BCISPA – Denial of Natural Justice
In the case of Lahey Constructions Pty Ltd v Newbold Build Haulage Pty Ltd NSWSC 215, Lahey Constructions Pty Ltd (“Lahey”) applied to the Supreme Court of New South Wales (the “Court”) seeking orders to have an adjudication determination made pursuant to the Building and Construction Industry Security of Payment Act 1999 (the “Act”), set = aside = and found void.
The background to this case was that Lahey had engaged Newbold Build Haulage Pty Ltd (“Newbold”) to perform construction works. Pursuant to the contract between Lahey and Newbold (the “Contract”), Newbold accepted all liability for any additional costs incurred in the construction works if adverse site conditions were discovered.
Whilst performing the construction, Newbold found reminisce from an earlier building and accordingly, there were extra excavation works required. Nevertheless, rather than Newbold accepting liability for the extra excavation works, Newbold issued a quotation to Lahey and asked for a variation to the Contract (the “Variation”). Lahey subsequently accepted the Variation, however, when it came time to pay for the Variation, Lahey refused to pay same and relied on the terms of the Contract.
As a consequence of Lahey’s failure to pay for the Variation, Newbold proceeded with an adjudication application. During the adjudication,the adjudicator decided to advance new legal arguments (the “New Argument”) which were not raised by Lahey or Newbold during the adjudication. The adjudicator then asked for each party to submit further legal submissions in response to the New Argument. As a consequence of this New Argument and the respective parties’ reply, the adjudicator found in favour of Newbold. Lahey appealed to the Court.
The Court held an adjudicator is not a judge and breaches the requirements of natural justice where a material issue is determined on a basis not advanced by either party. Therefore, Lahey was successful on appeal and was not required to pay Newbold in accordance with the adjudication determination.
If you are in the commercial building industry and the Act applies to your work:
- ensure you put forward all of your legal arguments in your application and/or response; and
- if you have received an unfavourable adjudication determination, consider whether you have been denied natural justice due to the adjudicator’s failure to:
- consider your argument; or
- Make the decision based on the arguments advanced by the parties.
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This article is not legal advice and should not be relied upon as legal advice. All articles found on this website are intended to provide informative information, nevertheless, in many instances legislation and case law has been simplified and/or paraphrased. If you would like personal legal advice based on your current circumstances, you should contact MurdockCheng Legal Practice for a free consultation.