Galaxy Developments Pty Ltd v Civil Contractors (Aust) Pty Ltd t/a CCA Winslow & Ors [2020] QSC 51 (Galaxy Developments Case)

The recent decision of the Queensland Supreme Court in Galaxy Developments Pty Ltd v Civil Contractors (Aust) Pty Ltd t/a CCA Winslow & Ors [2020] QSC 51 (Galaxy Developments) examined whether an adjudication determination delivered outside the time period prescribed under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (Act) is void.

Facts

On 29 October 2019, the second respondent (Adjudicator) purported to deliver an adjudication decision pursuant to the Act. The decision was made on a disputed progress payment claim, and the Adjudicator determined that the applicant, Galaxy Developments Pty Ltd, was required to pay a sum of approximately $1.3 million to the first respondent, Civil Contractors (Aust) Pty Ltd.

The applicant brought forward an application to have the Adjudicator’s decision declared void, due to the Adjudicator’s decision being delivered after the time period prescribed by the Act for its delivery.

Queensland Court’s Reasons

Her Honour, Justice Dalton agreed with the applicant that a decision delivered outside the time limits imposed by the Act is void. Her Honour distinguished the difference between the use of mandatory (i.e. must) and permissive (i.e. may) language which is used to either impose time limits or indicate that the subject of a provision has a choice in the manner in which it exercises its rights.

Section 85(1) of the Act states:

“(1)   Subject to section 86, an adjudicator must decide an adjudication application no later than

        (a)    for a standard payment claim—10 business days after the response date; or

       (b)   for a complex payment claim—15 business days after the response date.”

Her Honour held that the use of mandatory language under section 85(1) indicates the importance and strict nature of the time limits as well as the adjudicator’s obligation to adhere to these time limits and deliver a decision.

Relying on the Queensland Court of Appeal’s comments in Niclin Constructions Pty Ltd v SHA Premier Constructions [2019] QCA 177, Her Honour recognised that non-compliance with the time limits set by mandatory language is fatal to the validity of actions to be undertaken by either claimant or respondent. Her Honour noted that the Act uses mandatory language to support a key statutory aim of the Act: to provide for the quick resolution of a disputed progress payment.

The Court’s Deviation from Victorian and New South Wales Precedent

The decision in Galaxy Developments deviates from the decisions made by:

  1. the Victorian Court of Appeal in Ian Street Developer Pty Ltd v Arrow International Pty Ltd & Anor [2018] VSCA 294; and
  2. the New South Wales Supreme Court in MPM Constructions v Trepcha Constructions [2004] NSWSC 103 and Cranbrook School v JA Bradshaw Civil Contracting [2013] NSWSC 430.

The Victorian Court of Appeal and the New South Wales Supreme Court (collectively, Courts) had each previously concluded that holding the expiry of the time limit to terminate the adjudicator’s jurisdiction would frustrate the purpose of the legislation to “ensure that a builder is able to recover a progress payment”. Furthermore, the Courts held that the effectiveness of the legislation would be much more detrimentally affected if an adjudicator’s delay operated to nullify the process of adjudication.

The Queensland Supreme Court in Galaxy Developments departed from the above precedents, concluding that:

  1. the construction of the legislation cannot change with regard to the result it will produce in a particular case; and
  2. contrary to the conclusions made by the Victorian Court of Appeal, the Act (in Queensland) was sufficiently different from the legislation in other states, as it does not guarantee a progress claim will be paid, and aims to provide a claimant with a process outside of the operation of the courts to obtain a decision on its progress claim.

Conclusion

The Queensland Court held that the mandatory language used in s 85(1) of the Act imposed an obligation on the Adjudicator to deliver a decision within the prescribed time period. The Queensland Court concluded (contrary to decisions in other states) that the determination made by the Adjudicator was void as it was delivered after the statutory time limit imposed by the Act.

–  Article by Joel Dueck and Tess Nguyen

For further information, contact Brett Vincent – Principal Partner:

E  brett.vincent@vincentyoung.com.au
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