Adjudicator's Jurisdiction Under Security of Payment Act

The Adjudicator determined that he had jurisdiction under the Security of Payment Act despite not addressing all submissions regarding jurisdiction. The decision was based on the specific provisions of the Act.

Supreme Court New South Wales

Medium Neutral Citation: [COMPANY] v [COMPANY] [2014] NSWSC 442 Hearing dates: 11 April 2014 Decision date: 11 April 2014 Jurisdiction: Equity Division Before: Ball J Decision:

1. Application for interlocutory relief dismissed.

2. The Plaintiff pay the defendant's costs of the interlocutory application. Catchwords: BUILDING AND CONSTRUCTION - Building and Construction Industry Security of Payment Act 1999 (NSW) - adjudication determination - whether denial of natural justice - jurisdiction of adjudicator - whether adjudicator took into account all relevant factual matters Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW) Cases Cited: [COMPANY] v [NAME] [2009] QSC 205; [2010] 1 QdR 302 [COMPANY] v [NAME] (NSW) [COMPANY] [2008] NSWSC 399 Category: Interlocutory applications Parties: [COMPANY] (ABN 69 [PHONE]) (Plaintiff) [COMPANY] (ABN 34 159 561 403) (Defendant) Representation: Counsel: [redacted] [NAME]: [NAME] (Plaintiff) [NAME] (Defendant) File Number(s): 2014/94834 Publication restriction: None

EX TEMPORE Judgment 1By a summons filed on 28 March 2014, the plaintiff, [COMPANY], seeks an interlocutory injunction restraining the defendant from acting or seeking to enforce an adjudication determination of [NAME] (the Adjudicator) dated 17 March 2014 under the provisions of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act). The injunction is sought on the basis that the Adjudicator, in making his determination, failed to comply with the rules of natural justice. 2On 31 December 2013, the defendant, who had been engaged to perform construction work on a house owned by [NAME] in which [NAME] resides, served a payment claim under the Act and subsequently served a notice of intention to lodge an adjudication application under the Act. 3The plaintiff did not serve a payment schedule in response to either the payment claim or the notice served by the defendant. 4On 19 February 2014, the defendant made an adjudication application in respect of the payment claim. That application was heard by the Adjudicator. 5By letter dated 13 March 2014, the solicitors for the plaintiff sought to make submissions to the Adjudicator concerning the Adjudicator's jurisdiction. In effect, the submissions asserted that the Adjudicator did not have jurisdiction because the contract to perform the relevant works was not between the defendant and the plaintiff but rather was a contract between the defendant and [NAME] and that, consequently, the operation of the Act was excluded by s 7(2)(b). Relevantly, that section provides that the Act does not apply to: 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. 6In short, it was submitted that [NAME] was a party to the construction contract and that contract was for the carrying out of residential building work at premises in which she resides. 7In support of that submission, the plaintiff's solicitor's letter asserted that the plaintiff denied being a party to the construction contract and that [NAME] admitted to being the principal to the relevant construction contract. The letter also asserted that [NAME] had made a cash payment of $9,000 in respect of part of the work carried out by the defendant. 8Apart from those assertions, the submission did not place any other material before the Adjudicator which shed light on the question of who the parties to the construction contract were. 9In his reasons for determination, the Adjudicator concluded that he had jurisdiction to determine the application. In reaching that conclusion, the Adjudicator pointed out that the plaintiff had not provided a payment schedule pursuant to s 20(2A) of the Act and, therefore, was not entitled to provide an adjudication response. The Adjudicator went on to consider the question whether he had jurisdiction under the Act, which involved considering the question whether the plaintiff or [NAME] was the true party to the construction contract. 10After examining various matters, the Adjudicator concluded that he was satisfied that the contract was an agreement between the defendant and the plaintiff. 11The plaintiff claims in these proceedings that in failing to refer to the plaintiff's submissions the Adjudicator denied the plaintiff natural justice. 12In my opinion, there are two insuperable difficulties with the plaintiff's claim. 13First, under s 22(2) of the Act, the Adjudicator was required in determining an adjudication application to consider only the matters set out in that section. Those matters do not include the submissions that the plaintiff's solicitors sought to make to the Adjudicator. [NAME], who appeared for the plaintiff, submitted that s 22 could not be read as excluding the right of a party to make submissions to the Adjudicator concerning the Adjudicator's jurisdiction. In his submission, that was something prior to the adjudication process and was a matter on which submissions could be made in effect at any time by a person affected by the adjudication process. 14I do not accept that submission. 15In this case, the submission of the plaintiff in effect is that it was not a party to the construction contract, but someone else was. I can see no reason why that is a matter that should not have been raised as part of the normal process contemplated by the Act - that is, in a payment schedule. 16In any event, for the plaintiff to succeed, it must establish that there is a serious question to be tried that any failure no the part of the Adjudicator to comply with the rules of natural justice was material: see [COMPANY] v [NAME] (NSW) [COMPANY] [2008] NSWSC 399 at [52] and [COMPANY] v [NAME] [2009] QSC 205; [2010] 1 QdR 302 at [40]. 17I am not satisfied that any failure on the part of the Adjudicator to follow the requirements of natural justice was material. It is true that the Adjudicator did not refer specifically to the submissions made on the plaintiff's behalf. However, the Adjudicator did take into account all the relevant factual matters referred to in the submissions made on behalf of the plaintiff. In particular, the Adjudicator observed that [NAME] was the owner of the land and he also recorded the payment of $9,000 in cash by [NAME]. The Adjudicator also referred to a number of other matters from which he concluded that the contract was an agreement between the plaintiff and the defendant. In doing so, in my opinion, the Adjudicator took into account the relevant factual matters that the plaintiff sought to place before him. It is true that the Adjudicator did not refer to the assertion in the plaintiff's solicitor's letter that [NAME] acknowledged that she, rather than the plaintiff, was the party to the building contact. However, in my opinion, the Adjudicator was entitled to take the view that that bare assertion, in the circumstances, was of little weight. 18I dismiss the plaintiff's application for interlocutory relief. I order that the plaintiff pay the defendant's costs of the interlocutory application.

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