Adjudicators Discussion 15 June 2016

Transcription

1 Probuild Constructions v DDI Group Alucity v ASC/ Alucity v Hick Adjudicators Discussion 15 June 2016 David Campbell-Williams

2 Two recent cases Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2016] NSWSC 462 (Meagher JA 20 April 2016) Alucity Architectural Product Supply Pty Ltd v Australian Solutions Centre; Alucity Architectural Product Supply Pty Ltd v Paul J Hick [2016] NSWSC 608 [2016] NSWSC 608 (13 May 2016 Hammerschlag J)

3 Alucity v ASC/ Alucity v Hick A dispute over the validity and quantum of ANA and Adjudicators fees. Two sets of proceedings commenced by Alucity, in the Local Court, and transferred to Supreme Court on 20 November 2015, one vs ASC, the ANA, the other vs Hick, the adjudicator

4 Alucity v ASC/ Alucity v Hick In October 2014, Alucity made a payment claim on Empire Windows Pty Ltd, which was adjudicated on 26 November 2014, in favour of Alucity for $146,668.26, which amount Empire Windows paid to Alucity. On 22 December 2014, Alucity served another payment claim dated 19 December 2014 on Empire Windows claiming $692, This payment claim stated that it included the unpaid value of previous claims.

5 Alucity v ASC/ Alucity v Hick On 10 March 2015, Empire Windows provided a payment schedule, which indicated that the amount owing was a negative $424, or $Nil. The payment schedule gave a number of reasons for Empire Windows stance. One of those reasons was that: Contrary to Section 13(5) of the Act more than one payment claim has been served in respect to a reference date

6 Alucity v ASC/ Alucity v Hick 24 March 2015, Alucity made an adjudication application, and Empire had at paragraphs of its response, specifically dealt with s 13(5), concluding with the statement, The payment claim is invalid. The Adjudicator concluded that the reference date under the construction contract was 30 November 2014, and that Alucity had previously issued two payment claims after this reference date.

7 Alucity v ASC/ Alucity v Hick The Determination (para79): Given that I have found the Payment Claim invalid by virtue of s13(5) of the Act and the Claimant having previously served payment claims in respect to the 30 November 2014 reference date, I have no jurisdiction to determine this Application. Therefore, there is no basis nor reason for me to consider any further part of this Application. I have included my reasons for determination in respect to the other issues set out above because it was necessary to consider all of those matters in the process of getting to this point of determining that I do not have jurisdiction and because the parties may gain a better understanding as to why I have reached the determination I have. $10, as his fees and expenses, to sue the authority and the adjudicator in the Local Court for damages or restitution of the fees paid to them. and retained $6, as its fee for services

8 Alucity v ASC/ Alucity v Hick Alucity alleged that when the ANA informed Alucity that the adjudication application had been determined, this was a misrepresentation because contrary to what it was told, the adjudicator had found that he had no jurisdiction, with the result that he had not made a determinationunder the Act. Alucity alleged that it had paid the fees in reliance upon this misrepresentation, and claimed $10, as restitution. In the alternative, it claimed damages for misleading or deceptive conduct in trade or commerce under Sch 2, s 18 of the Competition and Consumer Act 2010 (Cth) and in the further alternative, damages of $10, for the tort of deceit. The same claims were made against the adjudicator but as a further alternative that whilst he was entitled under s 29(1)(b) to a reasonable amount by way of fees and expenses, the fees charged by the adjudicator were unreasonable. It claimed a refund of $10,

9 Alucity v ASC/ Alucity v Hick Alucity then abandoned all allegations of misrepresentation, misleading or deceptive conduct, and deceit. Alucity said it was entitled to restitution of all fees paid (although it restricted its claim against the adjudicator to $10,000.00) because there had been a total failure of consideration and if the adjudicator and ANA were permitted to retain the fees, they would be unjustly enriched. It said that the adjudicator, has no entitlement to payment for doing anything except produce a determination within the meaning of s 22 of the Act, and the consequence of him having found that he had no jurisdiction is that he did not produce a determination within the meaning of s 22. And never became entitled to the payment of any fees under the section. This contention does not distinguish between the entitlement of the adjudicator to be paid under s 29(1), and the entitlement of the authority to charge under s 28(3).

10 Alucity v ASC/ Alucity v Hick [58] Section 22(1)(a) requires the adjudicator to determine the amount of the progress payment (if any) to be paid by the respondent to the claimant. A determination that no amount is to be paid because the claim is invalid is no less a determination than one which determines that no money is payable for some other reason. [59] It is to be observed that s 29(1) provides that an adjudicator is entitled to be paid for adjudicating an adjudication application. That is what the adjudicator did.

11 Alucity v ASC/ Alucity v Hick [60] Empire Windows raised the question of s 13(5) invalidity in each of its payment schedule, adjudication response, and supplementary submissions. Alucity responded by dealing with the merits of the contention, and without any suggestion that the adjudicator should not, or was not empowered, at least in the first instance, to determine the issue because it went to his jurisdiction. To the contrary, Alucity and Empire Windows joined issue on the question, with the consequence that the adjudicator had to, and did, deal with it. It does not fairly lie in its mouth to suggest that its adjudication application has not been adjudicated.

12 Alucity v ASC/ Alucity v Hick [64] The doctrine applies where there has been a total failure of an agreed return for a payment made under a contract. In those circumstances, retention of the payment may unjustly enrich the payee, who may be required to give restitution of it. [65] Here, there is no contract. The relationship between Alucity on the one hand, and the authority and the adjudicator on the other, is statutory. The entitlement of the authority and the adjudicator to payment arises as a consequence of Alucity having invoked the procedures under the Act, and because ss 28 and 29 give the authority and the adjudicator a statutory right to payment. There was no contractual promise given by the authority or the adjudicator, in consideration for the money paid, for which consideration has failed wholly or at all. [85]The Court marks its disapproval of groundless proceedings such as these, which if not discouraged, will have the effect of deflecting adjudicators from accepting important appointments, and properly discharging their duties under the Act.

13 Alucity v ASC/ Alucity v Hick Some other issues?

14 Probuild Constructions v DDI Group Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2016] NSWSC 462 Meagher JA 20 April 2016 Another (unsuccessful) S. 69 Supreme Court Act certioari case, essentially based on an alleged want of procedural fairness.

15 Probuild Constructions v DDI Group Probuild was head contractor for the refurbishment of a hotel in Hunter Street, Sydney. It sub-contracted with the DDI to carry out ceiling and wall plasterboard installation by 5 January Probuild asserted those works were completed on 29 May 2015, more than three months after the Date for Practical Completion, entitling it to setoff liquidated damages of $15,000/day. DDI s Payment claim for about $2.175m was served 27 July No EoT had been granted by Probuild (or sought by DDI),

16 Probuild Constructions v DDI Group The Adjudicator did not seek S21(4)(a) submissions. Probuild contends that it was denied procedural fairness in that the adjudicator rejected that set-off claim on two bases that neither party contended for or notified to the other.

17 Probuild Constructions v DDI Group The key issue was the determination of the entitlement for LD s, at para 185 of the Determination [22]) The Respondent is claiming LDs up to 29 May 2015 and yet based on the Claimants variation submissions there were contract variations being directed by the Respondent and submitted for approval by the Claimant as late as 9 June Based on the submissions it appears that 80% of the contract variations (approximately $1.4m) were directed by the Respondent and executed by the Claimant after 5 January 2015.

18 Probuild Constructions v DDI Group It appears totally inconsistent and unreasonable for the Respondent to be directing the Claimant to perform significant additional work under the Subcontract after the original Date for Practical Completion and then making a claim for LDs against the Claimant for following the Respondents express directions. (Determination para 185)

19 Probuild Constructions v DDI Group Probuild argued the two conclusions made by the adjudicator raised both a prevention (SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391) and a good faith issue (Peninsula Balmain v Abigroup [2002] NSWCA 211) [27] Probuild maintains that because the adjudicator did not raise these matters before making his determination, it did not have a fair opportunity to address them by way of submission. Had it been given that opportunity and made further submissions, it is said the adjudicator may well have accepted that it had an entitlement to a set-off in relation to damages for delay.

20 Probuild Constructions v DDI Group Probuild s arguments (at [31]): First, there was a failure by DDI to complete the subcontract works by the original Date for PC. Secondly, DDI had not complied with cl 45.2 (cl 45.3(a)(iii)?) Thirdly, DDI had not complied with cl 41.5 in relation to the notification of likely or actual delay, that notification being a pre-condition to any entitlement to an extension of time under cl 41.6 DDI had not been granted nor was it entitled to any extension of time. DDI is not entitled to any extension of time under Cl 41.10

21 Probuild Constructions v DDI Group [31] By making that argument Probuild acknowledged that it would be an answer to its liquidated damages claim that DDI was entitled to an extension of time. In reply DDI: denied that claim was reasonable ; denied it had delayed the works; denied it was indebted to Probuild for liquidated damages; and asserted that because of the difficulties with access and the variations required it could never have completed the works by the original Date for Practical Completion. Each of those replies was made in documents served on Probuild with the adjudication application. (with my rearrangement of his Honour s layout)

22 Probuild Constructions v DDI Group [32] Rather, the conclusion that Probuild s position was totally inconsistent and unreasonable informs the next step in the adjudicator s reasoning, namely, that it was unreasonable of Probuild not to have granted DDI additional time in accordance with its ability to extend time for any reason ; that being a reference to its power to do so under cl That conclusion was also directed to, and rejected, Probuild s assertion that DDI was not entitled to any extension of time.

23 Probuild Constructions v DDI Group [33] There was, in the circumstances, no denial of procedural fairness. Probuild s argument acknowledged that its set-off claim depended on DDI not having an entitlement to an extension of time under cl That set-off claim was denied and Probuild had a reasonable opportunity to put forward its case as to why there was no entitlement under that clause.