Jurisdictional review – Building and Construction Industry Security of Payment Act 2002 (Vic) (Act) – incorrect inclusion of non-claimable variations –'method of resolving disputes' within the meaning of section 10A(3)(d)(ii) – whether claimant was required to serve a further section 18(2) notice before withdrawing the first adjudication application and making a fresh application under section 28 – breach of the rules of natural justice – section 21(2A)
A 'method of resolving disputes' under section 10A(3)(d)(ii) of the Act must include a prescribed process that is binding on the parties. In the circumstances, a second section 18(2) notice was not required when the claimant made a new adjudication application. An adjudicator may disregard an adjudication response pursuant to section 21(2A) of the Act where a payment schedule is not provided.
Tony Totaro, trading as Ezy Doze It (defendant), served a payment claim on Branlin Pty Ltd (plaintiff). The plaintiff did not pay any of the claim or serve a payment schedule. When the adjudicator failed to determine it within the time allowed under the Act, without notifying the plaintiff, the defendant withdrew that application and made a fresh application. The second adjudicator determined that the plaintiff was not entitled to lodge an adjudication response and disregarded the plaintiff's adjudication response in full. The plaintiff sought declaratory relief on various grounds.
The application of the plaintiff was dismissed. Vickery J found that:
- claimable variations: section 10A of the Act allows a claimable variation to be included in a payment claim if the original consideration agreed to in the relevant contract exceeds the value prescribed in the Act and the contract also does not provide a method of resolving disputes, being a prescribed method resulting in a resolution that is binding on the parties. The dispute resolution clause in the contract stated that 'reference may be made to' the conflict resolution process in an Australian Standard form was merely permissive.
- payment claim made outside time: there was no contractual mechanism for the issue of a final certificate within the meaning of section 9(2)(d)(ii) of the Act and there was a defects liability period within the meaning of section 9(2)(d)(i) through the incorporation of a clause from an Australian Standard. The relevant reference date was at the expiration of the 3 month defects liability period provided for in the contract. The payment claim was therefore served within time.
- second adjudicator's appointment outside the time permitted by section 18(3)(e) of the Act: a second section 18(2) notice is not required for a new adjudication application is made under section 28 of the Act. A compliant section 18(2) notice could never be provided where an adjudicator fails to make a decision within the time allowed in section 2(4) of the Act as the notice period would have expired before the period allowed to an adjudicator to make a determination.
- breach of natural justice: the adjudicator's reliance on section 21(2A) of the Act in disregarding the submissions of the plaintiff was appropriate because the plaintiff had not provided a payment schedule under the Act.