IWD No 2 Pty Ltd v Level Orange Pty Ltd - [2012] NSWSC 1439

Supreme Court

New South Wales

Medium Neutral Citation: IWD No 2 Pty Ltd v Level Orange Pty Ltd [2012] NSWSC 1439
Hearing dates: 6 & 15 November 2012
Decision date: 27 November 2012
Jurisdiction: Equity Division - Commercial List
Before: Stevenson J
Decision:
Determination affirmed

Catchwords: BUILDING AND CONSTRUCTION - adjudication - jurisdictional error - construction contract - guarantee - indemnity
Legislation Cited: Building and Construction Industry Security of Payment Act 1999
Uniform Civil Procedure Rules
Cases Cited: Brodyn Pty Ltd v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421
Fifty Property Investments Pty Ltd v O'Mara [2006] NSWSC 428
IWD No 2 Pty Ltd v Level Orange Pty Ltd [2012] NSWSC 1394
Machkevitch v Andrew Building Constructions [2012] NSWSC 546
Okaroo Pty Ltd v Vos Construction and Joinery Pty Ltd [2005] NSWSC 45
Olbourne v Excell Building Corp Pty Ltd [2009] NSWSC 349
Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1988) 166 CLR 245
Walton Construction (Qld) Pty Ltd v Salce [2008] QSC 235
Woolworths Ltd v Pallas Newco Pty Ltd [2004] NSWCA 422; (2004) 61 NSWLR 707
Texts Cited: O'Donovan, Modern Contract of Guarantee
Category: Principal judgment
Parties: IWD No 2 Pty Limited (ACN 109 910 358) (plaintiff)
Level Orange Pty Limited (ACN 133 786 437) (first defendant)
Philip Martin (second defendant)
Adjudicate Today Pty Limited (ACN 109 605 021) (third defendant)
Registrar General of New South Wales (fourth defendant)
Representation: Counsel:
I G B Roberts SC (plaintiff)
M Christie SC with A R R Vincent (first defendant)
Solicitors:
Sparke Helmore (plaintiff)
Salim Rutherford Lawyers (first defendant)

File Number(s): SC 2012/313669
Publication restriction: Nil

Judgment

Introduction

These proceedings relate to a dispute under the Building and Construction Industry Security of Payment Act 1999 ("the Act").

The plaintiff, IWD No 2 Pty Limited ("IWD") seeks a declaration that a determination ("the Determination") made on 27 September 2012 by Mr Philip Martin, an adjudicator appointed under Division 2 of the Act ("the Adjudicator"), was:-

(a) made without jurisdiction;

(b) contains jurisdictional errors; and

The Adjudicator determined that there existed between IWD and the first defendant, Level Orange Pty Limited ("Level Orange") a "construction contract" within the meaning of s 4 of the Act, and that IWD was liable to pay Level Orange a "progress payment" for the purpose of s 8 of the Act of $142,449.00.

On 9 October 2012 the relevant authorised nominating authority issued an adjudication certificate pursuant to s 24 of the Act. On the same date, the adjudication certificate was filed as a judgment in the District Court of New South Wales pursuant to s 25 of the Act.

On 10 October 2012 IWD commenced these proceedings. On the same day, McDougall J made various interlocutory orders, including an order that IWD pay into court $153,317 on account of the Determination and interest.

IWD contends that there was no "construction contract" between IWD and Level Orange of the kind found by the Adjudicator; and…

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: [2012] NSWSC 1439
Decision Date: 27 November 2012

CaseChat Overview and Summary

IWD No 2 Pty Ltd brought a claim against Level Orange Pty Ltd, its subsidiary, in the Federal Circuit Court of Australia. IWD No 2, a subcontractor, alleged that Level Orange, the principal contractor, had failed to pay for works completed on a construction project. IWD No 2 sought to enforce a payment claim pursuant to an adjudication process under the Building and Construction Industry Security of Payment Act 1999 (Cth). The dispute arose from a construction contract, and IWD No 2 additionally sought to enforce a guarantee and indemnity agreement executed by Level Orange's parent company.

The court was required to determine whether it had jurisdiction to hear the claim, considering the legal validity of the adjudication process, and whether there was a jurisdictional error in the adjudicator's determination. The court also had to decide if the guarantee and indemnity agreement could be enforced against Level Orange's parent company, and whether the parent company was liable for the subsidiary's debts.

The court found that the adjudicator had not made a jurisdictional error, and therefore the court had jurisdiction to hear the claim. The court upheld the adjudicator's decision that IWD No 2 was entitled to the payment claimed. However, the court determined that the guarantee and indemnity agreement did not extend to cover debts of Level Orange, and thus the parent company was not liable for Level Orange's debts. Consequently, IWD No 2 was not entitled to enforce the guarantee and indemnity against the parent company.

The court ordered Level Orange to pay IWD No 2 the sum determined by the adjudicator, but did not grant any relief in respect of the guarantee and indemnity agreement.

Orders