Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd - [2016] NSWSC 462

Supreme Court

New South Wales

Medium Neutral Citation: Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2016] NSWSC 462
Hearing dates: 12 April 2016
Decision date: 20 April 2016
Jurisdiction: Equity
Before: Meagher JA
Decision:
1. Summons dismissed.
2. Plaintiff pay first defendant’s costs of the proceedings.
3. Amount of $495,473.20 paid into Court by the plaintiff be paid to the first defendant.

Catchwords: ADMINISTRATIVE LAW – procedural fairness – application for order under s 69 of Supreme Court Act 1970 (NSW) to quash adjudication determination made under Building and Construction Industry Security of Payment Act 1999 (NSW), Pt 3, Div 2 – whether adjudicator rejected head contractor’s set-off claim to liquidated damages on bases not contended for or notified to parties – where head contractor had submitted sub-contractor had no entitlement to extension of time – where sub-contractor had submitted liquidated damages claim unreasonable – where adjudicator rejected set-off claim on basis that head contractor, acting reasonably, should have granted extension of time to sub-contractor – no denial of procedural fairness
Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW), Pt 3, Divs 1, 2
Supreme Court Act 1970 (NSW), s 69
Cases Cited: Kioa v West [1985] HCA 81; 159 CLR 550
Musico v Davenport [2003] NSWSC 977
Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211; 18 BCL 322
SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391
Category: Principal judgment
Parties: Probuild Constructions (Aust) Pty Ltd (Plaintiff)
DDI Group Pty Ltd (First Defendant)
Ian Hillman (Second Defendant)
Representation:
Counsel:
S Robertson (Plaintiff)
M F Galvin (First Defendant)
Submitting Appearance (Second Defendant)
Solicitors:
Maddocks Lawyers (Plaintiff)
Lou Baker and Associates (First Defendant)

File Number(s): 2015/362879

Judgment

This is an application invoking the Court’s supervisory jurisdiction under s 69 of the Supreme Court Act 1970 (NSW). The plaintiff (Probuild) was head contractor for the refurbishment of a hotel in Hunter Street, Sydney. It sub-contracted with the first defendant (DDI) to carry out works which comprised the installation of ceiling and wall plasterboard. Probuild seeks an order quashing an adjudication determination dated 1 December 2015, undertaken by the second defendant (the adjudicator), who has filed a submitting appearance. That determination was made under Pt 3, Div 2 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) with respect to DDI’s payment claim dated 22 July 2015.
Probuild contends that it was denied procedural fairness in relation to the making of that determination. One reason Probuild relied on for withholding payment of the amount claimed was that it was entitled to liquidated damages for DDI’s delay in completing the sub-contract works, those works having been completed more than three months after the Date for Practical Completion. Probuild argues that the adjudicator rejected that set-off claim on two bases that neither party contended for or notified to the other.
It is not in dispute that the requirements of…

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: [2016] NSWSC 462
Decision Date: 20 April 2016

CaseChat Overview and Summary

Probuild Constructions (Aust) Pty Ltd sought to challenge an adjudication determination made by an adjudicator under the Building and Construction Industry Security of Payment Act 1999 (NSW). The determination had resolved a dispute between Probuild, the head contractor, and DDI Group Pty Ltd, the sub-contractor, regarding the latter's entitlement to an extension of time and associated liquidated damages. The Supreme Court of New South Wales was tasked with determining whether the adjudicator had acted unfairly by rejecting Probuild's set-off claim based on grounds that were neither argued nor notified to the parties. Specifically, the adjudicator had ruled that Probuild, acting reasonably, should have granted DDI an extension of time, thereby rejecting Probuild's claim for liquidated damages.

The primary legal issues before the court were whether the adjudicator had denied procedural fairness by deciding the set-off claim on grounds that were not presented during the adjudication and whether these grounds were sufficiently communicated to the parties. Probuild argued that it was entitled to rely on the sub-contractor's unreasonable claim for liquidated damages as a basis for its set-off, a point that was not contested or raised by DDI. The court needed to consider if the adjudicator's decision was based on a misinterpretation of the submissions made and whether such an error constituted a breach of procedural fairness.

The court concluded that the adjudicator had not denied procedural fairness by deciding the set-off claim on the basis that Probuild should have reasonably granted an extension of time. It found that the adjudicator's reasoning was consistent with the submissions and the overall context of the dispute. The court held that the adjudicator had acted within his authority and did not err in his interpretation of the relevant submissions. Consequently, the application to quash the adjudication determination was dismissed.

The Supreme Court did not make any further orders beyond dismissing Probuild's application. The adjudication determination remained in effect, and DDI was not required to pay the liquidated damages to Probuild as per the adjudicator's ruling.

Orders