TQM v Dasein [2004] NSWSC 1216

New South Wales Supreme Court

CITATION : TQM v Dasein [2004] NSWSC 1216 HEARING DATE(S) : 3/12/04, 10/12/04 JUDGMENT DATE : 3 December 2004

JUDGMENT OF : McDougall J at 1 DECISION : See para [37] of judgment

CATCHWORDS : BUILDING AND CONSTRUCTION - Building and Construction Industry Security of Payment Act 1999 - whether adjudication determination void - where dispute as to date adjudication application served and received - natural justice - whether plaintiff denied natural justice in adjudicator taking into account material withheld from plaintiff - whether relief should be denied as matter of discretion when adjudicator considers payment schedule - whether adjudicator thereby taken to have considered whole of party's case LEGISLATION CITED : Building and Construction Industry Security of Payment Act 1999 CASES CITED : Brodyn Pty Ltd v Davenport [2004] NSWCA 394 TQM Design & Construct Pty Ltd (Plaintiff) PARTIES : Dasein Constructions Pty Limited (subject to a Deed of Company Arrangement) (First Defendant) National Electrical Communications Association (Second Defendant) FILE NUMBER(S) : SC 6406/04 D T Miller (Plaintiff) COUNSEL : P G Fisher (First Defendant) Submitting Appearance (Second Defendant) SOLICITORS : Colin Biggers & Paisley (Plaintiff) Paul Bard (First Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

McDOUGALL J

3 December 2004 Ex tempore (Revised 7 December 2004)

6406/04 TQM DESIGN & CONSTRUCT PTY LIMITED v DASEIN CONSTRUCTIONS PTY LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT) JUDGMENT 1 HIS HONOUR: The plaintiff ("TQM") and the first defendant ("Dasein") are parties to a construction contract. Dasein made a payment claim under the contract. TQM did not accept the claim. Accordingly, Dasein referred the matter to adjudication. The adjudicator found in favour of Dasein. In doing so, he disregarded (for reasons that I will deal with in detail later) the adjudication response provided by TQM. The question for decision in these proceedings is whether the adjudicator's determination is void. 2 Dasein is in administration. Its administrator is Mr Silvia of Ferrier Hodgson. Much of the work relating to the administration has been handled by Mr Costa Nicodemou, an employee of Ferrier Hodgson, under the supervision of others. In particular, it appears, Mr Nicodemou prepared the payment claim and the adjudication application. The issues 3 A number of issues were debated in the proceedings but it seems to me that there is a relatively easy road to the conclusion to which I have come. The essential issue of fact is whether the adjudication application was served on or received by TQM on 28 or 29 October 2004. The essential issue of principle is whether the adjudicator, Mr Davenport, denied TQM natural justice by failing to consider its adjudication response. An alternative issue, put impersonally, is whether TQM was denied natural justice because Mr Davenport took into account both evidence and submissions relating to the date of service provided to him by Mr Nicodemou on behalf of Dasein but not provided to TQM or its lawyers. The legislation 4 Under the Building and Construction Industry Security of Payment Act 1999 ("the Act"), an adjudication application may be made in the circumstances set out in s 17(1). When made, it is by s 17(5) to be "served on the respondent concerned". Once a respondent is served, it has an opportunity to furnish an adjudication response. By s 20(1)(a) (which is the relevant paragraph in this case) that is to be done within "five business days after receiving a copy of the application". The significance of that time limit (and for that matter, the alternative time limit in s 20(1)(b)) is that under s 21(2) an adjudicator must not consider an adjudication response unless it is made in time. 5 It will be seen that the Act talks variously of service and receipt. They are not equivalent concepts. It was submitted that I should construe the word "receiving" in s 20(1)(a) as having its ordinary English meaning, namely, taking into one's possession and not as equivalent to "being served" or "having been served". On the view to which I have come it is not necessary to answer that question, but, in particular having regard to the consequences that follow if an adjudication response is not lodged within time, I incline to the view that the distinction between the concept of service and concept of receipt is deliberate and that in s 20(1) the word "receiving" should be given its ordinary English meaning. The evidence of service and receipt 6 The evidence as to service or receipt is difficult to reconcile. Dasein says that the adjudication application was given (to use a neutral word) to TQM at about 10.55 or 10.58 am on Thursday 28 October 2004. It relies upon the evidence of Mr James Noel Wilson, a courier. Mr Wilson says that he picked up two envelopes (each of which, it has been proved, contained a copy of the adjudication application) from Ferrier Hodgson and that he took one to the second defendant (which was the authorised nominating authority) and the other to premises at 61 Redmyre Road, Strathfield. 7 Mr Wilson's evidence is that he went to 61 Redmyre Road, Strathfield, knocked on the door and, having received no response, went to the rear of the house. He says he did not see anyone in the house or in the backyard. He then says (in his affidavit) that he contacted Ferrier Hodgson and said that he intended to leave the envelope at the rear door and was told this would be all right. Somewhat strangely, Mr Wilson does not say in his affidavit that he then did so. However, a business record which he says he maintained, and which records deliveries made by him, has the notation "left at back door" and the time as "10.55". Mr Wilson said in his oral evidence that that document related to deliveries undertaken by him on 28 October 2004. It should also be noted that Mr Wilson said in oral evidence that he did in fact leave the envelope at the rear of the premises and he expanded upon this, saying that he thought he left it on a seat which he identified by reference to photographs annexed to the affidavit of Mr Maroun Taouk sworn 3 December 2004. 8 The premises at 61 Redmyre Road, Strathfield are the residence of Mr Taouk, the principal of TQM, and his family. They are also the "principal place of business" of TQM, according to the documents lodged with the Australian Securities Commission (as it then was) in connection with its registration as a company. However, at the relevant time, TQM had its ordinary place of business at premises lot 24, 111-121 Underwood Road, Homebush Business Village - a fact known to Mr Nicodemou at the time and stated by him as TQM's ordinary place of business in the adjudication application. It is somewhat mysterious that Mr Nicodemou, knowing that, chose nonetheless to direct that the provision of the adjudication application to TQM be done by sending it to 61 Redmyre Road. 9 The evidence from Mr Taouk and his family is that the envelope in question was not at their home, 61 Redmyre Road, on 28 October 2004. In particular, Mr Taouk's sisters, Ms Madeline and Ms Helen Taouk, have both sworn that they went into the backyard of the premises on a number of occasions during the evening of 28 October 2004 to smoke. They both said that the backyard has sensor lights so that, when someone walks out there, "the whole of the porch and backyard is lit up". They both said had there been any package "in front of any of the doors or anywhere on the rear porch" they would have noticed. They have both said there was no such package there on the evening in question. 10 I am satisfied that if either Ms Madeline or Ms Helen Taouk had noticed such a package at the rear of the premises on the evening in question they would have given it to Mr Maroun Taouk. 11 Ms Madeline Taouk was cross-examined on her affidavit. Ms Helen Taouk was not. Having paid careful attention to the cross-examination of Ms Madeline Taouk, I see no reason not to accept what she said in her affidavit. Equally, Ms Helen Taouk not having been challenged, I should accept what she said. Although I accept as a matter of possibility that the envelope could have been left somewhere where they did not see it, and as a matter of possibility that they did not see it on the occasions when they went outside to smoke, I take the view, having heard them, that the balance of the probabilities strongly favours the view they would have noticed the envelope had it been there, and that there was no envelope there to their observation. 12 I am comforted in that view by the evidence of Mr Taouk's wife, Mrs Manal Taouk. She said in her affidavit that she was "up and about" from about 9 am on 28 October and she was home for the entire day. She said that when she is home she leaves open the back door on to the verandah. She said she did this on the day in question. She said that no one rang the doorbell and no one, to her observation, came to the backyard or near the back doors. Further, she said, she was outside "on at least half a dozen occasions" during the day; that had there been a package she would have seen it; and that there was no such package. 13 Ms Madeline Taouk was not cross-examined on her affidavit. Again, I think I should accept her evidence. 14 Accordingly, and notwithstanding that in cross-examination Mr Wilson stuck substantially to his story, I think that the balance of probabilities and the balance of the evidence strongly favours that the view that he did not, as he said, leave the envelope at the rear of the premises on 28 October 2004. 15 Mr Taouk said that he found the envelope on the front porch of the premises "when I came home from work at about 6 pm the next day, Friday 29 October 2004". He said it had not been there when he left the house at 9 am that day. I accept that evidence. His wife confirms that the envelope was not there when she left the house at about 12.30 pm on that day. Correspondence between the parties 16 When Mr Taouk received the envelope and found what it contained, he acted promptly, on the next business day, to write to both Mr Nicodemou and to Mr Davenport stating that the adjudication application was received "on the afternoon of 29 October 2004 at the end of the business day and week". I have no doubt, having heard Mr Taouk, that had he received the document the preceding day he would have taken that action (ie, writing to Mr Nicodemou and Mr Davenport) on 29 October 2004. It was suggested in the course of submissions that Mr Taouk may have failed to do so deliberately, in effect to gain more time to put on TQM's adjudication response. That proposition was not put to Mr Taouk in cross-examination and I do not accept it. 17 Mr Davenport wrote on 1 November to TQM and Dasein notifying them that he accepted the adjudication application and saying that, unless advised otherwise, he would assume "that the adjudication application was served on the respondent on 27 October 2004". It is not clear whether that letter (which was dispatched by facsimile transmission) was sent before or after Mr Taouk's message of 1 November 2004 (which was also dispatched by facsimile transmission), but I would incline to the view that Mr Taouk's transmission followed Mr Davenport's one. 18 What is clear is that Mr Nicodemou was galvanised into action by the receipt of Mr Taouk's transmission. He wrote to Mr Davenport by facsimile transmission on 1 and 2 November 2004. The first of those transmissions referred to the TQM transmissions and said: