The Hat Trick

WP_20150227_001Justice Blue this morning handed down judgment in the case of Tagara Builders V AP&L Services [2015] SASC 30. The decision establishes that a contractor (or subcontractor) who does not hold the requisite builder’s licence under the Building Work Contractors Act 1995 (SA) is not entitled to make a claim under the Building and Construction Industry Security of Payment Act 2009 (SA), and that if he does so, the adjudicator has no jurisdiction. It appears that this is the first action in the Supreme Court of South Australia to proceed in the new and very welcome Fast Track Stream.

Judgment of The Honourable Justice Blue 27 02 15

The decision follows the Queensland authority of Cant v Casella, and the court rejected the argument that that case should be distinguished on the ground that in South Australia, a court hearing proceedings for recovery under the contract can excuse the lack of licence if “satisfied that the person’s failure to be so authorised resulted from inadvertence only”. Justice Blue found that unless and until the court so determines, section 6 of the Building Work Contractors Act negates a contractor’s right under the Security of Payment Legislation.

A similar conclusion had been reached a little over a year ago in Ko v BLD Construct in the Magistrates Court; see report. In that case, I argued precisely the same point, albeit in the slightly different context of default judgment being entered following a failure to serve a payment schedule.

So what is a contractor to do if it wants to bring a claim under the Security of Payment Legislation, but has inadvertently failed to obtain the requisite builder’s licence? One avenue would be to first bring a claim in the court under the Fast Track Stream for contractual recovery, and to seek hearing of a preliminary issue on whether its failure to be licensed is inadvertent. A court may well be sympathetic to such a procedural approach, and order an early preliminary issue on this point. If and when the contractor obtains such a finding, then it is at liberty to adjudicate in parallel with the court proceedings. Obviously, such course is much less convenient than simply adjudicating, but might well be better than simply issuing proceedings and hoping that the defendant never notices the lack of a licence. It is surprising how often the lack of a licence does come to be attention of the defendant relatively late in the court process.

This brings to three the number of occasions on which the Supreme Court of South Australia has heard an application to quash an adjudicator’s determination, and on each occasion, the court has quashed the determination. As it happens, I have been counsel for the parties seeking the quashing on each of these occasions, and so this decision brings up a “hat-trick”, so to speak. Leaving personal gratification aside, it is hardly an enviable track record for the legislation. As it happens, in the Tagara case, the adjudicator was entirely blameless, having no reason to believe that the claimant lacked a building licence (the lack of a licence was discovered only after the determination had been made). The State government is currently undertaking a review of the legislation, and hopefully the effect of that review will be to improve the quality of the adjudication process in the State. Certainly, the East Coast model which operates in so much of Australia stands as a very poor relation indeed to the evaluative models; in the UK, the strong tendency is for adjudicators’ decisions to be upheld by the courts, and at least in part that reflects a widespread perception that UK adjudicators’ decisions are typically not tainted by bias, and are generally of a reasonably high quality.

It would be good to be standing at the other end of the bar table for a change, defending high-quality decisions by adjudicators in favour of meritorious claimants.

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