Lahey Constructions Pty Ltd v State of New South Wales

Lahey Constructions Pty Ltd (the plaintiff) appealed to the Court of Appeal of New South Wales against an order of Henry J dismissing its application to set aside an expert determination. The dispute concerned the interpretation of an expert determination clause in a building contract, which stipulated that the expert's determination would be final and binding, precluding parties from commencing litigation unless the value of the determination exceeded a specified threshold. Crucially, the value of the determination was to be calculated without regard to amounts paid under the *Building and Construction Industry Security of Payment Act 1999* (NSW).

The primary legal issue before the Court of Appeal was whether the expert determination, as conducted, was final and binding, thereby preventing the plaintiff from pursuing its claim in court. This involved determining the correct interpretation of the contractual clause, particularly how the "value of the determination" was to be calculated for the purpose of the litigation threshold, and whether the expert had acted within their jurisdiction.

The Court of Appeal found that the expert had erred in their approach to calculating the value of the determination by failing to exclude amounts paid under the *Security of Payment Act*, as required by the contract. This error meant that the threshold for commencing litigation had not been met, and therefore the plaintiff was not precluded from pursuing its claim. The Court allowed the appeal, set aside the primary judge's orders, and remitted the matter for further directions in the Technology and Construction List. The defendant was ordered to pay the plaintiff's costs of both the motion and the appeal.