Broadview Windows Pty Ltd v Architectural Project Specialists Pty Ltd

1. [1]

   HIS HONOUR: The plaintiff (Broadview Windows) seeks relief aimed at quashing the determination of an adjudicator (who is the third defendant). For the reasons that follow, the plaintiff has not made good its claim to that relief.

Background facts

1. [2]

   The relevant facts are not in dispute. Broadview Windows contracted with the first defendant (APS) for APS to install windows and doors on a building site at Bellevue Park. Broadview Windows’ case is that the contract was made on 21 April 2014, by acceptance on that date of an earlier quotation. Its evidence on that point is unchallenged.

2. [3]

   It is clear, and no one disputes, that the contract was a construction contract for the purposes of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Security of Payment Act).

3. [4]

   Broadview Windows says that APS carried out no work under the contract after 26 August 2014. APS claims on the pleadings that it carried out no work under the contract after 31 August 2014. There is no need to resolve which is the correct date.

4. [5]

   On 21 October 2014 (that is to say, well after work under the contract was completed) Jamielee Kerry of APS sent an email to Ms Aravanopoulos of Broadview Windows chasing up invoices rendered on 10 and 12 August 2014. The email pointed out that the matter “is now 60+ days and requires rectification urgently please”.

5. [6]

   To the extent that Broadview Windows maintains that the email was a payment claim for the purposes of the Security of Payment Act, I do not agree. All that the email asked was that Broadview Windows should review the invoices, and either pay them or indicate what dispute it had with paying them.

6. [7]

   It referred to invoices that had been sent earlier. It pressed Broadview Windows:

7. [8]

   All that the email asked was that Broadview Windows should review the invoices, and either pay them or indicate what dispute it had with paying them.

8. [9]

   The evidence is not clear as to exactly what happened thereafter, save that on 22 October 2014 Broadview Windows sent a “without prejudice” email saying why it would not pay the amount claimed (because the builder “refused to acknowledge or pay” those claims). Nonetheless, the email made a “without prejudice” offer of a payment less than the amount in question. No objection was taken under s 131(1) of the Evidence Act 1995 (NSW) to the tender of that email.

The payment claims

1. [10]

   On 24 November 2014, APS served a payment claim, so-called. It recited, among other things, that it was a “payment claim” under the Security of Payment Act. It attached the invoices of 10 and 12 August 2014, to which I have referred already.

2. [11]

   There is no evidence that Broadview Windows provided a payment schedule in response to this payment claim.

3. [12]

   APS sought to have its payment claim (which, for convenience, I will call “the first payment claim”) adjudicated. It referred the matter to the second defendant, an authorised nominating authority. For reasons that I do not quite follow (bearing in mind the lack of a payment schedule), Broadview Windows provided an adjudication response.

4. [13]

   The first adjudicator nominated withdrew. So too did the second adjudicator nominated. Although APS was asked whether it wished to have yet a third adjudicator nominated, it did not do so. Instead, on 23 February 2015, it served what was said to be another payment claim (the second payment claim). Again, the second payment claim attached copies of the invoices of 10 and 12 August 2014.

Adjudication

1. [14]

   Broadview Windows provided a payment schedule. The dispute thereby constituted was referred to the second defendant for adjudication. The second defendant nominated the third defendant as the adjudicator.

2. [15]

   Broadview Windows provided an adjudication response, which, among other things, challenged the adjudicator’s jurisdiction. The challenge was based on s 13(5) of the Act.

3. [16]

   The adjudicator decided that he did have jurisdiction. He determined the matter in favour of APS, holding that it was entitled to payment of the whole of the amount claimed together with interest and that Broadview Windows should pay the costs and expenses of the adjudication.

Challenge to the determination

1. [17]

   The challenge that Broadview Windows makes to the third defendant’s determination is limited. As framed in the Technology and Construction List Statement, the challenge is on the basis that the second payment claim must have been referable to a reference date of 31 August 2014, and that the first payment claim, likewise, must have been referable to the same reference date. In those circumstances, it is said, APS served two payment claims referable to the one reference date, in defiance of the prohibition in s 13(5) of the Security of Payment Act.

2. [18]

   In those circumstances, Broadview Windows relies on the decision of Stevenson J in Grid Projects NSW Pty Ltd v Proyalbi Organic Set Plaster Pty Ltd [2012] NSWSC 1571 “and other similar cases”. Broadview Windows says that those decisions establish that the second payment claim was invalid and, hence, that the determination based on it is void.

Relevant provisions of the Security of Payment Act

1. [19]

   In essence, the parties’ submissions traversed the reasoning of Stevenson J in Grid Projects. However, before I look at his Honour’s reasons, I should set out relevant provisions of the Security of Payment Act.

2. [20]

   The right to progress payments under a construction contract is established by s 8. The key to that right is the concept of “reference date”. I set out s 8:

3. [21]

   The amount of the progress payment is to be determined in accordance with s 9. There is no need to go to s 9.

4. [22]

   Section 13 is the first section in Pt 3 of the Security of Payment Act, which Part deals with “Procedure for recovering progress payments”. Section 13 deals with payment claims. I set it out:

5. [23]

   I should make it clear that the Security of Payment Act was amended by the Building and Construction Industry Security of Payment Amendment Act 2013 (NSW). The amendments did not affect either s 8 or, relevantly, (that is to say, sub-s 4 to sub-s 6 of) s 13.

6. [24]

   It will be noted that the concept of “reference date” is central to the operation of s 13(5). There is no statutory definition of “reference date” apart from that set out in s 8(2). And that definition in terms applies only to s 8 itself. However, so it seems to me, the definition in s 8(2) must apply throughout the Act. Otherwise, important provisions, such as s 13(5), simply cannot work. I note that this was common ground before, and accepted by, Stevenson J in Grid Projects.

Authorities on s 13(5)

1. [25]

   There are cases that hold that where a payment claim is served in defiance of s 13(5), it is a nullity. That view was expressed by Allsop P in Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190 at [8] to [14]. There have been decisions, at first instance, that follow and apply this aspect of his Honour’s reasons. I hope I will not be thought to be immodest if I refer to my own decision in The Trustees of the Roman Catholic Church for the Diocese of Lismore v T F Woollam & Son [2012] NSWSC 1559, in particular at [48] to [49], and other cases that I cited in that decision.

2. [26]

   The fundamental question, in terms of s 13(5) is whether a claimant has served more than one payment claim in respect of each “reference date” under the construction contract. Allsop P came to the view in Dualcorp, that the claimant in that case, Dualcorp, had done precisely that. This is apparent from what his Honour said at [12]. The full content of that paragraph, I set out in context (in this case, from [8] to [14]):

3. [27]

   Whatever may have been the basis for his Honour’s conclusion at [12], what is crystal clear is that in his view, there was only one “reference date”, in respect of which each of the payment claims in question had been served. It was that state of affairs that, in his Honour’s view, triggered the prohibition contained in s 13(5) of the Security of Payment Act.

4. [28]

   I came to the same conclusion in T F Woollam & Son. However, I reached that conclusion specifically by reference to the terms of the contract in that case (see at [32]):

5. [29]

   That was because, in my view, the contract in that case specified what the “reference dates” were. In those circumstances, the identification of the “reference dates” was to be undertaken (as I did) in accordance with s 8(2)(a) of the Security of Payment Act.

6. [30]

   Thus, in a significant respect, there was a factual distinction between my decision in T F Woollam & Son and the facts of this case, where, it is clear, the argument is based on s 8(2)(b).

Authorities on s 8(2)(b)

1. [31]

   Grid Projects was also a case involving s 8(2)(b). Stevenson J noted at [18] that the contract made no express provision, within s 8(2)(a), specifying the reference dates.

2. [32]

   It is plain, from what his Honour said, at [20], that his Honour was not given any assistance in relation to the expressed “named month” in para (b). Thus, he said at [21] to [24]:

3. [33]

   In my respectful opinion, his Honour overlooked the operation of s 21 of the Interpretation Act 1987 (NSW). That definitions section provides, relevantly, that a “named month” “means January, February, March, April, May, June, July, August, September, October, November or December” when used in any Act or instrument.

4. [34]

   In my view, when the expression “named month” is used in s 8(2)(b), it is to be given its statutorily defined meaning. Darke J considered the matter in Veer Build Pty Ltd v TCA Electrical and Communication Pty Ltd [2015] NSWSC 864. His Honour came to the conclusion at [42], with which, as will be seen, I respectfully agree, that the words “named month” are to be given their statutory meaning, as it appears from the Interpretation Act.

5. [35]

   Thus, as it seems to me, the reasons of Stevenson J in Grid Projects are affected by what, in my respectful opinion, was a failure to give that meaning to the expression “named month”. It was because his Honour considered that the “named month” must be the month in which the work was undertaken, as named in the claim for a progress payment, that he came to the conclusion that he did. I should make it perfectly clear that, on the basis of this (as I see it) erroneous meaning given to “named month”, the conclusion that his Honour came to follows naturally.

6. [36]

   The real difficulty with this approach seems to me to follow from two decisions of the Court of Appeal which, in considering s 8(2)(b), indicate that the concept of a “reference date” is not tied to the performance of work in any given month. The starting point is the Court’s decision in Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421. That case is best known for its holding (which no longer represents the state of the law in New South Wales) that judicial review was not available for jurisdictional error but that this Court could intervene only (by declaratory and injunctive relief) for breach of what Hodgson JA at [53] called “the basic and essential requirements”, which were “laid down for the existence of an adjudicator’s determination”.

7. [37]

   The earlier approach, based on the proposition that judicial review under s 69 of the Supreme Court Act 1970 (NSW) is indeed available, was re-established by Chase Oyster Bar v Hamo Industries Pty Ltd (2010) 18 NSWLR 393.

8. [38]

   Nonetheless, in my view, nothing in Chase Oyster Bar had any impact on the other aspect for which the decision in Brodyn is relevant, namely, the Court’s views on s 8(2)(b). I said as much in Rubana Holdings Pty Ltd v 3D Commercial Interiors Pty Ltd [2008] NSWSC 1405 (which was decided before the decision in Dualcorp) and again in Allpro Building Services v C & V Engineering Services [2009] NSWSC 1247 (which was decided after Dualcorp).

9. [39]

   It is sufficient to set out what I said in Rubana at [19] to [21] and in Allpro at [10]:

10. [40]

    The Court of Appeal returned to the question of s 8(2)(b) after Brodyn, but before Dualcorp, in Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2006) 23 BCLR 292. In that case, Hodgson JA (with whom, on this point, the other members of the Court agreed) dealt with s 13 briefly at [36]. His Honour repeated the view expressed by him in Brodyn.

11. [41]

    The decision in Falgat, on this particular point, was considered by Hammerschlag J in Olympia Group Pty Ltd v Tyrenian Group Pty Ltd [2010] NSWSC 319. His Honour said at [32]:

12. [42]

    I return to the reasons of Hodgson JA in Brodyn at [63] his Honour there said that the only non-contractual limit to the occurrence of “reference dates” is that which is found in s 13(4).

13. [43]

    At [64], his Honour set out matters of context that, in his opinion, supported the view that he expressed. I set out those paragraphs:

14. [44]

    I should note that in Brodyn, Mason P and Giles JA agreed with the views expressed by Hodgson JA.

15. [45]

    In the present case, Mr Rodionoff of counsel, for Broadview Windows, submitted that what Hodgson JA had said, as to s 8(2), was obiter. That was so, Mr Rodionoff submitted, because his Honour’s conclusion, that judicial review was unavailable, disposed of the matter before the Court. I do not agree.

16. [46]

    Hodgson JA made it plain that where the basic and essential requirements for validity did not appear, then the determination was void (see at [55]). His Honour then said that where the determination is void, the court could grant declaratory and injunctive relief to ensure that the determination was void and to prevent it from being acted upon. There remained for decision a question as to whether the determination considered by the Court of Appeal in Brodyn was void. That was what Hodgson JA considered from [62] and following of his reasons. In that context, his Honour’s construction of s 8(2), set out at [63], seems to me to be an integral part of the reasoning leading to the conclusion to which his Honour came.

17. [47]

    I should add that, even if this were not so, I do not think that it is appropriate for a Judge at first instance to depart, without very good reason indeed, from a carefully considered opinion expressed by a unanimous Court of Appeal.

18. [48]

    Returning to Falgat, I note that Hodgson JA’s reasons at [36] were essentially the reasons underlying or leading to the conclusion that he came to, as to one of the attacks that was made on the determination in that case. His Honour’s reasons on this point were the reasons of the Court. Even if (contrary to my view) what his Honour said was obiter, I would not regard myself as being at liberty to depart from it. Hodgson JA said at [36]:

Decision

1. [49]

   In the present case, it is submitted for APS that, because of the view expressed by Hodgson JA in Brodyn and in Falgat as to the proper operation of s 8(2)(b), there were successive “reference dates” under the contract notwithstanding that work had finished. In my view, that submission must be correct. Hodgson JA expressly contemplated that reference dates did not necessarily cease "on termination of a contract or cessation of work": at least, for the purposes of s 8(2)(b).

2. [50]

   It follows, in my view, that even though no work was done under the construction contract in this case from, at the latest, 31 August 2014, reference dates continued to accrue under s 8(2)(b).

3. [51]

   In the present case, the first payment claim nominated as its reference date 31 October 2014, and the second payment claim nominated as its reference date 31 January 2015. On the face of the documents, they were not both referable to the one reference date. And as I have said, applying the reasoning of the Court of Appeal in Brodyn and Falgat in relation to s 8(2)(b), it cannot be the case that reference dates "stopped" simply because no further construction work was done.

4. [52]

   In those circumstances, the only relevant limitation is that set out in s 13(4)(b). That prohibition does not arise in this case.

Conclusion and orders

1. [53]

   For those reasons, I conclude that Broadview Window's challenge to the determination fails. The result is that the amended summons must be dismissed with costs, and I so order. The exhibit is to be handed out.