Greenwood Futures v DSD Builders - [2018] NSWSC 1407

Supreme Court

New South Wales

Medium Neutral Citation: Greenwood Futures v DSD Builders [2018] NSWSC 1407
Hearing dates: 06/09/2018
Date of orders: 13 September 2018
Decision date: 13 September 2018
Jurisdiction: Equity - Technology and Construction List
Before: McDougall J
Decision:
Amended summons dismissed. No order as to costs.

Catchwords:
BUILDING AND CONSTRUCTION – application to quash adjudicator’s determination under Security of Payment Act – whether first and second payment claims issued were invalid because supporting statement was not included – weight of first-instance authority indicates invalidity.

BUILDING AND CONSTRUCTION – where three payment claims issued in the same terms – whether third payment claim supported by a separate reference date – prohibition on serving multiple payment claims referable to same reference date – existence of reference dates to be determined in accordance with the Security of Payment Act – third payment claim validly supported by reference date.

BUILDING AND CONSTRUCTION – whether adjudicator failed to discharge his statutory functions in good faith – where alleged that adjudicator failed to value the construction work – no requirement for adjudicator to value work as the contract determined the progress payment amounts for each milestone.
COSTS – where successful defendant caused the present litigation – where defendant proceeded with disregard for the requirements of the Security of Payment Act to harass the plaintiff – only reason for not awarding costs against defendant is the compensatory and not punitive function of costs – each party to bear its own costs.
Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
Corporations Act 2001 (Cth)
Supreme Court Act 1970 (NSW)
Cases Cited: Central Projects Pty Ltd v Davidson [2018] NSWSC 523
Clyde Bergemann v Varley Power [2011] NSWSC 1039
Duffy Kennedy Pty Ltd v Lainson Holdings Pty Ltd [2016] NSWSC 371
John Holland Pty Ltd v Made Contracting Pty Ltd [2008] NSWSC 374
Kembla Coal and Coke v Select Civil [2004] NSWSC 628
Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602
Kyle Bay Removals Pty Ltd v Dynabuild Project Services Pty Ltd [2016] NSWSC 334
Lewence Construction Pty Ltd v Southern Han Breakfast Point Pty Ltd [2015] NSWCA 288
R J Neller Building Pty Ltd v Ainsworth [2009] 1 Qd R 390
Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2018] NSWCA 33
Southern Han Breakfast Point Pty Ltd (In Liquidation) v Lewence Construction Pty Ltd (2016) 260 CLR 240
Category: Principal judgment
Parties: Greenwood Futures Pty Ltd (Plaintiff)
DSD Builders Pty Ltd (First Defendant)
Peter Sarlos (Second Defendant)
Representation: Counsel:
F P Hicks SC (Plaintiff)
B D Kaplan (First Defendant)
Solicitors:
Keystone Lawyers (Plaintiff)
CCS Legal (First Defendant)

File Number(s): 2018/200878

Judgment

HIS HONOUR: The first defendant (DSD) agreed to construct for the plaintiff (Greenwood) a number of townhouses at Jesmond in this State. There is no doubt that the contract was a construction contract for the purposes of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Security of Payment Act).
Under the contract,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] NSWSC 1407
Decision Date: 13 September 2018

CaseChat Overview and Summary

The matter before the court involved Greenwood Futures, the plaintiff, and DSD Builders, the defendant, in a dispute concerning a building and construction contract. The plaintiff sought to challenge an adjudicator’s determination under the Security of Payment Act, arguing that the adjudicator failed to properly discharge his statutory functions. The plaintiff also contended that two of its payment claims were invalid due to the absence of a supporting statement, and that the adjudicator failed to value the construction work. The court was required to decide these issues and determine the appropriate costs.

The central legal issues before the court were whether the first and second payment claims were invalid due to the absence of a supporting statement, and whether the third payment claim was supported by a separate reference date. Additionally, the court had to consider whether the adjudicator failed to discharge his statutory functions by not valuing the construction work. The court examined the relevant provisions of the Security of Payment Act and relevant case law to determine the validity of the payment claims and the adjudicator’s actions.

In addressing the validity of the payment claims, the court found that the first and second payment claims were invalid as they did not include a supporting statement, following the weight of first-instance authority. However, the third payment claim was supported by a separate reference date, rendering it valid. The court also ruled that there was no requirement for the adjudicator to value the construction work, as the contract determined the progress payment amounts for each milestone. Consequently, the adjudicator had discharged his statutory functions. Regarding the costs, the court held that each party should bear its own costs, as the defendant’s actions in disregarding the Security of Payment Act were not sufficient grounds for awarding costs against them, given the compensatory and not punitive function of costs.

The court’s final orders were that the application to quash the adjudicator’s determination was dismissed, and each party was to bear its own costs. The court held that the third payment claim was valid, and the adjudicator had properly discharged his statutory functions. The absence of a supporting statement rendered the first and second payment claims invalid, but this did not affect the validity of the adjudicator’s determination.

Orders