On 24 April 2009, Justice Vickery of the Victorian Supreme Court handed down his decision in Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd [2009] VSC 156. The case is one of the relatively few Victorian cases relating to the interpretation of the Building and Construction Industry Security of Payment Act 2002 (Vic) (the SOP Act). The decision highlights that Victorian Courts are likely to take a similar approach to New South Wales by avoiding a technical interpretation of the Act.
Facts
The plaintiff in the proceeding, Hickory Developments Pty Ltd (Hickory) challenged the validity of an adjudication under the SOP Act instigated by the first defendant, Schiavello (Vic) Pty Ltd (Schiavello). The second defendant to the proceeding was the adjudicating authority, Adjudicate Today, although it did not actively participate.
Hickory engaged Schiavello under a subcontract (the Subcontract) to carry out the design and construction of the base building works and fit out of the TAC headquarters at Geelong.
Schiavello submitted a payment claim under the SOP Act. Hickory issued a payment schedule denying liability in respect of the claim. Schiavello then referred the claim to an adjudicating body which nominated Philip Davenport as adjudicator. Mr Davenport as adjudicator made a determination of the claim on 10 March 2009.
The adjudication application had been lodged by Schiavello's in-house counsel on its behalf by emailing the application to Adjudicate Today at 4.01 pm on the final day within which Schiavello could make its application. The application included Schiavello's submissions but did not include the lengthy documents referred to as attachments to the submissions. Schiavello's counsel had proposed to send a copy of these by post the next day. This email was also sent to the Contract Superintendent.
However, Schiavello's counsel received a later email from the general manager of Adjudicate Today requesting that he also provide a copy of all the attachments, which he did by scanning and emailing them at approximately 10 pm the same day. Again, the two emails containing the attachments were copied to the Contract Superintendent.
A hard copy of the application, submissions and attachments was delivered to Hickory the following day.
Hickory subsequently issued proceedings in the Supreme Court challenging the validity of the adjudication and seeking a permanent injunction to prevent Schiavello from relying on the adjudication determination. Hickory argued:
- Schiavello failed to lodge its adjudication application within the 10 day period required by the SOP Act because the adjudication application could not be lodged by email.
- Schiavello did not include its submissions with its adjudication application as required by the SOP Act.
- The payment claim on which the adjudication application was based was a nullity because Schiavello had served two payment claims instead of one. This had been the practice throughout the project because the subcontract had two components – the base building and the fit out works.
- The payment claim was invalid because it contained claims that had previously been made by Schiavello.
- There was no 'work under the subcontract' to support the payment claim.
The Decision
Justice Vickery rejected the technical arguments raised by Hickory and determined that the adjudication application was made within time and did comply with the requirements of the SOP Act.
His Honour's findings were:
- The SOP Act is silent on what constitutes the making of an application for adjudication. There is no reason, on principle, why an adjudication application cannot be commenced by the electronic filing of the appropriate documents.
- The documents referred to in Schiavello's submissions did not have to be served with the application and the submissions. Such material could be provided at a later date.
- The submissions on the time frame for the making of the application were matters for the adjudicator to consider as part of the adjudication application (which he did) and are not matters for the Court to determine.
- The delivery of two tax invoices nevertheless constituted a single and combined payment claim under the SOP Act and had in fact been treated that way by the parties during the project. The adjudicator was entitled to accept this proposition and there is no basis for the Court to intervene.
- It was open under the SOP Act for Schiavello to 'reactivate' claims previously made by the delivery of a fresh payment claim (provided it had not proceeded to adjudication of the previous claims). This was also a matter for the adjudicator and not the Court to determine.
- The issue of whether there was a valid payment claim, as there was no 'work under the Subcontract' to support it, goes to the question of whether the payment claim is due and payable and is a matter for an adjudicator not the Court.
Implications
Justice Vickery's comments on what he called the excessively technical arguments raised by Hickory are of particular interest. His Honour made the point that the purpose of the SOP Act is such that precise compliance with all of its requirements is not essential. This is similar to the decision of the NSW Supreme Court in Fernandes Constructions Pty Ltd v Tahmoor Coal (t/as Centennial Coal) Pty Ltd [2007] NSWSC 381 where the Court found that a payment claim was valid notwithstanding that the claimant did not correctly state that the claim was made under the NSW SOP Act. The Court found that the test for determining the validity of a claim, required consideration of the whole of the circumstances surrounding the claim.
His Honour stressed that the legislative intention of the SOP Act is that adjudication applications should be made and given effect to with minimum delay and therefore should be approached with minimum technicality and Court involvement. This greater certainty may lead to more take up of the adjudication process in Victoria, which has lagged behind New South Wales.
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