Agusta Industries v Niclad Constructions [2010] NSWSC 925

New South Wales Supreme Court

CITATION : Agusta Industries v Niclad Constructions [2010] NSWSC 925

HEARING DATE(S) : 30 July 2010

JUDGMENT DATE : 30 August 2010

JUDGMENT OF : Gzell J

DECISION : Summons dismissed. Plaintiff ordered to pay defendant's costs.

CATCHWORDS : Building and Construction - Building and Construction Industry Security of Payment Act 1999 - whether adjudicator's determination void for alleged failure of receipt of adjudication application - whether presumption of receipt of postal article - whether a denial of natural justice

Building and Construction Industry Security of Payment Act 1999 LEGISLATION CITED : Evidence Act 1995 Acts Interpretation Act 1901 (Cth)

TQM v Dasein [2004] NSWSC 1216 Falgat Constructions Pty Limited v Equity Australia Corporation Pty Limited [2006] NSWCA 259 CASES CITED : Brodyn Pty Ltd v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421 Timwin Construction v Façade Innovations [2005] NSWSC 548 Holmwood Holdings Pty Ltd v Halkat Electrical Contractors Pty Ltd & Anor [2005] NSWSC 1129

PARTIES : Agusta Industries Pty Limited (Plaintiff) Niclad Constructions Pty Limited (Defendant)

FILE NUMBER(S) : SC 2010/57655

COUNSEL : J Young (Plaintiff)

SOLICITORS : Colin Biggers & Paisley (Plaintiff) Massey Bailey Solicitors & Consultants (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

GZELL J

MONDAY 30 AUGUST 2010

2010/57655 AGUSTA INDUSTRIES PTY LIMITED v NICLAD CONSTRUCTIONS PTY LIMITED JUDGMENT 1 The plaintiff, Agusta Industries Pty Limited, claims that whether or not it received an adjudication application under the Building and Construction Industry Security of Payment Act 1999 (Security Act), it was denied natural justice and the determination made by the adjudicator was void. 2 The defendant, Niclad Constructions Pty Limited, carried out "construction work" for Agusta as that term is defined in s 5 of the Security Act. Under the building contract between the parties, Niclad was entitled to progress payments. 3 On 15 December 2008, Agusta withheld payment on the basis that it had offsetting charges. It itemised the amounts claimed by Niclad and the offsetting charges to that date. 4 On 20 December 2008, Niclad served a payment claim on Agusta in terms of s 13 of the Security Act. 5 On 16 January 2009, Agusta not having served a payment schedule under s 14 of the Security Act, Niclad served a notice under s 17(2)(a) notifying Agusta that it intended to apply for adjudication of its payment claim. 6 That drew a response from Agusta on the same day that referred back to its reconciliation of 15 December 2008. The adjudicator later found this to be a payment schedule. 7 Section 17(5) of the Security Act provides that a copy of an adjudication application must be served on the respondent concerned. On 4 February 2009, Niclad tried to send the adjudication application to Agusta by facsimile but there was a malfunction and portion only of the adjudication application was received by Agusta. 8 Angelo Ferella, the project manager of Agusta, said that approximately three pages were received. I do not accept that evidence. The facsimile transmission report recorded that the function was not completed but it also recorded that 11 pages were sent. 9 The first page of the facsimile clearly identified the document as an adjudication application under the Security Act. The second page identified the total amount of the payment claim. The third page identified the date and the claimant. There followed submissions in support of the claim. 10 Luigina Dal Cin was the accounts manager of Niclad. She said that after the facsimile malfunction and on the same day she placed a copy of the adjudication application in an express post envelope and addressed it to Agusta's registered office and principal place of business. 11 Mrs Dal Cin said she then sent the adjudication application of some 45 pages by facsimile to LEADR, an authorised nominating authority under the Security Act, together with the facsimile transmission report upon which was noted: "Fax not completed stopped at Augusta on other end (no answer) Mailed instead. Express Post 4/2/09." 12 That afternoon Mrs Dal Cin said she went to the post office and placed the envelope in an express post mailbox retaining the receipt number which she placed on the third page of the copy of the adjudication application that she kept together with the following: " Note – Fax only sent 10 pages to Augusta then stopped. Tried to send a number of timesno answer to fax machine on Augusta end. Mailed copy Express Post" 13 I accept the evidence of Mrs Dal Cin in relation to the posting of a copy of the adjudication application to Agusta. 14 Mr Ferella received a telephone call from Paridhi Jain of LEADR on 4 February 2009. She told him that Niclad had attempted to send Agusta an adjudication application. Mr Feralla said he had received a few pages by facsimile but had received nothing more due to some difficulties experienced with Agusta's facsimile machine. He asked Ms Jain to ask Niclad to courier the document or put it in the mail and Ms Jain agreed. 15 Ms Jain then telephoned Mrs Dal Cin on the same day and told her that she had spoken with Mr Ferella and he said he did not receive the adjudication application. Mrs Dal Cin said the facsimile machine said 11 pages were sent but she also said she had posted the adjudication application by express post and she would send it to Mr Ferella the next day by registered post. 16 On 5 February 2009, Mrs Dal Cin said she went to Burwood post office and addressed a registered post envelope containing a copy of the adjudication application to the plaintiff at its registered office and principal place of business. She kept a copy of the registered post receipt. I accept her evidence and infer that she paid the postal charge and placed the envelope in a post mailbox. 17 Mr Ferella claimed that he did not receive either envelope or any further documentation from Niclad in relation to the adjudication application or otherwise. 18 LEADR appointed Philip Martin who accepted appointment as adjudicator on 9 February 2009. LEADR sent a facsimile to both parties on 10 February 2009 announcing Mr Martin's appointment and also sending his acceptance and a letter addressed to both parties. 19 Mrs Dal Cin inserted the name of Niclad as claimant and dated the adjudicator's acceptance. She said she then sent by facsimile to Mr Ferella the adjudicator's acceptance, his letter and the LEADR letter. On the same day she sent to LEADR a copy of the adjudicator's acceptance together with the facsimile transmission report showing the three pages were sent to the facsimile number of Agusta. Mrs Dal Cin added a note to Ms Jain on the transmission report: " Attention Paridhi Jain

Confirmation that adjudicator's Acceptance has been faxed to Augusta Industries Pty Ltd on above fax number. Should you have any queries could you email Gina Dal Cin on nicladptyltd@optusnet.com.au Regards Mrs Gina Dal Cin Niclad Constructions Pty Ltd" 20 I do not accept Mr Ferella's evidence that he did not receive any further documentation from Niclad after 4 February 2009. Not only is the evidence of postal service of Mrs Dal Cin persuasive but also the facsimile transmission report of 10 February 2009 with the documents from Mr Martin and LEADR is compelling. 21 Mr Martin's letter of 9 February 2009 advised the parties of his fees and contained the following: "I require the following by 4 pm on 11 February 2009. 1. Written confirmation from both parties that the fees as set out above are acceptable by signing the enclosed Adjudicator's Acceptance form. 2. Confirmation that the adjudication application has been served on the Respondent and, if served, the date of service and method of service." 22 It was submitted that the adjudicator was not satisfied with the information as to service that had been provided to Ms Jain and he specifically sought further information. I reject that submission. The letter has every indication of being a pro forma and there are later indications that the adjudicator was satisfied with the information as to postal service provided to Ms Jain by Mrs Dal Cin. 23 It was submitted that Agusta was denied natural justice because it did not receive a copy of the adjudication application and was denied the ability to lodge an adjudication response. It was said on a number of occasions that had Agusta known that an adjudication application had been lodged it would have taken steps to ensure that it lodged an application response. 24 It was submitted that even if Agusta was deemed to have received the adjudication application, the adjudicator must have determined that Agusta received it on a date he determined in order to work out the dates upon which various steps should be taken. It was submitted that there was no evidence to support the conclusion that Agusta had received a copy of the adjudication application until after the adjudicator made his determination and his failure to act on proper evidence led to his finding that no adjudication response was lodged. 25 It was submitted that the adjudicator through Ms Jain mistook the reference to the adjudicator's acceptance in the note for her attention on the facsimile transmission report as a reference to the adjudication application. I do not accept that submission. Ms Jain had already been informed that one postal event with respect to the adjudication application had occurred on 4 February 2009 and another was to occur on 5 February 2009 and the note that accompanied the adjudicator's acceptance meant what it said. 26 Mrs Dal Cin subsequently learned from Australia Post that the registered letter sent on 5 February 2009 was not delivered. But the adjudicator was entitled to make his calculations of time from 4 February 2009 when the express post parcel was posted. 27 Section 31(1)(c) of the Security Act provides that any notice that by or under the Act is authorised or required to be served on a person may be served by sending it by post or facsimile addressed to the person's ordinary place of business. Section 31(2) provides that service in that fashion is taken to have been effected when the notice is received at the place. 28 The Evidence Act 1995, s 160 provides that it is presumed unless evidence sufficient to raise doubt about the presumption is adduced, that a postal article sent by prepaid post addressed to a person at a specified address in Australia was received at that address on the fourth working day after having been posted. The fourth working day after 4 February 2009 was 10 February 2009. 29 Section 21(1) of the Security Act provides that an adjudicator is not to determine an adjudication application until after the end of the period within which the respondent may lodge an adjudication response. That period is defined in section 20(1)(a) as five business days after receiving a copy of the adjudication application. Five business days after 10 February 2009 was 17 February 2009. The adjudicator made his determination on 23 February 2009 outside that period. 30 Section 21(3)(a) of the Security Act provides that the adjudicator is to determine an adjudication application as expeditiously as possible and, in any case, within ten business days after the date on which the adjudicator notified the claimant and the respondent as to his or her acceptance of the application. That occurred on 10 February 2009. Ten business days from then expired on 24 February 2009 the day after the determination was made. 31 The adjudicator had ample evidence upon which to come to this conclusion. I do not see how that leads to a denial of natural justice to Agusta. 32 Late in February 2009, Ms Jain told Mrs Dal Cin that she had been asked by the adjudicator to ask Niclad to demonstrate that Agusta received a copy of the adjudication application. It was then that Mrs Dal Cin made inquiries of Australia Post. On 2 March 2009 she wrote to LEADR reiterating that she had attempted to send the adjudication application to Agusta by facsimile but there was a malfunction; that on 4 February 2009 she sent a copy of the adjudication application by express post envelope; and that on 5 February 2009 she sent a copy of the application by registered post. 33 On 5 March 2009, Ms Jain wrote to both parties. Her facsimile included the following: "I would like to acknowledge the concerns that the Respondent has raised in relation to receiving a copy of the initial application lodged by the Claimant. I have followed up this situation and the Claimant has confirmed that all possible methods of service were exhausted in the attempt to serve the application to the Respondent. With the permission of the Claimant I have attached the letter confirming this. I have raised this issue with the Adjudicator who has reiterated that the determination has been made in accordance with the Act and is available upon payment of fees." 34 The parties had been advised on 23 February 2009 that the adjudication determination had been made and would be released upon payment of fees. What is apparent from the letter of 5 March 2009 is that, subsequent to the determination, Agusta raised the question of service of the adjudication application, which led to inquiry of Mrs Dal Cin and her response. It is also apparent that the adjudicator was satisfied with the evidence of postage at the time he made his determination. The letter of 5 March 2009 refers to a reiteration by him that the determination had been made in accordance of the Security Act, not an original determination of times dependent upon Mrs Dal Cin's letter of 2 March 2009. 35 It was submitted that the adjudicator should not have relied upon the postal provisions in s 31 of the Security Act and s 160 of the Evidence Act. Reference was made to an obiter dictum in TQM v Dasein [2004] NSWSC 1216 at [5] where McDougall J said he inclined to the view that there was a distinction between the concept of service and the concept of receipt and that receipt in s 20(1)(a) of the Security Act should be given its ordinary meaning. 36 But that decision predated Falgat Constructions Pty Limited v Equity Australia Corporation Pty Limited [2006] NSWCA 259 where Hodgson JA, having said at [51] that the onus was on Falgat to prove that a payment schedule was not provided, referred at [55] to the rebuttable presumption in the Acts Interpretation Act 1901 (Cth), s 29 and said that detection by any person on behalf of the company was not necessary because of s 160 of the Evidence Act. 37 His Honour then went on in an obiter dictum at [63] to say that receipt in s 17(3)(c) of the Security Act did not necessarily require that the document come to the notice of a person authorised to deal with the document on behalf of the claimant. 38 Hunt AJA, with whom Handley JA agreed, relied upon the presumption in s 29 of the Acts Interpretation Act that, unless a contrary intention appears, service of any document authorized or required to be served by post is deemed to be effected by properly addressing prepaying and posting the document as a letter, and unless the contrary is proved, is deemed to have been effected at the time at which the letter would be delivered in the ordinary course of the post. 39 Section 160 of the Evidence Act is not affected by that provision and applies in this case. 40 It was submitted that Falgat was distinguishable because it was concerned with the provision in s 17(3)(c) of the Security Act that an adjudication application must be made within ten business days after the claimant receives the payment schedule, whereas the instant circumstances were concerned with s 20(1)(a). I fail to see the difference. Each is concerned with a time limitation for a step in the chain that leads to a proper adjudicator's determination. 41 In Brodyn Pty Ltd v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421 at 441 [53], Hodgson JA with whom the other members of the Court of Appeal agreed identified at 441 [53] the basic and essential requirements for the existence of an adjudicator's determination and section 20(1)(a) of the Security Act was not one of them. Instead, it and other provisions of the legislation requiring notice to be given were identified at 445 [57] as not being preconditions to the existence of authority to make a decision and non-compliance does not result in invalidity if the adjudicator considers the matters and bona fide addresses the requirements. 42 It was not submitted that Brodyn did not define the ambit of judicial review of an adjudicator's determination. Instead, it was pointed out that Hodgson JA had indicated that the list of essential requirements was not closed and it was submitted that the requirement of lodging an adjudication response within a specified time should be added to the list of preconditions. I reject that submission. Section 20(1)(a) of the Security Act is no different in the form from the other time limitations in the Act. 43 Since s 20(1)(a) of the Security Act is not a precondition to the existence of authority in an adjudicator to make a determination, its non-compliance does not result in invalidity and judicial review is not available. 44 In Timwin Construction v Façade Innovations [2005] NSWSC 548 at [1] McDougall J itemised those circumstances identified in Brodyn as giving rise to judicial review. The list was adopted by Brereton J in Holmwood Holdings Pty Ltd v Halkat Electrical Contractors Pty Ltd & Anor [2005] NSWSC 1129 at [30]: "(1) Where an adjudicator failed to comply with the basic and essential requirements laid down in the Act for there to be a valid determination;

(2) Where the adjudication determination does not amount to an attempt in good faith to exercise the relevant power, having regard to the subject matter of the legislation; (3) Where the adjudicator denied natural justice to a party (the content and operation of the doctrine of natural justice must take account of the narrow statutory scheme); or (4) Where the adjudication determination was procured by fraud in which the adjudicator was complicit." 45 There was no suggestion in this case that either paragraph (2) or paragraph (4) was applicable. 46 With respect to paragraph (1) I have found that the requirement upon which Agusta relies is not a basic and essential requirement for a valid determination. Agusta is driven to reliance upon paragraph (3) – denial of natural justice. 47 There was no denial of natural justice in this case. Agusta had ample opportunity to request a copy of the adjudication application or to lodge an adjudication response. It knew on 16 January 2009 that Niclad intended to lodge an adjudication application. It knew on 4 February 2009 when it received the first part of that document that an adjudication application was being made. That was enforced later on that day when in Mr Ferella's conversation with Ms Jain he asked her to have Niclad courier or post the adjudication application to Agusta. It knew that an adjudication application had been made when it received the adjudicator's acceptance, the adjudicator's covering letter and the covering letter from LEADR on 10 February 2009. 48 Agusta could have reacted at any of these times. Indeed, it is arguable that upon receipt of the adjudicator's acceptance it had two business days in which it could have lodged an adjudication response under s 20(1)(b) of the Security Act. 49 But I set that issue to one side as it was not argued in the proceedings. 50 The result must be that I dismiss the summons and order the plaintiff to pay the defendant's costs.

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