May 19, 2017

A recent Court of Appeal decision from New South Wales serves as a timely reminder of the onward march of payment, under security of payment legislation.

The decision arose from a dispute between Fitz Jersey Limited (Fitz Jersey), a property developer, and Atlas Construction Group Pty Limited (Atlas), the builder that Fitz Jersey engaged to design and construct a major development project at Mascot in Sydney.

An adjudicator held that Atlas was entitled to payment, in full, of the amount claimed in its final payment claim issued under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SoP Act).

Fitz Jersey commenced proceedings in the Supreme Court to challenge the validity of the adjudicator’s decision, but failed to take any steps to prevent Atlas from enforcing the adjudication determination in the meantime.

Shortly after the commencement of the court proceedings, Atlas registered the adjudication certificate as a judgment, and obtained a garnishee order which allowed it to be paid the adjudicated amount (almost $11 million) directly by Fitz Jersey’s bank.

Fitz Jersey unsuccessfully applied to set aside the garnishee order, and have the money repaid. On appeal, Fitz Jersey contended (in broad terms) that Atlas should have notified it of the judgment before seeking to enforce it using the garnishee order, and/or that Atlas should have informed the Court when seeking the garnishee order, of Fitz Jersey’s challenge to the validity of the adjudication certificate.

In rejecting these arguments, the Court of Appeal held that:

  •   a judgment can be enforced without notifying the other party, and the specific legal grounds relied upon by Fitz Jersey did not change this; and
  •   Atlas’ duty of disclosure to the Court when seeking the garnishee order without Fitz Jersey present, only extended to disclosure of any circumstances which would disentitle it to the relief that it was seeking. Fitz Jersey’s challenge of the adjudicator’s decision did not have to be disclosed.

The full decision can be found here.

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