Supreme Court New South Wales

• Medium Neutral Citation: Jantom Construction Pty Ltd -v- S&V Quality Interiors (NSW) Pty Ltd [2011] NSWSC 670
• Hearing dates: 16 June 2011
• Decision date: 16 June 2011
• Jurisdiction: Equity Division - Technology and Construction List
• Before: Hammerschlag J

Decision

The second defendant's adjudication determination number 2011ADJT161-166 dated 11 April 2011 is set aside and is of no effect

• Catchwords: Building and Construction Industry Security of Payment Act 1999 (NSW) - ss 14, 16 and 17 - where claimant gives notice of intention to apply for adjudication prematurely - notice invalid - adjudicator's jurisdiction not enlivened
• Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
• Cases Cited: Chase Oyster Bar v Hamo Industries [2010] NSWCA 190
• Category: Principal judgment
• Parties: Jantom Construction Pty Ltd ABN 62 102173848 - Plaintiff; S&V Quality Interiors (NSW) Pty Ltd ABN 96 145040384 - First Defendant; Phillip Davenport - Second Defendant
• Representation: Counsel: A.C. Norrie - Plaintiff; Solicitors: Maxim Legal - Plaintiff
• File Number(s): 2011/193955

EX TEMPORE Judgment

1 HIS HONOUR: These proceedings were commenced by Summons, accompanied by a Technology and Construction List Statement issued with leave on 10 June 2011, seeking, relevantly, that an adjudication determination made by the second defendant under the provisions of the Building and Construction Industry Security of Payment Act 1999 (NSW) ("the Act") on 11 April 2011, in which the second defendant determined that $153,663.62 inclusive of GST was payable by the plaintiff to the first defendant, be quashed and set aside. The plaintiff also filed a Notice of Motion seeking interim relief.

2 The process was made returnable this morning and the time for service was abridged to 12.00 noon on 14 June 2011. Service on the first defendant took place within that time, as appears from the affidavit of Leona Lin Chen sworn 14 June 2011. Service on the second defendant, the adjudicator, took place slightly late but the adjudicator, Mr Davenport, has responded, noting that given that the plaintiff does not seek an order for costs against him, he does not propose to participate in the proceedings.

3 The first defendant was called outside of Court but did not appear and the plaintiff, as it was entitled to do, proceeded to hearing in the absence of the first defendant.

4 Section 14(4) of the Act provides, relevantly, that if a claimant for a progress payment serves a payment claim on a respondent and the respondent does not provide a payment schedule to the claimant within ten business days after the payment claim is received, 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.

5 Section 17(1) of the Act provides as follows:

(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.

6 Section 17(2) of the Act provides as follows:

(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.

7 The payment claim in this case was delivered on 9 March 2011. The plaintiff (the respondent to the claim) thus had up to and including 23 March 2011 to pay it and failing that the first defendant could on the next day give notice of its intention to apply for adjudication of the payment claim.

8 In saying that an adjudication application to which subs (1)(b) applies cannot be made unless the circumstances in ss 17(2)(a) and (b) have occurred, the Act makes it clear that the described period of 20 business days within which the application may be made only commences after the due date for payment and that notice of an adjudication application cannot be given earlier. A purported notice under s 17(2)(a) given too early deprives the respondent of the full statutory period provided for by s 16(1)(b)(ii) read with s 17(2)(b) of the Act and is invalid and of no effect. A valid notice is an essential pre-requisite for a valid adjudication application and the valid subsequent appointment of the adjudicator.

9 It follows that the adjudication application in this case was ineffective with the consequence that the adjudication determination was made without jurisdiction and is liable to be quashed; see Chase Oyster Bar v Hamo Industries [2010] NSWCA 190.

10 I make the following orders:

(a) The second defendant's adjudication determination number 2011ADJT161-166 dated 11 April 2011 is set aside and is of no effect.

(b) The first defendant is to pay the plaintiff's costs of the proceedings.

(c) The orders are to be entered forthwith.

11 Based on the adjudication determination, the first defendant obtained judgment in the District Court. It is for the plaintiff now to take whatever steps it may be advised in the District Court with respect to the judgment and any enforcement process based upon it.

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Decision last updated: 30 June 2011