Miller v LMG Building Pty Ltd [2023] NSWSC 995
Introduction
The case of Miller v LMG Building Pty Ltd [2023] NSWSC 995 is a reminder of the obligations of an adjudicator when making a determination under the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act).
Relevant facts
On 30 July 2021, Ms Suzanne Miller (Ms Miller) engaged LMG Building Pty Ltd (LMG) to undertake alternations and additions to her home for a fixed price of $2,750,000 including GST. The contract was terminated on 4 April 2023.
On 18 May 2023, LMG issued a payment claim (Payment Claim). The Payment Claim was accompanied by a quantity surveyors' report evidencing the amount of work completed by LMG (CACC Report).
On 1 June 2023, Ms Miller issued a payment schedule in response to the Payment Claim (Payment Schedule). The Payment Schedule was accompanied by two (2) expert reports:
- a report identifying the defects (Quest Report); and
- a report identifying the outstanding works and cost to complete (Coutts Report).
On 16 June 2023, LMG lodged an adjudication application.
On 26 June 2023, Ms Miller provided her adjudication response. A supplementary report to the Defects Report which included the costs to rectify the defects (Supplementary Quest Report) and a statutory declaration of the Superintendent (Superintendent Declaration) was included in the adjudication response.
Adjudication Determination
In making his determination, the adjudicator was not willing to consider the Supplementary Quest Report or the Superintendent Declaration because they were not in existence at the time of the Payment Schedule.
In addition, in determining the cost to complete, the adjudicator was also faced with conflicting opinions expressed in the CACC Report and the Coutts Report and thought that the best course was to choose between the two reports based on their credibility.
Jurisdictional Error 1
The Court found that the adjudicator made a jurisdictional error by refusing to review any material submitted after the date of the Payment Schedule which were in support of the reasons for withholding in the Payment Schedule.
Jurisdictional Error 2
The Court further found that the adjudicator made a jurisdictional error when he made a determination based on the credibility of the expert reports instead of the merits of the claim i.e. a failure to carry out their statutory obligations.
Key Takeaway
While the Courts are generally reluctant to quash an adjudication determination, it will not hesitate to do so if an adjudicator fails to carry out its statutory obligations under the Act i.e. determining the merits of the claim(s) based on the relevant materials.
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