SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
MAXCON CONSTRUCTIONS P/L v VADASZ & ORS (NO. 2)
[2016] SASC 156
Judgment of The Honourable Justice Stanley
29 September 2016
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS - ADJUDICATION OF PAYMENT CLAIMS
ADMINISTRATIVE LAW - JUDICIAL REVIEW - GROUNDS OF REVIEW - JURISDICTIONAL MATTERS
ADMINISTRATIVE LAW - JUDICIAL REVIEW - GROUNDS OF REVIEW - ERROR OF LAW
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - THE CONTRACT - CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS
Application for judicial review of an adjudication determination made by the third defendant under the Building and Construction Industry Security of Payment Act 2009 (SA) (the Act).
The plaintiff is a builder and was at all relevant times undertaking the construction of an apartment development in Wright Street, Adelaide known as the Bohem Apartments.
At all relevant times the first defendant was an undischarged bankrupt trading as a construction contractor under the registered business name of Australasian Piling Company. On or about 15 December 2015 the plaintiff and the first defendant entered into a written contract for the first defendant to supply and install piling at the Bohem Apartments development.
The plaintiff alleges that prior to entry into the contract the first defendant did not disclose to it that he was an undischarged bankrupt in contravention of s 269(1)(b) of the Bankruptcy Act 1966 (Cth).
The first defendant undertook the piling works which were completed in about February 2016. On 25 February 2016 the first defendant served a payment claim seeking payment of $204,864.55 (including GST) pursuant to s 13 of the Act (the payment claim). On 8 March 2016 the plaintiff issued a payment schedule for the amount of $141,163.55 (including GST) pursuant to s 14 of the Act. On 18 March 2016 the first defendant applied to the second defendant for an adjudication of the payment claim pursuant to s 17 of the Act. On 23 March 2016 the third defendant was appointed as adjudicator. On 6 April 2016 the third defendant made the adjudication determination the subject of the application for judicial review.
The third defendant found the first defendant is entitled pursuant to the payment claim to the sum of $204,864.55 (including GST) which was to be paid by 31 March 2016. He further determined that the first defendant is entitled to interest on the unpaid payment claim and the plaintiff is liable for the second and third defendant’s fees in respect of the adjudication.
On the application there is a fundamental challenge to the adjudicator’s jurisdiction and allegations of two discrete errors made by the adjudicator in his determination.
The plaintiff alleges that the third defendant lacked jurisdiction because the exercise of the adjudicator’s jurisdiction pursuant to the Act depends upon the existence of a construction contract between the first defendant and the plaintiff. The plaintiff alleges the contract was void for illegality by reason of the non-disclosure of…
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- AGLC
- Maxcon Constructions Pty Ltd v Vadasz (No 2) [2016] SASC 156
- Case
- [2016] SASC 156
- Decision Date
CaseChat Overview and Summary
The court examined the grounds for judicial review, including whether the adjudicator failed to consider relevant admissions made by the first defendant. The court found that the adjudicator did consider the email in question and concluded that it did not constitute a relevant admission. Even if the adjudicator had erred in this regard, it was an error within jurisdiction and not apparent on the face of the record. The court also found that the adjudicator did not err in law in determining that the plaintiff was not entitled to administrative charges and retention monies. The court concluded that none of the grounds for judicial review were made out.
The court dismissed the application for judicial review and ordered the parties to discuss the costs of the proceedings. The adjudicator's decision stood, and the plaintiff was not entitled to the administrative charges and retention monies it had claimed. The court found that the adjudicator had not made any jurisdictional errors or errors of law that would warrant setting aside the decision.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
The initiating adjudication application does not refer expressly to the failure to pay the retention monies. The submission refers to the provisions of the construction contract providing for retention monies being contrary to the proscription of “pay when paid” provisions in s 12 on the basis that the condition for payment of retention monies is subject to the operation of the head contract. The determination does not refer to the issue of the retention monies, “pay when paid” provisions or s 12 of the Act. As a result, the error by the third defendant in making a finding of fact in relation to the provisions of the head contract, where there was no evidence of that contract before him, is not apparent on the face of the record. Ground 3: The administration charges The plaintiff submits that the third defendant misconstrued the subcontract. It submits that the adjudicator fell into error by misconstruing clauses 7.5(d), 10(1) and schedule B clauses B27, B28, B29 and B30 in finding that they did not permit the plaintiff to charge for administrative services provided to the first defendant. The plaintiff also submits that the third defendant failed to consider and give appropriate weight to what it described as an admission by the first defendant in an email to the plaintiff of 22 January 2016, which, in relation to administrative charges, said:I understand you need something for your inconvenience. That’s fair enough. Clause 7.5(d) of the subcontract provides:If the builder agrees to assist the subcontractor in administration of their business and which is not part of this subcontract agreement, the builder shall charge the subcontractor a rate of $80 per hour subject to rise and fall. Clause 10(1) of the subcontract provides:If the Builder is required to manage the subcontractors accounts more than what should be normally required, the Builder shall be entitled to charge the sub-contractor without prior notice, a reasonable sum from that months progress claim and of which shall be deducted as required. Pursuant to special conditions B27, B28, B29 and B30 the concrete supplier was specified to be Hanson and the steel reinforcement supplier was specified to be Bianco. Each supplier was required to invoice the plaintiff directly and to be reimbursed on 30-day payment terms. The plaintiff submits that there were in excess of 50 invoices rendered by the suppliers which required significance administrative work. The third defendant found that the plaintiff agreed to be invoiced directly by the suppliers and therefore such work did not fall outside the scope of the contract. Accordingly, the underlying premise of clause 7.5(d) of the contract was not satisfied. He further found there was no evidence of any alternative arrangement agreed between the parties that should more than one invoice per month be issued by the suppliers the costs involved in processing those invoices could be back charged to the first defendant. Accordingly, he found that the administration costs of $22,500 were not justified.