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NSW Crest

Supreme Court
New South Wales

Medium Neutral Citation:
The Trustees of the Roman Catholic Church for the Diocese of Lismore v T F Woollam and Son [2012] NSWSC 1559
Hearing dates:
04/12/2012
Decision date:
04 December 2012
Jurisdiction:
Equity Division - Technology and Construction List
Before:
McDougall J
Decision:

Determination quashed with costs.

Catchwords:
[ADMINISTRATIVE LAW] - Building and Construction Industry Security of Payment Act 1999 (NSW) - jurisdictional error - whether adjudicator acted outside jurisdiction - whether payment claims complied with the requirements of s 13(4) and (5) of the Act - whether compliance with s 13(5) is jurisdictional.
Legislation Cited:
Building and Construction Industry Security of Payment Act 1999 (NSW)
Cases Cited:
Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421
Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2011) 78 NSWLR 393
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265
Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190
Energetech Australia v Sides Engineering [2005] NSWSC 1143
Kirk v Industrial Court of New South Wales (2010) 239 CLR 531
Lifestyle Retirement Projects No 2 v Parisi Homes [2005] NSWSC 705
Category:
Procedural and other rulings
Parties:
The Trustees of the Roman Catholic Church for the Diocese of Lismore (Plaintiff)
TF Woollam & Son Pty Limited t/as Woollam Constructions (First Defendant)
Michael Brand (Second Defendant)
Representation:
Counsel:
D M Macfarlane (Plaintiff)
F P Hicks (Defendant)
Solicitors:
Hannigans Solicitors (Plaintiff)
McKays Solicitors (First Defendant)
File Number(s):
2012/305664

Judgment

1HIS HONOUR: On 25 February 2009, the plaintiff as proprietor and the first defendant as builder made a "cost plus" contract for repairs to the roof of St Carthage's Cathedral in Lismore. There is no doubt that the contract was a "construction contract" for the purposes of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act).

2The proprietor and the builder fell into dispute as to claims by the builder for payment for scaffolding hire. Ultimately, that dispute was referred to the second defendant (the adjudicator) for determination pursuant to section 22 of the Act. In substance, the adjudicator determined that the builder was entitled to be paid the amount claimed by it for scaffolding hire.

3The proprietor makes two basic complaints about the determination. The first is that the adjudicator did not have jurisdiction to consider and determine the payment claim. The proprietor says that the payment claim did not comply with the requirements of s 13(4), (5) of the Act, and that these are essential requirements of validity - or, as it is now seen, jurisdiction.

4The second basic complaint made by the proprietor is that the payment claim which was submitted to adjudication was an abuse of the processes established by the Act because it repeated earlier claims that had been made and rejected.

5Those basic complaints were elaborated in various ways both in the proprietor's Technology and Construction List Statement and in submissions, including by reference to alleged lack of reasons given by the adjudicator and alleged denial of natural justice.

The first complaint: non-compliance with s 13(4), (5)

6It is convenient to consider these two aspects together.

The factual background

7The builder submitted payment claims, which it called progress claims, for the months of September, October and November 2009. In each of those payment claims (as I will call them), the builder claimed an amount payable to "Waco Kwikform Limited" for scaffolding hire. The total claimed for scaffolding hire, exclusive of builder's margin and GST, was $154,071.

8The proprietor, through its project administrator who was also its architect, rejected each of the claims for scaffolding hire. The ground for rejection given was that the builder had failed to provide certification as to the structural adequacy and safety of the scaffolding, which certification was said to be a requirement of the contract. Thus, the project administrator said, the scaffolding could not be used and the proprietor was not bound to pay for it.

9The three payment claims to which I have referred were numbered three, four and five. It is apparent that further payment claims were submitted between the fifth payment claim (for November 2009) and what was said to be a "final" progress claim, number 25, for the month of July 2011.

10The July 2011 progress claim included an amount for wages of $3,240, an amount for other invoices of $109,747, and the outstanding amount for "Waco invoices" of $154,071. It also claimed builder's margin and GST, and made provision for other amounts so as to arrive at a "grand total" of $317,258.62.

11It was, I think, common ground, and in any event is apparent, that the amount claimed for "Waco invoices" was the total of the amounts claimed by payment claims three, four and five for the months September to November 2009.

12The July 2011 payment claim, in so far as it claimed for wages and scaffolding hire, was also rejected. The reasons previously given (in relation to scaffolding hire) were reiterated.

13It was said in the course of submissions that work on the project was completed by July 2011. There is no direct evidence of that, but the fact that the payment claim for that month was described as a "final" claim could lend some support to that proposition.

14Be that as it may, the project administrator certified practical completion on 15 October 2011. It is open to infer, and I do, that no work was done after that date. However, it is to be noted that, under the terms of the contract, there was a twelve months' defects liability period. That period expired on 15 October 2012.

15In April 2012, the builder made a further "progress claim", number 26, said to be for the month of March 2012. The only (net) amounts claimed by that progress claim were the amount for wages in the sum of $3,240.00 and the amount for scaffolding hire in the sum of $154,071.00 that had been claimed in the July 2011 payment claim, and had been rejected.

16Before I leave the chronology of claims and their treatment, I should note that although a careful eye might have seen some deficiency in the formalities (such as they are) required for payment claims and payment schedules, the active parties proceeded on the very sensible basis that what was in issue was the fundamental question of validity, or jurisdiction; and the associated question of abuse of process. No party took any point as to formal defects, and in those circumstances it is unnecessary for me to give any attention to this question.

Relevant provisions of the contract

17The contract, which was not entirely satisfactory in its drafting, and in which some respects was regrettably elliptical, contained a regime for "certificates and payments" in cl 16. Paragraphs (a), (b), (d), (e) and (g) of that clause are of particular significance, and I set them out:

(a) The Builder may at the end of the first four weeks work and thereafter at intervals of not less than four weeks submit to the Architect a statement accompanied, if the Architect shall so require, by wages sheets, delivery dockets, invoices and other relevant data setting out the costs of the materials and labour provided by the Builder and of all other items claimed under clause 14 hereof in respect of the period covered by the statement and shall without delay give to the Architect all such further information as the Architect reasonably requires in relation to the statement.

(b) The Architect shall in the case of statements during the progress of the Works within seven days of the receipt thereof and of the accompanying documents and any further information required by him determine the cost of materials, labour and other items provided by the Builder during the period under review and issue a progress certificate for the amount so determined plus a proportion of the Builder's fee calculated as detailed in the Appendix hereto less a reasonable allowance in respect of any defective work or work not in accordance with this Agreement which the Builder has not removed or replaced in accordance with the provisions of clause 5(a). On presentation of any such certificate by the Builder to the Proprietor the latter shall within ten days pay to the Builder the amount therein certified to be due. And in default of payment the Builder shall be entitled to interest on the sum to which he is entitled at the rate of one and one half percent per month compounding and may in addition to all other remedies suspend the Works until payment and charge against the costs of the Works all expenses and losses attributable to such suspension.

...

(d) The Architect shall within fourteen days of receiving the final statement of the Builder including such documents and further information as aforesaid (and provided that any work required under the provisions of sub-clause (g) of this clause has been completed) determine the total amount payable by the Proprietor to the Builder according to the terms and conditions of this Agreement and shall issue to the Builder a Final Certificate for such amount less the value of all certificates which may have been previously issued and on presentation of such Final Certificate by the Builder to the Proprietor the latter shall within fourteen days pay to the Builder the amount so certified to be due.

(e) Such Final Certificate shall unless disputed by notice in writing served within fourteen days of the issue of the same be conclusive evidence that the Works have been completed in accordance with the terms of this Agreement and any proper adjustments made between the Proprietor and the Builder except in the case of fraud, dishonesty or error in computation of the amounts due or defect or in omission of any of the Works not apparent at date of issue of the Final Certificate.

...

(g) Any defects, shrinkage or other faults which may appear be notified in writing to the Builder within the defects Liability Period stated in the Appendix after the issue or deemed issue of the Notice of Practical Completion shall, upon the direction in writing of the Architect, and within such reasonable time as shall be specified therein be amended and made good by the Builder. The cost thereof shall form part of the actual cost of the Works unless such defects, shrinkage other faults are due to materials or workmanship not in accordance this Agreement, in which case they shall be amended and made good by the Builder at his own expense and in the case of default, the Proprietor may recover from the Builder the cost of making good such works.

18As will be seen, clause 16(b) referred to "the Appendix hereto". The relevant part of the appendix dealt with "proportion of builder's fee to be paid with certificates". It referred to three kinds of certificates:

(1) "progress certificates issued to prior practical completion";

(2) "progress certificates issued after practical completion"; and

(3) "the final certificate".

19It is I think a reasonably clear inference from the appendix that certificates of the first two kinds, relating to payment claims made respectively before and after practical completion, were those referred to in cl 16(b), and that the "final certificate" was that relating to "the final statement of the builder" referred to in cl 16(d).

Relevant provisions of the Act

20Sections 8 and 13 of the Act are of particular significance. I set them out:

8 Rights to progress payments
(1) On and from each reference date under a construction contract, a person:
(a) who has undertaken to carry out construction work under the contract, or
(b) who has undertaken to supply related goods and services under the contract,
is entitled to a progress payment.
(2) In this section, "reference date", in relation to a construction contract, means:
(a) a date determined by or in accordance with the terms of the contract as the date on which a claim for a progress payment may be made in relation to work carried out or undertaken to be carried out (or related goods and services supplied or undertaken to be supplied) under the contract, or
(b) if the contract makes no express provision with respect to the matter-the last day of the named month in which the construction work was first carried out (or the related goods and services were first supplied) under the contract and the last day of each subsequent named month.
Payment claims
13 Payment claims
(1) A person referred to in section 8 (1) who is or who claims to be entitled to a progress payment (the "claimant") may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.
(2) A payment claim:

(a) must identify the construction work (or related goods and services) to which the progress payment relates, and
(b) must indicate the amount of the progress payment that the claimant claims to be due (the "claimed amount"), and
(c) must state that it is made under this Act.
(3) The claimed amount may include any amount:
(a) that the respondent is liable to pay the claimant under section 27 (2A), or
(b) that is held under the construction contract by the respondent and that the claimant claims is due for release.
(4) A payment claim may be served only within:
(a) the period determined by or in accordance with the terms of the construction contract, or
(b) the period of 12 months after the construction work to which the claim relates was last carried out (or the related goods and services to which the claim relates were last supplied),
whichever is the later.
(5) A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract.
(6) However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim.

The proprietor's submissions

21Mr Macfarlane of counsel, who appeared for the proprietor, submitted, in relation to s 13(5), that the statutory concept of "reference date" was critical to the operation of the Act. Thus, he submitted (by reference to section 8), any entitlement to a progress payment was one which depended on the establishment of a relevant reference date.

22Mr Macfarlane built on that proposition to submit that the requirement of s13(5), to the effect that only one payment claim may be served in respect of any one reference date, was a necessary condition of jurisdiction. To put it another way: Mr Macfarlane submitted if there were more than one payment claim served in respect of a particular reference date, only the first would be valid.

23Against that background, Mr Macfarlane submitted that the March 2012 payment claim (which I should have said was the claim that proceeded to adjudication) could relate only to either the reference dates to which the third, fourth and fifth payment claims related, or the reference date to which the July 2011 payment claim related. Since there had been no work done after the date of submission of the July 2011 payment claim, there could be, he submitted, no further reference date.

24In relation to s 13(4), Mr Macfarlane submitted that the payment claim had not been served within either of the time limits for which that subsection provides. He relied on cl 16(a) of the contract, apparently on the basis that it applied instead of the second alternative (12 months after completion of construction work) in the subsection. That alternative could only relate to a final payment claim; and in this case that 12 month period had not elapsed.

The builder's submissions

25Mr Hicks of counsel, who appeared for the builder, submitted that s 13(5) was not jurisdictional. In any event, he submitted, s 13(5) did not arise for consideration, because the March 2012 payment claim was a final payment claim, and this was at least implicitly something authorised by the contract to be made.

Decision

26Although the point was not debated, it is convenient to start by stating that, in my view, the payment claim for July 2011 was a valid payment claim. It is apparent from that document that some work had been done in the month of July 2011, to which it related. That no doubt is why the payment claim included the (subsequently rejected) amount for wages and the amount for invoices, each relating to that month.

27In those circumstances, it was open to the builder to include, in the July 2011 payment claim, the amount for scaffolding hire that had been the subject of previous claims. That follows necessarily from s 13(6) of the Act.

28However, in my view, the payment claim for March 2012 cannot be analysed in the same way.

29As I have said, Mr Hicks sought to justify it on the basis that it was a final payment claim. Mr Macfarlane, I think, accepted that if it were properly so characterised then there would have been a "reference date" and no infringement of s 13(5). However, he disputed that characterisation.

30The resolution of this question turns on consideration of the relevant paragraphs of cl 16 of the contract. Nothing in that clause (and nothing elsewhere in the contract to which I was referred) specifies when it is that the "final statement of the builder" referred to in clause 16(d) is to be served. However, when one reads cl 16(d) in conjunction with paras (e) and (g), it is I think apparent that the "final statement" (or final payment claim) is to be given at the end of the defects liability period. That follows because at the end of the defects liability period the project administrator (who as I have said was the architect) is authorised to direct any defects to be made good, and if they are not made good then is entitled to set off the value of making good against any amount otherwise payable to the builder.

31If it were to be concluded that the final payment claim could be submitted earlier than the end of the defects liability period, the proprietor would be deprived of the valuable advantage of setting off, against any amount otherwise payable to the builder, the cost of making good defects which the builder had been directed, but had failed to make good.

32Thus, the reference dates fixed by the contract are:

(1) while work is being performed - those prescribed by cl 16(a); and

(2) the end of the defects liability period - cl 16(d).

33As I have said, there is no evidence that any work had been done between July (or, for that matter, October) 2011 and April 2012 when the March 2012 payment claim was served, which could lead to the creation of a fresh reference date. Further, and again as I have indicated, there is a clear inference from the very terms of the March 2012 payment claim that no such further work had been done. That payment claim simply resubmitted claims that had been made earlier and rejected.

34Hence, in my view, the March 2012 was a further payment claim in respect of the reference date in respect of which the July 2011 payment claim had been served. It follows that the March 2012 payment claim was made in contravention of s 13(5).

35However, in my view, there was no contravention of s 13(4). That subsection sets the outer temporal limits within which a payment claim may be made. In this case, the outer limit, following from cl 16 of the contract, was either at the expiry of the defects liability period or within some reasonable time (for the provision of a "final statement") thereafter. On no view of the facts had that outer limit been reached by March 2012.

36It is thus necessary to consider what are the consequences in terms of validity, of a contravention of s 13(5).

37Mr Hicks relied on the decision of Campbell J in Energetech Australia v Sides Engineering [2005] NSWSC 1143 at [86] to [90]. In that case, Campbell J concluded that the requirements of s 13(5) were not conditions essential for the existence of a valid adjudication determination. In reaching that conclusion, his Honour took into account the proposition (said to have been established by my earlier decision in litigation between the same parties [2005] NSWSC 801 at [25] and by his Honour's earlier decision in Lifestyle Retirement Projects No 2 v Parisi Homes [2005] NSWSC 705) that compliance with s 13(4) of the Act was not essential.

38It is significant that Campbell J used the language of essentiality. His Honour did that because, at the time, the test for evaluation of the validity of an adjudicator's determination was whether it complied with whatever were the requirements laid down in the Act for there to be a valid determination. That approach was mandated by the decision of the Court of Appeal in Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421 at, in particular, [52] to [59].

39It is to be noted, that in that passage of the reasons of Hodgson JA (with whom Mason P and Giles JA agreed), his Honour said at [54] that the "basic and essential requirements" test was perhaps narrower than the test of jurisdictional error.

40The test of jurisdictional error was reinstated, as the touchstone of validity, by the subsequent decision of Court of Appeal in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2011) 78 NSWLR 393. The Court came to that view without expressing a view on whether Brodyn had been correctly decided, but because it was thought to follow necessarily from the decision of the High Court of Australia in Kirk v Industrial Court of New South Wales (2010) 239 CLR 531.

41Returning to the question of characterisation of s 13(5): Mr Hicks also relied on what Hodgson JA had said in Brodyn at [62] to [64]. His Honour there said, among other things, that the statutory scheme supported the possible view (on which his Honour did not express a final opinion) that where there is a question as to whether a document that purports to be a payment claim was in fact a valid payment claim, that was perhaps a matter for the adjudicator to decide. That followed, his Honour said at [66], because such questions "can involve doubtful questions of fact and at law".

42However, as I have indicated, the approach to the legislative scheme has changed somewhat since Brodyn was decided. In Chase, the Chief Justice considered the question of essentiality (in the jurisdictional sense) at [33] to [55]. I considered the same question at [199] to [237]. Basten JA agreed at [96] with the approaches taken by the Chief Justice and by me.

43It is sufficient for present purposes to look at the reasons of the Chief Justice. His Honour noted that the starting point of analysis, in deciding whether a particular statutory requirement was jurisdictional, was the language used. His Honour said at [40] that, "substantial, indeed often, but not always, determinative weight must be given to language which is in mandatory form". His Honour referred to the decision in David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 276-267, where Gummow J considered that the formulation "may only" indicated that the requirement qualified by those words was indeed jurisdictional.

44In the present case, there is a statutory prohibition on serving more than one payment claim in respect of any one reference date: the claimant "cannot serve more than one payment claim...". It is difficult to understand how those words should be construed except that they prohibit the serving of more than one payment claim. It seems to follow that if more than one payment claim cannot be served then a payment claim, or more accurately purported payment claim, served in contravention of that prohibition, cannot form any foundation for the exercise of an adjudicator's power to determine.

45That indeed was the approach earlier taken by Allsop P in Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190 at, in particular, [9] to [15]. At [9] to [11] his Honour summarised the history of progress claims. At [12] his Honour noted that (on the facts before him) there could only be one reference date. He then said at [13] that nothing either in the contract or in the Act permitted the creation of fresh reference dates by lodging the same claim for the same completed works in successive payment claims.

46For those reasons his Honour concluded that the terms of s 13(5) were prohibitory, and manifested an intention that a document served in contravention of the subsection was not a valid payment claim.

47I set out those paragraphs of his Honour reasons:

[9] Here, Dualcorp, after undertaking the works, left the site in November 2007. It claimed to have substantially completed the works under the contract in November 2007.
[10] A payment claim was made on 29 January 2008 attaching six invoices, four of which were dated 24 January 2008 and two of which were dated 29 January 2008. The relevant reference date was not identified on the claim or invoices.
[11] On 3 March 2008, Dualcorp purported to serve a second payment claim annexing the same invoices and claiming the same amount. Again, no reference date was identified on the documentation.
[12] Whether or not this was a final claim or a progress claim does not matter. The claim represented by the six invoices must have been in respect of only one reference date - either 15 December 2007 or 15 January 2008, if pursuant
to Annexure A, Item 11, or the reference date pursuant to the operation of cl 8.13, if a final payment claim. In either case, there must have been one reference date under the contract or the last day of the month as provided for by the Building and Construction Industry Security of Payment Act, s 8(2)(b).
[13] I see no warrant under either the contract or the Act, s 8 for permitting a party in Dualcorp's position to create fresh reference dates by lodging the same claim for the same completed works in successive payment claims. That is not
the intended operation of the last phrase of s 8(2)(b) ("and the last day of each subsequent named month").
[14] Here, the work had been done; Dualcorp, the subcontractor, had left the site; it claimed payment by six invoices; six weeks later it repeated that claim by
reference to the same invoices and, in my view, in respect of the same reference date. Dualcorp was prevented from serving the second payment claim. The terms of s 13(5) are a prohibition. The words "cannot serve more than one payment claim" are a sufficiently clear statutory indication that a document purporting to be a payment claim that is in respect of the same reference date as a previous claim is not a payment claim under the Building and Construction Industry Security of Payment Act and does not attract the
statutory regime of the Act.
[15] For these reasons, Dualcorp was not entitled to proceed to judgment on a claim founded on the operation of the Act premised on the second payment claim of 3 March 2008 being a payment claim under the Act.

48I accept of course that the majority view in Dualcorp was that given by Macfarlan JA (with whom Handley AJA agreed), and that it rested on considerations of finality, analogous to issue estoppel. But in my respectful opinion that does not detract from the force to be attributed to the reasoning of Allsop P. On the contrary, if I may say so, I think that his Honour's approach to the construction of s13(5) is correct.

49As I have indicated already, any other approach would set at naught the statutory prohibition. And if the statutory prohibition is not to be given effect, then the subsection serves no useful purpose. It would be as though s 13(5) reads to the effect that a claimant cannot serve more than one payment claim in respect of each reference date but, if it does so, the payment claim nonetheless initiates the statutory enforcement or recovery mechanisms.

50The adjudicator came to the contrary view. I do not think that this view binds the court. Even if the adjudicator were empowered to determine the question of jurisdiction (and I do not conclude that he was; such a conclusion would be inconsistent with the reasoning of Basten JA in Chase, in particular at [97] to [101]), that does not mean that review is not available. As Basten JA indicated in Chase at [102], even in the circumstance postulated (but not accepted), decisions can be reviewed if they are arbitrary, capricious or irrational, or if they are not open to a reasonable person correctly understanding the relevant legislative scheme.

51In my view, the adjudicator's conclusion is plainly wrong, and is based on a misreading, or misapplication, of s 13(5), (6). On that basis alone, it is open to review in this court.

52Further, I think, the adjudicator's reasons involve some inconsistency. He accepted that a claimant could not create a reference date, and that for section 13(6) to apply there must be another or fresh reference date. But he did not explain - and hence, I infer, did not consider - how it was that a fresh reference date arose (in March 2012) which authorised the builder to rely on the provisions of s 13(6). For the reasons I have given, clause 16(d) of the contract, properly construed, does not so operate. Indeed, the adjudicator did not even refer to cl 16(d) in his part of his reasons.

53It follows that there was no valid payment claim and that the adjudicator's conclusion to the contrary should not be regarded as determining the issue, or as putting it beyond the reach of review by this court.

54In consequence, the payment claim being in my view invalid, the statutory mechanism which depends on the existence of a valid payment claim was not engaged. It follows from that that the adjudicator lacked jurisdiction to determine the application.

Second complaint: abuse of process

55There is no need to consider this point, since for the reasons I have given the determination should be quashed. In circumstances where, hitherto, abuse of process has been considered in a factual context that included prior adjudication on and determination of the repeated claim, I do not propose to muddy the waters by dealing with a moot point in an ex tempore judgment.

Orders

56I make the following orders:

(1) Order that the adjudication determination number 2012ADJT293 made by the second defendant on 21 May 2012 be quashed.

(2) Order that the first defendant be restrained from by itself, its

servants, its agents or otherwise enforcing the said determination and the judgment of the District Court of New South Wales in case number 2012/212347 founded thereon.

(3) Order that the first defendant forthwith take or cause to be taken all such steps as are necessary to have the said judgment set aside.

(4) Order the first defendant to pay the plaintiff's costs.

(5) Otherwise make no order as to costs.

(6) Order the exhibits be handed out.

(7) Reserve liberty to apply in respect of order 3.

[Counsel addressed.]

(8) I order that the sum of $183,036.34 paid into court by the plaintiff be paid out to the plaintiff forthwith together with any interest accrued thereon.

[Counsel addressed on costs.]

57The proprietor seeks its costs on the indemnity basis. It relies on a letter of 17 July 2012 written to the builder's solicitors. That letter, which comprises some thirteen pages, forty-three paragraphs and many annexures, gives among other things reasons why, in the proprietor's view, the adjudication was flawed.

58The builder's solicitor replied a few days later, saying that he was ill, engaged in other matters, and would review the letter "and revert to you as soon as I have been able to consider the contents of your correspondence and obtain instructions".

59The day after writing that letter, the builder obtained judgment in the District Court by registering the adjudication certificate.

60The want of courtesy is regrettable. However, it does not seem to me that a want of professional courtesy, (and indeed, a clear disregard of ordinary decorum of professional conduct) is of itself something to justify the award of costs on the indemnity basis.

61The letter of 17 July 2012 pointed out a number of suggested errors in the adjudicator's determination. I have accepted that there was one fundamental problem, namely, that the payment claim was not valid, because it contravened section 13(5). I have rejected another proposition put by the proprietor in its solicitor's letter, which was that the payment claim did not comply with section 13(4) of the Act, and hence was invalid.

62The proposition that any party who writes a letter stating that it will succeed, and asking the other party not to proceed, is entitled to indemnity costs in the events that his judgment is upheld, is a novel one. I do not think that the case was so clear cut as to be utterly without merit. On the contrary, the question of the proper construction of section 13(5) was a difficult one. The builder's approach was supported by earlier decisions of this court. It was necessary for those decisions to be reviewed, in the light of more recent decisions.

63In those circumstances, whilst stating once more that I do not applaud the want of courtesy shown in the course from the builder's side, I do not think that any ground has been made out for an award of costs on the indemnity basis.

**********

Amendments

21 December 2012 - Counsel
Amended paragraphs: Coversheet

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Decision last updated: 21 December 2012