Legal news

04.02.10

The new Building and Construction Industry Security of Payment Act 2009 is bound to occupy a great deal of our attention in this and following years. This website contains a considerable amount of information about this extremely complex topic, including our Australian Adjudication Casebook, with over 5,000 pages of judicial interpretation of the legislation.

Sometimes, when we are out and about with our laptops, we do not have ready or fast access to the internet, and so we have produced our Fenwick Elliott Grace adjudication toolkit on a 2GB USB Flash drive. This contains all of the useful equipment, including an annotated copy of the Act, our flowchart and list of drop dead dates, and all of the legal authorities. The toolkit can of course also be used as your usual USB Flash drive for every day.

These toolkits are available at a price of $25.00 plus GST each; email office@feg.com.au to order.

The Full Supreme Court of South Australia has heard the appeal by Hardesty & Hanover against Justice Anderson refusal to enforce the expert determinations of Colin Fullerton, by which Mr Fullerton ordered Abigroup to pay the professional fees of Hardesty & Hanover for its design and construction support services for the Port River Expressway bridges.  Justice Anderson had refused enforcement on the grounds that there was a cross-referencing error in the expert determination clause in the contract that Abigroup had drafted, which permitted Abigroup to treat the clause as void for uncertainty, and also on the ground that Hardesty & Hanover choosing to refer disputes to expert determination one by one, thereby bringing them within the enforceability limits in the contracts was a “contrivance”.

No date had yet been set for the delivery of the Full Court’s judgment.

The Full Supreme Court of South Australia today handed down its decision in the Abigroup Port River Expressway litigation.

Engineers Hardesty & Hanover have obtained two expert determinations requiring Abigroup to pay its fees but Abigroup refused to pay. In response to the first summary judgment application, Abigroup has paid the whole amount on a secured basis, but opposed a separate and early trial of the enforceability issue, and argued that enforcement should be postponed until a retrial by the court of all the disputes determined by the expert, and others. At first instance, Gray J refused to order separate trial, and refused leave to appeal. The Full Court has now overturned both those refusals.

The case is important as signalling recognition by the Supreme Court that expert determinations should be given effect to if the parties have agreed be bound by such determinations. The court accepted the approach of Robert Fenwick Elliott, as counsel for Hardesty & Hanover, that unless the court promptly enforces expert determinations by separating them from complex underlying issues, the policy lying behind them would be negated.

The MBA has backed the proposed Security of Payment legislation for South Australia, provided it follows the Western Australian model rather than the East Coast Model.

See our news item, and the MBA submission.

It is understood that both the government and the opposition has decided to support the proposed legislation in principle, but have yet to decide on what amendments are required. Debate on those amendments are expected in the House of Assembly, after the Bill's passage through the Legislative Council.

The Building and Construction Industry Security of Payment Bill has been before the South Australian Legislative Council for its second reading.

The Hon. J.A. DARLEY moved the reading. He said:

"I have met with the relevant stakeholders in the building and construction industry: representatives from the National Electrical and Communications Association; Air Conditioning and Mechanical Contractors Association; the Association of Wall and Ceiling Industries of South Australia; and the Plumbing Industry Association of South Australia, representing some 12,200 people working in the South Australian construction industry. They have outlined the ongoing hardship and disadvantage experienced by subcontractors...

I am aware that, to date, South Australia and Tasmania remain the only Australian jurisdictions without legislation of this type. I would like to ensure that South Australia will not be the winner in the race to be last in implementing security of payment legislation. I urge honourable members to support this bill.

Rumour has it that the government may be of a similar mind, so that at long last, some legislation will find its way into SA state law.

Robert Fenwick Elliott was consulted by the stakeholders mentioned for input into the Bill.

Both Lumbers v Cook and Cubelic have been applied by the Magistrates Court in Clark Timber v Interbuild. Where the insolvent head contractor was insufficiently licensed, an unpaid supplier was entitled neither to a worker's lien nor a quantum meruit as against the owner.

Robert Fenwick Elliott, instructed by Tom Grace, represented the successful defendant. See decision.

The High Court has delivered judgment in Lumbers v Cook, reversing the SA Supreme Court decision; see cases.

The decision reflects the criticisms we had made of the Supreme Court decision, and puts the law back where it had previously been: claims in quantum meruit by subcontractors against owners are essentially a "no-go" area.

This is the second decision limiting quantum meruit claims in 3 months; in Cubelic, the SA District Court found that a quantum meruit claim could not used used to found a Workers' Lien; see cases.

We have been asked to suggest some wording suitable to incorporate the terms of the Contractual Adjudication Group Scheme (also known as the CAG Scheme) into a standard form of contract.

See the CAG site, or our own note, for this.

The Local Court in New South Wales has handed down its decision in Ace Constructions & Rigging Pty Ltd v ECR International Pty Ltd; the decision of an adjudicator appointed under the Western Australian Construction Contracts Act made without considering an allegedly late adjudication response was found to be in breach of natural justice, and thus void.

See Legal Note and Cases

Fenwick Elliott Grace acted for the successful party.

Proclamation of the commencement of the Justice and Other Legislation Amendment Act 2007 (Qld) , which by section 91 amends the Judicial Review Act 1991 to exclude adjudication under the Building and Construction Industry Payments Act 2004 from review.

It seems it was just a drafting omission that adjudications were ever reviewable. Queensland is now back in line with other states in precluding judicial review of adjudication decisions.

Often, in large disputes involving numerous parties, it can be difficult to get all parties to simultaneously agree to negotiate with a view to resolution of the dispute.  Where one party is reluctant to negotiate and appears to carry the majority of the liability, this situation results in unnecessary legal costs and frustration for the other parties. Often in such matters, the potential legal costs of all of the parties combined can amount to millions of dollars and can exceed the quantum of the sum in dispute.

Faced with this scenario in recent multi party litigation, Fenwick Elliott Grace, acting for Genesee & Wyoming Australia Pty Ltd, adopted a two part strategy that resulted in the case settling.

We approached the Supreme Court of South Australia for orders that:

• all of the parties other than the reluctant party could make a filed offer, putting the reluctant party at risk of the legal costs, on an indemnity basis, of the other parties;
• the court order that the parties mediate the dispute.

The application required that the Court modify the Rules of Court as the Rules do not make provision for filed offers in multi party litigation.  The Court granted the application and the matter settled at the mediation.  

The full decision

Tom Grace was counsel for G&WA, the party that made the successful application

The High Court in London has granted a stay of court proceedings in DGT v Cubitt order that a contractually agreed adjudication procedure might take place.

See Cases

Fenwick Elliott LLP acted for the successful party.

The South Australian Supreme Court majority decision on W Cook v Lumbers is causing some ripples; it certainly looks like an unusual case of quantum meruit elbowing its way past the contractual structure. We understand that special leave is being sought for an appeal.

Trade Practices Act

Federal law challenge to Security of Payment legislation; NSW CofA gives judgment in Bitannia v Parkline.

Brereton J has handed down judgment in Pacific v Soliman [2006]  NSWSC 13. In this case, the adjudicator had disregarded respondent's submissions that had not been raised in the payment schedule, and thus accepted the claimant's claim at face value. The court held the adjudicator's purported determination was void, because there had been no determination that the work had been done, or of its value, as required by the Act.

The decision underscores the view we have been expressing for some time, namely that the adjudicator's role is not merely a clerical one of ticking off procedural boxes, rather he is faced with the truly evaluative task of determining what, if anything, is due to the claimant as a matter of fact and law.