favour and also filed the adjudication certificate in court as a judgment for a debt under s 25(1). [page 288] Barrett J set aside the statutory demand and held that although s 25(4) of the Building and Construction Industry Security of Payment Act 1999 (NSW) limits a respondent from cross-claiming against a claimant: … those constraints apply only in proceedings in which it is sought to have a judgment resulting from filing of an adjudication certificate under the Act set aside. It may be ignored in the present context as there is no suggestion that pursuit of the offsetting claim that the [claimant] considers itself to have involves any attempt to have the District Court judgment set aside: at [11].

See also Plus 55 Village Management Pty Ltd v Parisi Homes Pty Ltd [2005] NSWSC 559 where the claimant’s statutory demand was set aside on the basis that there was an offsetting claim under s 459H. The offsetting claim was as a result of an alleged failure by the claimant to comply with the Home Building Act 1989 (NSW) which, if proven, would preclude the claimant from enforcing as a debt the moneys it claimed to be owed to it under the contract: at [18]. In Aldoga Aluminium Pty Ltd v De Silva Starr Pty Ltd [2005] NSWSC 284 the respondent did not serve a payment schedule and the claimant issued a statutory demand under the Corporations Act 2001 (Cth). The respondent issued an application under s 459G of the Corporations Act to set aside the statutory demand asserting that there was a genuine dispute as to the existence of the alleged debt. Palmer J held that s 15(2) and (4) of the Building and Construction Industry Security of Payment Act 1999 (NSW) ‘did not preclude a company served with a statutory demand from raising a genuine dispute for the purpose of setting aside the statutory demand under s 459G, even where that dispute has not been the subject of a payment schedule served in accordance with the provisions of the [NSW Act]’ (at [8]), agreeing with the decision of Barrett J in Greenaways Australia Pty Ltd v CBC Management Pty Ltd [2004] NSWSC 1186 and Demir Pty Ltd v Graf Plumbing Pty Ltd [2004] NSWSC 553. Macready AJ in Project Venture Development No 11 v TQM Design & Construct Pty Ltd [2009] NSWSC 699 expressly approved Palmer J’s decision in Aldoga. In Falgat Constructions Pty Ltd v Masterform Pty Ltd [2005] NSWSC 525 the claimant obtained a judgment debt by registering the adjudication determination in the Local Court. Macready AJ set aside the statutory demand under s 459G of

the Corporations Act and held that ‘the effect of the judgment obtained is limited and a genuine dispute, for instance, as to the terms of the contract may give rise to a genuine claim which would be a foundation for an off-setting restitutionary claim to be brought pursuant to the contract’: at [38]. See also CCD Group Pty Ltd v Premier Drywall Pty Ltd [2006] NSWSC 1012 at [50]–[54]. Ziade Investments No 1 Pty Ltd v Tricon Projects Pty Ltd [2004] NSWSC 1070 was also a case where the claimant served a statutory demand based on a court judgment entered for the amount of the adjudication determination. The respondent sought to set aside the statutory demand on the basis of an off-setting claim under s 459H(1)(b) of the Corporations Act. Macready M held the test to be applied in determining whether there exists a genuine off-setting claim was stated by Palmer J in Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743 where his Honour held: A genuine off-setting claim … means a claim on a cause of action advanced in good faith, for an amount claimed in good faith. … [‘Good faith’] means a claim arguable on the basis of facts asserted with sufficient particularity to satisfy the court that the claim is not fanciful.

[page 289] On the facts in Ziade the alleged off-setting claim was a claim made by the respondent against the claimant who contracted with the respondent under a construction management agreement. Macready M held that the alleged offsetting claim for defects and faulty workmanship were in truth claims against trade contractors, not against the respondent and was therefore satisfied that the claim as against the claimant was fanciful and he refused to set aside the statutory demand: at [42], [43]. In Cashgain Pty Ltd v Excell Building Corp Pty Ltd [2007] NSWSC 196 the respondent’s ‘offsetting claim’ based on alleged defective work by the claimant and the evidence thereof was ‘sufficiently cogent as to be not fanciful’ (at [10]) and accordingly the court under s 459H(3) of the Corporations Act set aside the statutory demand: at [27]. In Ettamogah Pub (Rouse Hill) Pty Ltd v Consolidated Constructions Pty Ltd (in liq) [2006] NSWSC 1450 White J held that where the claimant properly obtained summary judgment because of the respondent’s failure to secure a payment schedule: Whilst there can be no dispute that the plaintiff is indebted to the defendant for the amount claimed in the statutory demand, the plaintiff will nonetheless have an offsetting claim equal to the amount of that

debt if there is a genuine dispute that the defendant was not contractually entitled to the amount claimed in the payment claims made under s 13 of the Security of Payment Act: at [12].

White J added: … under the contract, the defendant was entitled to be paid the amounts as assessed by the architect in the progress certificate. It was not entitled to progress payments merely on the issue of its progress claims. On this ground alone, the plaintiff has what is at least a seriously arguable claim to relief pursuant to s 32 of the Security of Payment Act in an amount at least equal to the amounts claimed in the statutory demand: at [15].

See also Pacific Islands Express Pty Ltd v Empire Building Development Pty Ltd [2008] NSWSC 576 where the evidence filed by the plaintiff seeking to set aside the statutory demand under s 459G(3)(a) was insufficient and so the statutory demand based on a judgment obtained under Building and Construction Industry Security of Payment Act 1999 (NSW) was not set aside. See also BBB Constructions Pty Ltd v Frankipile Australia Pty Ltd [2008] NSWSC 982 where in the context of s 459H Brereton J also considered what conditions an order setting aside a statutory demand may be made subject to under s 459M, such as: payment into court of the amount claimed (at [21]); or that the plaintiff diligently prosecute its offsetting claim: at [25]. It may be possible to make a single application to set aside more than one statutory demand: Remo Constructions Pty Ltd v Dualcorp Pty Ltd [2008] NSWSC 1172. However, the facts of a particular case may mean that a single application or a single affidavit in support will not comply with the statutory regime: at [44]. The application to set aside the statutory demand in Diddy Boy Pty Ltd v Design Environment Pty Ltd [2009] NSWSC 14 failed. The statutory demand was based on a judgment obtained as a consequence of an adjudication determination, which the respondent did not defend. The respondent’s arguments that the statutory demand was the subject of a ‘genuine dispute’ failed as a previous application to set aside the adjudication had previously failed and the respondent was therefore bound by the adjudication determination: at [40]. The argument that the respondent had an ‘offsetting claim’ also [page 290] failed as the respondent provided no admissible evidence to ‘found some right to claim these amounts’: at [45].

Section 553C of Corporations Act [4.5] In Brodyn Pty Ltd t/a Time Cost and Quality v Dasein Constructions Pty Ltd [2004] NSWSC 1230 the claimant made a successful adjudication application and ultimately obtained judgment under s 25(1) of the Act. Subsequently, the respondent commenced separate court proceedings under the contract claiming an amount in excess of the judgment. The claimant then went into administration and became subject to a deed of company arrangement. The respondent lodged a proof of debt which the deed administrator rejected. The respondent made application under s 1321 of the Corporations Act 2001 (Cth), which provides a person aggrieved by an administrator’s decision under a deed of company arrangement with a right of appeal, claiming it had a right of set-off under s 553C of the Corporations Act, against the judgment under s 25(1) of the Building and Construction Industry Security of Payment Act 1999 (NSW). Section 553C provided: Where there have been mutual credits, mutual debts or other mutual dealings between an insolvent company that is being wound up and a person who wants to have a debt or claim admitted against the company: (a) an account is to be taken of what is due from the one party to the other in respect of those mutual dealings; and (b) the sum due from the one party is to be set off against any sum due from the other party; and (c) only the balance of the account is admissible to proof against the company, or is payable to the company, as the case may be.

There was therefore a conflict between ss 25 and 553C which Young CJ resolved under s 109 of the Australian Constitution, where the Commonwealth Act prevailed. Young CJ also found in favour of the respondent on the perhaps more controversial basis that the Building and Construction Industry Security of Payment Act 1999 (NSW) ‘only intends to operate when the head contractor and the subcontractor are going concerns. Once the [claimant] ceased to be a going concern, it no longer needs cash flow and the mischief to be covered by the Act is not present’: at [87]. In Veolia Water Solutions & Technologies (Australia) Pty Ltd v Kruger Engineering Australia Pty Ltd (No 3) [2007] NSWSC 459, McDougall J reconciled s 25 of the Building and Construction Industry Security of Payment Act 1999 (NSW) and s 533C of the Corporations Act 2001 (Cth) thus: The effect of the application of s 533C (in a case where the offsetting claim exceeds the amount of the progress claim) is that the progress claim is satisfied by set-off. The person entitled to the progress claim has received the benefit of payment. That is so regardless of whether the progress claim has given rise to an adjudication determination or a judgment debt. Operation of the statutory scheme of set-off under the Corporations Act does not impeach the progress claim (or any adjudication determination or judgment

founded on it). On the contrary, the effect of the progress claim is accepted, because its amount is brought to account in the process of set-off: at [24].

Accordingly there was held to be no inconsistency between ss 25 and 533C. [page 291] BANKRUPTCY ACT 1966 (CTH) Sections 40 and 41 of Bankruptcy Act [4.6] Sections 41 and 40 of the Bankruptcy Act 1966 (Cth) relevantly provide that: 41(1) An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor: (a) a final judgment … that: (i)

is of the kind delivered in paragraph 40(1)(g); and …

Pursuant to s 40(1)(g) an act of bankruptcy is committed: … if a creditor who has obtained against the debtor a final judgment …, has served on the debtor …, a bankruptcy notice under this Act and the debtor does not … satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt … that he or she could not have set up in the action or proceeding in which the judgment or order was obtained.

Section 40(3)(b) provides that for the purposes of s 40(1)(g): … a judgment or order that is enforceable as, or in the same manner as, a final judgment obtained in an action shall be deemed to be a final judgment so obtained and the proceedings in which, or in consequence of which, the judgment or order was obtained shall be deemed to be the action in which it was obtained.

In Cavanah v Advance Earthmoving & Haulage Pty Ltd [2008] FMCA 427 the respondent to an adjudication determination in favour of the claimant under the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA) sought orders for the setting aside of a bankruptcy notice delivered by the claimant, consequent upon the adjudication determination and the filing of the relevant adjudication certificate in the Supreme Court of Queensland in accordance with the requirements of s 31 of the BCIPA. Burnett FM decided that: 1. The judgment entered under the BCIPA ‘constitutes a final judgment despite it not being a judgment based on a curial determination and it not being a judgment that will finally dispose of the proceeding’: at [50]. 2. The legislative framework of the BCIPA meant that it could be

characterised as a ‘proceeding’ as referred to in s 40(1)(g) of the Bankruptcy Act 1966 (Cth): at [64]. 3. The issue of a bankruptcy notice is consistent with the policy of the BCIPA and the Bankruptcy Act: at [72]. 4. Section 41(7) of the Bankruptcy Act allows a debtor to apply to the court for orders setting aside the bankruptcy notice on the ground that the debtor has a counter-claim, set-off or cross demand as referred to in s 40(1)(g) but ‘the application must be made before the expiration of the time fixed for compliance with the requirements of the Bankruptcy Notice’: at [75]. 5. For the respondent to succeed in an application to set aside such a bankruptcy notice ‘it is also necessary for [the respondent] to demonstrate that [it has] a counter-claim, set-off or cross demand that [it] could not have set up in the action or proceeding in which the judgment or order was obtained’: at [95]. The respondent contended that at the relevant times during the adjudication it could not quantify the heads of damage contended in its cross demand but Burnett FM held that ‘the absence of a capacity to precisely quantify the various heads of [page 292] damage contended for by the [respondent] in [the] cross demand as at the time when it was required to engage in the adjudication is not sufficient to establish an incapacity to set up a counter-claim, set-off or cross demand in the action or proceeding for the purpose of s 40(1)(g)’: at [113]. Accordingly, the respondent’s application to set aside the bankruptcy notice failed. TRADE PRACTICES ACT 1974/COMPETITION AND CONSUMER ACT 2010 (CTH) [4.7] In Energetech Australia Pty Ltd v Sides Engineering Pty Ltd [2005] NSWSC 1143 the respondent sought an injunction on the basis that the claimant’s conduct in submitting a payment claim was misleading and deceptive as it: 1. represented that work done was a variation when in truth it was not; and 2. represented a reference date that was not that date at all. Campbell J in Energetech held there was no misleading or deceptive conduct

as the claims were not likely to be held as anything other than the respondent’s contentions, and would ultimately be open to dispute and argument as part of the adjudication process: at [48]–[51]. Campbell J also held that the submitting of a payment claim to an adjudicator who has statutory powers is not conduct ‘in trade or commerce’ within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (now s 18 of the Australian Consumer Law (ACL) in the Competition and Consumer Act 2010 (Cth) Sch 2): at [56]. Further, Campbell J held that where the respondent sought an injunction restraining the claimant from proceeding with its payment claim or from applying for adjudication in relation to the payment claim, it was not the court’s role to answer any question of whether the respondent was entitled to apply for adjudication, ‘when that answer is sought as a way of pre-empting the possibility that an adjudicator might make a mistake in coming to a determination’: at [106]. Section 15(4)(b)(ii) of the Act and defence based on the Trade Practices Act [4.8] In Lucas Stuart Pty Ltd v Council of the City of Sydney [2005] NSWSC 840 the respondent defended the summary judgment application on the basis that the claimant engaged in misleading and deceptive conduct in breach of s 52 of the Trade Practices Act 1974 (Cth) (ACL s 18) and s 42 of the Fair Trading Act 1987 (NSW). The alleged misleading and deceptive conduct was that: 1. prior to the payment claim in question the claimant had previously served progress claims and payment claims on persons other than the respondent; 2. the claimant represented to the respondent prior to service of the payment claim that it would provide the respondent with a summary of outstanding claims for the purpose of settlement discussions; and 3. the claimant did not prior to service of the payment claim advise the respondent that it would now be securing a payment claim instead of the previously represented summary. The respondent’s defence failed, Einstein J holding that: It seems clear that the attempt by the Council to invoke the cause of action under the Trade Practices Act and under the Fair Trading Act, albeit sought to be pleaded in the defence, requires a positive

[page 293] cross-claim proceeding. For that reason alone the Council in relation of those causes of action could not pursue such a cross-claim: s 15(4)(b)(i). The attempt by the Council to invoke the estoppel defence flies in the face of s 15(4)(b)(ii): at [24]–[25].

Trade Practices Act/Competition and Consumer Act breaches can be raised by way of defence to a claim for judgment under s 15 of the Building and Construction Industry Security of Payment Act 1999 (NSW), or by cross claim: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238 at [90]– [104]. Such a defence is not a matter arising under the contract and so s 15(4)(b) (ii) should not prevent a defence based on such conduct in service of a payment claim: Bitannia at [96]. See also Winslow Constructors Pty Ltd v John Holland Rail Pty Ltd [2008] VCC 1491, referred to at [3.163] above. Relief against interest claim under s 51AA of Trade Practices Act/s 20 of ACL [4.9] In Katherine Pty Ltd v CCD Group Pty Ltd [2008] NSWSC 131, the adjudicator awarded an amount of $100,000 in favour of the contractor for work done and material supplied and determined that an extra $240,000 should be paid on account of interest at nine per cent per month, compounding. The respondent sought from the court relief in respect of the interest component of the determination under s 51AA of the Trade Practices Act 1974 (Cth) (now ACL s 20). Section 51AA provided that: ‘A corporation must not, in trade or commerce, engage in conduct that is unconscionable …’. In the circumstances, McDougall J decided that the interest rate in the construction contract (that equated to 180 per cent per annum) was clearly a penalty as the only evidence of loss which could be compared to that rate was the claimant’s overdraft interest rate which was in the order of 16.5 per cent per annum. McDougall J decided that ‘it would be an injustice to permit the claimant to have the full benefit of a bargain that, through its incorporation of a penalty, is unconscionable’: at [47]. Accordingly, the claimant was not permitted to enforce the determination of the adjudicator to the extent of the interest awarded by the adjudicator. The claimant could nevertheless claim interest but only at the overdraft rate applicable at the times when the payment was overdue.

[page 295]

Chapter 5 Other New South Wales Legislation Considered in the Context of the New South Wales Security of Payment Legislation COMMERCIAL ARBITRATION ACT 1984 (NSW) Section 47 of Commercial Arbitration Act [5.1] In Grant Constructions Pty Ltd v Claron Constructions Pty Ltd [2006] NSWSC 369, the claimant in a successful adjudication sought under s 47 of the Commercial Arbitration Act 1984 (NSW) a stay of arbitration proceedings commenced by the respondent, arguing that it was oppressive to require the claimant to have to deal with the arbitration when it was being denied the benefit of the adjudication determination. Einstein J dismissed the application as ‘misconceived’ as the arbitration was not denying the claimant the benefit of the adjudication: the claimant was free to enforce the adjudication determination unaffected by the arbitration: at [13]. Under the current Commercial Arbitration Act 2010 (NSW), there is no equivalent of s 47 of the now repealed Commercial Arbitration Act 1984 (NSW), so where the current Commercial Arbitration Act applies the Grant Constructions decision is of limited relevance. CONSUMER, TRADER AND TENANCY TRIBUNAL ACT 2001 (NSW) [5.2] In Cooper v Home Productions Pty Ltd (General) [2004] NSWCTTT 597 the successful claimant in an adjudication sought to rely on s 25(4) of the Act in separate proceedings commenced by the respondent in the NSW Consumer, Trader and Tenancy Tribunal. In the Tribunal proceedings the respondent claimed goods supplied by the claimant were not of merchantable quality and were delivered late — the respondent did not raise those issues, however, in the

adjudication. The Tribunal decided that s 25(4) of the Act may afford the claimant a defence to proceedings attempting to set aside a judgment entered as referred to in s 25(1) but s 25(4) could not provide a defence to the separate Tribunal proceedings. Patten AJ in Cooper v Veghelyi [2005] NSWSC 602 held that the Tribunal’s determination that it had jurisdiction to deal with Ms Cooper’s application was correct: at [3], [23]. In Meyer v Brian Burston Building Design Consultant (General) [2005] NSWCTTT 235 a building designer’s claim in the NSW Consumer, Trader and Tenancy Tribunal based on the Act failed as the building designer (the claimant) had not commenced proceedings in a court of competent jurisdiction (at [21]), and so the building designer [page 296] could not rely on s 15(4) of the Act to defeat claims made by the respondent in the Tribunal proceedings. Where a subcontractor made a claim in the NSW Consumer, Trader and Tenancy Tribunal, the head contractor claimed the Tribunal lacked jurisdiction to hear the claim relying on s 22(7) of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) which provides that: If, at the time when an application is made to the Tribunal in accordance with this Act, an issue arising under the application was the subject of a dispute in proceedings pending before a court, the Tribunal, on becoming aware of those proceedings, ceases to have jurisdiction to hear or determine the issue.

The alleged ‘dispute in proceedings pending before a court’ was Supreme Court proceedings commenced by the principal to the head contract to challenge an adjudication determination between it and the head contractor. The Tribunal rejected the challenge to its jurisdiction holding that: … for the proceedings in the Tribunal and in a Court to require determination of the same issue, the parties in the Tribunal proceedings must also be parties in the proceedings being conducted by the Court: Precision Flooring Pty Ltd v Tricon Projects Pty Ltd (Home Building) [2005] NSWCTTT 250 at [21].

However, in Bell v Pearce (Home Building) [2005] NSWCTTT 433 the NSW Consumer, Trader and Tenancy Tribunal held that it must regard an adjudication determination as valid, until set aside by a relevant court: at [27]. In Bell the Tribunal therefore proceeded on the basis of the adjudicator’s determination that the contract was terminated: at [28].

A claimant can commence proceedings in the NSW Consumer, Trader and Tenancy Tribunal and subsequently serve a payment claim and then proceed to adjudication: Falgate Constructions Pty Ltd v Masterform Pty Ltd [2005] NSWSC 728 at [9]–[10]. In Falgate, after registering the adjudicator’s determination as a judgment in the Local Court the claimant in effect discontinued the NSW Consumer, Trader and Tenancy Tribunal proceedings. Macready AJ rejected the respondent’s argument that as a consequence it should lose its interim rights under the Act, and held that the claimant’s judgment in the Local Court was not affected by what happened with the NSW Consumer, Trader and Tenancy Tribunal claim: at [45]. Section 22(3) of the Consumer, Trader and Tenancy Tribunal Act provides: If, at the time when an application was made to the Tribunal in accordance with this Act, no issue arising under the application was the subject of a dispute in proceedings pending before a court, a court has no jurisdiction to hear or determine such an issue.

‘Issue’ in s 22(3) means ‘a point in dispute between the parties’: Advance Earthmovers Pty Ltd v Fubew Pty Ltd [2009] NSWCA 337 at [40]; accordingly, the NSW Consumer, Trader and Tenancy Tribunal proceedings by the principal alleging overcharging by the contractor did not raise the same issue as court proceedings claiming summary judgment under the Security of Payment legislation: at [42]. Further, s 22(3) ‘merely deprives the District Court of jurisdiction to try the same “issue” as is before the [Consumer, Trader and Tenancy Tribunal]. It does not operate to deprive the District Court of jurisdiction to decide any other question arising between the parties’: at [43]. [page 297] HOME BUILDING ACT 1989 (NSW) [5.3] Campbell J held in Glen Eight Pty Ltd v Home Building Pty Ltd (in liq) [2005] NSWSC 907 there were serious questions to be tried as to whether the claimant was in breach of the Home Building Act 1989 (NSW) by not having the required insurance and therefore whether it was precluded by s 94 of that Act from recovering the amount of the adjudicator’s determination: at [21]–[25]. In Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2004] NSWCA 394 the Court of Appeal held that failure by the respondent to have a licence under the Home Building Act was not a basis on which to have the adjudicator’s determination declared void or otherwise unenforceable. Hodgson JA held:

In my opinion, the civil consequences for an unlicensed contractor for its breach of s 4 are those set out in s 10, and not any wider deprivation of remedies. In my opinion this is confirmed by the different provisions of s 94, which explicitly precludes, in the event of breach of the insurance provisions, the obtaining of a quantum meruit unless a court considers it just and equitable. In my opinion, the remedy given by the Act is not of the nature of damages or any other remedy in respect of breach of contract nor is it enforcement of the contract: it is a statutory remedy, albeit one that in part makes reference to the terms of a contract, and thus it is not affected by s 10 of the [Home Building Act]: at [82].

Section 7D of the Home Building Act imposes restrictions on the creation of an interest in land arising from a charging provision in a contract subject to the Home Building Act. Section 7D(3) sets out certain exceptions to the restrictions, one such being s 7D(3)(c) which refers to where the charge is created ‘to secure payment … of money due under the contract but only if a court or tribunal has made an order or judgment that such payment be made’. Brereton J in Kell & Rigby Pty Ltd v Flurrie Pty Ltd [2006] NSWSC 906 determined that ‘a judgment obtained by registering an adjudication certificate in respect of a progress payment is a judgment that a payment of money due under the contract be made’ (at [55]) but the charge was nevertheless void under s 7D(1) as the charging provision creates an immediate interest in land, that is, not only if or when ‘a court or tribunal has made an order or judgment’: at [33]. In Smith t/a Michael Smith Constructions v Avibe Pty Ltd [2006] NSWSC 1402, the charge on land clause (cl 28) in the building contract provided: 28. CHARGE ON LAND The Owner subject to the Act hereby charges the parcel of land on which or on part of which the works are to be erected with the due payment to the Builder of all moneys that may become payable to the Builder by virtue of this Contract or otherwise arising from the carrying out of the works.

The builder served a payment claim and subsequently obtained an adjudication determination in its favour which was registered in the District Court as a judgment in accordance with the Building and Construction Industry Security of Payment Act 1999 (NSW). Relying on Kell & Rigby the owner said cl 28 was void by virtue of s 7D(1) of the Home Building Act 1989 (NSW) in the same way that the charge on land provision was void in Kell & Rigby. The builder relied on the words ‘subject to the Act’ in the charge on land clause to argue that the charge was only created if a court or tribunal made an order or judgment for payment and therefore it comes within the exception in s 7D(3)(c). Young CJ determined that the words ‘hereby charges’ in the charge on land [page 298] clause meant that the charge was created at the moment the contract was entered

into even though the charge would only operate at a later date and therefore it was void under s 7D(1) of the Home Building Act: at [17], [18]. Section 48L(3) of the Home Building Act excludes matters arising under ss 15, 16 or 25 of the Building and Construction Industry Security of Payment Act from the requirement that the Consumer, Trader and Tenancy Tribunal is to be chiefly responsible for resolving building claims. SUPREME COURT ACT 1970 (NSW) [5.4] In Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399, McDougall J also observed in obiter comments that the court does have the power where it declares that an adjudicator’s determination was void to order the adjudicator to ‘reconsider an application and make a determination according to law’ (at [89]), and that ‘[u]ndoubtedly, there may arise cases where it would be inappropriate to make such an order, and more appropriate to leave the dissatisfied claimant to its rights under s 26(2)’: at [90]. Such relief would be relief under s 29 of the Supreme Court Act 1970 (NSW): at [86]. CIVIL PROCEDURE ACT 2005 (NSW) AND UNIFORM CIVIL PROCEDURE RULES 2005 [5.5] On the issue of costs and Uniform Civil Procedure Rules 2005 rr 12.1. 12.3, 42.1, 42.9 and 42.10, where there was a late amendment of pleadings in an application for relief under the Act, see Bitannia Pty Ltd v Parkline Construction Pty Ltd [2009] NSWCA 32. In IWD No 2 Pty Ltd v Level Orange Pty Ltd [2012] NSW SC 1394 the respondent sought to amend its summons to include a claim that the determination was void by reason of the failure of the adjudicator to afford natural justice to the respondent. After considering the effect of the case management principles established by the Civil Procedure Act 2005 (NSW) and the Uniform Civil Procedure Rules 2005 on the application for leave to amend (where the amendment application was made late, where there was no good reason why the point was not raised earlier and where the amendment would likely cause delay), because of the serious nature of a likely denial of natural justice, Stevens J allowed the amendment to be made but subject to the condition that the respondent pay the costs of the claimant on an indemnity basis for a portion of the hearing of the claimant’s application. DISTRICT COURT ACT 1973 (NSW)

[5.6] In Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2005] NSWCA 49 the claimant initially commenced District Court proceedings under the contract, but subsequently (after it was ordered to provide security for costs in the proceedings) served a payment claim under the Act. The District Court granted an anti-suit injunction under s 46 of the District Court Act 1973 (NSW) on the grounds that: 1.

The builder’s statutory claim was vexatious and oppressive.

2.

The statutory adjudication would frustrate the District Court’s task. [page 299]

3.

The builder had elected to submit the dispute to the jurisdiction of the District Court and should be held to its election.

4.

On the proper construction of the Act, any statutory proceedings should be completed before court proceedings are commenced: at [7].

The Court of Appeal in Falgat dissolved the injunction, holding the District Court judge’s conclusions do not ‘follow if the [claimant’s] statutory remedies for interim relief supplement his contractual rights, subject to a final determination of those rights in court proceedings’ (at [11]), and s 32 of the Act essentially has that effect: see [21] of the judgment of Handley JA. Accordingly, the Court of Appeal disagreed with each of the four grounds upon which the District Court judge based the injunction, noting that it may have been different where claims under the Act were prosecuted close to the trial of the common law proceedings: at [26], [27]. INTERPRETATION ACT 1987 (NSW) [5.7] See [3.326] and the Kittu Randhawa t/as Mystery of Spice v Serrata t/as Innova Design Solutions [2009] NSWSC 170 decision. EVIDENCE ACT 1995 (NSW) [5.8] See [3.326] and the Kittu Randhawa t/as Mystery of Spice v Serrata t/as Innova Design Solutions [2009] NSWSC 170 decision. Section 160 of the Evidence Act 1995 (NSW) provides that it is presumed unless evidence sufficient to raise doubt about the presumption is adduced, that a

postal article sent by prepaid post addressed to a person at a specified address in Australia was received at that address on the fourth working day after having been posted. In Agusta Industries Pty Ltd v Niclad Constructions Pty Ltd [2010] NSWSC 925 Gzell J held that s 160 is not affected by the presumption in s 29 of the Acts Interpretation Act 1901 (Cth) referred to in Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259 so that s 160 of the Evidence Act continued to apply: see [38], [39]. ELECTRONIC TRANSACTIONS ACT 2000 (NSW) [5.9] Where a contract specifically permitted service by email by the annexure to the contract specifying a particular email address, the question to be considered was where a payment claim is provided by email, when does the claimant ‘serve a payment claim on a respondent’ as referred to in s 14(4)(a). In Reed Constructions Pty Ltd v Eire Contractors Pty Ltd [2009] NSWSC 678 Macready AJ referred to s 13(3) and (4) of the Electronic Transactions Act 2000 (NSW). Those sections provide: 13(3) For the purposes of a law of this jurisdiction, if the addressee of an electronic communication has designated an information system for the purpose of receiving electronic communications, then, unless otherwise agreed between the originator and the addressee of the electronic communication, the time of receipt of the electronic communication is the time when the electronic communication enters that information system. 13(4) For the purposes of a law of this jurisdiction, if the addressee of an electronic communication has not designated an information system for the purpose of receiving electronic

[page 300] communications, then, unless otherwise agreed between the originator and the addressee of the electronic communication, the time of receipt of the electronic communication is the time when the electronic communication comes to the attention of the addressee.

Specifically, Macready AJ considered the question of whether ‘receipt’ as defined in the Electronic Transactions Act equates to service and held that: Sections 13(3) and 13(4) draw the distinction between electronic communications sent to a designated information system and those that are not. Section 13(3) provides that if an information system has been designated, it can be inferred that receipt into that information system equates to service. If no information system has been identified, then under s 13(4), receipt occurs when the communication comes to the attention of the addressee. Therefore, if s 13(3) applies, evidence must be adduced of when the email entered the information system, not when the email came to the attention of the addressee, meaning that the read receipt is not relevant. Evidence of the time an email entered a mail server would presumably be adduced through some kind of email exchange log generated by that server. The evidence does not indicate whether this is data that is regularly logged by mail servers and if so, whether there may be a question as to the length of time this information is stored: at [31].

If a destination mail server is very busy or if an email has been incorrectly addressed, a “bounced” message is usually returned to sender with details of the problem. However, if a sending mail server can locate a domain it is trying to contain but cannot for some reason despatch the communication to the designated user account, it may hold onto the communication for some time in order to try again. Alternatively a destination mail server may be off-line for some reason. Therefore, in the absence of evidence to assist me, I would be reluctant to infer that the recipient server received the email on the same day that it was sent: at [35].

In s 20 ‘lodged’ does not require that it actually arrived, so that an adjudication application could be lodged when it was sent to the email address of the authorised nominating authority even if it was caught in the spam filter and not read by the authorised nominating authority: Bauen Constructions Pty Ltd v Sky General Services Pty Ltd [2012] NSWSC 1123 at [71], [75]. Further, because of s 13A of the Electronic Transactions Act 2000, when the email got caught in the spam filter it was ‘capable of being retrieved by the addressee at an electronic address’ as referred to in s 13A and therefore it has then been ‘received’ or ‘lodged’: see [76]–[78].

[page 301]

Chapter 6 Other Victorian Legislation Considered in the Context of the Victorian Security of Payment Legislation SUPREME COURT AND COUNTY COURT AND RULES [6.1] Rule 13.14 of the Victorian Supreme Court Rules cannot be relied on to enable the respondent to plead a set-off to a summary judgment application: AMD Formwork Pty Ltd v Yarraman Construction Group Pty Ltd [2004] VCC 17 at [24], applying LU Simon Builders Pty Ltd v Fowles [1992] 2 VR 189. See, however, the later decision of Shelton J in Brady Constructions Pty Ltd v Dominicon Lifestyle Tower Apartments Pty Ltd [2006] VCC 1830 where after referring to r 13.14 of the County Court Rules (at [33]), Shelton J held that in the circumstances there was: … a question to be tried both with respect to the defendant’s claims for liquidated damages and defective work and on the proper construction of the February 2006 Agreement, the March 2006 Agreement, and the Contract, the defendant is not precluded from raising these matters by way of setoff. These claims for damages exceed the plaintiff’s claim I conclude that the plaintiff is not entitled to summary judgment: at [54].

Shelton J in Shelford Engineering and Construction Pty Ltd v Rescom Constructions Pty Ltd [2005] VCC 361 held that it was open to the respondent to oppose the summary judgment application on the basis that all the elements of the statutory cause of action under the Victorian Security of Payment Act had not been proven by the claimant, but left open the question whether O 56 of the Supreme Court (General Civil Procedure) Rules 1996 provided an avenue of challenge to the determination: at [12], [13]. COUNTY COURT ACT 1958 (VIC) [6.2] A summary judgment obtained under the Victorian Security of Payment

Act where no payment schedule has been provided ‘does not finally dispose of the rights of the parties to the construction contract’: Pearl Hill Pty Ltd v Concorp Construction Group (Vic) Pty Ltd [2011] VSCA 99 at [18]. Accordingly, under s 74(2D) of the County Court Act 1958 (Vic) an appeal does not lie to the Court of Appeal except with leave. DOMESTIC BUILDING CONTRACTS ACT 1995 [6.3] In Domaine Homes (Vic) Pty Ltd v RIA Building Pty Ltd [2005] VSC 111 the claimant commenced County Court proceedings when the respondent failed to provide a payment schedule. The project was ‘domestic’ and ordinarily s 57 of the Domestic Building [page 302] Contracts Act 1995 (Vic) would operate to stay court proceedings, as the Victorian Civil and Administrative Tribunal has jurisdiction to hear domestic building disputes. The respondent conceded however that s 16(2)(a) of the Building and Construction Industry Security of Payment (Amendment) Act 2006 (Vic) (BCISPA) meant the BCISPA claim could not be heard by the Victorian Civil and Administrative Tribunal and therefore there should be no stay under s 57 in respect of that claim. The claimant also brought a claim for breach of contract in the County Court proceedings and the respondent claimed those proceedings should be stayed under s 57 of the Domestic Building Contracts Act. Section 57 provides: (1) This section applies if a person starts any action arising wholly or predominantly from a domestic building dispute in the Supreme Court, the County Court or the Magistrates’ Court. (2) The Court must stay any such action on the application of a party to the action if — (a) the action could be heard by the Tribunal under this Subdivision; and (b) the Court has not heard any oral evidence concerning the dispute itself.

Shelton J refused the stay because: 1. ‘action’ in s 57 means ‘proceeding’ not ‘cause of action’; 2. the claim under the Victorian Security of Payment Act is not one arising from a domestic building dispute but rather is a claim for a debt due; and 3. therefore the proceeding was not one ‘arising wholly or predominantly from a domestic building dispute’.

In Brady Constructions Pty Ltd v Dominicon Lifestyle Tower Apartments Pty Ltd [2006] VCC 1830 the claimant and respondent were parties to a domestic building contract and after disputes arising they entered into two subsequent settlement agreements. Ultimately a claim under one or both of those settlement agreements was referred to adjudication and the claimant obtained an adjudicator’s determination in its favour. When the respondent did not pay the amount of the adjudicator’s determination the claimant sought summary judgment for the sum of $200,000 pursuant to s 27. The respondent’s application for a stay of the proceeding pursuant to s 57 of the Domestic Building Contracts Act 1995 (Vic) was unsuccessful. Shelton J held that the action as pleaded, as a matter of construction, was based on the settlement agreements: … which were compromise agreements, rather than an action “arising wholly or predominantly from a domestic building dispute” whether regarded as arising in relation to the Contract or the carrying out of domestic building work. The action pleaded … is essentially for moneys due under the settlement agreements: at [28].

Shelton J distinguished Presser v Oceanview Properties Pty Ltd [2006] VSC 143 at [29]. In Glenrich Builders Pty Ltd v 1–5 Grantham Street Pty Ltd [2008] VCC 1170 Shelton J held that the Domestic Building Contracts Act does not apply to owner-developers, that is, does not apply to a contract between an ownerdeveloper and the builder: at [28]. FAIR TRADING ACT 1999 (VIC) [6.4] Section 11 of the Fair Trading Act 1999 (Vic) provides that once an application has been made to the Victorian Civil Administrative Tribunal (VCAT) ‘in respect of a consumer and trader dispute or in respect of any other matter in respect of which the [page 303] Tribunal has jurisdiction under this Act, the issues in dispute are not justiciable at any time by a Court’. It was argued that once the VCAT jurisdiction was invoked, a payment claim was an ancillary dispute which could be dealt with by VCAT. In Professional Floor Services Pty Ltd v Techor Developments Pty Ltd [2009] VCC 0560, Shelton J held that: To imply that in all the circumstances VCAT has jurisdiction to deal with the plaintiff’s claim is totally inconsistent with s 16(4) of the [Security of Payment] SOP Act … to grant the defendant’s application and allow VCAT to hear the plaintiff’s claim under the SOP Act would totally frustrate the purpose of s

16(2)(4)(b) of the SOP Act by mingling the plaintiff’s claim with the defendant’s claim. This could not be done in the County Court: at [22].

MAGISTRATES’ COURT CIVIL PROCEDURE RULES [6.5] The Magistrates Court Civil Procedure (Amendment No 23) Rules 2008 inserted a new O 28A into the Victorian, Magistrates Courts Civil Procedure Rules from 23 June 2008. Order 28A sets out the procedural rules to recover in court the amount of an adjudication determination (O 28A.02 and 28A.03), to set aside an order made (O 28A.04), for certification under s 33 of the Act (O 28A.05), and for applications for stays of payment under s 37 of the Act (O 28A.06). EVIDENCE ACT 2008 (VIC) [6.6] In proceedings between a builder and principal about a disputed termination of the contract, there was a claim for privilege against production of documents relating to an earlier adjudication under the Act between the parties. The party claiming privilege said that the adjudication process was not an ‘Australian proceeding’ under s 119 of the Evidence Act 2008 (Vic) and so the relevant communications did not qualify for privilege. Macaulay J in Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [2011] VSC 477 held that: 1. documents relating to the adjudication which attracted the advice privilege under s 118 were privileged from production (at [38]); and 2. s 119 provides for privilege to attach to documents made or prepared ‘for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceedings’. Although an adjudicator does not qualify as an ‘Australian Court’ on the basis that adjudicators are not bound to apply the rules of evidence, they nevertheless are authorised to ‘hear, receive and examine evidence’ and therefore the definition of ‘Australian Court’ does include an adjudicator and an adjudication is therefore an ‘Australian Proceeding’ under s 119: at [48]–[51].

[page 305]

Chapter 7 Other Principles from Decided Cases in Context of Security of Payment Legislation ALLOWING INTERLOCUTORY DETERMINATIONS TO BE LITIGATED [7.1] In JBK Engineering Pty Ltd v Brick & Block Co Pty Ltd [2007] NSWSC 163 at [7] Einstein J held that: [T]here are occasions when the public interest in the finality of litigation must yield to the undoubted discretion in the court to permit a matter which had been determined at an interlocutory level to be relitigated. However … it is important for the court to monitor any obvious attempt to forum shop extremely closely and it is equally clear that where there is a change in circumstance, the inherent jurisdiction of the court to vary an interlocutory order may be invoked.

PRINCIPLES TO BE APPLIED IN SUMMARY JUDGMENT APPLICATION [7.2] In Fifty Sixth Taljan Pty Ltd v Dattilo Holdings Pty Ltd [2007] VSC 226 Williams J cited with approval the test in Fancourt v Mercantile Credits Ltd [1983] HCA 25 and held that: Further, in such an application, the court should be reluctant to try a case on affidavit where the facts are in dispute. Nevertheless, it must consider whether the defendant’s account is credible in all the circumstances: at [42].

In AC Hall Airconditioning Pty Ltd v Schiavello (Vic) Pty Ltd [2008] VCC 1490 Shelton J cited with approval the statement in Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 that ‘where there is a real case to be investigated, leave to defend should be given’. PAYMENT BY RESPONDENT TO SUBCONTRACTOR OF CLAIMANT IN DISCHARGE OF PAYMENT OBLIGATION TO CLAIMANT

[7.3] In Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] NSWSC 753, the respondent paid a subcontractor of the claimant a part of the adjudicated amount and said that by its payments to the subcontractor it had discharged the obligations of the claimant to the subcontractor, which therefore satisfied the adjudication determination (and the court judgment obtained consequent upon the determination under s 25(1)) that it pay the claimant). The respondent’s arguments failed before Hammerschlag J, as: [T]he [respondent] on its own version was a voluntary and unrequested payer of the [claimant’s] debt to [the subcontractor]. The [respondent] accepted that on equitable principles the [claimant] is entitled only to a restitutionary claim to reimbursement if the debtor (here the [claimant]) adopts the payment by the third party (here the [respondent]) in discharge of the debt. This was expressed by Brereton J in Brasher v O’Hehir [2005] NSWSC 1194 at [37] in the following terms:

[page 306] While a voluntary and unrequested payer of a debt has no common law restitutionary claim to reimbursement, equity recognises such a claim arising through subrogation to the creditor’s rights, if the debtor validly applies the money advanced to the discharge of its debt [Re Cleadon Trust Ltd [1939] Ch D 286 at 302 (Lord Greene MR), 316 (Scott LJ), 322–324 (Clauson LJ)]. If a debtor adopts the payment by the third party by applying it in discharge of the debt, then the debtor’s conscience is bound by the knowledge that the payer made the payment not as a gift, but with the intention of being repaid, even though unsupported by a promise express or implied, because adoption of the payment with knowledge of the payee’s intent creates an equity to reimbursement [, and see generally the discussion by I M Jackman in The Varieties of Restitution, Federation Press, 1998, pp 90–95]: at [71].

On appeal to the Court of Appeal (Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] NSWCA 279) no attack was made to Hammerschlag J’s reasoning on the point of the payment to the claimant’s subcontractor. Noting that the determination therefore ‘may be seen to lead to an unusual or arbitrary result that the [claimant] has a judgment for a sum … referable to a debt to [the claimant subcontractor] that has been paid’ by the respondent, the court held that s 32 ‘gives a mechanism for the [respondent] to vindicate any assertion that the [claimant] had been overpaid’ (at [48]); see also [49]. Further, Hodgson JA held that in those circumstances (particularly where any payment made is likely to be irrecoverable) the respondent may be able to get a stay of judgment or injunction against enforcement: at [59]. CAN AN AMENDING ACT BE TAKEN INTO ACCOUNT IN INTERPRETATION OF THE PRIOR LEGISLATION? [7.4] In Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 at [217] Vickery J held that ‘consistently with the prevailing authority in

Australia, I accept that an amending Act might be taken into account in the interpretation of the prior legislation in the manner described in the authorities to which I have referred’. DOCTRINE OF SEVERANCE AND THE ACT [7.5] The question in Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 was whether a payment claim which was partly compliant with s 14(3)(a) and partly non-compliant could for the purpose of a claimant enforcing its rights, contend that the non-compliant parts should be severed. Vickery J held that: Severance in this case would operate to achieve the purpose and objects of the Act and would not operate to diminish the attainment of these goals. A respondent to a payment claim and an adjudicator, if appointed, should be able to assess the valid part of this progress claim which sufficiently describes the work for which payment is claimed, and provide a rational response or adjudication determination in respect of that part of the claim, and exclude from consideration that part of the claim which does not comply: at [116].

Accordingly severance was permitted. ALLOWING ISSUE TO BE RAISED IN COURT OF APPEAL EVEN THOUGH NOT RAISED BEFORE ADJUDICATOR OR SINGLE JUDGE [7.6] On appeal to the New South Wales Court of Appeal, even though a particular issue was not raised by the respondent before the adjudicator or single judge it was [page 307] still permitted before the Court of Appeal: Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd [2012] NSWCA 31 at [75]. LEAVE TO WITHDRAW AN ADMISSION AS TO SERVICE [7.7] In defence of summary judgment proceedings under the Act the respondent in its original defence admitted service of a payment claim. Subsequently it applied for leave to withdraw the admission and to amend its defence to deny service. The Court of Appeal in The Owners – Strata Plan 74635 v Buildcorp Group Pty Ltd [2013] NSWCA 40 said that the courts generally require ‘clear evidence as to why an admission was made, explaining a mistake if a mistake was made and frankly and appropriately disclosing that a deliberate decision was

made, but is now sought to be changed’: at [6]. The court held that the single judge’s refusal to allow the amendment was upheld on the basis that the affidavit sworn in support of the application for leave provided an inadequate foundation for an explanation of the change that was desired.

[page 309]

Appendix Useful Links New South Wales Act

NSW Government Procurement website — information page about the Security of Payment regime, including a list of authorised nominating authorities:

NSW Security of Payment Regulations:

(click on ‘B’ under Regulations In Force) Building and Construction Industry Security of Payment Bill 1999 (NSW) and Building and Construction Industry Security of Payment Amendment Bill 2002 (NSW) — Second Reading speeches: