Key cases that have affected building and construction – Part 2 NSW

July, 2014

The Building and Construction Industry (Security of Payment) Act 2009 (ACT) (“the Act”) has, to an extent, provided a simpler and more cost effective approach to resolving construction industry disputes arising from the non-payment of invoices. As most sections in the ACT legislation mirror the NSW legislation, which was created a decade prior to the Act, it is vital to have an understanding of both jurisdictions.

Key Facts in Chase Oyster Bar

Chase Oyster Bar (1) was removed to the Court of Appeal on the basis that the Court of Appeal inBrodyn (2) decided that determinations of adjudicators were not amenable to orders in the nature of certiorari for jurisdictional error of law. It is important to note, in my opinion, that the Court of Appeal did not overrule Brodyn. The Court of Appeal held that compliance with section 17(2)(a), which is section 19(2)(a) in the Act, is an essential requirement for the validity of an adjudication application, which was a matter not decided in Brodyn, and, as Brodyn decided, the Supreme Court can declare a determination void when the adjudication application was not valid. (3)

Section 17(2) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (“SOP NSW”), which is section 19(2) in the Act, provides that when a respondent fails to serve a payment schedule within 10 business days after service of the payment claim, the claimant cannot make an adjudication application unless the claimant has notified the respondent within the period of 20 business days immediately following the due date for payment of the claimant’s intention to apply for adjudication of the payment claim and has given the respondent an opportunity to provide a payment schedule within 5 business days. (3)

By the court deciding that certiorari was available by way of review of adjudicator’s decisions, the court has apparently handed respondents potential challenges to adjudicator’s decisions. We have now seen some of these decisions in the ACT.

Implications for Owners/Principals and Contractors

The key question in the immediate aftermath of Chase Oyster Bar is therefore, how to identify which requirements of the Act will give rise to jurisdictional error, and thus make certiorari available if they are not complied with. Chase Oyster Bar makes it clear that there will be jurisdictional error in the case of:

There are a number of significant cases in the ACT which have had regard to Brodyn and Chase Oyster Bar.

 

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