Cardinal Project Services Pty Ltd v Hanave Pty Ltd [2011] NSWCA 399
A majority of the New South Wales Court of Appeal held that, where an adjudicator issued only a void determination, a claimant's five business days for a new adjudication application under section 26 of the Building and Construction Industry Security of Payment Act 1999 (NSW) ran from the end of the time for a valid determination, not from a later declaration of voidness.
What the court decided
Cardinal Project Services Pty Ltd agreed to perform excavation and shoring works for Hanave Pty Ltd [63]. On 8 January 2010 an adjudicator determined $354,181 in Cardinal's favour [64]. Hanave complained of a denial of procedural fairness, and on 6 August 2010 the Supreme Court, with Cardinal's consent, declared that determination void [65]. Cardinal purported to withdraw its application and on 12 August 2010 lodged a second one [66].
Cardinal sought a declaration that the second determination was void for want of procedural fairness [71]. Hanave said it was void because the second application was out of time, which would leave Cardinal unable to make a third [72], [73]. McDougall J accepted Hanave's contention, declared the second determination void and quashed it [56], [75].
The Court of Appeal, by majority, dismissed Cardinal's appeal with costs [104], [105]. Macfarlan JA gave the principal reasons for the majority, and Tobias AJA agreed with his orders and reasons while adding his own reasons [105]. Basten JA dissented and would have allowed the appeal and remitted the proceedings to the Equity Division [62].
Macfarlan JA held that a void determination was not a determination at all unless the statute indicated otherwise, and the Act gave no contrary indication [83]. He saw no significance in the difference between quashing a determination and declaring it void, since quashing for a breach of procedural fairness makes a decision a nullity unless the statute provides otherwise [81]. An adjudicator who issued only a purported but void determination within time had therefore failed to determine the application, which satisfied section 26(1)(b) [84].
Macfarlan JA found the text of section 26 clear on when time began [86]. The claimant had five business days from the expiry of the period for a valid determination to make a new application [86]. On an assumed notification date, the period had ended in January 2010, so the August application was long out of time [87]. He did not follow the contrary view of Palmer J in Multiplex Constructions Pty Ltd v Luikens, adopted in later cases, noting that those cases identified no textual or other reasons for differing from the primary judge [88].
His Honour held that an inconvenient or unjust result in some cases was not enough to depart from clear statutory words [91], [92]. Nor, in his view, could the court state with certainty what other words Parliament would have chosen, and choosing among the alternatives would be speculation [95], [98]. Even if non-textual considerations had been decisive, they would not have helped Cardinal, since a claimant that thought a determination void could apply again within days [101], [103]. A new payment claim, subject to its time limit, and contractual rights also remained [102].
Tobias AJA reasoned that if a purported determination were effective until set aside, there would be no failure to determine within time, so section 26(2) would never be enlivened [109], [112]. The situation was a lacuna that "only the legislature can fill" [117].
Basten JA accepted, as the primary judge had held, that words could not be read into the section [3], [30], [37]. He considered, however, that the assumption that a decision made without jurisdiction had no legal effect at all was false [40]. In his view, a determination should be treated as effective for section 26(1)(b) until set aside or declared ineffective by a court, which gave the claimant an opportunity to apply again under section 26(3) [50]. On that basis the approach in Luikens was correct [55].
Why it matters
On the majority's reasoning in 2011, a claimant facing a determination that might be void could not safely wait for a court ruling before applying again, because the five business days might expire long before any order. The Court was divided, and Tobias AJA saw the gap as one for the legislature. Readers should check the Act as now in force.
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.