The recent Supreme Court decision in Equa Building Services Pty Ltd v A&H Floors 2 Doors Australia Pty Ltd  NSWSC 152 (Equa) has re-emphasised the importance of strict compliance with the provisions of the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act). In particular:
- contractors and subcontractors must ensure that construction contracts specify an email address for service of documents under the Act;
- if an email address is not specified in the contract, a party must prove any documents were actually received (by an authorised recipient); and
- adjudicators should request further written submissions from parties to an adjudication if they intend to make a determination on the basis of facts or theories not raised by either party.
Equa involved an application to quash an adjudication determination. Hammerschlag J quashed the determination on two grounds:
- A&H Floors 2 Doors Australia Pty Ltd’s (Builder) payment claim had not been properly served; and
- the Adjudicator denied procedural fairness to Equa Building Services Pty Ltd (Principal).
The Payment Claim Was Not Properly Served
Hammerschlag J found that the Adjudicator failed to consider whether the parties had specified an email address for the service of payment claims pursuant to section 31(d) of the Act.
In those circumstances, the Builder failed to prove the payment claim had been properly brought to the attention of an authorised representative of the Principal (i.e. that the email had actually been received and read). The payment claim was not properly served and could not form a proper basis for an adjudication application.
Hammerschlag J also found that the Adjudicator:
- made a determination on grounds not raised by either party; and
- failed to give the Principal an opportunity to provide further submissions on the determinative issues.
Specifically, the Adjudicator requested written submissions from the parties with respect to an alleged written contract between the parties. The Adjudicator later determined that the alleged contract was not binding, and proposed that an alternative “arrangement” was in place, which neither party had contended for in their submissions, but did not request further submissions from the parties in relation to this alternative arrangement.
Hammerschlag J held there was a “realistic prospect of a different outcome” to the adjudication had the Principal been given an opportunity to respond to the Adjudicator’s proposal.
Parties to construction contracts should always specify an email address for the service of documents. Otherwise, a party sending a payment claim (or payment schedule) by email will need to prove the relevant documents were actually brought to the attention of the recipient.
Equa is also a reminder that an adjudicator’s power to request further written submissions must sometimes be exercised more than once in order to ensure both parties are afforded procedural fairness.