Supreme Court New South Wales Medium Neutral Citation: Falco's Pty Limited v AB Developments (Australia) Pty Limited [2017] NSWSC 1320 Hearing dates: 14/09/2017 Date of orders: 14 September 2017 Decision date: 14 September 2017 Jurisdiction: Equity - Technology and Construction List Before: McDougall J Decision: Quash adjudicator's determination. Money in court to be paid out to plaintiff. Catchwords: BUILDING AND CONSTRUCTION – Building and Construction Security of Payment Act 1999 (NSW) s 13(5) – whether adjudication determination is valid – whether there was more than one payment claim served in respect of the same reference date Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW) Cases Cited: Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190 SSC Plenty Road Pty Ltd v Construction Engineering (Aust) Pty Ltd [2015] VSC 631 Suprima Bakeries Pty Ltd v Australian Weighing Equipment Pty Ltd [2016] NSWSC 998 Category: Principal judgment Parties: Falco's Pty Ltd (Plaintiff) AB Developments (Australia) Pty Limited (First Defendant) Christopher Harriss (Second Defendant) Representation: Counsel: B Phillips (Plaintiff) A Duc (Defendants) Solicitors: Mahony Law (Plaintiff) Edgeworth Legal Pty Ltd (First Defendant) King Lawyers (Second Defendant) File Number(s): 2017/252173 Judgment (ex tempore – revised 14 september 2017) 1. HIS HONOUR: The plaintiff (Falco's) and the first defendant (AB Developments) were parties to a contract under which the latter agreed to supply concrete for a project being conducted by the former. The contract was informal in the extreme, consisting of a schedule of rates quotation dated 10 July 2016 and an acceptance endorsed on it dated 13 July 2016. 2. From time to time, AB Developments submitted progress claims to Falco's. Those progress claims were said to be also payment claims for the purposes of the Building and Construction Industry Security of Payment Act 1999 (NSW) ("the Act"). It was unnecessary for them to contain that statement, but nonetheless the fact that they did is not without significance. 3. There is no doubt that the contract in question was a construction contract for the purposes of the Act. 4. It seems that it was the practice of Falco's to deduct retentions from the amounts claimed by AB Developments. That practice was not authorised by the terms of the contract. It seems, further, that from time to time Falco's backcharged AB Developments for alleged defects. 5. No work has been done under the contract since April this year. In April, AB Developments sent a number of documents comprising both progress claims and payment claims to Falco's. One of those made a claim for formwork, steel fixing and pouring concrete on Building B. The next one appears to have resubmitted that claim, but in a slightly different amount. There was a third one claiming $6,000 for formwork, steel fixing and concrete pour in a walkway. However, on the evidence, although that third payment claim (as I shall call it) was dated 28 April 2017, it was not served until 25 May 2017. Service was effected by an email of that date attaching "our tax invoice for walkway" totalling $6,600 (that is to say, taking account of GST). 6. On 26 May 2017, AB Developments sent a further progress claim/payment claim to Falco's, which claimed outstanding amounts under earlier invoices, amounts that had been withheld for retention, and amounts withheld for allegedly defective or incomplete work and other backcharges. There was at one point in time some dispute as to when that payment claim was actually served, but for present purposes nothing turns on that. 7. If Falco's provided a payment schedule, it did so in a very informal way, by an email dated 30 May 2017. Again, nothing turns on that. 8. AB Developments took the view that there had been no payment schedule. Accordingly, it decided to proceed pursuant to s 15(2)(a)(ii) of the Act, by making an adjudication application. By s 17(2) of the Act, AB Developments was required to give notice to Falco's of that intention. It did so. If Falco's had not earlier provided a payment schedule, the s 17(2) notice gave it the opportunity to do so. There is some dispute as to whether Falco's did so. If it did, it was by email of 20 June 2017, which again was somewhat informal. However, that is another dispute that does not need to be considered. 9. The matter went to adjudication. The second defendant ("the adjudicator") was the adjudicator. He asked the parties to provide written submissions as to service of the adjudication application. They did so. He then proceeded to make his determination. In that determination, the adjudicator decided that AB Developments was entitled to the amount claimed, together with interest. 10. Falco's says in these proceedings that AB Developments was not permitted to serve the payment claim that was the subject of the adjudication. It relies on s 13(5) of the Act, which provides that a claimant cannot serve more than one payment claim in respect of each reference date under the construction contract. It is common ground that s 13(6) does not apply. 11. The adjudicator did not consider s 13(5). He did refer, in his reasons, to the history of claims in April and May 2017 to which I have referred. He referred to "invoices" but does not appear to have realised that the invoices in question were also expressly stated to be payment claims. Whether the adjudicator knew that the "walkway" payment claim had not been served until 25 May 2017 – the day before service of the payment claim that was referred to him for adjudication – is not entirely clear. 12. The grounds of challenge to the determination include not only s 13(5) but also: 1. an assertion that the adjudicator denied Falco's natural justice, in the way that he sought submissions and then decided the application without reference to the material that Falco's could have put before him; and 2. that the adjudicator failed to carry out his statutory function to value the work, as that function has been considered in cases such as Suprima Bakeries Pty Ltd v Australian Weighing Equipment Pty Ltd [1] and SSC Plenty Road Pty Ltd v Construction Engineering (Aust) Pty Ltd [2] . 1. Since it appears to be common ground that the s 13(5) point must succeed, it is unnecessary to consider the second and third grounds of challenge. 2. Section 13(5) has been considered more than once. It is sufficient to refer to the decision in Dualcorp Pty Ltd v Remo Constructions Pty Ltd [3] . In that case, Allsop P said at [14] that s 13(5) contained a prohibition that meant what it said. His Honour said: 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 payment claim is not a payment claim under the [Act] and does not attract the statutory regime of the Act. 1. Allsop P, although agreeing in the outcome in that case, gave somewhat different reasons to those given by the majority (Macfarlan JA, with whom Handley AJA agreed). It has never been suggested that his Honour's analysis of the prohibitory nature of s 13(5) is incorrect. 2. In this case, there could only have been one available reference date: 30 April 2017. No work was done after April 2017. The contract made no express provision for reference dates. Section 8(2)(b) of the Act therefore applies. The reference date is "the last day of the named month in which the construction work was first carried out...and the last day of each subsequent named month". 3. The uncontested facts are, therefore, that two payment claims were served in May 2017; the only reference date available to support them was 30 April 2017; and the payment claim that went to arbitration and was the subject of the adjudicator's determination was the one served later in point of time. 4. It follows inevitably that there was no right to make the adjudication application and the adjudicator had no power to consider it. 5. In those circumstances, Falco's is entitled to the relief that it claims. 6. I make orders in accordance with paragraphs 1 to 4 of the short minutes of order initialled by me and dated today's date and add as order 5 "make no other order as to costs". ********** Endnotes 1. [2016] NSWSC 998 2. [2015] VSC 631 3. (2009) 74 NSWLR 190 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 September 2017