Adjudicate or litigate
Kell & Rigby Pty Limited v Guardian International Properties Pty Ltd [2007] NSWSC 554
Facts
Kell & Rigby Pty Limited (“Kell”) and Guardian International Properties Pty Ltd (“Guardian”) were parties to a construction contract under which Kell performed building works for Guardian in Paddington NSW.
On 25 September 2006 Kell served a payment claim on Guardian. Guardian did not provide a payment schedule in accordance with the Building and Construction Industry Security of Payment Act 1999 (NSW) (“the Act”). On 24 October 2006, Kell filed an adjudication application and served a copy of the application on Guardian.
On 2 November 2006 Guardian filed an adjudication response stating that Kell had not given Guardian a notice of intention to apply for adjudication, as required by section 17(2)(a) of the Act. Consequently, Guardian submitted that Kell had no entitlement to lodge the adjudication application.
Kell formally withdrew its adjudication application and on 13 November 2006 the Adjudicator notified both parties that he did not propose to proceed with the adjudication.
Kell then applied for entry of judgment in the amount of $1,599.848.27 pursuant to section 15(2)(a)(i) of the Act.
Issue
Whether Kell is precluded from bringing judgment proceedings because it elected to pursue the adjudication option under section 15(2)(a)(ii) of the Act instead of the entry of judgment option under section 15(2)(a)(i) of the Act.
Decision
Justice Bergin found that Kell is not precluded from commencing judgment proceedings.
The adjudication application was null by reason of failure to comply with the mandatory conditions imposed by section 17(2) of the Act (particularly the notification of intention to apply for adjudication requirement). However, this did not have the legal consequence of nominating the adjudication option under section 15(2)(a)(ii) of the Act and excluding the entry of judgment option under section 15(2)(a)(i).
Impact
The act of filing and serving an adjudication application is incapable of creating legal consequence, including the election of an option under section 15(2) of the Act.
Australian industry group construction forecast
The Australian Industry Group (“AIG”) May 2007 Construction Outlook forecasts that growth in engineering and non-residential building activity will moderate over the next two years.
AIG forecasts that the total value of construction by the private sector (excluding overseas construction) will reach approximately $72 billion in 2008. This significantly outweighs historical values.
A key contributor to growth is the engineering construction sector with total turnover (by the private sector) predicted to rise by 12.2% in 2007 and 9.4% in 2008 to a level of $44.3 billion.
The growth in engineering construction is expected to continue across all key project areas, with solid rises forecast in sectors such as transport infrastructure, mining construction, and power generation. It is also expected that there will be an increase in civil projects such as the construction and upgrading of freight and port facilities to ease export bottlenecks.
Non-residential building is forecast to maintain an upward trend, generating $27.9 billion of work in 2008. However, growth is expected to be moderate. Apartment building sector work is forecast to experience a decline by 22.3% in 2007, followed by a fall of 2.9% in 2008.
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