Castle Constructions Pty Ltd v N and R Younis Plumbing Pty Ltd

[2019] NSWSC 225

Supreme Court

New South Wales

Medium Neutral Citation:	Castle Constructions Pty Ltd v N & R Younis Plumbing Pty Ltd [2019] NSWSC 225
Hearing dates:	26 February 2019; further written submissions ending 28 February 2019
Date of orders:	11 March 2019
Decision date:	11 March 2019
Jurisdiction:	Equity - Commercial List
Before:	Parker J
Decision:	The determination by the second defendant as Adjudicator under the Building and Construction Industry Security of Payment Act 1999 (NSW), issued on 11 January 2019 and numbered ADJT605, be quashed.  The first defendant to pay the plaintiff’s costs of the proceedings.
Catchwords:	BUILDING AND CONSTRUCTION – construction contracts – Building and Construction Industry Security of Payment Act 1999 (NSW) – challenge to adjudication determination – entitlement to progress payment – whether payment claim supported by valid reference date – whether reference dates may arise following termination of the relevant contract – operation of ss 8(2)(a) and 8(2)(b) – whether existence of a reference date is a jurisdictional fact – whether validity of a termination is a jurisdictional fact – review of adjudication determination.
Legislation Cited:	Building and Construction Industry Security of Payment Act 1999 (NSW), ss 4, 8, 13
Cases Cited:	Abergeldie Contractors Pty Ltd v Fairfield City Council [2017] NSWCA 113 All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289 Broadview Windows Pty Ltd v Architectural Project Specialists Pty Ltd [2015] NSWSC 955 Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394 Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259 Greenwood Futures v DSD Builders [2018] NSWSC 1407 Holdmark Developers Pty Ltd v GJ Formwork Pty Ltd [2004] NSWSC 905 McNab NQ Pty Ltd v Walkrete Pty Ltd [2013] QSC 128 Patrick Stevedores Operations No. 2 Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2014] NSWSC 1413 Pinnacle Construction Group Pty Ltd v Dimension Joinery & Interiors Pty Ltd [2018] NSWSC 894 Primelime (NSW) Pty Ltd v BAEC Contracting Pty Ltd [2018] NSWSC 372 Southern Han Breakfast Point Pty Ltd v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 Trustee for Allway Unit Trust trading as Westside Mechanical Contracting Pty Ltd v R&D Air Conditioning Pty Ltd [2018] SASC 46 Veer Build Pty Limited v TCA Electrical and Communication Pty Ltd [2015] NSWSC 864 Watkins Contracting Pty Ltd v Hyatt Ground Engineering Pty Ltd [2018] QSC 65
Texts Cited:	Nil
Category:	Principal judgment
Parties:	Castle Constructions Pty Ltd (Plaintiff) N & R Younis Plumbing Pty Ltd (First Defendant) Callum Campbell (Second Defendant)
Representation:	Counsel: F P Hicks SC (Plaintiff) M Southwick (First Defendant)   Solicitors: McLachlan Thorpe (Plaintiff) Macquarie Lawyers (First Defendant)
File Number(s):	2019/22955
Publication restriction:	Nil

Judgment

1. In these proceedings, Castle Constructions Pty Ltd (“the Builder”) challenges an adjudication determination in favour of N & R Younis Plumbing Pty Ltd (“the Contractor”) under the Building and Construction Industry Security of Payment Act1999 (NSW). Unless otherwise stated, statutory references in the balance of this judgment are to that Act. All figures quoted are inclusive of GST.

2. The contract between the parties was one of three contracts to which the Builder and the Contractor were party for works under a building project being constructed by the Builder at Northbridge. The contract in question covered the provision of hydraulic services. It was dated July 2017 and was a Standard Trade Contract published by the Master Builders’ Association of NSW, August 2014 Edition. The contract price was $517,000.

3. The present dispute concerns a payment claim issued by the Contractor on 20 November 2018. The amount claimed was $142,140.51, which covered both the completion of the works and variations. The claim was rejected by the Builder; in response to the claim, it issued a payment schedule refusing to make any payment. The Contractor brought an adjudication application which was referred to Callum Campbell, (“the Adjudicator”), the second defendant. In its application the Contractor reduced its claim to $120,654.50. The Adjudicator awarded the whole of this amount in the Contractor’s favour.

4. Pursuant to an agreement between the parties which is referred to in more detail below, the Builder paid the sum of $150,000 into a bank account controlled by the solicitors for the parties to abide the outcome of the dispute. The present proceedings were commenced on 22 January 2019 and have been conducted on an urgent basis.

Issues for determination

5. Section 8 of the Act provides:

Rights to progress payments

(1)   On and from each reference date under a construction contract, a person:

(a)   who has undertaken to carry out construction work under the contract, or

(b)   who has undertaken to supply related goods and services under the contract,

is entitled to a progress payment.

(2)   In this section, reference date, in relation to a construction contract, means:

(a)   a date determined by or in accordance with the terms of the contract as the date on which a claim for a progress payment may be made in relation to work carried out or undertaken to be carried out (or related goods and services supplied or undertaken to be supplied) under the contract, or

(b)   if the contract makes no express provision with respect to the matter—the last day of the named month in which the construction work was first carried out (or the related goods and services were first supplied) under the contract and the last day of each subsequent named month.

6. The Act (s 4) contains the following definition of the term “progress payment”:

progress payment means a payment to which a person is entitled under section 8, and includes (without affecting any such entitlement):

(a)   the final payment for construction work carried out (or for related goods and services supplied) under a construction contract, or

(b)   a single or one-off payment for carrying out construction work (or for supplying related goods and services) under a construction contract, or

(c)   a payment that is based on an event or date (known in the building and construction industry as a “milestone payment”).

7. Section 13 of the Act relevantly provides:

(1) A person referred to in section 8(1) who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.

…

(4)   A payment claim may be served only within:

(a)   the period determined by or in accordance with the terms of the construction contract, or

(b)   the period of 12 months after the construction work to which the claim relates was last carried out (or the related goods and services to which the claim relates were last supplied),

whichever is the later.

(5)   A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract.

(6)   However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim.

…

8. Under the Act there is no entitlement to a progress payment, and there can be no valid progress claim, unless there is an available reference date. This is established by the High Court decision in Southern Han Breakfast Point Pty Ltd v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 which is referred to in more detail below.

9. The Builder contends that, at the time the Contractor issued its November progress claim, it had no entitlement to a progress payment under the Act. The Builder advances two separate contentions to support this conclusion.

10. First, the Builder contends that it terminated the relevant contract before the progress claim was issued by the Contractor. According to the Builder, once the contract was terminated there was no remaining reference date upon which the progress claim could be based.

11. The Builder’s alternative contention is that, if the contract was not terminated, then as a matter of construction of the contract and the Act, the relevant reference date was 28 November. According to the Builder, the Contractor’s progress claim dated 20 November was invalid because it was issued before the relevant reference date.

12. The Contractor disputes that the Builder’s purported termination of the contract was valid, and disputes the Builder’s contention concerning the available reference date. But in addition the Contractor contends that the resolution of these contentions was a matter for the Adjudicator, and there was no jurisdictional error by the Adjudicator which would permit this Court to intervene.

Facts and evidence

13. The Builder is a company controlled by Victor Lahoud. The Contractor is a company controlled by Richard Younis. All relevant commercial negotiations and dealings took place between Mr Lahoud on behalf of the Builder and Mr Younis on behalf of the Contractor.

14. The printed MBA conditions of contract dealt with the making of payment claims and payment terms in clause 4 which relevantly provided:

4.   

(a)   Payment claims must relate to the contract price and are to be made as required by the timetable set out in Schedule 2.

(b)   If there are no payment claim period details set out in Schedule 2 then the Trade-Contractor is entitled to make a claim for payment every 4 calendar weeks from the commencement of work.

…

(e)   Any dispute as to a payment claim is to be advised in writing to the Trade-Contractor within 10 business days of receipt of the payment claim. This applies to payment claims which are submitted prior to, or after, the date or period specified in Schedule 2.

Payment Claims Received After Due Date

(f)   Where a payment claim required by the contract to be submitted by a specified date or period is submitted after the date or period then payment of the same may be postponed until the next payment period. However the payment claim, even though received late, should still be assessed pursuant to (c) above.

15. Schedule 2 Item (ii) dealt with progress payments. It provided in its printed form:

A.   Payment claims are to be made on the due date which is determined by the following:-

(a)   every ……………. days from commencement of work, or

(b)   on the …………… day of the month.

16. The printed form of Item (ii) was amended and completed in handwriting. Sub-clause A(a) was struck out. In sub-clause A(b) the word “on” was struck out and replaced by the word “by”. The word “28th” was written in to the blank space. The result was that the contractual version of the clause read as follows:

A.   Payment claims are to be made on the due date which is determined by the following:-

…

(b)   by the 28th day of the month

17. The contract provided for the work to begin in July 2017 and for it to be completed by May 2018. The parties fell into dispute and the work was not completed by that date.

18. By letter dated 3 October 2018, McLachlan Thorpe, solicitors acting for the Builder, wrote to Mr Younis. The letter asserted among other things that the Contractor had failed to comply with the hydraulic services contract and its staff had left the site. The letter stated that this conduct amounted to repudiation of the contract and purported to accept the repudiation by terminating the contract.

19. Mr Younis responded on 17 October asserting that the purported termination was invalid and reserving the Contractor’s rights. The letter asserted that the contract remained on foot. It stated that the Contractor remained ready, willing and able to carry out its obligations under the contract.

20. Negotiations then took place between McLachlan Thorpe and solicitors acting for the Contractor, Salim Rutherford. Those negotiations resulted in the preparation of a document styled “Term Sheet”. The Term Sheet was drafted as a communication between the solicitors for the Builder on the one hand and the solicitors for the Contractor on the other, describing the parties as “our client” and “your client” respectively. It was then signed by Mr Lahoud and Mr Younis on behalf of the Builder and the Contractor. It stated:

1.   Our respective clients agree that the Air Conditioning Contract and the Hydraulic Services Contract are reinstated and on foot. In this respect:

(a)   our client withdraws this firms letters of 3 October 2018; and

(b)   your client withdraws his letters dated 17 October 2018 sent to Castle.

2.   Subject to our client complying with 3 below your client returns to the site on 30 October 2018 and works diligently to complete all the incomplete works under the contracts referred to in 1 above (Incomplete Work), starting with the gas meters, as soon as reasonably possible, but in any event no later than 10 working days from the date of confirmation that our client has complied with 3 below, and in this respect, time is of the essence.

3.   Our client deposits into our trust account before COB today, the sum of $150,000 to be held on the terms set out below (deposit).

4.   Upon completion of the Incomplete Works, your client issues a payment claim under the Building and Construction of Industry Security of Payment Act (Act) in respect of that work. Then:

a)   Our client either pays the payment claim in full or serves a payment schedule on your client in respect of it. If that payment claim is paid in full, the payment is made from the deposit and the balance of the deposit, if any, is returned to our client.

b)   If a payment schedule is served, your client either accepts the scheduled amount in it or seeks adjudication under the Act. If your client accepts the scheduled amount, that amount is paid from the deposit and the balance of the deposit, if any, is returned to our client. If your client seeks adjudication under the Act, the scheduled amount will be paid from the deposit and the balance of the deposit will remain on trust pending a decision of the adjudicator.

c)   If adjudication under the Act is sought the decision of the adjudicator is binding for the purpose of dealing with the deposit. The decision of the adjudicator will be a deemed direction to McLachlan Thorpe Partners to pay the adjudicated amount from the deposit. The balance of the deposit, if any, is to be returned to our client.

5.   Our respective clients reserve all their rights in respect of matters which have occurred to date, and the above arrangements are entered into without admissions by either of our respective clients.

21. The Term Sheet was dated 29 October but was referred to in subsequent communications as an agreement of 30 October.

22. The sum of $150,000 referred to in clause 3 of the Term Sheet agreement was paid and the Contractor’s workers returned to the site. But the parties fell into dispute again. On 12 November McLachlan Thorpe wrote to Salim Rutherford complaining that the work was incomplete. The letter referred to ninety-eight separate allegedly incomplete aspects of the work. The letter purportedly terminated the “30 October agreement” and directed that the Contractor’s workers should not return to the site without prior written authority.

23. Salim Rutherford responded later that day:

We will not respond in detail to your letter except to say that our instructions are that our client has completed all works under the contracts, save for the certificate of compliance from the gas company. We understand that your client has still not undertaken the works it is required to do and an inspection is still unable to be booked in.

There appears to be little utility in engaging with your client in relation to the matters raised in your letter which are the matters for adjudication and are denied in any event.

We are instructed, however, to note that prior to leaving site our client’s workers asked Victor and Daniel (the architect) whether they required any further works to be completed before they left. The response was no. Hence the plumbing inspector was on site today who confirmed in the presence of both Richard and Victor that the works were in accordance with all legislative requirements.

24. The Contractor’s payment claim followed on 20 November. The claim took the form of an invoice. It contained an invoice number and a reference which read “final claim”. Under the description of the work it stated that the job was “now complete” and that the invoice represented the final claim for plumbing work. The sum claimed included the 5% retention provided for in the contract.

25. The invoice also stated that it represented a payment claim for the purposes of the Act. It did not state what the relevant reference date was. In the payment schedule the Builder took the point, among others, that there was no available reference date. In its submissions in support of the adjudication application the Contractor responded:

17.   There can be no dispute that a reference date has accrued to entitle the Claimant to make the Payment Claim. Schedule 2(ii)(b) provides that “Payment claims are to be made on the due date which is determined by the following …by the 28th day of the month”. Under the Contract, a reference date accrues on the 28th day of the month. The Claimant has not made a payment claim since 25 September 2018 and at least 2 reference dates have accrued since then (not to mention the many more reference dates that have accrued during the course of the Contract).

18.   Further and in the alternative, even if the Contract did not provide the time to make a payment claim (which is denied), under the Terms Sheet (which is discussed in further detail below) the Claimant was entitled to make a claim upon completion of the incomplete works under the Contract. The Claimant completed the incomplete works under the Contract on 20th November 2018 in accordance with the Terms Sheet.

19. Further and in the alternative, even if the Contract did not provide the time to make a payment claim (which is denied), the Terms Sheet did not provide a time to make or a reference date did not accrue under the Terms Sheet (which is also denied), under section 8(2)(b), a reference date accrues on the last day of the month.

26. The Adjudicator stated:

49.   Based on the material before me, I am satisfied that the claimant is entitled to utilise the date of 28 November 2018, in accordance with the terms of the contract, as a reference date pertaining to the payment claim. The contract specifically states that the payment claim must be served by the 28th day of each month. This indicates that a payment claim is able to be served prior to such a date, and that any works claimed are to be calculated to the reference date of the 28th day of any said month.

50.   The parties have made extensive contradicting submissions pertaining to the status of the contract i.e. whether it has been terminated, repudiated, varied or remains on foot. As such, should I be wrong in relation to the application of the contractual reference date, the Act by default addresses such an Issue. The Act states that the last day of the named month in which the construction work was first carried out (or the related goods and services were first supplied by the person) under the contract and the last day of each subsequent named month.

51.   As such, and given the uncertainty pertaining to ascertaining a reference date as a result of the parties conflicting views as to the status of the contract, under the Act, the reference date of 31 October 2018 is also able to be utilised by the claimant.

52.   As such, I am satisfied that a valid reference date is available of either 28 November 2018 under the contract or 31 October 2018 under the Act for the claimant to serve a payment claim.

27. In dealing with the Builder’s argument that the contract had been terminated the Adjudicator said:

83.   The respondent has failed to satisfy me, due to a lack of evidentiary proof, that the claimant has wrongfully suspended the works and that the respondent is entitled to terminate the contract. I am not satisfied that clause 16 of the contract has been enlivened. It is noted that the claimant refutes that it suspended the works under the contract.

84.   Should I be wrong on this issue, in a situation where there are conflicting submissions before me as to the contract and its operation, the statutory entitlements under the Act still come into play.

85.   I have previously been satisfied that the claimant has a reference date under the contract of 28 November 2018, and should I be wrong in that instance, the claimant by default has a reference date of 31 October 2018 available to it under the Act.

86.   Again, in relation to this issue, I am satisfied that the claimant has served a valid payment claim with an available reference date.

28. For the purpose of the hearing, affidavits were filed and read from both Mr Lahoud and Mr Younis. These affidavits canvassed the merits of the termination dispute. In particular, Mr Lahoud set out in detail his complaints about the Contractor’s alleged failure to complete the work. Both affidavits were read without objection. Even though they contradicted each other, neither Mr Lahoud nor Mr Younis was required for cross-examination. I will return to the significance of this in resolving the issues between the parties below.

29. Following the hearing counsel for the parties lodged supplementary written submissions. Those submissions, helpfully, restated each party’s argument.

Available reference date

30. The question for me is whether, having regard to the terms of the contract (including the effect of the Term Sheet), the application of the Act, and the alleged termination, the Contractor’s payment claim was supported by a valid reference date. Strictly speaking, I must first decide to what extent, if at all, the Court is entitled to go into these questions, having regard to the Contractor’s submission that any error the Adjudicator may have made was a non-jurisdictional one.

31. Counsel for the parties referred me to a number of decided cases, and review of those cases led me to consider a number of other decisions. I set out below the authorities I consider to be relevant.

32. In Holdmark Developers Pty Ltd v GJ Formwork Pty Ltd [2004] NSWSC 905 it was common ground that the building contract (a sub-contract between Holdmark as builder and GJ as contractor) came to an end on 12 March 2004. Holdmark’s contention was that it had terminated the contract for cause. GJ’s contention was that Holdmark had not been entitled to terminate the contract but GJ had accepted its repudiation. Thereafter GJ issued four successive payment claims. The fourth, which ultimately became the subject of the adjudication, was issued on 27 July.

33. Counsel for Holdmark submitted that periodic payment claims could only be made during the currency of the contract, while work was being performed, and that after the completion of work a final payment claim could be made but there could not be more than one. Counsel for GJ submitted that periodic claims could be made at each reference date occurring after the end of the contract. McDougall J said (at [25]-[27]):

[25]   … In principle, and subject to any relevant provision of the contract (it was not submitted that any provision was relevant under this sub-contract), it should not matter why termination occurred or why work ceased. That could be because the work was complete; or because the contract had been terminated for breach; or because of accepted repudiation; or indeed for some other reason.

[26]   In some cases, contracts make provision for the occurrence of reference dates after termination or cessation of work. As I have indicated, those cases may be put to one side. Where there is no provision, then, in my view, there is but one more reference date. That is the reference date that, according to either the contractual or statutory scheme, occurs (or would have occurred) next after termination or cessation of the work. The builder, in my judgment, may make a final payment claim by reference to that date. It may do so within 12 months after cessation of work.

[27]   I do not think there is a successive reference date monthly (or at any other intervals fixed by the contract) thereafter. If there were, the builder could harass the proprietor with a series of claims for the same work, or parts of the same work. It is obvious that, in many cases, payment claims are complex and detailed. It is obvious that a proper response may often require a very great amount of work. If the response is inadequate, or if the proprietor for whatever reason omits to respond, then the mechanisms of the Act are engaged. That may have at least potentially very serious consequences for the proprietor.

34. The contract relevantly provided (cl 3(a)) for invoices to be sent “monthly”. His Honour considered that the effect of this clause was to provide for a reference date on the last day of the month. Alternatively, if the clause did not have this effect, then that would be the relevant date pursuant to s 8(2)(b). His Honour said (at [37]-[38]):

[37]   The reference date in relation to which a final payment claim is made is, therefore, the reference date next following the date on which the contract is terminated or work ceases unless the contract provides otherwise. Alternatively, it may be a date at the end of the month (or other interval prescribed by the contract) in which termination occurs.

[38]   In the present case, if (as I think is the better view) clause 3(a) of the subcontract does provide for the determination of a reference date, then it may be, in the event that has happened, that the reference date for the purposes of a final payment claim is 30 April 2004. I do not express a concluded view because even if that be so, there were two purported payment claims made in relation to one reference date.

35. It is not clear to me why his Honour nominated 30 April as being the reference date rather than 31 March, which was the last day of the month in which work ceased. But nothing turns on this. Having held that there could be only one reference date after the end of the contract, his Honour concluded that the fourth payment claim was invalid because it contravened the prohibition in s 13(5) against a claimant serving more than one payment claim for the same reference date.

36. In Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394 the owner (Brodyn) purported to terminate the building contract based on an alleged repudiation by the builder (Dasein). The purported termination took place on 13 June 2003. On 27 June Dasein served a “final claim” stating that it was a claim under the Act. Dasein served a further claim on 28 August and another further claim on 28 September. The third of the claims was the subject of the adjudication.

37. Hodgson JA, who gave the leading judgment in the Court of Appeal, said (at 443-444 [62]-[65]):

[62]   Brodyn's submission was that the payment claim served on 28 September 2003 was not a valid payment claim under the Act, because the termination of the contract and cessation of the work under it meant that there was thereafter only one reference date, in respect of which only one final payment claim could be made. This submission was supported by the decision of McDougall J in Holdmark Developers Pty Ltd v G J Formwork Pty Ltd [2004] NSWSC 905.

[63]   However, s 8(2) of the Act does not provide that reference dates cease on termination of a contract or cessation of work. This may be the case under s 8(2)(a) if the contract so provides but not otherwise; while s 8(2)(b) provides a starting reference date but not a concluding one. In my opinion, the only non-contractual limit to the occurrence of reference dates is that which in effect flows from the limits in s 13(4): reference dates cannot support the serving of any payment claims outside these limits.

[64]   In my opinion, as submitted by Mr Fisher for Dasein, this view is supported by s 13(6), which indicates that successive payment claims do not necessarily have to be in respect of additional work; and especially by s 13(3)(a), which provides for inclusion in payment claims of amounts for which the respondent is liable under s 27(2A). Losses and expenses arising from suspension of work could arise progressively for a substantial time after work has ceased on a project, and s 13(3)(a) expressly contemplates that further payment claims for these losses and expenses may be made progressively.

[65]   There is a possible point of distinction between the present case and Holdmark, in that in Holdmark it was common ground that the contract was at an end, whereas in the present case Dasein did not concede this. However, in circumstances where the document provided by Dasein on 27 June 2003 referred to its “final claim”, it seems strongly arguable that, if Brodyn was not entitled to terminate, Dasein did by this document accept the repudiation that the purported termination would in these circumstances constitute. In any event, in my opinion Holdmark was wrongly decided, and it is not necessary to distinguish it.

38. His Honour added (at 444 [66]):

There is also a question whether this point could in any event lead to a conclusion that the determination was void. If there is a document served by a claimant on a respondent that purports to be a payment claim under the Act, questions as to whether the document complies in all respects with the requirements of the Act are generally, in my opinion, for the adjudicator to decide. Many of these questions can involve doubtful questions of fact and law; and as I have indicated earlier, in my opinion the legislature has manifested an intention that the existence of a determination should not turn on answers to questions of this kind. However, I do not need to express a final view on this.

39. In Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259 the Court of Appeal returned to what was said in Brodyn at [62]-[65] about whether reference dates fixed by s 8(2)(b) cease after the termination of the contract. Hodgson JA, on this occasion with the concurrence of Handley JA and Hunt AJA, reaffirmed his views (at [36]). These views are binding at first instance in this State: Broadview Windows Pty Ltd v Architectural Project Specialists Pty Ltd [2015] NSWSC 955 at [42]-[44], [48] (McDougall J); Veer Build Pty Limited v TCA Electrical and Communication Pty Ltd [2015] NSWSC 864 at [43]-[44] (Darke J); Pinnacle Construction Group Pty Ltd v Dimension Joinery & Interiors Pty Ltd [2018] NSWSC 894 at [20] (Stevenson J).

40. In Patrick Stevedores Operations No. 2 Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2014] NSWSC 1413 the building contract gave the owner (Patrick) the right to terminate the contract for convenience. Patrick exercised this right on 24 April 2014. The payment claim by the builder (McConnell Dowell) was served on 30 June. Ball J said (at [36]):

[36] Much of McConnell Dowell's claim relates to work done prior to the last reference date provided for under the contract before termination. The contract clearly provided for progress payments in respect of that work. Indeed, a claim could have been made in respect of that work on prior reference dates identified in the contract. Why that did not happen is not explained. In those circumstances, it is clear that s 8(2)(b) of the Security of Payment Act does not apply since the contract provides reference dates in respect of that work. Two questions, however, remain. The first is whether the contract continued to provide reference dates following termination. The second is the position in relation to work done during the period between the last reference date before termination and termination.

41. His Honour concluded that as a matter of construction of the contract, the right to make progress claims did not survive termination. This meant that no reference date was available under s 8(2)(a). He continued (at [38]):

[38] That leaves the question of what happens in relation to work done after the last reference date under the contract and before termination. In my opinion, the contract still provided a reference date in respect of that work at the time the work was performed because, at that time, the contract was still on foot. Consequently, there is no room for the operation of s 8(2)(b). The fact that the contract was terminated before the reference date in respect of that work arrived does not alter the position. It simply means that no reference date in respect of that work can arise. That result does not seem to me to be inconsistent with the purpose of the Security of Payment Act. As I have said, the purpose of the Act is not to ensure that a contractor is paid for work as soon as it is done. Nor do I think it is to ensure that a contractor is paid everything it is owed promptly. Rather, the purpose of the Act is to provide a practical mechanism to ensure that contractors receive progress payments for the work that they do. It seems to me that purpose is achieved even if, because of the way in which the contract and Act operate, the contractor is not entitled to use the mechanism provided for by the Act to recover a payment for work done shortly before termination.

42. The reasoning in Patrick Stevedores is not directly inconsistent with that in Brodyn. But it introduces an important practical qualification. Where the contract specifies a reference date for the purposes of s 8(2)(a) but is terminated before that date is reached no further reference dates are available either under s 8(2)(a) or s 8(2)(b).

43. In Southern Han v Lewence Constructions the building contract entitled the principal (Southern Han), in the event of substantial breach by the contractor (Lewence), and following a show cause procedure, to take the work out of the contractor’s hands and suspend payment. On 27 October 2014, having purportedly invoked the show cause procedure, Southern Han issued a notice purporting to take the remaining work out of Lewence’s hands and suspending payment under the contract. On 28 October, Lewence purported to terminate the contract on the basis that Southern Han, in taking this step, had repudiated. Lewence then, on 4 December, issued the payment claim which was the subject of the proceedings. The claim did not expressly specify its reference date, but included work done up to 27 October.

44. The adjudicator considered that the payment claim was validly supported by a reference date, and the Court of Appeal held that this finding was binding because the actual existence of a reference date was not a jurisdictional fact. But the High Court disagreed. The Court said (at [61], [72]):

[61] … The description in s 13(1) of a person referred to in s 8(1) is of a person whom s 8(1) makes entitled to a progress payment. Section 8(1) makes a person who has undertaken to carry out construction work or supply related goods and services under a construction contract entitled to a progress payment only on and from each reference date under the construction contract. In that way, the existence of a reference date under a construction contract within the meaning of s 8(1) is a precondition to the making of a valid payment claim under s 13(1).

…

[72] From the preceding analysis of the Act, it follows that: the question whether the document served by Lewence on Southern Han on 4 December 2014 answered the description of a payment claim in s 13(1) turns on whether Lewence was on that date entitled under s 8(1) to make a progress payment in relation to work carried out to 27 October 2014; and the question whether Lewence on that date had that entitlement under s 8(1) turns on whether a reference date under the Contract had then come to exist in relation to that work under s 8(2).

45. The Court made some general observations about the way in which a reference date is determined under the Act. The Court said (at [65], footnotes omitted):

Through its adoption of the drafting device “means … and includes …”, the amended definition serves to indicate that the categories of payment to which s 8(1) is capable of applying extend to include a payment meeting any of the descriptions in the three paragraphs of the definition. That is to say, s 8(1) is to be read in light of the definition as capable of creating a statutory entitlement not only to a payment in the nature of an instalment but also to a final payment under a construction contract, to a single or one-off payment under a construction contract and to a payment of a type known in the construction industry as a milestone payment. This makes clear that the Act is not concerned only with providing a statutory mechanism for securing payments that are to occur during the currency of an existing construction contract. The statutory contemplation is that a claim for a progress payment might be made after the contract has expired.

46. The Court made it clear that sub-paragraphs 8(2)(a) and 8(2)(b) are alternatives. The Court said (at [70]-[71]):

[70] The reference date for which s 8(2)(a) provides is a date set by contractual force as a date for making a contractual claim to be paid the whole or part of the contracted amount. The mention in s 8(2)(a) of “a date determined by or in accordance with the terms of the contract” is of a date fixed by operation of one or more express provisions of the construction contract. The mention is not of a date that is determined independently of the operation of the contract merely having regard to the contractual terms.

[71] The reference date for which s 8(2)(b) provides is applicable only where a construction contract contains no express provision for determining a date for making a contractual claim to be paid the whole or a relevant part of the contracted amount. Absent an express contractual provision for determining a reference date, s 8(2)(b) operates of its own force to provide a reference date for the purpose of s 8(1). In so applying, s 8(2)(b) fulfils the statutory promise in s 3(2) of granting a statutory entitlement to a progress payment regardless of whether the relevant construction contract makes provision for progress payments. The provision does not, however, alter the nature of a progress payment in respect of which a claim can be made.

47. Clause 37 of the contract provided for the making of progress claims on the eighth day of each calendar month for work done to the seventh day of that month. The Court said (at [73]):

The Contract having made express provision in cl 37.1 fixing the date for the claiming of progress payments under the Contract, s 8(2)(b) could have no application. The requisite reference date was potentially capable of having arisen only in the application of s 8(2)(a).

48. The Court then considered whether cl 37 still continued to operate beyond 28 October. The Court held it did not. If the notice taking the works out of Lewence’s hands was valid, any entitlement under cl 37 was suspended. And (at [79]):

On the hypothesis that Lewence accepted Southern Han’s repudiation and terminated the Contract on 28 October 2014, the effect of termination was that Lewence and Southern Han were both discharged from further performance of the Contract and that Lewence’s rights under the Contract were limited to those which had then already accrued under the Contract except in so far as the Contract is properly to be interpreted as stipulating to the contrary. The right to make a progress claim under cl 37.1 of the Contract in relation to work carried out to 27 October 2014 had not accrued as at 28 October 2014. Had the Contract not then been terminated, the right would have accrued only on 8 November 2014.

49. In Abergeldie Contractors Pty Ltd v Fairfield City Council [2017] NSWCA 113 the building contract relevantly provided for a payment claim to be made on the twenty-eighth day of the month “immediately after” practical completion. The question was whether this was 28 September 2016 (the date on which the owner contended practical completion had in fact been achieved) or 28 November (the month in which practical completion was certified by the superintendent). Basten JA, with whom the other members of the Court of Appeal agreed, stated (at [4], footnote omitted):

The appellant contractor accepted that it was a matter for the Court to determine whether a reference date had arisen under the contract at the time the payment claim was served. That conclusion followed from the decision of the High Court in Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd.

50. In All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289 the relevant payment claim was issued on 12 July 2016. The building contract in question provided (cl 37.1) for claims to be made progressively on the 20th day of the month, but that an early progress claim should be deemed to have been made on the date for making that claim. Leeming and Payne JJA gave the leading judgment. Their Honours considered that, although the clause was effective as a matter of contract between the parties, it was not effective to alter the reference date of 20 July for the purposes of the Act. The payment claim therefore predated the reference date and was therefore invalid.

51. The third member of the Court, White JA, agreed, but added some further comments. The first of those comments was (at [49]):

… at all times both before the primary judge and on appeal the applicant accepted that the reference date was 20 July 2016. Notwithstanding that part of its progress claim was for the release of a retention amount payable on practical completion, it did not argue that it was entitled to a one-off payment for having (as it claimed) reached practical completion. It did not contend that the date for practical completion was a reference date that had arisen by the time it made its claim (cp Southern Han at [65]).

52. In Primelime (NSW) Pty Ltd v BAEC Contracting Pty Ltd [2018] NSWSC 372 the building contract was an informal one, constituted by correspondence. The parties fell into dispute and work ceased on 20 January 2017. The owner (Primelime) purported to terminate the contract on that date. The defendant (BAEC Contracting) responded by letter on 23 January; it was common ground that the effect of the letter was to bring the contract, if not already terminated, to an end. At some point after 23 January, BAEC Contracting submitted a payment claim and thereafter obtained an adjudication in its favour.

53. One of Primelime’s contentions was that there was no reference date to support the payment claim. McDougall J said (at [22]-[24], [30], footnotes omitted):

[22]   The reference date issue seems to me to be quite clear. The contract was made on or shortly before 14 July 2016. It provided for payment claims every 14 days. Thus, work having commenced on 14 July 2016, payment claims could be made every 14 days thereafter whilst work was performed. On any view, that contract came to an end on about 20 or 23 January 2017.

[23]   There is nothing in the material to suggest that the contractually determined reference dates would survive termination. Thus, it seems to me, there was no statutory right to make a payment claim after 20 or 23 January 2017 or perhaps, more accurately, based on a reference date that but for termination would have occurred after 20 or 23 January 2017. In this respect, the contract, although informal in the extreme, seems to me to be a contract of the kind to which the High Court referred in Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd.

[24]   In that case, the High Court held, as it seems to me clearly, that if a contract did not provide for the survival of contractual reference dates after termination, then any right to make a progress claim following termination came to an end, except insofar as there was a pre-termination reference date that had not been utilised for the purposes of a payment claim.

…

[30]   It must follow that the termination of the contract having within it the contractually stipulated provision for reference dates had the effect of terminating the right to make a progress claim, or payment claim under the Act, for any reference date that, but for termination, would have accrued after the date of termination. That point follows inexorably from what the High Court said in Southern Han at [79].

54. In Greenwood Futures v DSD Builders [2018] NSWSC 1407 the building contract (cl 17.3) required the builder (DSD) to give the owner (Greenwood) a written claim for a progress payment “for” the completion of each identified stage of the works. McDougall J said (at [63]):

The only specification of when a progress claim may be submitted is that contained in cl 17.3. That subclause contemplates that the stage in respect of which the progress payment is claimed will be complete. It requires the claim to be made “for the completion of [that] stage”. But it does not say that the claim must be made immediately upon completion of that stage, or indeed on any other date that is defined by reference to completion of that stage (for example, “on the 30th day of the month in which completion of that stage is achieved”). It may be assumed that a builder, seeking to maintain its cashflow, will submit the progress claim as quickly as it can following completion of the stage to which it relates. But that does not enable the date for submission of the progress claim to be “determined”.

His Honour considered that this followed from the observations of the High Court in Southern Han at [70]-[71].

55. The relevant payment claim was served on 30 April 2018. McDougall J concluded that under the Act that was an available reference date under s 8(1)(b) (this was on the basis that work had been undertaken in April 2018: see at [65]) and the adjudicator’s determination was sustained. Although the payment schedule had asserted that the contract had been terminated on 27 April, before the reference date arose, no argument appears to have been put to the Court that this prevented the reference date from being available.

56. I was not referred to any NSW case which directly considers whether the validity of a termination is a jurisdictional fact. Counsel relied on dicta in two decisions in this Court by way of analogy. Counsel also relied on two interstate decisions.

57. In Brodyn v Davenport, Hodgson JA stated (at [52]) that for a document purporting to be an adjudication determination to have the effect provided for by the Act, it had to satisfy whatever the conditions laid down in the Act were as essential for there to be a determination. His Honour stated (at [53]) that the “basic and essential requirements” appeared to include:

The existence of a construction contract between the claimant and the respondent, to which the Act applies (s 7 and s 8).

58. In Primelime v BAEC Contracting one of the questions was whether the defendant was a proper party to the building contract in question. Primelime contended that the contractor had not been BAEC Contracting but a related company called BAEC Electrical. This contention was rejected by the adjudicator but McDougall J said (at [16]):

It is common ground, and rightly so, that the existence of a construction contract between the parties, who were respectively the claimant and the respondent, and the applicant and the respondent, in the payment claim and the adjudication application, is a matter that goes to jurisdiction. It was common ground also, and again rightly so, that the findings of the adjudicator could not conclude the existence of jurisdiction where, on a correct view of the parties’ dealings, there was no jurisdiction.

59. His Honour went on to consider, on the material before him, whether BAEC Electrical was the contracting party. His Honour thought that it was, but did not need to reach a concluded view because the payment claim was not supported by a valid reference date in any event.

60. The question whether the validity of a purported termination of a building contract is a jurisdictional fact for the purposes of the Act was raised directly in McNab NQ Pty Ltd v Walkrete Pty Ltd [2013] QSC 128, a decision of de Jersey CJ (as his Honour then was). The payment claim by the contractor (Walkrete) was made on 1 November 2012. The builder (McNab) contended that the contract had been terminated on 10 September and that as a result there was no available reference date to support the claim.

61. His Honour said (at [11]-[12]):

[11]   Whether or not the sub-contract was determined therefore bore the character of what has become known as a jurisdictional fact — a circumstance determinative of whether or not the adjudicator had jurisdiction to make his decision, and this court may review an adjudicator’s approach to that. Compare Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd (2012) QCA 276, para 101.

[12]   Reference was made, for Walkrete, to the provisional nature of an adjudicator’s determination, and to the Second Reading Speech. None of that means an adjudicator can endow himself with jurisdiction by wrongly deciding a “jurisdictional fact”.

62. His Honour went on to consider the relevant facts for himself and concluded that the builder had been entitled to terminate the contract as it purported to do.

63. McNab v Walkrete was referred to by Brown J in Watkins Contracting Pty Ltd v Hyatt Ground Engineering Pty Ltd [2018] QSC 65. His Honour apparently accepted what de Jersey CJ had said as being correct: see at [60]-[62], [97] fn 72. In any event, his Honour found that a reference date had accrued prior to the alleged determination of the contract and the challenge to the decision on other natural justice grounds failed, so it was not necessary to decide whether the finding was otherwise immune from judicial review.

64. In The Trustee for Allway Unit Trust trading as Westside Mechanical Contracting Pty Ltd v R&D Air Conditioning Pty Ltd [2018] SASC 46 the building contract between the builder (Westside) and the sub-contractor (R&D) provided in clauses 9.1 and 9.2:

9.1   The Subcontractor may submit a payment claim to Westside by the day of the month specified in item 8 of the Subcontract Particulars or by such other date as requested by Westside.

9.2   Any payment claim received prior to the day of the month specified in item 8 of the Subcontract Particulars is deemed to have been received on the date as per item 8. Payment claims received after the day of the month specified in 8 will be deemed to be the following month’s payment claim.

65. The contract particulars provided the time for submission of payment claims was “the 23rd day of the month for work done to and including the last day of the month”. The relevant payment claim was made by R&D on 8 December 2017. Westside contended that the contract had come to an end in late October 2017 when R&D left the site following disputes between the parties. According to Westside, it had terminated the contract for cause or alternatively there had been a repudiation which had been accepted or the contract had been mutually cancelled. The adjudicator found that the contract had not been terminated.

66. Doyle J said (at [80]-[81]):

[80]   The legal status of the Contract following the parties’ dealings and communications of late October 2017, is not, of itself, a matter determinative of the Adjudicator’s jurisdiction. Thus, if the Adjudicator erred in concluding that the Contract remained on foot, then this would not, of itself, involve jurisdictional error.

[81]   However, the existence or availability of a reference date is a precondition to the existence of a valid payment claim and hence a matter going to the Adjudicator’s jurisdiction. And because the status of the Contract from late October 2017 is relevant to the existence of a reference date, it is a matter that I must consider as an aspect of my consideration of the parties’ competing submissions in relation to the existence of a reference date. It is thus convenient to commence by considering this issue.

67. His Honour went on to consider Westside’s contentions for himself. He concluded that the contract had not been terminated, but had been brought to an end on or shortly after 27 October by mutual agreement. This meant that 23 October would have been an available reference date, and would have continued to have been available even after the contract came to an end (at [105]). But R&D had relied on 23 December as the reference date for the purpose of the adjudication, and the adjudicator had determined the application on this basis. Because the contract had come to an end in the meantime, 23 December could on no view be an available contractual date.

68. His Honour said (at [119]-[121]):

[119]    It is true that R&D’s statutory payment claim did not nominate or identify any particular reference date. In that sense, R&D did not confine itself at that point in time to reliance upon any particular reference date.

[120]    It is also true that the ‘failure’ to identify any particular reference date in the payment claim did not invalidate that payment claim. While the existence of an available reference date is a precondition to a valid payment claim [citing Southern Han at [27]], the identification of the reference date in the payment claim is not.

[121]    However, it does not follow from this that the ability to later identify some available reference date will always be sufficient to sustain the validity of the payment claim, or an adjudicator’s determination in respect of that payment claim. To so hold would, in my view, be to ignore the significance of the reference date under the SOP Act, including its relationship with the right to make a progress claim that underpins both the reference date and the entitlement under the SOP Act to serve a payment claim.

69. His Honour went on to point out (at [122]-[127]) that a reference date was not merely a precondition to the entitlement to serve a payment claim. It was critical to the operation of the prohibition against multiple statutory payment claims (s 13(5)). It was also linked to the date on which the progress payment was to be paid. His Honour concluded (at [129]-[130]):

[129]    In my view, by upholding the validity of the payment claim on the basis it was in respect of a 23 December 2017 reference date, in circumstances where a 23 October 2017 reference date was available but a 23 December 2017 reference date was not, the Adjudicator fell into jurisdictional error. The reason for this is that I consider that the validity of a payment claim, and consequential adjudicator’s determination, must be considered in respect of a particular reference date, and the particular right to make a progress claim that underpins it. The particular date need not be identified or nominated in the payment claim (although for obvious reasons this will be preferable), but it must be ascertained at some point in the process.

[130]    By way of explanation, I consider that not only must a payment claim under the SOP Act be supported by an available reference date, but also any adjudicator’s determination in respect of that payment claim must be in respect of the same reference date. In other words, while the existence of a payment claim in respect of an available reference date is sufficient to trigger the adjudicator’s statutory authority or jurisdiction to adjudicate and determine a payment claim under the SOP Act, it is not an authority or jurisdiction at large. It is confined to an authority or jurisdiction in respect of that reference date (and the right to make a progress claim that underpins it). A payment claim in respect of a particular reference date only provides authority or jurisdiction for an adjudicator’s determination in respect of a payment claim with that reference date. Conversely, and relevantly here, an adjudicator’s determination in respect of a payment claim with a particular reference date can only be sustained by a payment claim with that reference date; it cannot be sustained by reference to a payment claim with a different reference date.

70. Doyle J also considered the question on the alternative hypothesis that he was wrong in thinking the contract had come to an end on 26 October. On that view, 23 November would, in theory, have been available but had not been relied upon. Because the claim was issued on 8 December, the claim was premature and invalid on the reasoning in All Seasons Air (at [135]-[141]).

71. I have not found it easy to pick my way through this thicket of authority. But I think one thing is clear. Despite the suggestion to the contrary by Hodgson JA in Brodyn, the existence or otherwise of the reference date is a jurisdictional fact which is determined by the Court. This proposition was accepted by the Court of Appeal in Abergeldie as following from Southern Han. The Court must consider for itself whether the payment claim is supported by a reference date.

72. It is convenient to defer the question of termination and consider what reference date would be available for the 20 November payment claim, even assuming the contract had not been terminated at that point. I will consider this question for both reference dates adopted by the Adjudicator, namely 28 November and 31 October.

73. No doubt if Item (ii) cl A(b) in the printed MBA form is selected and a date of the month is specified, that date will be the reference date for each month in which work is carried out under the contract. The form contemplates that a claim may be submitted after that date (cl 4(f)) for work done up to the nominated date, in which case payment may be postponed but the claim remains contractually valid. But there is a difficulty in the present case which arises from the fact that cl A(b) was amended so as to substitute the word “by” for the word “on”.

74. The Adjudicator’s view was that, despite this change, the reference date remained the nominated day of the month, namely the 28th. I am not sure that, if it were necessary to decide this, I would agree. The expressed intent was arguably to allow the Contractor to bring the date of the claim forward from the 28th day of the month. If that is correct, then the reference date would presumably be the date on which the claim was made (or perhaps, the date of the last work for which payment was claimed). In effect, the Contractor would have a discretion. Difficult questions would arise as to how such an arrangement would work under the Act, and in particular whether such a discretionary arrangement would satisfy s 13(1)(a).

75. It is not necessary to go into these questions (which were not argued before me) for the purpose of resolving this case. In my view, the suggested reference date of 28 November cannot be supported. That is for two reasons.

76. First, even if Item (ii) cl A were construed so that the payment claim took effect from 28 November, the claim itself was lodged on 20 November, before that date arrived. The claim was therefore invalid on the authority of the Court of Appeal decision in All Seasons Air.

77. The second reason why I consider 28 November was not a contractual reference date is based on the provisions of the Term Sheet. At one point in the argument, counsel for the Contractor sought to characterise the Term Sheet as a contract separate from the original MBA building contract. Counsel submitted that the purported termination of 12 November was a termination of the provisions of the Term Sheet only. I consider the question of termination below, but in my view, the Term Sheet should not be characterised in that way. It was a variation of the MBA building contract not some new or separate contract.

78. At the outset, I should note that the Term Sheet incorporated the making of an adjudication application into the mechanism it set out. The Term Sheet also provided that the Adjudicator’s decision would be “binding for the purposes of dealing with the deposit”. It might have been argued that the effect of these provisions was to render the Adjudicator’s decision unchallengeable as a matter of contract, quite apart from any preclusive effect it might have had under the Act. But no such argument was presented by counsel for the Contractor.

79. The Term Sheet expressly provided that a further claim would be made once the work had been completed. On the face of it, the effect would appear to have been to amend the contract and to substitute for the provisions of item (ii) a provision that the final claim will be made upon completion of the work. Thus the entitlement to make a progress claim by reference to the 28th day of the month had ceased by 20 November.

70. In the end, counsel for the Contractor did not seek to support the Adjudicator’s reliance on 28 November as a reference date. Counsel instead sought to support the Adjudicator’s alternative date of 31 October.

71. But in my view, that alternative date cannot be supported either. On the view I take of the contractual relationship between the parties, the building contract did provide, once the Term Sheet was executed on 29 October, for a reference date. That reference date was the date of completion of the works. On the reasoning in both Patrick Stevedores and Primelime v BAEC Contracting, this excluded the operation of s 8(1)(b).

72. There is another potential difficulty with the 31 October date. Had that been the relevant reference date, then the entitlement for the purposes of the application was to a progress payment for work done up to that date. It seems clear enough that, as at that date, on no view had the work been completed. Yet the claim sought to recover the whole of the amount due under the contract for the work. In other words, had 31 October been available it would have been open to the Adjudicator to make a determination in favour of the Contractor based on work undertaken up to that point, but that is not the way in which the Adjudicator proceeded. In view of the conclusion I have reached that s 8(1)(b) did not apply, it is not necessary to pursue this further.

73. On the view I have taken, neither 28 November nor 31 October was available as a reference date to support the payment claim. It would have been open to the Contractor to contend that the work had been completed and, if that was so, then on the view I take of the contract the date of completion would have been a reference date. It appears from Salim Rutherford’s letter of 12 November that the Contractor’s position was that the work had been completed by the time the Contractor left the site.

74. Had the case been put forward on this basis by the Contractor, a question might have arisen about whether the date of completion, not being a fixed calendar date, satisfied the requirements of s 8(1)(a). Arguably it would have. The Act expressly recognises an entitlement to “milestone” progress payments. The making of a progress claim on completion of works in such circumstances which was recognised as a possibility by White JA in All Seasons Air and by Doyle J in Westside. The High Court in Southern Han spoke of a date under s 8(1)(a) being fixed by operation of one or more express provisions of the contract. It is not necessary to go further into these questions for the purposes of this case. They were touched on in oral argument but counsel for the Contractor did not, in his supplementary submissions, advance an argument that the date of completion of the works was the reference date. It would have been difficult for counsel to maintain any such submission because it had not been put to the Adjudicator on this basis.

75. For these reasons, I consider that even if the contract was still subsisting on 20 November, the Adjudicator made a jurisdictional error in concluding that there was an available reference date to support the claim.

76. If I am wrong in thinking that the Adjudicator’s determination cannot be supported by a reference date of 31 October, then the question of termination becomes irrelevant since the purported termination did not take effect until after that date. The question would only be relevant if the Adjudicator’s determination could be supported on a reference date of 20 or 28 November. In that event, it would be necessary to consider whether there had been a valid termination of the contract before 20 November which would prevent that date from being used.

77. For reasons touched on by Hodgson JA in Brodyn the conclusion that the Court must determine for itself whether the contract has been validly terminated would be a very inconvenient one. Where, as in this case, it was contended that the Builder is entitled to terminate because of defects in the way the work has been carried out, the Court would inevitably be drawn into factual debates and questions about the interpretation of the contract which are usually the province of the Adjudicator. Such a result was described in a similar context by Basten JA as driving “a horse and cart (or perhaps a B-Double) through the legislative scheme” (Abergeldie at [47]). But the view that the Court must decide the validity of termination for itself has been expressly accepted by de Jersey CJ in Queensland and also (albeit indirectly) by Doyle J in South Australia. Counsel for the Contractor did not present any submissions as to why those decisions were wrong or should not be followed. Had it been necessary to do so, I would have followed them despite the inconvenience involved.

78. But this does not mean that it would have been possible to decide the case immediately. If the Court is to make a factual finding on such an issue, then there must be a proper basis for a factual resolution. The Court should simply be presented, as it was in this case, with conflicting affidavit evidence and be told to resolve the disputed question of fact without the benefit of cross-examination or, indeed, any detailed submissions on the proper outcome. Furthermore, the Court should, consistently with the Supreme Court Act, s 63, deal with all matters in dispute between the parties, and do so in a way so as to quell the controversy finally. The Builder’s case on this point in effect invited the Court to conclude, finally and substantively, that the contract between the parties was terminated on 12 November 2018. In order to quell the controversy finally, in my view, the Builder should have sought a declaration to this effect. If the Builder wished to make any claim for damages for loss of bargain, they should also be claimed in the same proceedings.

79. Had it been necessary to go into the question of determination, I would have adjourned the proceedings and required the parties to proceed to determine the question of termination in the usual way in which such a claim would be done; namely, by way of pleadings, full evidence, and, in the event of disputed issues of fact, cross-examination. In view of the conclusions I have reached, however, the Builder is entitled to succeed and it is not necessary for these steps to be taken.

Conclusion and orders

90. I have concluded that:

(1)   there was no valid reference date to support the Contractor’s payment claim which was the subject of the Adjudicator’s determination in the Contractor’s favour, even if the contract still subsisted on 20 November 2018;

(2)   it is unnecessary to decide whether the contract was terminated prior to the issue of the payment claim.

91. The Builder has therefore succeeded in these proceedings. There is no reason why costs should not follow the event. I assume that the monies paid into the joint bank account can be paid out in accordance with my decision without the need for any further order from the Court.

92. The Orders of the Court are:

1.   Order that the determination by the second defendant as Adjudicator under the Building and Construction Industry Security of Payment Act 1999 (NSW), issued on 11 January 2019 and numbered ADJT605, be quashed.

2.   Order that the first defendant pay the plaintiff’s costs of the proceedings.

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Decision last updated: 11 March 2019