Catchwords

Jurisdictional fact – jurisdictional error – whether the existence of a reference date to support a payment claim is a jurisdictional fact

Significance

This decision confirms that the existence of a reference date to support a payment claim is not a jurisdictional fact or an essential pre-condition for the making of a valid payment claim.  Hence, if there is a dispute about this issue, it is for the adjudicator to determine.

Facts

Lewence Construction Pty Ltd (contractor) entered into a contract with Southern Han Breakfast Point Pty Ltd (principal) for the construction of an apartment block. On 27 October 2014 the principal issued  a notice purporting to take further work under the contract out of the contractor's hands. The contractor notified the principal that it regarded this as repudiation of the contract which the contractor accepted and terminated the contract. On 4 December 2014, the contractor served a payment claim pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act) for work done prior to termination of the contract. The payment claim was the subject of an adjudication determination made in favour of the contractor.

The principal sought a declaration that the adjudication was void. The primary judge accepted the principal's argument that the adjudicator had committed a jurisdictional error because he wrongly determined that a reference date within the meaning of section 8 of the Act had arisen in respect of the work. The contractor appealed from that decision.

Decision

The appeal was allowed. The Court of Appeal held that the existence of a reference date to support a payment claim is not a jurisdictional fact. It is not an essential pre-condition for the making of a valid payment claim.

The Court of Appeal found that the words 'on and from each reference date' in section 8(1) of the Act do not purport to identify a person; rather they identify the time on and from which a person who satisfies the description in either section 8(1)(a) or section 8(1)(b) is entitled to a progress payment.  The words  'a person referred to in section 8(1)' in section 13(1) of the Act refer, in their ordinary meaning, to a person falling within either sections 8(1)(a) or 8(1)(b) of the Act. It does not require a claimant who satisfies either of those subsections to also be able to identify the reference date. The words 'or who claims to be entitled to a progress payment' in section 13(1) make clear that the existence of a dispute  as to the entitlement does not preclude the making of a valid payment claim.

Section 13(1) is contrasted with section 13(5) which provides that a claimant cannot serve more than one payment claim in respect of each reference date.  Section 13(5) is expressed as a prohibition on the making of a claim. The Court of Appeal held that there was no evidence or reason to conclude that the payment claim was a second claim in respect of the (earlier) October date when the payment claim covered work under the contract after that date, and the earlier claim was not in evidence.