NEW SOUTH WALES SUPREME COURT

CITATION:

Steel v Beks [2010] NSWSC 1404

JURISDICTION:

Equity Division

FILE NUMBER(S):

22010/352774

HEARING DATE(S):

10/11/2010

JUDGMENT DATE:

6 December 2010

PARTIES:

Steel Building Systems Pty Limited v Beks Constructions (NSW) Pty Limited

JUDGMENT OF:

Macready AsJ

LOWER COURT JURISDICTION:

Not Applicable

LOWER COURT FILE NUMBER(S):

Not Applicable

LOWER COURT JUDICIAL OFFICER:

Not Applicable

COUNSEL:

Mr MJ Watts for plaintiff

Mr S Assaf for defendant

SOLICITORS:

MJ Woods & Co for plaintiff

DPH Lawyers for defendant

CATCHWORDS:

Building & Construction. Application to set aside determination under Building & Construction Industry Securty of Payment Act 1999. Finding by the court that payment claims and s17(2) notices not served. Determination set aside.

LEGISLATION CITED:

CASES CITED:

TEXTS CITED:

DECISION:

I direct the parties to bring in short minutes.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION

Associate Justice Macready

Monday 6 December 2010

2010/352774 - STEEL BUILDING SYSTEMS PTY LIMITED v BEKS CONSTRUCTIONS (NSW) PTY LIMITED

JUDGMENT

1 His Honour: This is the hearing of an amended summons in which the plaintiff seeks various orders and declarations concerning two adjudication certificates given under the Building and Construction Industry Security of Payment Act 1999 (‘the Act’). These include declarations that the certificates are null and void and orders restraining the enforcement of the judgment that has resulted from the filing of the certificates.

2 A Judge of the Court has referred the hearing of the proceedings to me.

3 The plaintiff is a supplier of temporary building structures and the defendant is a small building contractor who erects buildings supplied by the plaintiff. The defendant erected building structures for the plaintiff at the Emirates Resort, Wolgan Valley, Coates Balmain and at the Caltex Refinery at Kurnell.

4 The defendant prepared progress claims. One was for Emirates Resort and Coates Balmain and the second was for Caltex Kurnell.

5 According to a consultant who assisted the defendant in the preparation of the claims, on 7 May 2010, the consultant attempted to send the claims to the plaintiff’s facsimile number: 02 9833 3177. The transmission was not successful. On that same day he located a website on the internet that displayed the facsimile number as 02 9627 5310 and sent the claim to that number. No payment schedule was received.

6 On 24 May 2010, notices were then prepared under s 17(2)(b) of the Act. In respect of the first claim this was sent to the facsimile number 02 9627 5310. A facsimile of that same notice was sent to a telephone number 02 9627 9886. The transmission was said to have been successful.

7 The same procedure was followed in relation to the notice for the second payment claim pursuant to s 17(2)(b). There was no response by the plaintiff to the notice, so applications for adjudication were lodged and adjudications issued in due course. They were then registered as a judgment.

8 The plaintiff’s case is that there was no receipt of the payment claims or the section 17 notices. According to Mr Matthew Young, he first heard about the matter when he received an email or a letter from the adjudication authority, Australian Solutions Centre (‘ASC’), saying that the application had been received. As he had not provided a payment schedule, following advice from ASC, he did not provide a response.

9 The defendant’s evidence is that since they moved from Riverstone to Schofields some two years ago the facsimile telephone number at their place of business is 02 9833 3177. In December 2009 and April 2010 facsimiles from the defendant to the plaintiff were received on that facsimile number and the defendant’s evidence suggests that in June 2008, there was a redirection notice for three months in respect of telephone services 02 9627 5310 and 02 9627 9886 to the plaintiff’s new telephone facsimile number of 02 9833 3177. There is also evidence that in September and October 2010 the telephone service 02 9627 5310 was used for an unrelated business trading as “Fishtastic Aquarium Riverstone”.

10 It seems clear that the defendant did not receive the payment claims and that they were sent to someone else who by May 2010 used that number presumably the same business which was still operating Fishtastic in September 2010.

11 The question that arises is how this error occurred. It is plain that the defendant company had used the correct facsimile number in 2009 and in 2010. Indeed the consultant, Mr Robert Sundercombe, who was employed to prepare the claims was told to send it to the new 02 9833 3177 number but as his affidavit records he was not successful in sending it, so he searched the internet to find contact details for the plaintiff. The consultant retained a copy of the page he found on the internet and it is exhibit B to Mr Sundercombe’s affidavit dated 29 October 2010. The top of the page commences with a Steel Building Systems Pty Ltd logo and gives a postal address of PO Box 602, Riverstone, NSW 2765. It gives a phone number of 02 9627 9886 and a facsimile number of 02 9627 5310. The first four letters of the prefix of the ordinary number is for the Riverstone area and not Schofields where the plaintiff is now located. It is plain from the notations on the document that it was found on a website: www.portaroom.com.au. That is a separate company, although there is some connection between the directors of that company and the plaintiff.

12 On the face of the document there is some business inter-relationship between these companies. The document states:

“…Steel Building Systems Pty Ltd started a Greenfield company to brand our product, …portaroom and now also offer a componentry service for your transportable buildings…

… Our steel building system allows Modular flexibility to configure the design t your specific needs, … Go to our Design Gallery @portaroom.com.au

…

It is a pleasure introducing SBS and we would like to assist in quoting and/or preliminary designs for your future projects. Please do not hesitate to contact us for your next Modular Transportable Building.”

13 In the absence of expert evidence I could not interpret what was the significance of where the particular page was located as shown by the address at the bottom of the page, other than that it was a page accessed through the portaroom website. The internet address printed on the document is recorded as:

“http://www.portaroom.com.au/Steel%20Building%20Systems%20Pty%20Ltd.htm “

Looking at the date printed next to the address, the document was accessed on 10 May 2010.

14 However, what is plain from the document it that it is out of date. The company does not use the logo and has not used it since 2008, nor has its address been at Riverstone, nor has it used any of the telephone numbers referred to on the document since June 2008.

15 Section 31 of the Buildings and Construction Industry Security of Payment Act 1999 provides as follows:

“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

(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”

16 Section 17 of the Act relevantly provides:

“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:

(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,

(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.

…”

17 I note that the telephone number shown on the web page document to which I have referred, is a number to which s 17 notices were said to have been sent successfully by facsimile. I would conclude that given that the plaintiff moved in 2008 and relinquished the number, that presumably anything sent to the number would have gone to some other company who now uses it. None of these old numbers were used by the plaintiff company at their new place of business in 2010.

18 Accordingly I am satisfied that there was no service of the payment claim and the s 17 notices on the plaintiff.

19 It necessary to consider what result flows from this. The law in this regard changed recently in a decision Chace Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190, which has held that the basic and essential requirements for the existence of a valid determination by an adjudicator, as they appear in Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421 at 441, may also be characterised as essential pre-conditions for the existence of an adjudicator’s determination (at [148] to [149]).

20 In Chace Oyster Bar the first defendant served a payment claim on the applicant. The applicant did not provide a payment schedule in response and became liable, pursuant to s 14(4) of the Act, to pay the claimed amount by the due date. As it did not provide a payment schedule, in the words of McDougall J:

“[117] … Hamo had the right either to sue for the claimed amount as a debt or to make an adjudication application (see s 15(2) of the Security of Payment Act ). It sought to follow the latter course. By s 17(2)(a) of the Security of Payment Act , Hamo could not do so unless it had notified Chase, within 20 business days after 13 January 2010, of its intention to apply for adjudication. Hamo did not give that notice until 11 February 2010: well outside the 20 business day period for which s 17(2)(a) provides.

[118] Nonetheless, Hamo made an adjudication application. The adjudicator was appointed. Chase lodged with the adjudicator what was (or purported to be) an adjudication response. The adjudicator concluded that he should not consider the adjudication response, because Chase had not provided a payment schedule within the time provided by s 17(2)(b) of the Security of Payment Act.

[119] The adjudicator made a determination dated 18 March 2010. He concluded that Hamo was entitled to payment of the claimed amount, together with interest.

[120] Although there was no payment schedule, nor (according to the adjudicator) any valid adjudication response, nonetheless the adjudicator considered whether (among other things) Hamo’s notice pursuant to s 17(2)(a) of the Security of Payment Act had been given within the time required. He concluded that it had … That conclusion cannot be right, having regard to the facts that I have set out above. Nor could it be right, even on the findings of fact made by the adjudicator, which were that:

(1) the payment claim was served on 22 December 2009, by facsimile transmission …;

(2) the due date for payment of the claimed amount was 6 January 2010 …; and

(3) the notice pursuant to s 17(2)(a) was given, by facsimile transmission, on 11 February 2010 … .”

21 His Honour went on to say the adjudicator’s findings were erroneous as to the date of service of the payment claim and the due date for payment of the claimed amount. There was no evidence to support the adjudicator’s finding that the notice pursuant to s 17(2)(a) had been given within 20 business days of the due date for payment. The applicant in that case submitted that compliance with s 17(2)(a) of the Act was essential if the adjudicator were to have jurisdiction and the adjudicator’s findings amounted to jurisdictional error.

22 The Court of Appeal (Spigelman, CJ, Basten JA and McDougall J) unanimously made three findings that are significant to the determination of this case. It decided, firstly, that in the circumstances set out above, the Supreme Court has power to determine that:

(i) an adjudication application has not been made in compliance with s 17(2)(a) of the Act;

(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 the Court has power to grant relief in the nature of certiorari and set the determination aside.

23 Secondly, in the light of the High Court decision in Kirk v Industrial Relations Commission [2010] HCA 1, the decision in Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421 should not be followed in relation to an adjudication application which was not in compliance with s 17(2)(a) of the Act, so far as it held 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;

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.

24 Thirdly, the Act does not limit the power of the Supreme Court of New South Wales to review an adjudicator’s determination for jurisdictional error.

25 The plaintiff has drawn attention to paragraphs [31] to [53] in which Spigelman CJ discusses the distinction between jurisdictional and non-jurisdictional error and sets out general guidelines for identifying jurisdictional error. At [31] to [32] His Honour states,

“ [31] In Kirk , after identifying the constitutional foundation of the supervisory jurisdiction of the Supreme Courts of the states, the High Court concluded:

‘[100] … [T]he observations made about the constitutional significance of the supervisory jurisdiction of the State Supreme Courts point to the continued need for, and utility of, the distinction between jurisdictional and non-jurisdictional error in the Australian constitutional context.

[32] This new dimension of the distinction between jurisdictional and non-jurisdictional error undermines the proposition in Brodyn, if that is the correct interpretation of the passage set out at [22] above, which suggests that, as a matter of statutory interpretation, a provision can constitute “jurisdictional error” but not constitute “an essential pre-condition”.

26 In Chase Oyster Bar the submissions for the applicant were based on the proposition that a valid notice under s 17(2) was a jurisdictional fact (at [34]), however, his Honour did not agree. Spigelman CJ then stated:

“ [36] The issue to be determined is whether the adjudicator had jurisdiction to determine an “application” which had been made without compliance with the mandatory (in a negative sense) terminology of s 17(2). The issue is not, contrary to some of the submissions made, whether the adjudicator had jurisdiction to determine that s 17(2)(a) had been complied with. That section is not addressed to the adjudicator and is not a matter which he is directed to “determine” within s 22(1) of the Act. It may be that it is a matter which he must “consider” as one of the “provisions of the Act” within s 22(2)(a). However, that section confers no power to determine the issue.

[37] As Hodgson JA recognised in Brodyn, in the passage set out at [23] above, the relevant question is that which was propounded in the joint judgment in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355. Section 17(2) of the Act is a procedural requirement of the kind to which the High Court referred in Project Blue Sky in the following way:

[91] An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. Unfortunately, a finding of purpose or no purpose in this context often reflects a contestable judgment. The cases show various factors that have proved decisive in various contexts, but they do no more than provide guidance in analogous circumstances. There is no decisive rule that can be applied; there is not even a ranking of relevant factors or categories to give guidance on the issue.

[92] Traditionally, the courts have distinguished between acts done in breach of an essential preliminary to the exercise of a statutory power or authority and acts done in breach of a procedural condition for the exercise of a statutory power or authority. Cases falling within the first category are regarded as going to the jurisdiction of the person or body exercising the power or authority. Compliance with the condition is regarded as mandatory, and failure to comply with the condition will result in the invalidity of an act done in breach of the condition. Cases falling within the second category are traditionally classified as directory rather than mandatory.

[38] The joint judgment went on to approve the judgment in Tasker v Fullwood [1978] 1 NSWLR 20, particularly with respect to the doubt expressed by this court about the utility of the distinction between “directory” and “mandatory” requirements. The High Court concluded:

[93] … A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid … In determining the question of purpose, regard must be had to “the language of the relevant provision and the scope and object of the whole statute”. ( Tasker v Fullwood at 24.)

[39] The language of essentiality, extending as it does to words like “mandatory” and “jurisdictional” is, as has frequently been pointed out, a convenient way of expressing a conclusion. This is the result of a process of construction in which all of the relevant principles of the law of statutory interpretation are applied. (See, eg, Tasker v Fullwood supra at 23–24; Project Blue Sky supra at [93]; Timbarra Protection Coalition Inc v Ross Mining NL [1999] NSWCA 8 ; (1999) 46 NSWLR 55 at [39]; Commissioner of Taxation v Futuris Corporation Ltd [2008] HCA 32 ; (2008) 237 CLR 146 at [23].) The joint judgment in Project Blue Sky supra at [91], quoted at [37] above, indicated that a range of factors have been identified as relevant to the process of statutory interpretation, but there is neither a “decisive rule” nor “even a ranking of relevant factors … to give guidance”.

[40] The first textual indicator that is always of significance is the mode of expression of the element directly in issue. Substantial, indeed often, but not always, determinative, weight must be given to language which is in mandatory form. …

[41] The element under consideration in the present case — “cannot be made unless” — has a similar mandatory import. To adapt the words of Gummow J in David Grant v Westpac at 277:

… it is impossible to identify the function or utility of the words — “cannot be made” — if (they do) not mean what (they) say.

[42] The second aspect which must be taken into account, in addition to the text, is the structure of the legislative scheme. This is the context which must be taken into account in the first instance, not only after some ambiguity is identified in the directly operative words. (See CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408.) There are two particularly relevant considerations for present purposes. First, the point of time in the decision-making process at which the element under consideration occurs. Secondly, the treatment of time limits in the scheme as a whole.

[43] With respect to the first aspect, it is particularly relevant that the element occurs at the application stage of the decision-making process. It does not involve consideration of matters which can arise during the course of the decision-making process itself. A traditional formulation of the relevant distinction is whether the relevant element is “a fact to be adjudicated upon in the course of inquiry” as distinct from an “essential preliminary to the decision-making process”. ( Colonial Bank of Australasia v Willan (1874) LR 5 PC 417 at 443 See also the discussion in Timbarra supra at 65–67 and Woolworths Ltd v Pallas Newco Pty Ltd [2004] NSWCA 422 ; (2004) 61 NSWLR 707 at [46]–[49].)…

[49] Mr B Hodgkinson SC, who appeared for the respondent, submitted that the essential element in s 17(2)(a) was the requirement of notice. The additional element — that such notice be made within 20 days after the due date for payment — was not, he submitted, essential.

[50] But for the detailed sequence of the express provisions for time set out at [46] above, there may have been some force in Mr Hodgkinson’s submission. However, the structure of the legislative scheme, that I have set out above, strongly suggests that Parliament intended the time limits to operate precisely in accordance with their terms. Such an operation ensures that, at every stage, each party knows exactly where s/he stands on any day.

[51] Mr M G Sexton SC, the New South Wales Solicitor General, who appeared for the intervening Attorney, submitted that although the 20 days period is easily ascertained, the commencement date, ie, when payment is due, is not always so clear. This is, in my opinion, of little weight in view of the express stipulation in s 11(1) that a progress payment becomes due and payable on the date specified in the contract or if none is specified, 10 days after a payment claim is made.

[52] It is well established that the adverse effects of a finding that an element is jurisdictional should be considered before reaching a final conclusion. In Brodyn it was noted that the determination of a statutory entitlement to payment under the Act does not foreclose the possibility of an ultimate finding that the contractual rights were different. (See Brodyn supra at [51] and [88].) However, as McDougall J indicates, payment does shift the risk of insolvency, not an unknown phenomenon in the building industry.

[53] The statute itself also creates another risk which may lead to irreversible contractual consequences. A claimant is given the option, at several stages of the process which I have set out at [46] above, to give notice of an intention to suspend the carrying out work or supplying services. (Sections 15(2)(b), 16(2)(b), 24(1)(b).) S/he is given statutory protection in the event of such a suspension by s 27 of the Act. In Brodyn, Hodgson JA said at [51] that s 27 “could operate as a trap”, if the processes under the Act were subsequently set aside as void. Nevertheless, Hodgson JA went on to observe that the court may be able to avoid injustice by the terms of any relief which it gives.”

27 After considering the matter further His Honour agreed with the answer to Question 2.

28 McDougal J expressed some difference on this point, stating:

“ [178] The fundamental issue on this point is whether s 17(2)(a) embodies, as a criterion of jurisdiction, a “jurisdictional fact” in the sense explained in Gedeon at 139[43]… . If there is such a criterion and it is not satisfied then, …, “the decision purportedly made in exercise of the power or discretion will have been made without the necessary statutory authority required of the decision maker”.

[179] Spigelman CJ suggests, at [35], that s 17(2)(a) does not “invoke a jurisdictional fact” but that it is either:

(1) something that limits the content of the power otherwise conferred upon adjudicators by the Security of Payment Act; or

(2) an element of the right given by s 17(1) to make an adjudication application.

[180] With respect, I am not sure that the distinction is a real one, at least in terms of s 17(2)(a). There is encompassed in that provision a requirement of notification within a specified period. Whether or not that notice is given is a matter of fact. If the fact of notification, within the specified period, is absent then the prohibition stated in the introductory words of the subsection applies.

[181] I accept (for the reasons that I give at [226]–[228] below, that the giving of notice in accordance with s 17(2)(a) is an essential element of the right to make an adjudication application in accordance with s 17(1). But it does not follow that the existence in fact of the requisite notice is not to be characterised as a “jurisdictional fact”.

[182] In this matter, the alleged jurisdictional fact is not specified in terms as a condition of an adjudicator’s exercise of the statutory function of determining an adjudication application. But it is a condition, or essential element, of the right to make an application under s 17(1). Accordingly, it is necessary to look in more detail at the scheme of the Security of Payment Act to understand how the issue arises.

[183] However, I agree with Spigelman CJ, as his Honour says at [36], that s 17(2)(a) is not addressed to the adjudicator, and does not fall within the competence of the adjudicator to “determine” within s 22(1) of the Security of Payment Act. Further, I agree with Basten JA, for the reasons that his Honour gives at [97]–[101], that the power to determine compliance with s 17(2)(a) is not given to the adjudicator.

…

29 His Honour then referred to the relevant provisions of the Act and said:

[218] To my mind, the weight of those factors favours the conclusion that the requirement of s 17(2)(a) are jurisdictional, in the sense that the giving of notice within the requisite period is a condition that must be satisfied for a valid application to be made pursuant to s 17(1). Considerations of inconvenience and departure from the statutory scheme do not tell against that conclusion. There are a number of reasons why this is so:

(1) satisfaction of the condition is a matter peculiarly within the control of the claimant. A requirement to give notice of intention to proceed to adjudication within 20 business days is hardly onerous, particularly in the context of other requirements as to time in the Security of Payment Act.

(2) It is unlikely that investigation, assessment and decision on the s 17(2)(a) jurisdictional fact will be complex. Nor is it something that is likely to involve the particular expertise of adjudicators (beyond an ability to count) or difficult questions of construction.

(3) The inconvenience resulting from any challenge (a matter to which attention was directed in the submissions for the Attorney General) is but one side of the coin; on the other side, there is the inconvenience to the respondent of being subjected to adjudication applications even in circumstances where their making is forbidden by the legislation.

(4) The departure from the statutory scheme of speedy but interim resolution is scarcely substantial; on the contrary, as I have shown, the right to the claimed amount remains alive and may be enforced, either through a subsequent payment claim or by an action for debt in which the ability to defend is severely limited.”

30 At [103] Basten JA concluded:

“ [103] As McDougall J has determined, the adjudicator correctly identified the dates on which various events had occurred. However, the adjudicator’s conclusion that the adjudication application was valid depended either on a miscalculation of the period identified in s 17(2)(a), or a misreading of the statute. If the error fell into the former category, the conclusion was one which not only lacked support in, but was inconsistent with, the primary facts as found. If in the latter category, the error involved a misconstruction of the statute in relation to the conferral of authority. On either view, the error was jurisdictional and is one in respect of which this court can intervene.

[104] Because there was no contention that this court should decline to intervene on discretionary grounds, it is not necessary to consider the role that discretion may play in particular cases in refusing relief, the claim to which has otherwise been made good.

[105] The first question removed into this court assumes that the adjudicator made a determination that he could hear and determine the adjudication application which he had accepted. I would prefer to answer the question in a manner which does not assume that the adjudicator made a determination to that effect. If he formed a view as to that matter (as he did) it was without legal consequence and arguably cannot (or should not) be quashed or set aside.”

31 The defendant drew attention to paragraphs [238] to [244] of McDougall J’s decision:

“ The adjudicator’s decision on the jurisdictional fact does not bind the court

[238] For the reasons that Basten JA gives at [97]–[101] above, the power to determine compliance with s 17(2)(a) is not given to the adjudicator. The court is not bound by his finding that the requirements of s 17(2)(a) had been met.

[239] In this case, the ultimate jurisdictional fact, as found by the adjudicator, was that set out in para 24 of what it remains convenient to call his determination. (For the reasons that I have given at [192] above, the actual “determination” is in fact the decision on the three matters referred to in s 22(1), not the reasons, as required by s 22(3)(b), for that decision.) That finding was, in relation to the notice under s 17(2)(a), that it had been served within time.

[240] The adjudicator’s finding was not correct. It is clear, from what I have said at [115] and [116] above, that no notice was given in accordance with s 17(2)(a).

[241] Alternatively, even if satisfaction of the existence of the fact were a matter entrusted to the adjudicator for determination, the court does not inquire into the existence of the fact itself but, rather, looks at the adjudicator’s reasoning.

[242] The adjudicator found that:

(1) the payment claim was served on 22 December 2009 (para 13);

(2) the due date for payment was 6 January 2010 (para 31); and

(3) notice under s 17(2)(a) was served on 11 February 2010 (para 19).

[243] On the basis of those findings, it was not possible rationally to conclude that the notice under s 17(2)(a) had been served in time. That ultimate finding had no basis in the evidence (in so far as that is reflected in the adjudicator’s findings of primary fact to which I have just referred). On the contrary, the ultimate finding is in contradiction to those findings of primary fact.

[244] On either approach, therefore, the court is not bound by the adjudicator’s finding. It follows that the erroneous finding as to satisfaction of the jurisdictional fact cannot bind the court.”

32 The adjudication determination, determined by Mr Scott Pettersson, on 23 June 2010, stated:

“2. The Claimant issued a number of invoices which are evidenced and asserts these have not been paid. Some of these documents were issued as Payment Claims under the provisions of the Building and Construction Industry Security of Payment Act 1999 (the Act) and others were not. Nothing turns on this inconsistent accounting / billing process.

3. The Respondent was duly served a Payment Claim on 7 May. That Payment Claim aggregated the Past Payment Claims and Invoices and sought payment of $108,281.25 inclusive of GST. The Claimant asserts that it was not paid at the time it became due. The Claimant asserts it then served a notice in accordance with the requirements of section 17(2) of the Act. The Claimant asserts that no Payment Schedule was provided in response to that notice. The Adjudication Application includes material supporting the assertion that service was properly affected.

4. The Claimant made the application, referred to me for determination to the Australian Solutions Centre (ASC) on 4 June 2010 and accepted by me on 10 June 2010. I calculate that this application is required to be determined not later than 25 June 2010.

Procedural history and jurisdiction

5. I have carefully considered the documents provided with the application and am satisfied that the application was properly made with regard to the time frames stipulated by the Act. Specifically, I have considered the following:

5.1 Does a construction contract exist between the parties to which the Act applies

5.2 Has the Applicant served on the Respondent a Payment Claim

5.3 Has this application been made to an Authorised Nominating Authority properly appointed by the Minister for Commerce

5.4 Has the Application been properly referred to me and have I caused a notice of acceptance to be served on the Parties.

6. I am satisfied that these elements, essential to bring this determination within the requirements of the Act, have all been satisfied.

7. I also find as facts that the documents provided satisfy me that the application is compliant with the requirements of the Act such as the nature of the work, the relevant location is New South Wales and the other legislative criteria. In reaching my determination I have considered only those matters allowed by section 22(2) of the Act.

…

9. In my view it is appropriate to provide reasons and to consider and deal with any potential or actual irregularities. In this matter there are no irregularities or deficiencies that are apparent. The claimant has attested to the existence of the contract and evidenced the service of the documents required to establish the statutory entitlement.

…

Consideration of the merits of the Claim

11. The elements necessary to prove the claim are evidenced…

12. To the extent that the Respondent may or may not have an arguable case… I note that given the absence of a Payment Schedule the Claimant was not able to deal with any such possible submissions and there fore the matter has not been agitated before me.”

33 The adjudicator’s finding was not correct. On the evidence before me the payment claim and the notices required by section 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 section 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 (apparently in paragraph 9 of the decision) that the requirements of s 17(2)(a) had been met.

34 Accordingly, I am satisfied that the application was not properly made in accordance with the Act. As the parties have not addressed the details necessary to apply McDougall J’s reasoning in Chase Oyster Bar at [241], I will not consider the adjudicator’s consideration of the claimant’s evidence as to the service of documents and the reasons of the adjudicator in that regard.

35 It was faintly suggested in oral submissions that there was some estoppel that may operate because the defendant allowed the web page to remain accessible on the World Wide Web. Given the lack of evidence as to whom the web page belonged and who controlled it there is no basis for this claim.

36 I direct the parties to bring in short minutes.

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LAST UPDATED:

6 December 2010