Security of payment – the risks of a late adjudication response
In the recent Victorian Supreme Court (Court) decision of Rise Constructions Pty Ltd v Walid El-Hajj (t/a Andary Excavation), the Court reinforced the limited circumstances in which a respondent to an adjudication application under the Victorian Security of Payment Act 2002 (SOP Act) may apply for judicial review.
The case relates to a finding by the adjudicator that the respondent’s adjudication response had been served out of time.
It also highlights the risks and uncertainty for respondents in calculating the deadline for provision of an adjudication response based on receipt of the adjudicator’s notice of acceptance – and the importance of getting a response in on time.
A quick refresher
The timeframe for delivering an adjudication response
Under section 21(1) of the SOP Act, the respondent must deliver an adjudication response within the later of:
(a) 5 business days after receiving a copy of the application; and;
(b) 2 business days after receiving notice of an adjudicator’s acceptance of the application.
The timeframe for delivering an adjudication response is therefore uncertain until an adjudicator comes on the record. That uncertainty is often exacerbated if an adjudicator delivers their notice of acceptance by post, meaning that the notice is sent on a different day to when it ultimately comes to the attention of the respondent.
The consequences of late delivery of an adjudication response are fatal. Under section 22(3), an adjudicator is not to consider an adjudication response unless it was made within the required timeframe.
Service under the SOP Act
Section 50 of the SOP Act relevantly provides that the giving or service of a notice that is sent to a person’s ordinary place of business is taken to have been effected - in the case of posting – 2 business days after the day on which the notice or document was posted.
In this case, the adjudicator determined that the adjudication response issued by Andary Excavation (Plaintiff) was submitted out of time. Under section 22(3) of the SOP Act, the adjudicator therefore considered that he was not permitted to consider the adjudication response.
The Plaintiff applied for judicial review on the basis that its adjudication response was not served late, and that the adjudicator deprived the Plaintiff of natural justice in not considering it.
The relevant chronology was as follows:
- On 5 July 2019, the Adjudicator issued a notice of acceptance by express post, addressed to the Plaintiff’s address as specified in the construction contract (Suite 5, 13-25 Church Street, Hawthorn);
- On 8 July 2019, the notice of acceptance was delivered, as evidenced by an Australia Post tracking receipt;
- On 12 July 2019, the Plaintiff issued its adjudication response, asserting that it had only received service of the notice on 10 July 2019.
On consideration of the evidence adduced by each of the parties concerning service of the Notice of Acceptance, the adjudicator determined that the notice of acceptance was delivered to the Plaintiff on 8 July 2019, and therefore the adjudication response was due by 10 July 2019. The adjudication response delivered on 12 July 2019 was therefore late, and could not be considered. The adjudicator determined that an amount of $66,950.00 (inclusive of GST) was payable by the Plaintiff to Rise Constructions.
The Plaintiff complained that the address listed in the construction contract was not its ‘ordinary place of business’ and therefore section 50 of the SOP Act (dealing with deemed service of notices) did not apply.
The Court dismissed the Plaintiff’s application on the basis that the adjudicator’s determination was ‘in essence a finding of fact’ not amenable to judicial review, turning as it did on the evidence before him as to the date of service of the Notice of Acceptance.
In any event, the Court held that the tracking receipt from Australia Post provided the adjudicator with a sufficient basis to be satisfied that the Plaintiff had been served with the Notice of Acceptance on 8 July 2019. This meant that, even if the Court could review the adjudicator’s determination on the question of service of the Notice of Acceptance, the Court was satisfied that the Adjudicator in this case had made no error and could not be said to have failed to afforded the parties natural justice.
The Court was not persuaded by the Plaintiff’s evidence regarding actual receipt of the notice of acceptance, and considered that the ‘deeming’ provisions under section 50 of the SOP Act were applicable. The Court was satisfied that the address specified in the construction contract constituted the Plaintiff’s ‘ordinary place of business’ for the purposes of the SOP Act. It followed that the adjudication response was late and could not be considered by the adjudicator.
This case reinforces the strict confines of the judicial review process in the context of the SOP Act, which does not extend to enabling a court to undertake a general review of an adjudicator’s determination or to interfere with findings that the adjudicator is empowered to make on the merits.
Respondents also need to be mindful that the provisions of the SOP Act, which deem service of notices by post will prevail to the extent that they are earlier than the date on which the notice was actually received.
In practice, parties that are likely to be respondents in an adjudication application should consider taking the following steps to preserve their rights:
- First, ensure that the address set out in the construction contract for delivery of notices is an address that is constantly monitored;
- Second, upon receipt of an adjudication application, confirm the address and preferred method for service of any notices sent by the adjudicator (for instance, service by email to your solicitors). This avoids any guesswork about where notices are to be sent, and when they are received; and
- Third, if in doubt about when and how the adjudicator’s notice of acceptance was served, a conservative approach should be taken and the adjudication response should be filed within 5 business days of receiving the adjudication application.
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