MPM Constructions v Trepcha Constructions [2004] NSWSC 103
This judgment of McDougall J in the Equity Division of the Supreme Court of New South Wales concerned an adjudication under the Building and Construction Industry Security of Payment Act 1999 (NSW) [1]. His Honour held that the ten business day limit in section 21(3)(a) is a procedural condition, so that a determination made after it is not for that reason invalid [6], [21]. At a final hearing held by agreement, he dismissed MPM's amended summons with costs [5], [36].
What the court decided
Trepcha, the first defendant, served a payment claim on MPM, the plaintiff, and referred the disputed claim to adjudication [1]. The adjudicator notified his acceptance of the application on 7 January 2004, and the last day for determination was 21 January 2004 [1]. His determination, dated 25 January 2004, was made available on 27 January 2004 once his fees were paid [2]. His unchallenged evidence was that he had mistakenly calculated the time limit as expiring on 27 rather than 21 January 2004 [2]. By agreement the matter proceeded as a final hearing, Trepcha maintaining an alternative argument of waiver [5].
The question was whether the ten business day period in section 21(3)(a) goes to the adjudicator's jurisdiction, or whether a later determination can nonetheless be effective [6]. Following the majority in Project Blue Sky Inc v Australian Broadcasting Authority, his Honour started from the proposition that the legislature was unlikely to have intended a breach of the time limit to cause invalidity [17]. That was because invalidity seemed to him capable of undermining the purpose of the Act set out in section 3 [17].
That view was confirmed because the claimant's only relief under the Act for a late determination seems to be to withdraw the application and make a new one under section 26 [17]. That must be done within five business days, and it would be "to put it mildly, anomalous" if a late determination were a nullity but a claimant who missed that period could not seek adjudication [17]. The Act thus provides in two places for non-compliance with the time limits, but not that a late determination is a nullity [20].
His Honour held that section 21(3) imposes not "an essential preliminary to the exercise of a statutory power or authority" but a procedural condition [21]. Relying on the objects of the Act, its two specific provisions for non-compliance and its silence on nullity, he answered "no" to whether the legislation intended a late determination to be invalid [22]. The challenge to the determination on the ground of lateness therefore failed [24].
His Honour said it was unnecessary to consider Trepcha's alternative defence of waiver [25]. Trepcha relied on MPM having paid the fees on 27 January 2004 and uplifted the determination on 28 January 2004 [25]. Relying on Vakauta v Kelly, Trepcha argued that by taking the determination MPM had elected to accept it [26]. His Honour said Vakauta was informed by significant public policy considerations about raising apprehended bias promptly [28]. There was no equivalent public policy interest here, and an objection before the determination was delivered might be thought premature [29]. Had it been necessary to decide the point, he would have held that MPM had not waived its right to complain of the lateness [30].
Why it matters
None of the later appellate decisions reviewed for this note mentions this decision or decides whether a determination made after the time fixed by section 21(3) is void. In Brodyn Pty Ltd v Davenport (2004) NSWCA 394 at paragraphs 54 and 55 the Court of Appeal listed section 21 "as to the time when an adjudication application may be determined" among the more detailed requirements exact compliance with which was not intended to be essential, but at paragraph 57 it treated the measure of natural justice secured by provisions including section 21(1) as essential to validity.
In Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) NSWCA 190 at paragraph 25 Spigelman CJ said the remarks in Brodyn about section 17 were obiter, and the Court held at paragraphs 96 and 222 that the time limit in section 17(2)(a) is essential. Spigelman CJ's general remarks on the Act's time limits at paragraphs 47, 48 and 55 were made in deciding the status of section 17(2)(a), so the decisions reviewed leave section 21(3) unresolved.
Readers should check the current text of the Act, as this note addresses the Act as the judgment applied it.
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.