McNab Building Services Pty Ltd v Demex Pty Ltd - [2022] NSWSC 1441

Supreme Court

New South Wales

Medium Neutral Citation: McNab Building Services Pty Ltd v Demex Pty Ltd [2022] NSWSC 1441
Hearing dates: 7 October 2022
Date of orders: 24 October 2022
Decision date: 24 October 2022
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Plaintiff succeeds in its claim. Parties to bring in short minutes of order to give effect to this judgment.

Catchwords:
BUILDING AND CONSTRUCTION — Adjudication — Natural justice — Where the adjudicator applied a conversion factor in his determination which was not raised by the parties and to which the parties did not have an opportunity to make submissions — Whether there was a breach of procedural fairness in the adjudicator’s application of that conversion factor

Cases Cited:
- Brodyn Pty Ltd t/as Time Cost and Quality v Davenport (2004) 51 NSWLR 421
- Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123
- John Goss Projects Pty Ltd v Leighton Contractors (2006) 66 NSWLR 707
- Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421
- Musico v Davenport [2003] NSWSC 977
- MZAPC v Minister for Immigration and Border - Protection (2021) 95 ALJR 441
- Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1
- Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340
- TWT Property Group Pty Ltd v Cenric Group Pty Ltd [2020] NSWSC 72

Category: Principal judgment
Parties: McNab Building Services Pty Ltd (Plaintiff)
Demex Pty Ltd (First Defendant)
Chris Thompson (Second Defendant)
Representation:
Counsel:
D Byrne (Plaintiff)
J P Hastie (First Defendant)
Solicitors:
Level Field (Plaintiff)
Shand Taylor (First Defendant)

File Number(s): 2022/235968

Judgment

Nature of the application and background

These proceedings concern a challenge to an adjudication determination (“Determination”) made on 28 July 2022 under s 22 of the Building andConstruction Industry Security of Payment Act 1999 (NSW) (“SOPA”) in favour of the First Defendant, Demex Pty Ltd (“Demex”) against the Plaintiff, McNab Building Services Pty Ltd (“McNab”), for $1,390,882.42 inclusive of GST. By its Summons filed on 10 August 2022, McNab seeks a declaration that the Determination is void and an order that it be quashed, and an order restraining Demex from taking any steps to enforce the Determination. By its Technology and Construction List Statement filed on 10 August 2022 (“TCLS”), McNab identifies the grounds for the application, which involve an allegation that it was denied procedural fairness or that the adjudicator made a jurisdictional error in respect of the Determination.

Background

McNab relies on the affidavit dated 12 August 2022 of its solicitor, Mr Thomas Cranitch, which largely exhibits relevant documents. Demex in turn tendered an additional bundle of documents. The relevant facts are largely uncontentious and emerge from the pleadings and documents in evidence.
In January 2021, McNab and Demex entered into a subcontract (“Subcontract”) by which Demex agreed to undertake remediation works in respect of asbestos contaminated material 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: [2022] NSWSC 1441
Decision Date: 24 October 2022

CaseChat Overview and Summary

The case of McNab Building Services Pty Ltd v Demex Pty Ltd involved a dispute between two companies in the construction industry. McNab, the applicant, sought to enforce an adjudication decision made in their favour against Demex, the respondent. The matter was heard in the Supreme Court of New South Wales. The primary issue before the court was whether the adjudicator's use of a conversion factor in his determination constituted a breach of procedural fairness, as the factor was neither raised by the parties nor were the parties given an opportunity to make submissions on it.

The court considered the principles of natural justice and procedural fairness in the context of adjudication. It was established that parties to an adjudication must be given a fair opportunity to respond to the issues that will be considered by the adjudicator. The court found that the adjudicator had applied a conversion factor that was not disclosed by either party and without providing them an opportunity to comment on it. This unilateral application of the conversion factor was held to be a significant procedural irregularity that breached the rules of natural justice.

In light of the breach of procedural fairness, the court set aside the adjudicator’s decision. The applicant's claim to enforce the decision was therefore dismissed. The court's decision underscores the importance of adhering to procedural fairness in adjudication proceedings, ensuring that all parties are given a fair opportunity to address all issues that may affect the outcome of the adjudication.

Orders