MMIR Pty Limited v Iskra - [2019] NSWSC 35

Supreme Court

New South Wales

Medium Neutral Citation: MMIR Pty Limited v Iskra [2019] NSWSC 35
Hearing dates: 29 January 2019
Date of orders: 29 January 2019
Decision date: 29 January 2019
Jurisdiction: Equity - Technology and Construction List
Before: Parker J
Decision:
Adjudication determination (reference number 2018ADJT451) be quashed.
Sum of $138,135.59 together with interest accrued be paid out to the plaintiff.
First defendant to pay the plaintiff the further sum of $35,202.67.
First defendant pay the plaintiff’s costs.

Catchwords: BUILDING AND CONSTRUCTION – construction contracts – Building and Construction Industry Security of Payment Act 1999 (NSW) – requirement that Adjudicator assess the value of construction works in accordance with terms of “do and charge” contract – requirement that Adjudicator assess the reasonableness of builder’s margin – failure of Adjudicator to address requirements amounts to jurisdictional error.
Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
Cases Cited: Krahe v Manfate Pty Limited [2016] NSWCA 363
Laing O'Rourke Australia Construction Pty Limited v Monford Group Pty Limited [2018] NSWSC 491
Pacific General Securities Limited v Soliman & Sons Pty Limited [2006] NSWSC 13
Plaza West Pty Limited v Simon’s Earthworks (NSW) Pty Limited [2008] NSWCA 279
Richard Crookes Construction Pty Ltd v CES Projects (Aust) Pty Ltd (No 2) [2016] NSWSC 1229
SSC Plenty Road Pty Ltd v Construction Engineering (Aust) Pty Limited [2015] VSC 631
Category: Principal judgment
Parties: MMIR Pty Ltd (Plaintiff)
Ganni John Iskra (First Defendant)
Callum Campbell (Second Defendant)
Representation:
Counsel:
EA Walker (Plaintiff)
M Auld (First Defendant)
Solicitors:
Ejaz Ur Rehman Kahn (Plaintiff)
William Cotsis (First Defendant)

File Number(s): 2018/357940
Publication restriction: Nil

Judgment - EX TEMPORE

Revised and reissued 4 February 2019

This is an application for review of an Adjudicator’s determination under the Building and Construction Industry Security of Payment Act1999 (NSW) (to which I will refer as “the Act”).
The plaintiff, MMIR Pty Limited (to which I will refer as “the owner”), challenges the determination by the second defendant, Callum Campbell (to whom I will refer as “the Adjudicator”), in favour of the first defendant, Ganni John Iskra, trading as JI Projex (to whom I will refer as “the builder”), in the amount of approximately $160,000. The owner and the builder have been represented before me by counsel. The Adjudicator has not appeared, and, I was told, submits to any orders the Court may make.
The application arises out of a building project at Wollongong. The work involved the upgrading and refurbishment works of a restaurant and fitness centre. The owner, apparently, began preparatory works on the site in August or September 2016. Work was later undertaken by the builder up until September 2017. In the course of the project, the owner made payments totalling the sum of $456,000 to the builder. The claim in question is for the balance the builder says is owing.
The payment claim in question was dated 4 September 2018, and consisted of a two-page invoice and supporting documents. The invoice contained…

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: [2019] NSWSC 35
Decision Date: 29 January 2019

CaseChat Overview and Summary

MMIR Pty Limited brought proceedings against Iskra in the Supreme Court of New South Wales, seeking a declaration that a payment determination made by an adjudicator was invalid. The dispute arose under a construction contract governed by the Building and Construction Industry Security of Payment Act 1999 (NSW). The central issue was whether the adjudicator’s determination was flawed due to an oversight in assessing the value of construction works in accordance with the terms of the "do and charge" contract and the reasonableness of the builder’s margin.

The court needed to determine whether the adjudicator’s failure to properly assess the value of construction works and the reasonableness of the builder’s margin constituted a jurisdictional error. This involved examining whether the adjudicator correctly applied the statutory framework and the contractual terms. The court considered whether the oversight rendered the adjudicator’s determination invalid and whether the claimant was entitled to a declaration of invalidity.

In examining the adjudicator’s determination, the court found that the adjudicator had indeed failed to assess the value of construction works in accordance with the terms of the contract. Additionally, the adjudicator did not evaluate the reasonableness of the builder’s margin, which was a critical aspect of the statutory framework. The court held that these oversights amounted to a jurisdictional error, invalidating the adjudicator’s determination. Consequently, the court granted the claimant’s request for a declaration that the adjudicator’s determination was invalid.

Orders