Falgate v Masterform [2005] NSWSC 728

New South Wales Supreme Court

CITATION : Falgate v Masterform [2005] NSWSC 728

HEARING DATE(S) : 18 July 2005

JUDGMENT DATE : 3 August 2005

JURISDICTION : Equity Division

JUDGMENT OF : Associate Justice Macready at 1

DECISION : Paragraph 46

CATCHWORDS : Catchwords: BUILDING AND CONSTRUCTION - Whether the claim was a payment claim, whether failure to allow the time required before applying for adjudication was a substantial breach of natural justice, whether failure to serve application for adjudication was a breach of natural justice, and whether ceasing action in one jurisdiction indicates abandonment of rights at general law. - The claim set out all the requirements under the Building and Construction Industry Security of Payment Act 1999, thus it was a payment claim. Failure to allow time required was a substantial breach of natural justice. - Held: Adjudication Determination set aside.

CASES CITED : Brodyn Pty Limited v Davenport [2004] NSWCA 394

PARTIES : Falgate Constructions Pty Limited v Masterform Pty Limited

FILE NUMBER(S) : SC 55022/2005

Mr M. Southwick & I. Wylie for plaintiff COUNSEL : Mr S.A. Benson for defendant

Julie Orsini for plaintiff SOLICITORS : Marks Griffiths & Bova for defendant

LOWER COURT JURISDICTION :

- 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY & CONSTRUCTION LIST

Associate Justice Macready

Wednesday 3 August 2005

55022 of 2005 FALGAT CONSTRUCTIONS PTY LIMITED v MASTERFORM PTY LIMITED

JUDGMENT

1 His Honour: This is an application by amended summons filed 18 July 2005 in which the plaintiff seeks a declaration that the Determination made by an Adjudicator, Mr Philip Martin, on 20 August 2004 under the Building & Construction Industry Security of Payment Act 1999 (NSW) (the Act) is void. 2 Previously there had been proceedings between the same parties in respect of a statutory demand arising out of the same dispute between the parties. The evidence in this matter substantially corresponds with the evidence in the earlier matter and, accordingly, I will incorporate some of the chronology of the matter as I referred to it in my earlier judgment of 23 June 2005 in those proceedings. 3 The factual background giving rise to the dispute concerns building work carried out by the defendant company for the plaintiff company which was a contractor in respect of building work at 23 - 25 Chesterfield Parade, Bronte. 4 The plaintiff had entered into a contract with the owner of the site in about July 2003. The defendant was engaged as a sub-contractor to the plaintiff to carry out part of the relevant works. 5 There are conflicting accounts of the arrangements under which this work was to be carried out given by the principals of the two companies. Mr Paul Sussanna for the defendant gave evidence of giving a written quote which priced the job at $128,760.90. He discussed the quote with Mr Rocco Gattellaro of the plaintiff company who said it was too much. The matter proceeded no further at that stage. Mr Sussanna says that a few days to a week later he had a telephone call from Mr Gattellaro to come and see him at the premises and during the course of that visit he says that Mr Gattellaro said to him that he wanted him to come and do the job. There is no doubt that thereafter the job proceeded and the work was done up until such time as work on the site ceased. 6 Mr Gattellaro's evidence is quite to the contrary. In a slightly more detailed account of the conversation he indicated that the quote was too high and he could not do a lump sum contract. He concluded by saying that he would only give Mr Sussanna the job if he would do it on a cost plus basis. He alleges that Mr Sussanna agreed to his proposal. Clearly the parties are at issue on this fundamental question of what were the terms of their contract. 7 There were three invoices submitted during the course of the job and in Mr Gattellaro's evidence he complained that the form of the invoices were not sufficient as they did not include backup invoices to enable him to properly assess the amount payable under what he described as a cost plus contract. 8 The plaintiff's contract with the owner of the property was terminated on 5 December 2003. By that stage according to the plaintiff there had been paid some $65,000 on account to the defendant. 9 On 15 April 2004 the defendant commenced proceedings in the Consumer Trader & Tenancy Tribunal to recover the balance which it claimed was then owed. On 19 May 2004 directions were made by the Tribunal for the supply of invoices to the defendant so that the defendant could see the basis for the claim. 10 On 9 June 2004 there was served on the plaintiff company a progress claim under the Act. That claim was for a sum of $20,541.49. Although in the form of a tax invoice it clearly included the relevant statement under the Act, namely, that "This claim is made under the New South Wales Building & Construction Security of Payments Act 1999 No 46". According to Mr Gattellaro at the time he received the claim he believed it was simply a statement sent to his company by the defendant setting out the previous invoices that were sent in answer to the Tribunal directions. 11 Although in response to the letter the plaintiff sent a letter to the defendant demanding supply of delivery dockets for steel and concrete in the context of the proceedings in the Tribunal, there was no payment schedule served by the plaintiff under the Act. The letter in response did not identify the payment claim or indicate whether any payment was to be made. 12 On 16 July 2004 the defendant sent a letter to the Master Builder's Association (MBA) with a copy to the plaintiff. It was an Adjudication Application. On the same day a letter was sent to the plaintiff enclosing a number of documents in the following terms: "Further to our Payment Claim of the 9 June 2004 made under the NSW Building and Construction Industry Security of Payments Act 1999 No.46. The claim was served upon you by Dependable Couriers on that date. Your letter of the 24 June 2004, which included a copy of our claim with your handwritten note, confirms it was received by you on that date. As we have received no response to our claim, we herewith advise that we will today be making an application through the Master Builders Association of NSW (ANA) for the appointment of an adjudicator to rule on the matter. We herewith enclose documents as listed in attached page." 13 The defendant did not suggest that this was a notice required under s17(2) of the Act. 14 On 19 July 2004 the defendant faxed to the plaintiff a letter mistakenly dated 19 June 2004. The substance of that letter was in the following terms: