Catchwords

Security of payment – Jurisdictional review – Payment claim served out of time

Significance

This decision provides guidance on the interpretation of the time limits set out by the Building and Construction Industry Security of Payment Act 2002 (Vic) (Act). The court applied Sugar Australia Pty Ltd v Southern Ocean Pty Ltd & Anor [2013] VSC 535 and took into account relevant new evidence that was not considered by the adjudicator in an application made to set aside a payment claim on the basis that it was made out of time.

Facts

Hallmarc Construction Pty Ltd (plaintiff) entered into a construction contract with Mr Saville (defendant) for the supply and installation of joinery for a project in Highett, Victoria.  The contract did not provide for the issue of any final certificate or any defects liability period.

The defendant served two separate payment claims, each couched as a 'final claim', on 21 February 2014 (first claim) and 16 May 2014 (second claim) respectively. In relation to the first claim, the adjudicator rejected the plaintiff's submission that this was a final claim.  He determined that he had jurisdiction on the basis that:

  • there was an invoice issued on 25 November 2013 by JMP Carpentry (JMP) for repairs to wardrobes that formed part of the defendant's scope of work under the construction contract on that date and therefore the relevant reference date arose after 25 November 2013; and
  • the first claim was valid, as the defendant served the payment claim within three months of the day when work under the construction contract was last carried out.

In response to the adjudicator's determination, the plaintiff sought declarations that the first claim and the second claim were invalid payment claims and that the determination was unlawful and void.

Decision

The Supreme Court quashed the adjudicator's determination and found that both claims were invalid.

Vickery J found that section 9(2)(d)(iii) of the Act (and not sub-paragraphs (i) or (ii)) applied in the circumstances, as the construction contact made no express provision for the issue of any final certificate or any defects liability period.  Accordingly, the date when construction work was last carried out, or when related goods and services were supplied, was the reference date for the purposes of section 14(5)(b).

Vickery J held that where an application is made to quash a decision for jurisdictional error, breach of procedural fairness or fraud, the court can take into account any relevant material including new material placed before it. Based on this new evidence from the contract administrator and a director of the plaintiff, His Honour accepted that the plaintiff had engaged JMP to rectify the defendant's defective work independently of the construction contract and found that the defendant last performed work under the construction contract when the defendant attended site to perform a final clean on 30 September 2013.  As the first claim was made on 21 February 2014, more than 3 months from the correct reference date of 30 September 2013, the first claim was invalid and the adjudicator had fallen into jurisdictional error in the sense described in Craig v South Australia (1995) 184 CLR 163.