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Abacus v Davenport & ORS

ABACUS V DAVENPORT & ORS [2003] NSWSC 977

NSW Supreme Court (Final Hearing)

The plaintiff (“Abacus”) engaged the second defendant (“Renascent”) to carry out refurbishment of Abacus’ premises.

Renascent served on Abacus a payment claim made pursuant to Section 13 of the Building and Construction Industry Security of Payment Act 1999 (“the Act”). A payment schedule was issued.

However the third Defendant was dissatisfied with the Plaintiff’s response to the payment schedule and applied to the Adjudicator for a further determination.

Whether and on what grounds prerogative relief is available against the determination of an adjudicator under the Act.

While following Musico and noting Einstein J’s approval of the judgment in Musico, Justice McDougall held that “.. there was no jurisdictional error and thus no basis on which to quash the determination. The interim injunction of Gzell J was set aside.

Prerogative relief would in principle lie against the determination of an adjudicator under the Act in cases where there is a jurisdictional error on the face of the record, a denial of natural justice (at para 16).

The adjudicator was required to do was undertake for himself the task that the architect (supervisor) had purported to undertake. An adjudicator is not required simply and only to “apply his rubber stamp and initials to the results of the architect’s labours” (at para 39).

It was not only open to but also incumbent upon the adjudicator to consider for himself the entitlement to delay “An adjudicator under the Act is entitled, in the course of making his or her determination, to make mistakes of law as long as those mistakes do not cause the adjudicator either to exercise a jurisdiction that he or she does not possess, or to decline to exercise jurisdiction that he or she does possess” (at para 32). While there may be other circumstances that might ground an application for relief, an adjudicator determination under the Act is not bound by the terms of any progress certificate issued.

© Doyles Construction Lawyers 2007

This publication is intended to be a topical report on recent cases in the construction, development and engineering industries. This publication is not intended to be a substitute for professional advice, and no liability is accepted. This publication may be reproduced with full acknowledgement.

Jim Doyle

Tel.: 1800 888 783

jdoyle@doylesconstructionlawyers.com
www.doylesconstructionlawyers.com

Abacus Fund Management v Davenport & 2 ORS

ABACUS FUNDS MANAGEMENT LTD V DAVENPORT & 2 ORS [2003] NSWSC 935

Supreme Court of New South Wales – 20 October 2003

FACTS

Abacus Funds Management Ltd (‘Abacus’) engaged a contractor to carry out construction work on its premises. The contractor lodged a progress claim under the Building and Construction Industry Security of Payment Act 1999 (‘the Act’).

Abacus lodged a payment schedule in accordance with the Act and the matter proceeded to adjudication. Davenport was appointed to determine the adjudication.

The determination was delivered in favour of the contractor and Abacus sought an injunction restraining the contractor to enforce the determination by way of applying for an adjudication certificate under the Act. Abacus submitted that there was an arguable case that there was an error of law on the face of the record, giving rise to a decision quashing the adjudication determination.

ISSUES

Whether judicial review lies against an adjudicator.

Whether there was an arguable case of error of law.

FINDING

Despite the legislative intention demonstrable in the Act, the Court held granted an interlocutory injunction restraining the contractor from seeking and enforcing an adjudication determination or obtaining an adjudication certificate, pending an application for an order quashing the adjudicator’s determination for error of law on the face of the determination.

The Court held that section 30(1) of the Act, governing the adjudicator’s liability for anything done or omitted in good faith, was not a privative clause (that is, ‘final and conclusive’) and did not seek to exclude judicial review. On the facts, the Court found that Abacus had raised an arguable case that there was an error of law on the face of the record that may give rise to a decision to quash the determination.

QUOTE

Gzell J at paragraph 18 stated:

“The clear legislative purpose is to provide an interim regime for payment of progress claims pending the final resolution of disputes under construction contracts in the ordinary way, would suggest that a court should be slow to intervene for to do so would thwart that legislative purpose.”

Further, at paragraph 21 his Honour stated:

“Section 30(1) of the Act is not a privative clause. It does not seek to exclude judicial review. It is not of the nature of such provisions as were considered in R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 and does not fall within the principles discussed in Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 and more recently in Plaintiff S157/2002 v Commonwealth (2003) 77 ALJR 454. Indeed, the current provision is less restrictive than it was in the original legislation which provided that no action lay against an adjudicator or any other person with respect to anything done or omitted to be done by the adjudicator in good faith in the exercise of the adjudicator’s functions under the Act.”

IMPACT

It is now possible to appeal an adjudicator’s determination.

Claimant’s who expected to obtain speedy relief under the Act may have to contend with an application by the Respondent for judicial review of an adjudicator’s decision.

This publication is intended to be a topical report on recent cases in the construction, development and engineering industries. This publication is not intended to be a substitute for professional advice, and no liability is accepted. This publication may be reproduced with full acknowledgement.

Jim Doyle

Tel.: 1800 888 783

jdoyle@doylesconstructionlawyers.com
www.doylesconstructionlawyers.com

Abacus v Davenport & ORS

ABACUS V DAVENPORT & ORS [2003] NSWSC 1027

Supreme Court of New South Wales – 14 November 2003

FACTS

Abacus engaged Renascent to carry out refurbishment of Abacus’ premises at 109 Pitt Street, Sydney. Renascent served on Abacus a Payment Claim under the Building and Construction Industry Security of Payment Act 1999 (‘the Act’) for $1,750,844.48. Abacus responded with a Payment Schedule under the Act and was accompanied with a progress certificate from the Architect approving $372,038.32. Abacus proposed to pay that approved amount.

Renascent was dissatisfied with the response and Mr. Davenport nominated and accepted as the Adjudicator.

Mr. Davenport determined that Renascent was entitled to $819,796.32 made up of the approved amount, variations, on-site costs and backcharges.

Abacus then sought relief to quash Mr. Davenport’s determination on the grounds that Mr. Davenport had committed errors of law on the face of the record. Abacus submitted that Mr. Davenport was bound by the terms of progress certificate issued by the architect and that Mr. Davenport had determined “a delay claim that was never made”. Abacus also sought an order to restrain Renascent from obtaining an adjudication certificate. Abacus relied upon Musico v Davenport [2003] NSWSC 977 to asset that relief does in fact lie in principle. Renascent submitted that there was no jurisdictional error and that if there was errors of law they were errors within jurisdiction.

ISSUES

In principle, does relief lie to quash the determination of an adjudicator under the Act?

If yes, on what grounds will that relief lie?

If yes, are any grounds for relief made out on the facts of the case?

FINDING

Relief in the nature of relief would in principle lie against the determination of an adjudicator under the Act for jurisdictional error (including refusal to exercise jurisdiction, acting in excess of jurisdiction, that is, jurisdictional error of law on the face of the record) and denial of natural justice. The Court held that the submissions contained within the Adjudication Applicationand Adjudication Response should be taken to form part of the record.

The Court held on the facts of the case the Adjudicator had not committed jurisdictional error on the face of the record, and if he did err it was within jurisdiction. The Court rejected Abacus’ argument that an Adjudicator under the Act is bound by the terms of the progress certificate issued, commenting that if Abacus were correct then an Adjudicator could not make a determination that was inconsistent with a certificate that was manifestly wrong, or that had been issued in bad faith or as the result of fraudulent collusion to the disadvantage of the builder.

QUOTE

McDougall J at paragraph 32 held:

“For the reasons that I gave in Musico at paras [46] to [54], an adjudicator under the Act is entitled, in the course of making his or her determination, to make mistakes of law as long as those mistakes do not cause the adjudicator either to exercise a jurisdiction that he or she does not possess, or to decline to exercise jurisdiction that he or she does possess.”

IMPACT

Due to the speedy and informal nature of the Act, Adjudicators may make mistakes in their determinations.

However, the Courts may uphold these mistakes so long as the Adjudicator does not exceed his or her powers or deny a party natural justice.

This publication is intended to be a topical report on recent cases in the construction, development and engineering industries. This publication is not intended to be a substitute for professional advice, and no liability is accepted. This publication may be reproduced with full acknowledgement.

Jim Doyle

Tel.: 1800 888 783

jdoyle@doylesconstructionlawyers.com
www.doylesconstructionlawyers.com