In-Line Building and Construction Management Services Pty Ltd v Bluecarp Pty Ltd
[2020] NSWSC 606
•21 May 2020
Supreme Court
New South Wales
Medium Neutral Citation: In-Line Building and Construction Management Services Pty Ltd v Bluecarp Pty Ltd [2020] NSWSC 606 Hearing dates: 21 May 2020 Date of orders: 21 May 2020 Decision date: 21 May 2020 Jurisdiction: Equity - Technology and Construction List Before: Stevenson J Decision: Defendant restrained from enforcing adjudication determination pending final determination of the proceedings
Catchwords: BUILDING AND CONSTRUCTION – whether serious question to be tried that an adjudication determination made under the Building and Construction Industry Security of Payment Act void – whether balance of convenience favours restraining defendant from enforcing the determination pending the hearing of the proceedings Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW) Cases Cited: Brodyn Pty Ltd t/as Time Cost and Quality v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394
Laing O'Rourke Australia Construction Pty Ltd v H&M Engineering & Construction Pty Ltd [2010] NSWSC 818
TWT Property Group Pty Ltd v Cenric Group Pty Ltd [2020] NSWSC 72Category: Procedural and other rulings Parties: In-Line Building and Construction Management Services Pty Ltd (Plaintiff)
Bluecarp Pty Ltd (First Defendant)
Peter Sarlos (Second Defendant)Representation: Counsel:
Solicitors:
Mr D Weinberger (Plaintiff)
Bradbury Legal (Plaintiff)
File Number(s): 2020/149186
Judgment
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On 19 May 2020, as Technology and Construction List duty judge, I granted the plaintiff, In-Line Building and Construction Management Services Pty Ltd, leave to serve the Summons and supporting affidavit in these proceedings on the defendant, Bluecarp Pty Ltd, with short notice.
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Service was effected in accordance with my order.
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Bluecarp appeared today, by telephone, by its director Mr Kevin Trasler.
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I ordered, pending final determination of these proceedings, that:
Bluecarp be restrained from registering any Adjudication Certificate issued pursuant to s 24 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (“the Act”) in respect of an Adjudication Determination dated 7 May 2020 made pursuant to s 22 of the Act, to which I refer further below, as a judgment in the Local Court of New South Wales or any other Court of competent jurisdiction; and
execution of any judgment that has been entered in respect of that Adjudication Determination be stayed.
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In accordance with the Court’s usual practice, those orders are subject to In-Line paying into Court the amount of the Adjudication Determination.
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I informed Mr Trasler that I would publish reasons for my decision. These are those reasons.
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In-Line and Bluecarp entered a contract for the provision by Bluecarp of carpentry services at premises in Bondi.
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On 4 March 2020 Bluecarp served on In-Line a Payment Claim pursuant to s 13 of the Act claiming $35,895.50.
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On 18 March 2020 In-Line served a Payment Schedule pursuant to s 14 of the Act specifying that the amount payable by it to Bluecarp was nil.
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On 1 April 2020 Bluecarp made an Adjudication Application pursuant to s 17 of the Act, to which In-Line responded with an Adjudication Response pursuant to s 20 of the Act served on 9 April 2020.
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In its Adjudication Response, In-Line contended that four amounts relating to allegedly defective work and totalling $74,000 should be set-off against the amount claimed by Bluecarp.
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In its Adjudication Response, In-Line also contended that it had paid $18,656 on account of the work the subject of the Payment Claim.
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Thus it stated:
“Conclusion including reconciliation noting the contents of the payment schedule as to offsets and failure to account for money already paid.
In the payment schedule (attached as #8) the offsets which are allowed to be deducted from the value of the work claimed are set out in several different ways so that the impact of what was not done by Bluecarp and or what was not done properly by Bluecarp was clear.
That reconciliation also made it clear that In-Line had paid a sum of $18,656.
Despite the contents of the adjudication claim there is no clear let alone specific rebuttal of this position. The one page invoice on which there are written notes which may or may not be a reconciliation by Bluecarp does not recognise that the agreement made as a result of the 14 May work to complete Boonara document and subsequent but contemporaneous discussions saw invoice 297 absorbed into the $30,000 fee and noting as mentioned in the payment schedule and as I recall it the Bluecarp submissions the invoices sent were made and first sent in February 2020 in an effort to conclude this matter.
Payments made after the agreement was made are as follows:
19/07/2019
$ 6,205
09/08/2019
$ 9,198
18/08/2019
$ 3,253
Total
$18,656
As stated in the payment schedule the above payments leaves based on Bluecarp’s own figures a maximum sum owed independent of the [claimed $74,000 set-off] of $(35,000 - $18,656) being $16,344.”
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On 7 May 2020 an Adjudicator determined that In-Line was obliged to pay Bluecarp $11,906.50. That sum was calculated by deducting from the $35,895.50 claimed in the Payment Claim and Adjudication Application an amount of $23,989 being part of the $74,000 set-off claimed by In-Line.
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The Adjudicator made no reference to the $18,656.
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In-Line contends that, had the Adjudicator taken into account the $18,656, he would have found that no amount was due by it to Bluecarp.
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In-Line contends that in these circumstances the Determination is of no effect because the Adjudicator:
failed to consider the allegedly undisputed fact that In-Line had paid the $18,656 to Bluecarp;
thereby failed to “consider” the payment schedule as required by s 22(2)(d) of the Act;
thereby acted in breach of the rules of natural justice so as to render his Determination void on the basis of the principles that I recently summarised in TWT Property Group Pty Limited v Cenric Group Pty Limited . [1]
1. [2020] NSWSC 72.
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In that case I said:
“Section 22(2)(d) of the Act requires an adjudicator to consider “the payment schedule … to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule”.
A failure by an adjudicator to consider such submissions is a breach of natural justice and, if material, renders the adjudication determination void. Thus Hodgson JA in Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2] said:
‘…if there is a failure by the adjudicator to receive and consider submissions, occasioned by breach of these provisions [including s 22(2)(d)], the determination will be a nullity.’
The error of the adjudicator could not have been a mere misunderstanding of Cenric’s submission. Rather it must have been a failure to consider the submissions at all. If the adjudicator had considered Cenric’s submissions, particularly those he received on 5 February 2019 in response to his request, he could not have failed to conclude that the payment claim related to sandstone excavation, and thus to work done since 10 December 2017.
This was a breach of natural justice and one which was material. Had the adjudicator considered Cenric’s submissions, he was bound to have come to a different view: see Laing O'Rourke Australia Construction Pty Ltd v H&M Engineering & Construction Pty Ltd.”[3]
2. (2004) 61 NSWLR 421; [2004] NSWCA 394 at [57]
3. Ibid at [110]-[113].
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I was satisfied that, in these circumstances, there is a serious question to be tried as to whether the Adjudication Determination can be impugned upon the basis contended for by In-Line and that the balance of convenience favoured granting In-Line the interlocutory relief pending final determination of the proceedings.
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In addition to making the orders set out above,[4] I directed that:
4. At [4].
In-Line file and serve any further evidence on which it relies by 5.00pm on 22 May 2020.
Bluecarp file and serve any evidence on which it relies by 5.00pm on 12 June 2020.
The matter be listed for further directions before the Technology and Construction List Judge on 19 June 2020.
The costs of today be reserved.
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Relative to the legal costs incurred and likely to be incurred in these proceedings, the amount in dispute is not large. The parties would be well advised to explore whether some compromise is possible, lest the costs of the dispute exceed the amount in dispute.
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Endnotes
Decision last updated: 21 May 2020
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