The decision of Lahey Constructions Pty Limited (Lahey) v Trident Civil Contracting Pty Limited (Trident) [ 2013 ] NSWSC 176 of his Honour Justice Stevenson on 8 March 2013 has given some relief to those parties having to respond to payment claims under the Building and Construction IndustrySecurity of Payment Act 1999 (NSW) (the Act). The decision upholds the primacy of the contract and confirms time bars are able to be relied upon.
Lahey had received a payment claim from Trident under a subcontract arrangement for earthworks carried out at the Northern Beach Bathers Pavilion in Wollongong, Australia. The payment claim was referred to Phillip Martin, Adjudicator at Adjudicate Today under the Act.
The Adjudicator ultimately determined the amount of $71,417.50 in favour of Trident.
Lahey appealed the determination of the Adjudicator to the NSW Supreme Court on the basis that the Adjudicator had wrongly determined that certain time bars within the contract did not apply. Lahey’s position before the Adjudicator was that, amongst other things, Trident was not entitled to an excavation variation because Trident had not complied with certain contractual conditions precedent.
The Adjudicator in finding against Lahey determined at [ 39 ] that:
“The Act provides at section 3 that a person who undertakes to carry out construction work under a construction contract is entitled to receive and is able to recover progress payments in relation to the carrying out of that work. I [ the Adjudicator ] determine that where [ Trident ] has undertaken construction work it is entitled to payment for that work and the conditions of the contract do not provide a bar to the payment for that work.”
His Honour Justice Stevenson did not accept that the Adjudicator had properly determined the matter before him in claiming that the time bars could not be applied to the variation claim. His Honour stated at [ 58 ] that:
“On the contrary, the Act makes clear, in my opinion that a fundamental matter for consideration by the adjudicator is the terms of the contract between the parties.”
His Honour then went on to reference sections 9(a), 10(1)(a) and 22(2)(b) of the Act and the decision of Roseville Bridge Marina Pty Limited v Bellinghaum Marine Australia Pty Limited [ 2009 ] NSWSC 320.
Ultimately, his Honour held that the Adjudicator’s misapprehension of the role played by section 3 of the Act and his consequent failure to have regard to the terms of the subcontract compel the conclusion that the Adjudicator’s error was a jurisdictional error. In the circumstances, his Honour declared the determination void.
The decision of his Honour Justice Stevenson is good news for those people responding to payment claims under the Act where they have a well-drafted construction contract that includes time bars. Previously, Adjudicators had adopted the position that despite non-compliance with time bars a claimant was entitled to be paid if the work had been completed.
This decision reinforces the primacy of the contract and the fact that the legislation regulates the terms of the contract and is not there to override those terms. This is once again a timely reminder of the need to have a well-drafted contract which sets the parameters for claims to be made within a specified time, failing which, there is a bar to making a claim.