The phrase “punctilious compliance” aptly sums up the approach required by applicants and respondents in dealing with adjudication applications under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act), as noted in the judgment of Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393.  Adjudication determinations will be susceptible to challenge should the various requirements set out in the SOP Act not be scrupulously followed, resulting in the beneficiaries of such determinations deprived of payment.  The recent decision of Parkview Constructions Pty Ltd v Total Lifestyle Windows Pty Ltd t/a Total Concept Group [2017] NSWSC 194 demonstrates the pitfalls of poorly managed adjudication applications.

Background

The Builder engaged the Subcontractor to design, supply and install glazed windows and doors at the Woolooware Bay Town Centre.  The Subcontractor later served a payment claim on the Builder claiming $668,177.24, to which the Builder responded with a payment schedule, asserting “nil” monies owing.

On 8 November 2016, the Subcontractor made an adjudication application to an Authorised Nominating Authority.  It did so via the Authority’s “cloud” based data storage service.  As it transpired, the version of the submissions uploaded with the application was not the version upon which Subcontractor intended to rely.  The Subcontractor had prepared revised submissions. These were separately uploaded to the cloud later on the same day.  Hard copies were later provided to the Authority (in four folders).  A hard copy of the adjudication application was subsequently provided to the Adjudicator.  The revised submissions did not form part of that copy, and were not otherwise provided to the Adjudicator.

A copy of the adjudication application was purportedly served on the Builder on 9 November 2016, contained on a USB stick, under covering letter.  The letter advised the Builder that “a copy of this application is contained in full on the enclosed USB drive”.

The following day the Builder accessed the data on the USB stick.  The application provided to the Builder contained, amongst other things, a series of witness statements and “revised submissions” prepared by the Subcontractor.  The Builder subsequently prepared and served its adjudication response on 17 November 2016 (within 5 business days after accessing the data on the USB stick).  The Subcontractor submitted to the Adjudicator that the response was served late, contending that the relevant date was the date of service, not any other date.  The Adjudicator agreed, and rejected he Builder’s adjudication response.  The Adjudicator ultimately determined that the Builder was required to pay the Subcontractor $539,634.24.

Parkview Constructions Pty Limited v Total Lifestyle Windows Pty Ltd t/a Total Concept Group [2017] NSWSC 194

Unsurprisingly, the Builder took the matter on appeal.  Its complaints included:

  • the adjudication application made by the Subcontractor differed from that referred by the Authorised Nominating Authority to the Adjudicator;
  • the adjudication application served on the Builder was not a copy of that which was referred to the Adjudicator; and
  • the Builder’s response was wrongly disregarded by the Adjudicator.

The Builder’s primary submission was that the Adjudicator had no jurisdiction because a necessary prerequisite to him having jurisdiction to determine the application was that it should have been served with “a copy of that application”, which did not occur here. The two applications differed, in so far as one had the original submissions and the other had the revised submissions.

The Court agreed with the Builder, finding that copy meant actual copy.

[59] The Act contemplates that it is the same written words which are to be copied to the respondent and, for that matter, to be referred by the authorised nominating authority to an adjudicator. Compliance with this requirement is an essential preliminary for the decision making process for which the Act provides.

The Court observed that the differences between the submissions provided to the Adjudicator and those provided to the Builder were “not trivial”.  The instrument purporting to be the “adjudication application” served on the Builder cannot properly be viewed as a copy of the one which was made.

The Court held that non-compliance with such a requirement will have the consequence that an essential prerequisite to an adjudicator’s jurisdiction is not met, and an adjudication determination made in the face of such non-compliance will be vitiated.

The Court left open the question of whether the same result would apply if the instrument purporting to be a copy of an adjudication application provided to the adjudicator contained “trivial differences” to that served on a respondent.  The Court noted that “triviality of differences (even if their presence means that one instrument is not strictly a copy of another) may be a relevant factor in the granting or withholding of discretionary relief.” Such was not the situation in the current case.

Service via USB stick

The Court also addressed the issue of service via USB stick, and whether receipt of a USB stick, containing the adjudication application in digital form (assuming it be identical to that which was provided to the Adjudicator, which it was not), constituted service for the purposes of s17(5) of the SOP Act.

Again, the Court agreed with the Builder, holding that mere receipt of a USB stick could not, on any view, constitute service for the purposes of the SOP Act.

The Court referred to s17(3)(a) of the SOP Act, which requires an adjudication application to be in writing.  Section 17(5) requires copy of it to be served on the respondent.  It is plain, the Court noted, that “what is served on the respondent must itself be in writing.”  The Court further referred to s21 of the Interpretation Act 1987 (NSW) (Interpretation Act), which provides, relevantly:

21(1)    In any Act or instrument: 

“writing” includes printing, photography, photocopying, lithography, typewriting and any other mode of representing or reproducing words in visible form.

The Court held that service (that is, delivery) of the USB stick could not be equated with “service of writing stored on it”.  Additionally, whatever it is that was served by such delivery, it was not in writing within the meaning of s17(5) of the SOP Act, as affected by s21(1) of the Interpretation Act.

[76] … In the case of an email transmission, or where documents are uploaded to a site such as Hightail, it cannot be said that they have been served until they have been accessed: Conveyor & General Engineering Pty Ltd v Basetec Services Pty Ltd [2015] 1Qd R 265 at 271 [32]-[34].

Accordingly, the Court found, service was not perfected until the Builder physically accessed the adjudication application documentation (leaving aside the fact that it differed from that served on the Adjudicator).  That, in turn, meant that the Builder’s adjudication response was served within time (within 5 business days of accessing the data, not receipt of the device), and should not have been rejected by the Adjudicator.

The Court made orders in the nature of certiorari quashing the adjudication determination and permanent injunctions restraining the Subcontractor from acting upon the determination.

Comment

In the emerging age of paperless correspondence and, more recently, paperless hearings in various jurisdictions throughout Australia, the safer approach in relation to serving documents in the context of adjudication applications under the SOP Act is to ensure that service be carried out via physical delivery.  The effective service of documents via USB stick or a “cloud service” is (unless the relevant contract otherwise provides) beholden to the recipient accessing the data, which is typically a process beyond the control of the serving party.