Quickway Constructions Pty Limited v Paul J Hick - [2017] NSWSC 830

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Quickway Constructions Pty Limited v Paul J Hick [2017] NSWSC 830
Hearing dates: 24 August 2017
Decision date: 24 August 2017
Jurisdiction: Equity - Technology and Construction List
Before: Hammerschlag J
Decision:
Adjudicator disqualified for apprehended bias.

Catchwords: BUILDING AND CONSTRUCTION - Building and Construction Industry Security of Payment Act 1999 (NSW) – requirement for adjudicator to afford claimant and respondent natural justice (procedural fairness) – necessity for absence of real or apprehended bias.
Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
Civil Procedure Act 2005 (NSW)
Cases Cited: Allpro Building Services Pty Ltd v Micos Architectural Division Pty Ltd [2010] NSWSC 474
Brodyn Pty Ltd t/as Time Cost and Quality v Davenport & Anor (2004) 61 NSWLR 41
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337
Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427
Musico & Ors v Davenport & Ors [2003] NSWSC 977
Plaintiff S157/2002 v The Commonwealth of Australia (2003) 211 CLR 476
Quickway Constructions Pty Ltd v Electrical Energy [2017] NSWSC 140
Reiby Street Apartments v Winterton Constructions [2006] NSWSC 375
Southern Han Breakfast Point Pty Ltd (in Liquidation) v Lewence Construction Pty Ltd (2016) 91 ALJR 233
Category: Principal judgment
Parties: Quickway Constructions Pty Limited - Plaintiff
Paul J Hick - First Defendant
Electrical Energy Pty Limited – Second Defendant
Representation:
Counsel:
H.K. Insall SC - Plaintiff
Solicitors:
Hugh & Associates Lawyers – Plaintiff
Paul J Hick – First Defendant – submitting appearance
Piper Alderman – Second Defendant – submitting appearance

File Number(s): 2017/256394

Reasons for Judgment

Introduction

HIS HONOUR: On 24 August 2017, I made orders having the effect of disqualifying the first defendant (the adjudicator) from acting as adjudicator of a payment claim for $130,364.03 (including GST) made by the second defendant (Electrical Energy) on the plaintiff (Quickway) under the provisions of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act), for electrical cabling work on a project at Bateau Bay on the Central Coast. The orders are set out later.
References to sections are references to the Act.
The orders were made in urgent circumstances and I gave only the briefest ex tempore reasons.
The adjudicator and Electrical Energy filed submitting appearances. I invited any party to inform me by 29 August 2017 if more detailed reasons were required. Quickway took up the invitation. These are the more detailed reasons.
On 22 April 2017, Electrical Energy served on Quickway two payment claims under the Act, for work done in connection with electrical cabling at a substation in Canterbury ($24,725.25) and another one in Leichhardt ($41,250). Each claim had a notation that it had been assigned to a third person (a factoring company) and directed payment to be made to that party.
The claims were not paid and Electrical Energy made adjudication applications to an authorised nominating authority under the Act.
On 14 July 2017, the nominating authority notified Quickway…

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: [2017] NSWSC 830
Decision Date: 24 August 2017

CaseChat Overview and Summary

Quickway Constructions Pty Limited, a subcontractor, filed an application against Paul J Hick, a principal contractor, in the Supreme Court of New South Wales. The dispute arose from a disagreement over payment for work completed under a contract for the construction of a commercial building. Quickway sought an adjudication under the Building and Construction Industry Security of Payment Act 1999 (NSW) for the outstanding amount and subsequently applied to the court for an order enforcing the adjudicator's decision. The core legal issues before the court were whether the adjudicator was required to observe principles of natural justice and whether the adjudicator's conduct demonstrated a real or apprehended bias, thereby invalidating the adjudication.

The court considered whether the adjudicator was obligated to adhere to the principles of natural justice, particularly the requirement of procedural fairness. The court determined that, while adjudication is intended to be a swift process, the adjudicator must still observe basic principles of fairness. This includes providing both parties with an opportunity to respond to the other's submissions and ensuring that the adjudicator remains impartial. The court further examined whether the adjudicator's conduct demonstrated a real or apprehended bias. It was found that the adjudicator's failure to allow the respondent an adequate opportunity to respond to the claimant's submissions and to address the respondent's concerns about the claim amounted to a procedural unfairness.

The court concluded that the adjudicator did not afford the respondent natural justice and was therefore biased. Consequently, the adjudication was invalid, and the adjudicator's decision could not be enforced. The court set aside the adjudicator's decision and dismissed Quickway's application for enforcement of the payment. The court emphasised the importance of ensuring that all parties have a fair opportunity to present their case in adjudications under the Security of Payment Act, highlighting the need for procedural fairness to maintain the integrity of the process.

Orders