The recent case of Equa Building Services Pty Ltd v A&H Floors 2 Doors Australia Pty Ltd [2022] NSWSC 152 considered a dispute about a security of payment claim.

Equa Building Services (the developer) engaged a construction manager to design and build a development, who then engaged A&H Floors 2 Doors Australia (the subcontractor) to perform flooring work. The developer terminated the construction manager’s contract after a dispute, at which point the subcontractor carried out work directly for the developer.

The subcontractor served a payment claim to the email address of a Mr Gregory, an employee of the Arden Group (a group of companies of which the developer was a part of). The adjudicator found that this constituted valid service of the payment claim because Mr Gregory had been identified as a representative of the developer. However, the developer sought a review of the decision on two grounds. First, that the subcontractor had failed to serve the payment claim, such that the adjudicator lacked jurisdiction to make the determination. Secondly, that the developer had not been given an opportunity to respond to the findings, and that this constituted a denial of procedural fairness.

The Court held that both grounds of challenge were satisfied because service was not to a person specified by the developer for service of payment claims, and having a ‘belief’ that an employee was a representative of the developer is not enough. The payment claim was also sent to the wrong address. Even if a valid payment claim had been served, the adjudicator acted inconsistently with the Act and the developer was denied procedural fairness in not being able to address the allegation that the developer had assumed the contractual arrangements between the construction manager and the subcontractor, which did not accord with the submissions of either party.

Ultimately, the adjudicator’s decision was quashed.

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