In Built Environs Pty Ltd v Tali Engineering Pty Ltd & Ors [2013] SASC 84 a determination was set aside on the basis of a reasonable apprehension of bias on the part of the nominating authority, Nominator. A director of Nominator had assisted Tali Engineering Pty Ltd with the quantification of its claims. A “Chinese wall” arrangement had been put in place within Nominator before selection of the adjudicator but the Supreme Court found that this was ineffective to avoid a perception of bias.

The adjudicator’s reliance on the prevention principle in making its determination was also considered. The principle was not expressly raised by Tali Engineering Pty Ltd in its application, and therefore not responded to by Built Environs Pty Ltd in its response. The fact that Built Environs Pty Ltd was not given an opportunity to put forward submissions in relation to the principle, which was decisive in the determination, meant that it was denied natural justice. This could have been avoided if the adjudicator sought further submissions on the principle from both parties.

This case serves as an important reminder that nominating authorities need to be, and need to be seen to be, independent. Further it may lead to a practice of adjudicators seeking further submissions from parties where they are considering legal principles not raised on the face of the adjudication application.

In Adelaide Interior Linings Pty Ltd v Romaldi Constructions Pty Ltd [2013] SASC 110 Adelaide Interior Linings Pty Ltd commenced proceedings in the District Court in an effort to deal with the entirety of matters in dispute as between the parties. This included an injunction, which was granted at first instance, against the requirement to pay Romaldi Constructions Pty Ltd an adjudicated amount. The proceedings did not seek judicial review of the determination itself, only to avoid payment of the adjudicated amount before resolution of the proceedings.

The Supreme Court noted that the legislation was enacted with the intention of introducing a ‘pay now, argue later’ system. It overturned the District Court’s decision to grant the injunction, stating that it would not permit attempts to circumvent the purpose of the legislation.

While Adelaide Interior Linings Pty Ltd argued that an injunction was warranted on the grounds that Romaldi Constructions Pty Ltd were near insolvency, Justice Blue found that the evidence in this regard was insufficient.

We understand that separate proceedings currently underway in South Australia include allegations that an adjudicator was not properly qualified under the South Australian regulations. The regulations are particularly proscriptive. It will be of interest to see what the Court determines as the consequences of any infringement found.

Queensland – Building and Construction Industry Payments Act 2004 (Qld)

In Agripower Australia Ltd v J & D Rigging Pty Ltd [2013] QSC 164 the Supreme Court considered whether a contract for the dismantling of mining plant on land the subject of a mining lease was a “construction contract” for the purposes of the Queensland Act. The section 10 definition of “construction work” includes reference to buildings, structures or works “forming, or to form, part of land”.

The definition of “land” was therefore critical. The matter was eventually determined with reference to the fact that the plant had been erected and used pursuant to, and was required to be removed upon expiry of, the mining tenement. No real property existed in those rights. The plant was never intended to be permanent. For these reasons the plant never became a fixture and therefore its removal could not be considered construction work for the purposes of the Act.

This can be contrasted with the earlier case of HM Hire Pty Ltd v National Plant & Equipment Pty Ltd [2013] QCA 6 in which the Court of Appeal confirmed that contracts to supply equipment for use on a mining site may still be covered by the Act. In that case the supply was “in connection with” work on a mining site which was found to be construction work under the Act.

It will therefore be critical to consider the factual matrix in which a contract exists to determine whether it is construction work for the purposes of the Act.

New South Wales – Building and Construction Industry Security of Payment Act 1999 (NSW)

In State Asphalt Services Pty Ltd v Leighton Contractors Pty Limited [2013] NSWSC 528 State Asphalt Services Pty Ltd issued two payment claims in identical terms. Leighton Contractors Pty Limited did not respond to the first but answered the second with a payment schedule. The Supreme Court held that the liability under the first claim survived its repetition in the second claim and that summary judgment could be sought on the basis of the first claim.

Parties receiving multiple claims need to remember that later claims will not necessarily alleviate liability under earlier claims, irrespective of duplication.

In Lahey Constructions Pty Ltd v Trident Civil Constructions Pty Ltd [2013] NSWSC 176 the Supreme Court declared void an adjudication on the basis that the adjudicator had committed a jurisdictional error in failing to consider the provisions of the contract between the parties as to requirements of making a valid variation claim. The adjudicator had found that s3 of the Act which provides the entitlement to payment for carrying out works meant that he did not need to consider the contractual requirements for making a valid claim. As such, time bars and notification requirements were not taken into account in determining the value of works performed. Further, the Court found that the adjudicator’s failure to give the parties notice of his intention to decide the issue with regard to the Act alone was a breach of natural justice. The determination was declared void.

This case is a blunt reminder to adjudicators of their obligation to consider the terms of the relevant contract.

Victoria – Building and Construction Industry Security of Payment Act 2002 (Vic)

In Maxstra Constructions Pty Ltd v Joseph Gilbert & Ors [2013] VSC 243 Joseph Gilbert performed concreting work under a subcontract that was found not to have provided for the valuation of the subcontract work. A claim regarding the estimated costs of rectification of alleged defects was made by Maxstra Constructions Pty Ltd for the first time in their adjudication response.

The adjudicator was forced to consider the interaction of two provisions of the Victorian Act, each relating to the valuing of work where the contract is silent. One excluded claims for damages while the other allowed the estimated cost of rectifying defects in work to be taken into account. The adjudicator considered that the rectification work was a damages claim and that it was therefore excluded. The Supreme Court held that this was a jurisdictional error and quashed the determination, remitting the matter to be re-determined but at the same time allowing for further submissions by Joseph Gilbert regarding the alleged defects.

In doing so the Supreme Court distinguished between the concepts of “damages” and an estimate as to the cost of repair of defects, noting that a damages claim might include consequential losses and are to be determined on the balance of probabilities rather than costs for repair only to be determined as an estimate. The Court found that the adjudicator should have considered whether there was defective work and what the estimated cost of rectification would be.

The subcontract could have been improved in terms of clarity regarding the valuation of work, however it does not appear that the ambiguity arising regarding the claim for costs of rectification could have otherwise been avoided by the parties. Adjudicators will be well placed to keep abreast of the Court’s decisions considering the Act so that its expectations regarding the treatment of claims and interpretation of the legislation are understood.