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Taylor Projects Group v Brick Dept & ORS

TAYLOR PROJECTS GROUP PTY LIMITED V BRICK DEPT. PTY LIMITED & ORS [2005] NSWSC 571

Supreme Court of New South Wales – 17 June 2005

FACTS

Taylor Project Group Pty Ltd (‘Taylor’) entered into a construction contract with Brick Dept. Pty Limited (‘Brick’) for the carrying out of brick and block laying work at a site in Holden Street, Ashfield. Brick made an Adjudication Application under the Building and Construction Security of Payment Act 1999 (NSW) (‘the Act’). The Adjudicator determined that Taylor was required to pay Brick the sum of $109,987.80.

Taylor and Brick subsequently entered into an agreement in which Taylor agreed to refrain from seeking an injunction preventing Brick from entering judgment for the adjudicated amount and would pay the adjudicated amount into Court on the basis that that the parties would obtain an early listing of the matter in the Supreme Court for determination and that the sum would be paid to Brick if it succeeded in those proceedings. Consent orders to that effect were made by the Court on 11 March2005.

Proceedings were subsequently brought by Taylor against Brick in the Supreme Court, seeking to impugn the adjudication determination. The matter was heard on 5 May 2005 and the Court held that the adjudication determination was valid. The proceedings were stood over for argument as to costs, orders and questions concerning a Stay of Orders.

At a further hearing, commencing on 15 June 2005, Taylor sought an Order from the Court restraining Brick from taking steps to enforce the judgment obtained on 5 May 2005, and a further Order restraining Brick from filing any adjudication certificate as a judgment in any court. Taylor in its submissions relied on the decision in Grosvenor Constructions (NSW) Pty Ltd v Musico [2004] NSWSC 344 in which it was held that where a claimant clearly being insolvent had obtained an adjudication certificate, it was appropriate to order a stay of the execution of the judgment debt. Taylor argued that it would otherwise suffer irreparable prejudice as payment pursuant to the judgment debt could never be recouped.

ISSUE

If a claimant is close to insolvency, can the Respondent obtain an order of stay of the execution of the judgment debt?

FINDING

The Court held that whilst the financial position of Brick over the past few years had “waxed and waned”, it was not proved to be under administration or being wound up in insolvency. The Court considered that if a claimant is close to insolvency, then non-payment of the debt would prevent cashflow and may drive the claimant into insolvency, which the Act was designed to prevent. Also the Court found that Taylor had not demonstrated that the principles in Grosvenor applied as there was neither certainty nor a very real risk that it would not be repaid should it succeed on the final determination. The Court ordered that upon Brick filing the adjudication certificate as a judgment, the sum paid into Court by Taylor be paid out to Brick.

QUOTE

Einstein J at paragraphs 52 and 60 held:

“[52] The principle to be derived from Grosvenor is that where there is certainty that the defendant’s rights will be otherwise rendered nugatory, and that it will suffer irreparable prejudice, because moneys paid would be irrecoverable as a result of the claimant’s insolvency or liquidation, then the proper and principled exercise of the

Court’s discretion…is to grant a stay… Such a stay is to “prevent injustice”. [60] As counsel for Brick case contended, to grant a stay in circumstances short of actual or imminent insolvency would be to turn the Act on its head. Rather than providing a statutory regime which ensures progress payments, and thus cashflow, to permit a person undertaking construction work to continue to do so, it may then operate to prevent cashflow and bring about the very result the Act is designed to prevent – persons not being paid promptly for the work which they have done.”

IMPACT

When a claimant is not insolvent, but may become insolvent due to non payment of an adjudicated amount, the Respondent will not be permitted an order of stay of execution of a judgment debt.

Taylor Projects Group v Brick Dept & ORS

TAYLOR PROJECTS GROUP PTY LIMITED V BRICK DEPT. PTY LIMITED & ORS

Supreme Court of New South Wales – 5 May 2005

FACTS

Taylor Project Group Pty Ltd (‘Taylor’) entered into a construction contract with Brick Dept. Pty Limited (‘Brick’) for the carrying out of brick and block laying work at a site in Holden Street, Ashfield. Brick faxed a Payment Claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (‘the Act’) on 5 January 2005 at 10:41pm for $158,490.82. However, Taylor did not receive the Payment Claim until 10 January 2005 when the office re-opened after the Christmas vacation.

Taylor delivered a Payment Schedule under the Act stating the amount payable as $NIL on 20 January 2005, that is, 10 business days from 6 January 2005. The matter proceeded to Adjudication, the Adjudicator determining that Taylor should pay$101,459.31 and that the Payment Schedule was out of time.

Taylor says that the earliest that time under section 14 of the Act could have begun to run was 6 January 2005, or alternatively, on 10 January when the Payment Claim came to its attention. In particular, Taylor submitted that service under section 13(1) of the Act should be construed to mean “brought to the attention of the person served”. Accordingly, Taylor submitted that the Adjudicator had failed to satisfy an essential requirement of the Act and the determination should be declared void.

ISSUE

What is the meaning of “serve” within section 13(1) of the Act?

FINDING

The Court referred to Mohamed v Farrah [2004] NSWSC 482 at 52-53 as authority for the proposition that in the absence of a specific limitation in the service provision relied upon, service which takes place at any time of the day, whether within or without business hours, is regarded as service on that day. Consequently, the Court found that Taylor’s Payment Schedule was required to be provided by 19 January 2005.

QUOTE

[18] “The legislature was careful to distinguish between the concepts when it wished to do so. Sections 17(2)(b),20(1) and s31(2) depend upon “receipt”. Each is instructive. The first two relate to the entitlement of a respondent to provide an answer to a claimant’s claim – a payment schedule and an adjudication response respectively – for the purpose of foreshadowed or actual adjudication. In contradistinction to s13(1), the legislature has been careful to ensure that a respondent is not shut out from providing those responses until a particular time has expired after receipt of the triggering document. In that sense, receipt gives the respondent a greater level of protection than “mere” service under s13(1). Similarly, s31(2), which deals with service by post or facsimile addressed to the person’s ordinary place of business under s31(1)(c), provides that “service” is taken to have been effected when the notice is “received” at that place.”

[19] “Hence the legislature plainly considered “service” under the provisions of s31(1) did not incorporate “receipt” as the critical element, absent an express statement to that effect.”

[20] “… service outside business hours does not turn the 10 business day limit … into a 9 business day limit. The day of service is not counted so that the respondent has 10 full days thereafter to provide a payment schedule [to be precise the respondent has 10 business days, plus the number of hours left in the day of service after being served, plus any non business days during the 10 business day period].”

IMPACT

A payment claim sent by facsimile, whether within or outside normal office hours on a business day, is regarded as being served on that day.

Errol Investments v Taylor Projects Group

ERROL INVESTMENTS PTY LTD V TAYLOR PROJECTS GROUP PTY LTD [2005] NSWSC 1125

Supreme Court of New South Wales – 4 November 2005

FACTS

Errol Investments Pty Ltd (“Errol”) and Taylor Projects Group Pty Ltd (“Taylor”) entered into a construction contract. Taylor served two Payment Claims under the Building and Construction Industry Security of Payment Act 1999 (NSW) (‘the Act’) onErrol in the sum of $771,000.00. In response, Errol submitted two Payment Schedules under the Act contending that  the Payment Claims were invalid because it could not “in any meaningful manner assess all parts of the claim being made”. In support of its contention, Errol, in its Adjudication Response, submitted a statutory declaration (by Mr. Norman Barnes) which said that the progress claim relied upon differed from many previous claims in respect of the same construction contract and that either it was impossible for him to assess it in a reasonable way or, later, that the claim was difficult to assess. The statutory declaration of Mr. Barnes continued to say that, nevertheless, Errol went on to endeavour to assess the claim. Errol also submitted a statutory declaration by Mr. David Collins who assisted Mr. Barnes. Two Adjudicators were appointed to determine the two Payment Claims and the matter was determined in favour of Taylor. The Adjudicator noted the statutory declaration of Mr. Collins, however, did not appear to consider the statutory declaration of Mr Barnes.

Errol then sought to appeal the Adjudication Determination on the grounds, firstly, that there was a denial of natural justice or procedural fairness on the part each Adjudicator and, secondly, that there was a failure to comply with section 22(2) of the Act. Section 22(2) of the Act sets out the matters which the Adjudicator is to consider in making his determination, including“the Payment Schedule together with all submissions that have been duly made…in support of the schedule”. In particular, Errol  contended that neither Adjudicator considered material in the form of the statutory declaration by Mr. Barnes put forward as part of the submissions.

ISSUES

Whether the Adjudication Determination was void for want of natural justice and whether the Adjudicator had considered the statutory declaration of Mr. Barnes.

FINDING

The Court held that there was no basis upon which the Court could come to the conclusion that the Adjudicators did not consider the declaration of Mr. Barnes. The fact that the Adjudicator rejected the statutory declaration of Mr. Collins, yet did not refer to that of Mr. Barnes, could just as well lead to an inference that he considered it, read it, but did not think that it carried the day in an argument as to the validity of the Payment Claim. Accordingly, the Court dismissed Errol’s claim.

QUOTE

Windeyer J at paragraph 4 said:

“There was, in addition to the statutory declaration of Mr Barnes, a statutory declaration of a David Collins, who worked with Mr. Barnes in assessing the payment claims. This declaration by Mr. Collins was referred by the adjudicator in 2005 ADST 203 who said that, following the decision of Palmer J in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, it was unhelpful for the purposes of the Act. From that statement and the fact that that declaration was mentioned, the plaintiff in these proceedings wishes the court to take a step which, in my view, involves an impermissible jump to reach a conclusion or to infer that, because the declaration of Mr. Collins was referred to and the declaration of Mr. Barnes was not, then the adjudicator failed to take into account material placed before him by way of submission in the payment schedule, which failure brought about a denial of natural justice making the determination void.”

IMPACT

The fact that an Adjudication Determination does not on its face show that an Adjudicator expressly considered a matter, submission or supporting document does not conclusively demonstrate that the Adjudication Determination is void for want of natural justice or a failure to comply with section 22(2) by not considering all required material.