Supreme Court

New South Wales

Case Title: Douglas Aerospace v Indistri Engineering Albury

Medium Neutral Citation: [2014] NSWSC 1445

Hearing Date(s): 20/10/2014

Decision Date: 20 October 2014

Jurisdiction: Equity Division

Before: McDougall J

Decision: Summons dismissed with costs.

Catchwords: BUILDING AND CONSTRUCTION – adjudication applications - whether there was a valid construction contract between the parties - where name in contract not the same as name on adjudication application - where invoices issued in a different name to the name in the construction contract - whether correct specification of ACN and ABN evidence an intention that the first defendant be "Contractor" to the construction contract – whether sufficient to show construction contract between the Parties

BUILDING AND CONSTRUCTION – adjudication applications - whether first defendant gave plaintiff notice of intention to seek adjudication of the payment claim - where payment claim sent by facsimile transmission to facsimile number in contract - where facsimile transmission number in contract actually for a different company - where evidence that the plaintiff received s 17(2)(a) notice – whether sufficient evidence that letter sent to defendant asking them to no longer utilise the facsimile transmission number in the contract before notice was sent to that number - whether failure to give notice under s 17(2)(a) is jurisdictional error - application of s 17(2)(a) of the Building and Construction Industry Security of Payment Act 1999 (NSW)

BUILDING AND CONSTRUCTION – adjudication applications - whether adjudication application served on plaintiff - whether service of adjudication application is jurisdictional - where respondent could not lodge adjudication response even if adjudication application were served - where adjudication application was received - application of s 17(5) of the Building and Construction Industry Security of Payment Act 1999 (NSW)

Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)

Cases Cited: Associated Midland Corporation Ltd v Bank of New South Wales (1984) 51 ALR 641

Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393

Brodyn Pty Ltd t/as Time Cost and Quality v Davenport (2004) 61 NSWLR 421

Category: Principal judgment

Parties: Douglas Aerospace Pty Ltd (Plaintiff)

Indistri Engineering Albury Pty Ltd (First Defendant)

Johanne Tobin (Second Defendant)

Representation

- Counsel: Counsel:

N Obrart (Plaintiff)

CA Botsman (First Defendant)

- Solicitors: Solicitors:

Keith Hurst & Associates (Plaintiff)

Kell Moore (First Defendant)

File Number(s): 2014/236651

JUDGMENT (EX TEMPORE - REVISED 20 OCTOBER 2014)

1 HIS HONOUR: The plaintiff seeks an order quashing a determination made by the second defendant (the adjudicator) pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act). The adjudicator's determination was made in respect of what the first defendant contended and, it seems, the adjudicator accepted was a construction contract made between the first defendant and the plaintiff on 6 February 2013 (the Stage 2 contract).

The issues

2 The plaintiff says that there are three jurisdictional errors infecting the adjudicator's adjudication. In those circumstances, it says, it is entitled to the relief claimed. The first defendant does not submit that, if any of the errors be made out, relief should be withheld on discretionary grounds.

3 The errors asserted are these:

(1) it was said that there was no construction contract between the first defendant and the plaintiff.

(2) It was said that the first defendant did not give the plaintiff notice, pursuant to s 17(2)(a) of the Act, of its intention to seek adjudication of the payment claim (s 17(2)(a) applied because on any view the plaintiff had not provided a payment schedule).

(3) It was said that the first defendant had not served a copy of the adjudication application on the plaintiff, as required by s 17(5) of the Act.

First issue

4 The contracts in evidence cannot be said to have been drafted with conspicuous precision. There were two contracts proved. One (the Stage 1 contract) was made on 7 September 2012. The parties to that contract were said to be the plaintiff as "Consumer" and, as "Contractor", Adrian Robinson T/A Indistri Engineering...

5 The evidence establishes that, at the time the Stage 1 contract was made, Mr Robinson did carry on business under the business name "Indistri Engineering".

6 The Stage 1 contract was for the construction of a hangar at Wagga Airport. It appears that the Stage 1 contract was used as the template, or precedent, for the Stage 2 contract. The Stage 2 contract was made on 6 February 2013. It related to the construction of another hangar, and was referred to as "Stage 2" of the works overall.

7 Mr Robinson says that, before the Stage 2 contract was prepared and executed, he was advised by Mr Clarke, the principal of the plaintiff, to incorporate a company and carry on business through that company. Mr Clarke denies that he gave any such advice. By agreement between the parties, there was no cross-examination of any witness. There is no contemporaneous document, at least to which the Court was taken, which would suggest that one account rather than the other should be accepted. Nor was there any extrinsic circumstance pointed to which might suggest that one account rather than the other should be rejected as inherently implausible. In those circumstances, it is not possible to resolve the dispute.

8 There are two points, however, which Mr Botsman of counsel for the first defendant, relied on as relevant. The first is that, before the Stage 2 contract was made, Mr Robinson caused the first defendant to be incorporated. The other is that, two days after the Stage 2 contract was made (on 6 February 2013, as I have said), Mr Robinson caused the first defendant to open a bank account in its own name.

9 I am not certain as to the extent to which those precedent and subsequent circumstances can be taken into account in determining, objectively from what appears in the Stage 2 contract, who were the parties to it. That, as I see it, falls to be determined as a matter of imputed intention, to the extent that the intention can be said to appear objectively from the contract as a whole, perhaps informed by the circumstances known to both parties leading up to the making of the contract.

10 As with the Stage 1 contract, the plaintiff was the "Consumer" named in the Stage 2 contract. However, the "Contractor" was described as follows:

Adrian Robinson T/A Indistri Engineering Pty Ltd...

11 It appears to be common ground that there was not, as at 6 February 2013, nor had there been at any relevant prior time, a company by the name "Indistri Engineering Pty Ltd".

12 As the Stage 1 contract had done, the Stage 2 contract set out more details of the "Consumer" and the "Contractor". For each, it gave (where relevant) a full address, telephone and fax contact details, and email contact details.

13 In addition, the Stage 2 contract set out for each of the parties the Australian Business Number (ABN) and the Australian Company Number (ACN).

14 In the part of the Stage 2 contract to which I am referring, the "Contractor" was described as:

Indistri Engineering Pty Ltd Albury Pty Ltd

15 It will be seen that this is the name of the first defendant except that the words "Pty Ltd" have been interpolated between "Engineering" and "Albury".

16 The ABN stated for the Contractor (as for convenience I shall call it, bearing in mind that the same peculiar form of name was used here and in relation to the ACN) was:

161 632 104

17 That same number was given for the "Contractor" under the heading "Australian Company Number (ACN)".

18 A search of the first defendant shows that its ACN is indeed 161 632 104.

19 Thus, if matters went no further, although in relation to the ABN and the ACN the words "Pty Ltd" were in each case interpolated between the words "Engineering" and "Albury", it might seem clear from the correct specification of the ACN, that reference to the first defendant was, objectively, what the parties intended their contract to achieve. To put it another way, from this part only of the Stage 2 contract, I think the objective indications are that the parties regarded the first defendant as the party to the contract in the capacity of the "Contractor".

20 However, the confusion does not end there. Each page of the Stage 2 contract bears a footer. That reads:

Independent contract agreement, Douglas Aerospace P/L

(consumer) and Indistri Engineering Pty Ltd (contractor)

21 Further, when one turns to the signature page, one finds, among other things, the following:

Contractor

[Mr Robinson's signature]

Indistri Engineering Pty Ltd

[address]

22 The question posed on all this material is thus who, objectively, was intended to be the "Contractor" party to the Stage 2 contract.

23 Ms Obrart of counsel, for the plaintiff, laid stress on the fact that, within five or so months after the Stage 2 contract was made, two invoices were issued on the letterhead of "Indistri Engineering", stating its ABN as that appears from the Stage 1 contract. Each of those invoices was said to be referable to "Stage 1".

24 Each of those invoices claimed payment from the plaintiff of the amount stated in it.

25 I accept that there are circumstances in which, in the absence of any other evidence, a contract may be inferred from the giving and receipt of an invoice. An obvious example is where an invoice is tendered in relation to the sale of goods. Even though no express antecedent or underlying contract is proved, it may be inferred from the giving of the invoice, and usually will be inferred if the invoice is paid, that there was a contract between the person who gave the invoice and the person to whom it was given for the supply of the goods in question at the price claimed in the invoice. To the extent that it is relevant, that analysis is supported by the judgment of Gibbs CJ in Associated Midland Corporation Ltd v Bank of New South Wales (1984) 51 ALR 641 at 643-644.

26 However, in this case, the invoices to which I have referred are not the only evidence of whatever was the contract that was made.

27 Further, it is clear that at some stage Mr Robinson thought that he had made a mistake in issuing the invoices in the form in which he did. On 21 January 2014, under cover of a document signed by him on behalf of the first defendant and expressed to be a payment claim, he forwarded invoices corresponding to the two that I have just mentioned, but on the letterhead of the first defendant and bearing the first defendant's ABN (or ACN). He included, as well, a further invoice, likewise on the letterhead of the first defendant, which did not replicate any invoice hitherto delivered.

28 The question, as to the identity of the contracting parties, is not an easy matter to resolve. I do not think that it can be resolved simply by reference to what happened before (there being a dispute as to that) or what happened afterwards. The indications from what happened afterwards (were it legitimate to take those indications into account), are less than clear.

29 There is another feature of the Stage 2 contract that I should have mentioned. In cl 11, dealing with "Compensation" (which appears to have been the term selected to refer to payments to be made by the "Consumer" to the "Contractor" for work done and materials provided) the following appeared:

INSTITUTION: Westpac Bank

Account name: Indistri Engineering Pty Ltd

BSB: *** ***

Account number: ******

30 Again, that appears to have been lifted from the Stage 1 contract. In the Stage 1 contract, the only difference, so far as I can tell, is that the words "Pty Ltd" do not appear as part of the account name.

31 Further, the bank account that was nominated was a bank account either in Mr Robinson's own name or in the business name Indistri Engineering. It is clear, from the evidence, that the bank account set up by the first defendant on 8 February 2014 had a different account number (although, since the branch was the same, the BSB number was the same).

32 Ms Obrart relied on the specification of Mr Robinson "T/A Indistri Engineering Pty Ltd" on the cover sheet of the Stage 2 contract, followed by the words "(the "Contractor")" as signifying who was the party with whom her client had contracted. She relied also on the invoices to which I have referred.

33 Mr Botsman relied on the more detailed (and substantially, although not entirely, accurate) description of the "Contractor" in the body of the contract. He relied also on the surrounding circumstances to which I have referred.

34 If one thing is clear from the Stage 2 contract, it is that no great care or skill was directed to ensuring that it referred accurately to whoever was to be the "Contractor" party. If it were intended to be Mr Robinson personally, there was simply no point in referring to him as "T/A Indistri Engineering Pty Ltd".

35 Presumably, it was not intended to make the company thus described a contracting party, since, on the evidence, it does not appear ever to have existed at the time the Stage 2 contract was made.

36 On the other hand, the detailed description of the "Contractor" in the body of the document, although not entirely accurate in the way it sets out the name, nonetheless could be taken, tolerably clearly, to have been intended to be a reference to the first defendant. That follows, in my view, from the inclusion of the word "Albury" in that name.

37 That position becomes clearer, in my view, when one has regard to the specification of the ABN and ACN. To my mind, when one reads this section of the Stage 2 contract, it is apparent that the parties, objectively, intended to describe in detail who they were, or to identify themselves. In that respect, the choice of an ABN or ACN, which is a unique identifier, seems to me to be of particular significance. Whatever mistakes the parties may have made, they did not get that part wrong.

38 Further, when one refers back to the Stage 1 contract, it is apparent that the parties took care to ensure that the specification of the ABN for the "Contractor" was changed from that referable to Mr Robinson trading as Indistri Engineering to that referable, as the evidence shows, to the first defendant.

39 It is that aspect of the Stage 2 contract that seems to me to have particular significance.

40 The "Compensation" provision - more precisely the specification of the bank account - is against that view, but not in my view dispositive. It may have been thought, for some reason, that payments should be made into the old account; I do not know. However, even looking at that and comparing it to the Stage 1 contract, it can be observed that the words "Pty Ltd" have been added to the description of the account name. That seems to indicate some attempt to recognise that the "Contractor" party was to be a corporation and not an individual trading under a business name.

41 That leaves, as to the Stage 2 contract itself, the signature page. On the face of things, the document has not been signed expressly on behalf of the first defendant. It is, however, clear that the signature is intended to be that of, or to bind, the "Contractor". Thus, if the rest of the contract, taken as a whole, indicates that objectively the parties intended that the first defendant should be the contractor, the proper inference from the signature page is that Mr Robinson signed as he did intending to bind the first defendant to the contract.

42 As I have observed already, it is difficult to understand why the parties would have intended to bind a non-existent company to the contract.

43 According, on balance, I conclude that the Stage 2 contract was one made between the plaintiff as "Consumer" and the first defendant as "Contractor."

44 If that appears from the proper construction of the Stage 2 contract, I do not think that the invoices that were issued afterwards are sufficient to negate the conclusion. Mr Robinson gives an explanation for why it was that the invoices were issued in that form. Clearly enough, that cannot be relevant as an objective circumstance. What is however apparent is that Mr Robinson was in a state of some confusion as to the precise structure that he had adopted and the appropriate way to designate his corporate alter ego.

45 As I have said, if the invoices were all there is to go on, there would be a strong inference that the contracting parties were Indistri Engineering (ie, Mr Robinson) as "Contractor" and the plaintiff as "Consumer". But since on any view the invoices were intended to be referable to the Stage 2 contract (that appears expressly from their terms), I do not think that they can be taken as negating what is otherwise the inference properly drawn from the terms of the Stage 2 contract, and the appropriate conclusion, as to construction and parties, drawn from it.

46 As I have said, I conclude that the contracting parties were the plaintiff and the first defendant. Since it was not suggested that the Stage 2 contract was anything other than a construction contract, for the purposes of the Act (nor could any such suggestion be sustained), it follows that the first limb of the plaintiff's challenge to the determination must fail.

Second issue

47 I turn to the second challenge, based on s 17(2)(a).

48 The relevant facts are not complex. On 21 January 2014, the first defendant sent a document to the plaintiff which was described as a "payment claim". That is the document which annexed the revised version of the invoices to which I referred earlier, plus a new invoice. The document was headed "Payment Claim". It stated that it was a payment claim in accordance with the provisions of the Act. The invoices described the work and materials in respect of which they were given. As a matter of formality, it seems to me that the payment claim of 21 January 2014 satisfied the formal requirements of s 13(2) of the Act.

49 The payment claim was sent by facsimile transmission. The fax number to which it was sent was the fax number specified as that applicable to the plaintiff in the Stage 2 contract (and, I might add, in the Stage 1 contract).

50 The Stage 2 contract contained a rather confusing clause dealing with notice (clause 17). That clause reads as follows:

All notices, requests, demands or other communications required or permitted by the terms of this agreement will be given in writing and delivered to the parties of [sic] this agreement. A phone call and/or email to advise of the incoming mail to the other parties [sic] must also be made to ensure the party is aware of the document.

51 The fax transmission report for the payment claim shows that it was sent to the number that I have referred to on 21 January 2014. There is no evidence that any of the kinds of communication referred to in clause 17 of the Stage 2 contract preceded the sending of the fax.

52 The plaintiff's evidence is that the fax number in question is that of Aerospace Surface Coatings Pty Ltd. Clearly enough, that is a company associated with Douglas Clarke, the principal of the plaintiff. I say that based partly on a company search of Aerospace Surface Coatings and partly on the fact that Mr Clarke's daughter, Ms Claire Clarke said that, at the time, she worked both for Aerospace Surface Coatings and for the plaintiff. She said, further, that when she received fax communications at the office of Aerospace Surface Coatings, addressed to the plaintiff, she passed them on to her father (as one might expect).

53 It is apparent that the plaintiff received the payment claim. Mr Clarke says that he replied on 24 January 2014, and annexed to his affidavit a letter purporting to be that reply. The letter contains the notation "posted on 24/1/14" with initials that could be thought to be "VC"; Ms Claire Clarke says that she heard her father "ask his wife Vivian [sic] to post the original copy of the letter dated 24 January...".

54 Mr Clarke said that the letter was sent by registered post. If that happened, the person who posted it, and the people who keep the records of the plaintiff, omitted to affix to the copy, or otherwise to prove, the receipt, or tab, which is kept by those who send documents by registered post.

55 The only reason I go into that degree of detail is that Mr Robinson said that he did not receive the letter of 24 January at any time and that he did not become aware of its contents until some months later. Again, since the conflicting testimony was not tested by cross-examination and there is no extrinsic guide to who should or should not be accepted, I am unable to resolve that factual issue.

56 What is sufficient for present purposes is the obvious inference, from the letter of 24 January 2014, that the adjudication application had been both served by fax on and, to the extent that it is necessary received by, the plaintiff.

57 In the circumstances, the plaintiff had ten business days from either 21 or 24 January 2014 to provide a payment schedule (see s 14(4)(b)(ii) of the Act). Counsel agreed that if time ran from 21 January 2014, those ten business days would expire on 5 February 2014. They agreed further that if time ran from 24 January 2014, those ten business days would expire on 10 February 2014.

58 Counsel agreed that the twenty business day period referred to in s 17(2)(a) expired on either 5 or 10 March 2014, according to whether the starting date was 21 or 24 January 2014.

59 It follows that I am satisfied that a payment schedule was served by no later than 24 January 2014. It is common ground that the plaintiff did not provide any payment schedule at all. Hence, s 17(1)(b) of the Act was engaged, in circumstances where the whole of the claimed amount had not been paid by its due date (or at all).

60 In those circumstances, the first defendant had twenty business days following the due date for payment to notify the plaintiff of its intention to apply for adjudication, so that the plaintiff would have a further five business days to provide a payment schedule (see s 17(2) of the Act).

61 It is the first defendant's case that it sent such a notice by fax (to the number I have already mentioned) on 13 February 2014. The sending of that document by fax transmission is confirmed by a fax transmission report which shows that it was sent at 15:08 on 13 February 2014.

62 There is no suggestion that the document in question did not meet such formal requirements as there are to satisfy s 17(2).

63 Equally, there is no doubt that the document got through to the plaintiff. First of all, as I have said, transmission was confirmed, although to the fax number of Aerospace Surface Coatings. Secondly, and more importantly, in respect of that document Ms Claire Clarke says that "the second notice was received and acknowledged by me after close of business the afternoon of the 14th February".

64 I am not sure what Ms Clarke meant by saying the document was "acknowledged" by her. However, bearing in mind her affidavit as a whole and the family relationship to which I have referred, bearing in mind that she appears to have worked for both companies, and taking into account most importantly that there is no evidence to the contrary, I am comfortably satisfied that she gave the document to her father either on the afternoon of its receipt or, at the latest, the following day.

65 In short, I am satisfied that the s 17(2)(a) notice did make its way to Mr Clarke, on behalf of the plaintiff, by, at the latest, 15 February 2014.

66 I have referred already to the letter that Mr Clarke claimed to have sent on 24 January 2014. Among other things, that letter contained the following:

67 Please do not continue to send correspondence to the fax number, please email any future correspondence to [email address given] or send via registered post to [street address given].

68 As I have said, Mr Robinson denied that he received this letter on or shortly after 24 January 2014, or indeed at any time relevant to the matters in issue in this case. He said that he did not see it until it arrived, as part of a bundle of correspondence, from the plaintiff's solicitors, much later in the piece (relatively speaking).

69 In those circumstances, there is no basis for concluding that there was any effective countermanding of the authority, which I think is at least implicit in the specification of the fax number in the Stage 2 contract, to serve or provide documents on or to the plaintiff by sending to that fax number.

70 Both for that reason and because as I have said I conclude Mr Clarke, on behalf of the plaintiff, did indeed receive the s 17(2)(a) notice, I conclude that there was no jurisdictional error in proceeding to make an adjudication application after the time for provision of the payment schedule in accordance with s 17(2)(b) had expired. The adjudication application appears to have been made on 4 March 2014. On any view, that was within ten business days after the end of the s 17(2)(b) period (see s 17(3)(e)).

71 I accept that failure to give a notice under s 17(2)(a) is jurisdictional. That is established by the decision of the Court of Appeal in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393. However, given that in my view the s 17(2)(a) notice was given and received, within the time limits prescribed by s 17, I do not think that there is jurisdictional error in this respect.

Third issue

72 The third asserted jurisdictional error was said to be that no adjudication application had been served, as required by s 17(5).

73 There may be a question as to whether s 17(5) should be regarded as jurisdictional. It was not identified as a "basic and essential" condition of validity in Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421. It was not identified as a jurisdictional prerequisite in Chase Oyster Bar . I was not referred to any decision which holds that compliance with s 17(5) is jurisdictional.

74 It could be argued that the role of s 17(5) is to ensure that a respondent is given a degree of procedural fairness by being served with the payment claim. If that is the limit of the function of the subsection then, in circumstances where the respondent cannot lodge an adjudication response and thus in effect cannot be heard (see s 20(2A), (2B)), it may be wondered whether there is any reason, on the proper construction of the statute, to hold that the requirements of s 17(5) are jurisdictional.

75 However, it is not necessary to pursue that fascinating debate. The evidence for the first defendant is that a copy of the adjudication application was served by fax (again, to the number mentioned above) at 15:23 on 5 March 2014. In this case, there can be no doubt that it was received. Mr Clarke replied on 24 March 2014. He sent an email both to Mr Robinson and to Mr Robinson's lawyers which attached, among other things:

76 Letter in response to letter received on 5 March 2014.

77 It was not suggested that there was any other letter sent and received on that day. The inevitable inference is that Mr Robinson was referring to the letter serving the adjudication application. In my view, his letter of 13 March 2014 must be regarded as acknowledging or admitting receipt of a copy of the adjudication application.

78 Thus, as a matter of fact, even if the requirements of s 17(5) were to be regarded as jurisdictional, they have not been infringed in the present case.

Conclusion and orders

79 It follows that each of the challenges to the determination fails. The result is that the plaintiff's summons filed on 12 August 2014 must be dismissed with costs and I so order.

80 The exhibits are to be handed out once these reasons have been revised.

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