There are numerous reasons why it would be sensible for there to be a single security of payment regime operating throughout Australia. That was the recommendation of the Society of Construction Law Australia in 2014[1]. It was the recommendation of the Murray Review in 2017[2]. In particular, the legislation is complex. The New South Wales Act[3], for example, is 16,011 words long. The Queensland Act[4] is even worse – much worse – at 52,629 words. It is absurd that parties and their lawyers – subject to very short timescales – have to navigate not only these complex regimes, but if they practice interstate, also to navigate intricate differences State by State.

One of these differences is in relation to the requirement which appears in all the legislation: that when a party makes an adjudication application, a copy of that adjudication application must be served on the respondent. Section 18(5) of the Victorian Act, for example, provides as follows:

A copy of an adjudication application must be served on the respondent concerned.

Section 21(5) of the Queensland Act is in the same terms. But these same words mean different things in those States.[5]

The provision does not say who has to do the serving.[6] In practice, it is the claimant, or the claimant’s lawyers. Nor does it say when it has to be served.[7] Nor does it spell out the consequence if it is served later than it should have been served.

The issue arose in Queensland in 2019 in Niclin Constructions Pty Ltd v SHA Premier Constructions Pty Ltd & Anor, both at first instance[8] and on appeal[9].  On the same day as the claimant lodged its adjudication application, its solicitors served the 10 lever arch folders of supporting documents. But by mistake, the adjudication application itself was omitted. It was about three weeks before that mistake was rectified. The adjudicator refused to proceed, on the basis that this delay meant he had no jurisdiction. But first instance, the Supreme Court agreed. So did the Court of Appeal.

The deciding factor was section 44(3) of Queensland’s Legislation Interpretation Act 2021, which provides:

If no period of time is provided or allowed for doing a thing that is required to be done, the thing must be done as soon as is reasonably practicable.

The requirement is stricter than the common law rule, under which there is merely an implication that such a thing has to be done within a reasonable time.[10]

It was decided in Niclin that this statutory provision does apply to the requirement in the security of payment legislation to serve the adjudication application.  It was found that the adjudication application had not been served soon as reasonably practicable, and that this went to the question of jurisdiction.

The following year, the same question came before Digby J in the Supreme Court of Victoria in 1155 Nepean Hwy v Promax Buildings[11]. The factual background in this case was much more tangled, but a key legal question before the court was whether the adjudication application had to be served as soon as reasonably practicable (the stricter test), or only within a reasonable time (the less strict test). The plaintiff in the proceedings (the respondent in the adjudication) argued on the authority of Nicolin that the stricter test should be applied, notwithstanding that there is in Victoria no statutory equivalent to section 44(3) of Queensland’s Legislation Interpretation Act 2021.

Digby J, however, disagreed, and spelled out the reasons why the less strict test of “within a reasonable time” was appropriate. In particular, he said at [106]:

(d)                It is also unlikely that the legislature would have intended to impose a strict or inflexible time limit in relation to the service of a copy of the adjudication application under s 18(5) of the SoP Act, given that s 18 itself provides elsewhere for specific times within which the claimant is to do certain things, including to notify its intention to apply for adjudication (s 18(2)(a) of the SoP Act).  Similarly, s 18(3) of the Act prescribes several specific time limits for the time within which the claimant must make adjudication application;

(e)                 In a number of provisions the SoP Act expressly seeks to limit time by specifying that matters be undertaken ‘as soon as reasonably practicable’ (ss 18(7), 23A(a), 24(3), 28D(5), 28H(2) and 28J of the SoP Act);

(f)                  It is likely that if the legislature intended service under s 18(5) of the SoP Act to be effected ‘as soon as practicable’, after an adjudication application was made, those words, which are used in many instances elsewhere in the Act, would have been employed in s 18(5) of the Act;

(g)                There are many other sections of the SoP Act in addition to s 18(5) in relation to which no time limits are expressly provided within which an act is to take place.[12]  The implication of a requirement of the SoP Act that they be done ‘as soon as practicable’ would be potentially problematic;

(h)                In an adjudication proceeding in which the respondent is entitled to make a response to the applicant’s adjudication application that response is provided for by s 21 of the SoP Act.  Significantly, it is to be noted that the time under s 21(1) of the Act for the respondent to lodge its response to the adjudication application is flexible;

(i)                  The timing of service under s 18(5) of the SoP Act is inconsequential as a result of s 21(2A) of the Act precluding the respondent from lodging an adjudication response when it has not served a payment schedule pursuant to ss 15(4) or 18(2)(b) of the Act.  In circumstances where a respondent is not entitled to lodge an adjudication response (as is the case in the instant matter), the adjudicator will, in any event, only receive and consider the applicant’s adjudication application;

(j)                  Service of an adjudication application under s 18(5) of the SoP Act within a reasonable time accommodates both the desirability of the discipline of the requirement of a reasonable time for service when the respondent is entitled to lodge an adjudication response pursuant to s 21(1) of the SoP Act, and also when the respondent is not permitted to lodge an adjudication response because of the operation of s 21(2A) of the SoP Act.

On the facts, it was found that the adjudication application had been served within a reasonable time, and so it was not necessary for the court to decide whether a failure to serve the adjudication application within a reasonable time gave rise to a jurisdictional issue. In other words, if the adjudicator felt that he could continue with the adjudication, and proceeded to make a determination, would that determination be susceptible to a jurisdictional challenge on the basis that the adjudication application had not been served within a reasonable time? But while that question was not answered directly, the reasons given by the court for not imposing the stricter test also lend force to the argument that the point is not jurisdictional. It hard to see that the respondent is likely to suffer any prejudice if service of the adjudication application on it is delayed by a few days: the time for the adjudication response is adjusted accordingly.[13]

So, the position is that in Queensland, the adjudication application has to be served as soon reasonably practicable. That is likely to mean the same day that the adjudication application lodged. By contrast, in Victoria, the adjudication application merely has to be served within a reasonable time. What is a reasonable time is a matter of fact, but it might mean a few days.

What about other States? In New South Wales, the Interpretation Act 1987 contains no equivalent of the Queensland “as soon as reasonably practicable” rule. And so it is likely that the position there is the same as in Victoria: i.e. the adjudication application merely has to be served within a reasonable time. Likewise Tasmania. In South Australia, on the other hand, the Queensland formula does appear at section 43(3) of the Legislation Interpretation Act 2021, and so in that State the stricter test applies.  In Western Australia they spell it out expressly: the claimant must give a copy of the adjudication application (and of any accompanying documents) to the respondent within 1 business day after the application is made.[14] In the ACT it is different yet again, because at noted above, there it is the adjudicator, not the claimant, who provides the respondent with a copy of the application.[15]

But that is not entirely the end of the issue. What is the position if an adjudicator proceeds to make a determination notwithstanding that the service of the adjudication application was late? Is the determination susceptible to judicial review on the basis of jurisdictional error? That question may be open everywhere except Queensland. And what is the position if an adjudicator erroneously declines to proceed, wrongly applying the stricter test in a State where the less strict test applies? Arguably, that might be one of those rare circumstances where a claimant might seek a judicial review.

 

 

 

 

 

 

 

[1] Report on Security of Payment and Adjudication in the Australian Construction Industry.

[2] Review of Security of Payment Laws: Building Trust and Harmony.

[3] Building and Construction Industry Security of Payment Act 1999.

[4] Building Industry Fairness (Security of Payment) ACT 2017.

[5] For the reasons which appear below, I respectfully disagree with the passage at page 74 of Philip Davenport’s Adjudication in the Construction Industry (4^th Edition) from which it might be thought that the position is the same in all States and Territories except the ACT.

[6] Except in the ACT, where it is the adjudicator who is to give a copy of the adjudication application to the respondent; see section 21(2) of Building and Construction Industry (Security of Payment) Act 2009 (ACT).

[7] Except in Western Australia; see below.

[8] [2019] QSC 91 (Ryan J).

[9]  [2019] QCA 177

[10] Koon Wing Lau v Calwell (1949) 80 CLR 533, 573–574, in which the High Court described this as the “ordinary rule”.

[11] [2020] VSC 398.

[12]          SoP Act, ss 12A(2), 16(2)(b), 17(2)(b), 20(1)&(2), 21(2B) and 21(3), 22(2), 28(2)(a), 28O(b), 32(1)(b).

[13] See e.g. section 20(1)(a) of the NSW Act.

[14] Section 30(2) of the Building and Construction Industry (Security Of Payment) Act 2021 (WA).

[15] Section 21(2) of the Building and Construction Industry (Security of Payment) Act 2009 (ACT).