The importance of serving an Adjudication Application

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The hard work of preparing an adjudication application does not end once you lodge it with an adjudicator.  You must copy and then serve the application on the respondent.  The question of what constitutes a “copy” and “service” of an application was considered in a judgment of Equa Building Services Pty Ltd v KLG Trading Pty Ltd [2021] NSWSC 1674 published on 17 December 2021.

Requirement to serve application – section 17(5)

Section 17(5) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) requires that a copy of an adjudication must be served on the respondent.

As discussed below in more detail, the requirement is an obvious and common sense requirement – as a complete failure to serve an adjudication application would almost certainly cause the respondent to suffer a denial of procedural fairness.

Documents lodged -v- documents served – the differences

Equa Building concerned an adjudication determination which was made consequent to an application made by KLG Trading.  Equa Building (the respondent) complained of differences between what the applicant lodged with the Adjudicator (via the electronic “Lockbox” application) and what the Applicant served on the Respondent.

The differences in the “served application” were as follows:

  • a video was uploaded to a USB in a format which was unable to opened on certain computer (due to software inability) but was able to be opened and viewed on another computer.
  • 1 document was printed in monochrome (i.e. black and white) whereas document lodged was in colour.
  • 2 missing documents:
    • part of an ASIC organisation extract for a non-party (i.e. the developer)
    • part of an excel spreadsheet (2 pages) – one page contained an “about us” section for the company who prepared the spreadsheet.
  • 3 (allegedly) illegible documents:
    • annotations superimposed on a photograph which were “a little difficult to read…[but were] legible”
    • 2 architectural plans with some writing and detail that was “difficult to read” (as they were printed and served as A4, but were originally in A3)
  • 10 instances where “tab numbering” (i.e. the numbered page dividers) were “mis-labelled”

Does a “copy” of an Application lodged need to be identical?

Since the judgment of the the Supreme Court in in Parkview Constructions Pty Limited v Total Lifestyle Windows Pty Ltd t/a Total Concept Group [2017] NSWSC 194, the test for determining whether a “copy of” an Adjudication Application has been served has been a test of substance.

In Parkview, it was determined that a copy of an adjudication application can nevertheless be a copy of it within the meaning of section 17(5) of the SOP Act if there are “trivial differences” (see Parkview at [5].

In Equa Building, Justice Stevenson adopted the same test as applied in Parkview and went further by saying: (at [13])

if what is served has only trivial or inconsequential differences from the original adjudication application, it should been seen as a “copy” of the original. There would of course be questions of degree. But, in this case, the differences are so insignificant that the hard copy adjudication application together with the USB drive delivered to Equa should be seen as a “copy” of the electronic version provided to the adjudicating authority and the adjudicator.

Is “service” of an Application invalid if there are differences in what is lodged and served?

The Respondent contended that the slight differences between the copy of the application served results in a non-compliance with section 17(5) of the SOP Act.

In Equa Building the Court considered whether differences between the copy of the Application served and what was lodged with the adjudicator would cause for “service” of the copy of the application to be invalid.   This involved the statutory interpretation of section 17(5) of the SOP Act.  In doing so, the Court adopted the principle of statutory interpretation that: (at [50])

Where a statutory requirement is capable of “degrees of non-compliance” and if “some degree of non-compliance can be seen as not necessarily prejudicing the substantial carrying into effect of the general object” of the statute, the statute may be construed as not necessarily invalidating the non-compliant action.

It followed that the Court looked to the “degree” of the non-compliance.  As noted above, the non-compliance was minimal and the Court determined that the applicant substantially complied with section 17(5) of the SOP Act and that the service of the application was not ineffective.

Is service of an Adjudication Application a “jurisdictional fact”?

A “jurisdictional fact” in the context of the SOP Act is a matter which goes to the core of the Adjudicator’s authority.  These are the essential requirements for a valid Adjudication.  If a “jurisdictional fact” is missing or has not been established, the Adjudication will be invalid.

The Respondent in Equa Building argued that the service of a copy of an adjudication application is a “jurisdictional fact”.  The law in New South Wales on this point is not settled. There are authorities which tend to suggest that the service of a copy of an application does not constitute a jurisdictional fact. The Court did not make any finding about this question and the issue remains unsettled.

The Court did consider whether the failure to serve a copy of an adjudication application may be a denial of procedural fairness to the respondent – which may be an alternative means to quash an adjudication determination.  The Court assessed the degree and extent of the discrepancies between what was served and what was lodged with the Adjudicator.  The Respondent contended that the manner in which the application had been copied was designed to cause the Respondent difficulty and delay in preparing an Adjudication Response.  In particular, that the application was served in “print” (not electronic) and also contained the abovementioned “differences”.

The Court held that there was no evidence of any practical injustice caused by the way in which the application was served.  A factor which the Court considered was the fact that the Adjudication Response lodged was comprehensive and complete.

Practical tips arising from this judgment

Whilst this judgment found that the application was properly served (even with discrepancies), the importance of ensuring proper service of the application was indirectly emphasised.

An applicant would be unnecessarily creating risk of a determination being quashed by not adopting diligence when copying and serving an application.

If you have any questions about this note or otherwise require assistance with an adjudication or SOP Act matters, please contact Mark Yum on (02) 9324 4300 or on  Alternatively, please complete the form below and we will get in touch with you.

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