Posts

A Downer of a decision: The importance of articulating adjudication submissions

In Diona Pty Ltd v Downer EDI Works Pty Ltd [2020] NSWSC 480 (Diona), the Supreme Court considered an application to set aside an Adjudicator’s Determination for failure to consider the terms of the contract as required by s 22(2)(b) of the Building and Construction Industry Security of Payment Act 1999 (the SOP Act).

Key takeaway:

  • It is important to ensure that adjudication submissions clearly articulate all relevant arguments and contractual provisions. Unclear, poorly framed or ambiguous submissions can be costly.
  • An adjudicator’s decision will not be declared void simply because it contains what one party considers to be an error or failure by the adjudicator to expressly address all arguments made in parties’ submissions.
  • Lawyers can be useful to assist in preparing an adjudication application and response. Having prepared and responded to numerous security of payment claims, the lawyers at Bradbury Legal are experts at ensuring your arguments are clearly articulated.

 

Background

Diona Pty Ltd (Diona) entered into a subcontract with Downer EDI Works Pty Ltd (Downer), for Downer to provide works in relation to safety upgrades on the Great Western Highway, Blackheath. Downer proceeded to adjudication on a payment claim under the SOP Act. On 16 April 2020, the relevant Adjudicator determined that Downer was entitled to a progress payment of $430,990.13 (Determination).

Diona made an application to the Supreme Court, seeking a declaration that the Determination was void and an injunction preventing Downer from requesting an adjudication certificate or filing the adjudication certificate as a judgment debt. Diona contended that the Adjudicator had incorrectly awarded a set off claim by Downer, in response to Diona’s liquidated damages claim, in the amount of $30,000 on account of two extension of time claims (EOT Claims).

Diona argued that the Adjudicator had not fulfilled the requirements of s 22(2)(b) of the SOP Act because the Adjudicator had failed to give any reference to, or consideration of, Diona’s contention in its adjudication response submissions that Downer was not entitled to these extensions of time, due to the operation of a time bar in the contract.

 

Did the Adjudicator consider the time bars?

The central question was whether the Adjudicator considered the provisions of the contract. Under section 22(2)(b) SOP Act, an adjudicator must consider the provisions of the construction contract.

To determine if the Adjudicator did consider the contractual provisions, especially those containing the time bar, the Court looked at the submissions made by both parties and the Adjudicator’s determination.

The Court noted that Downer had ‘devoted a number of pages to its contentions concerning extension of time and, in particular, its asserted entitlement to EOT 18 and EOT 21’. This was contrasted with Diona’s submissions, the Court found did not properly engage with Downer’s EOT Claims. Diona’s submissions stated:

Determinations of claims for…extension of time…by Diona are final and cannot be disturbed except by raising a Claim under the Contract, see relevant clauses of the Subcontract.’

The Court highlighted a part of the Adjudicator’s reasons which stated:

The Act at section 22(2)(b) requires the adjudicator to consider the provisions of the construction contract when making the determination

Having regard to the Adjudicator’s express reference to s 22(2)(b) of the SOP Act, the Court stated that there were several reasons why the Adjudicator did not refer to the dispute clause in the Determination. Firstly, the Adjudicator may have felt that Diona did not properly articulate and develop the time bar argument. Alternatively, the Adjudicator may have misunderstood the submissions. The Court concluded that:

The Adjudicator may have come to the wrong decision about Dower’s entitlement to EOT 18 and EOT 21. But that, without more, is not a basis to set aside the set aside the determination.

The argument that Diona sought to raise, while potentially valid, was not properly articulated. Therefore, it could not be inferred that the Adjudicator had failed to consider the provisions of the subcontract as required by s 22(2)(b) of the SOP Act.

 

So what?

The significance of this case is that it shows that what appear to be errors or failures to consider an argument by an adjudicator will not always result in a basis to set aside the adjudicator’s determination. The adjudicator’s decision can be rough and ready, provided the adjudicator makes their decision in accordance with the SOP Act. Payments made under SOP Act are on account only and may be determined on a final basis at a later stage.

 

Regulatory Overhaul and Reform Pillars: building confidence and stronger foundations for the NSW building and construction industry

Transparency, accountability and quality of work are always issues at the forefront of the building and construction industry. In the wake of many high profile instances of defects in newly built developments, these are also the big issues that the NSW Government is tackling in 2020.

Where it began: the Shergold Weir Building Confidence Report

Back tracking to early 2018, the Shergold Weir Building Confidence Report recommended the implementation of a national best practice model. The purpose of this was to enhance public trust in the building and construction industry and strengthen the effective implementation of the National Construction Code. The best practice model comprises 24 recommendations relating to:

  • registration and training of practitioners;
  • roles and responsibilities of regulators;
  • the role of fire authorities;
  • integrity of private building surveyors;
  • collecting and sharing building information and intelligence;
  • adequacy of documentation and record keeping;
  • inspection regimes;
  • post-construction information management;
  • building product safety; and
  • how the above recommendations will be implemented.

The NSW Government’s Response: Building Stronger Foundations Discussion Paper

The NSW Government welcomed the Shergold Weir Report and announced that it is committed to improving the building and construction industry through a number of new reforms. In June 2019, the NSW Government presented its Building Stronger Foundations Discussion Paper seeking input from stakeholders on its four key reforms. These reforms are:

  1. requiring practitioners defined as ‘building designers’ (e.g. architects, engineers) to declare that their building plans/specifications/solutions are compliant with building regulations, including the Building Code of Australia;
  2. introducing a registration scheme for ‘building designers’ who will be making declarations;
  3. ensuring that building practitioners owe a duty of care to owners’ corporations and subsequent residential homeowners; and
  4. appointing a Building Commissioner who is a consolidated regulator for the whole of the NSW building and construction industry.

What to expect in 2020 and beyond

It has been just over a year since the NSW Government committed to implementing regulatory reform and six months since it consulted with stakeholders to shape the direction of these reforms. So what progress has been made in that time?

In October 2019, the first tranche of reforms was introduced with the Design and Building Practitioners Bill 2019 (the “Bill”). The Bill seeks to deliver the NSW Government’s first, second and third key reforms by imposing new obligations on design and building practitioners. The Bill is currently before the NSW Upper House. Make sure to read our next newsletter as we will be providing a detailed explanation of the substance of the Bill.

In relation to fourth key reform, the NSW Government has appointed David Chandler OAM as the NSW Building Commissioner. In January 2020, Mr Chandler announced the Six Reform Pillars, which is the public’s first insight into his plans and implementation strategies for the reforms. The Six Reform Pillars are:

Pillar Actions Outcomes
Building a better regulatory framework

 

Implementing legislation and regulation and transforming the focus of the regulator

 

Ensure that NSW has a strong customer focused regulatory framework
Building rating systems

 

Work with ratings agencies, insurers and financiers to assist in better selection of industry participants

 

Move away from one-size-fits-all participant recognition and better identify risky players

 

Building skills and capabilities

 

Improve accreditation of construction related programs through improved standard modules

 

Shared minimum learning content and open source resources for all institutions

 

Building better procurement methods

 

Establish clear standards for engagement and outputs

 

Viable risk allocation and performance accountability

 

Building a digital future

 

Digitise the NSW Building Industry and move away from analogue record keeping

 

Shared industry wide platforms that build confidence

 

Building the reputation for quality research

 

Evidence based approach to accessing and closing the gap via case studies and other research

 

Baseline and measurement against our ability to improve confidence in the industry

 

 

This article provides a snapshot of the NSW Government’s plans to implement effective and wide ranging regulatory reforms of building and construction industry. This summary demonstrates that there is a significant task ahead in implementing these reforms, so watch this space for future updates.

If you or someone you know wants more information or needs help or advice in relation to this article, please contact us on (02) 9248 3450 or email info@bradburylegal.com.au.

Protecting your plans: intellectual property basics for architects

Architectural designs and plans are a valuable commodity in the building and construction industry. With technology facilitating the seamless reproduction, transformation and dissemination of printed and digital material, architects should be vigilant in protecting their original creations and their livelihoods.

This article provides an overview of copyright law in Australia and explains how architects may take steps to protect their original works from copyright infringement.

Application of copyright law to architectural designs

Federal copyright protection was introduced in Australia in 1905 and has since evolved into the Copyright Act 1968 (Cth) which is currently in force. This Act includes broad categories of subject matter benefiting from its protection, to keep pace with emerging technologies.

The subject of copyright material comprises ‘artistic works’ or ‘forms of expression’ rather than ‘ideas, information or facts’ – that is, the actual production of work in a material form, rather than a mere idea or thought.

Architectural drawings and designs (whether sketched or generated with software), models of buildings and the buildings themselves all fall within the category of ‘artistic works’ and are therefore protected by copyright law. An architect will also have copyright over plans drawn from ideas or instructions received from a client, as they have been produced and expressed in a material form.

What is copyright infringement?

The owner of copyright work has an exclusive right to reproduce it in material form, publish the work and communicate it to the public.

Infringement of copyright occurs when a person does anything that constitutes the exercising of these rights, or the authorising of another person to do so without permission of the owner.

Essentially, the creator of the work should have control over its commercial exploitation including licensing the use of the work to a third party.

To prove infringement, there must be a fundamental link between the original work and the copy. This link can often be established where an infringing party has seen or had access to the original work.

The alleged reproduction of the work must be in a material form with an objective similarity between the original and copy. The objective similarity need not relate to an entire work provided a substantial part of it is reproduced.

In copyright cases concerning architectural drawings and plans, the reproduction of unique, distinctive or important design aspects can be influential in determining whether the work has been infringed.

Protecting plans from infringement – service agreements

Because copyright subsists in an original creation, such as architectural drawings and designs, there is no requirement (or method) to register the work with an authority to obtain the protection of copyright law. This makes the process appear simple, however it opens the door to disputes over who is the original creator of the work.

Architects can be proactive in protecting their original work by ensuring that a service agreement is entered into by every client who retains their services.

The agreement should set out the terms of retainer, the parties’ respective rights and their respective responsibilities. It should also include provisions regarding intellectual property rights and the licensing of the work created by the architect.

A licence may be exclusive or non-exclusive.

Generally, a service agreement will provide that an architect retains ownership in the copyright of their work but allow for the licensing of the work created to the client who has paid for it.

An exclusive licence will allow the client of the architect (the licensee) to exercise the rights to the exclusion of all others. This means that the licensee may take action against others for infringing the copyright and using the material, including action against the original creator of the work.

A non-exclusive licence limits the use of the material by the client (licensee) in accordance with the terms negotiated and contained in the agreement. A non-exclusive licence will enable the architect to continue to use the works and allows the architect to grant further non-exclusive licence rights to other parties. This may be appropriate if an architect intends to reuse the work elsewhere.

Implied licences

If there is no service agreement or if an agreement is silent as to the assignment of copyright, the law generally recognises an implied licence for the benefit of a client who has commissioned the architect for a certain purpose, such as the production of plans for a specific site.

The extent of the implied licence will depend on the circumstances. However, it is generally limited to one-off use of the plans on the site for which they were designed.

The recognition of an implied licence may leave an architect vulnerable in circumstances where the relationship between the architect and client breaks down and the retainer is terminated. A written agreement with provisions stating that any implied or express licence will be revoked, and that the agreement is terminated in the event that the client refuses to pay the architect for the services, should help to protect the architect in such circumstances.

Other steps to protect copyright works

In addition to having a service agreement in place before commencing work, there are other steps architects can take to protect their designs.

Copyright notices and the copyright symbol “ © ” should be placed in prominent positions on all original work.

When giving sample drawings and designs to potential clients, architects should also provide a written warning stating that allowing access to the plans does not constitute an implied licence to use them, and that copyright remains at all times with the original creator.

Architects can also keep original drafts, drawings and references tracking the production of their work, and any other information such as commencement dates, instructions, notes and communications, that all may assist in proving the work’s originality, should this become necessary.

Remedies for infringement

Proceedings for copyright infringement may be instigated in the Federal Court or the Federal Circuit Court.

Remedies include an injunction (restraint) which prevents the immediate and future use of the copyright material by the infringing party, an award of damages for financial loss, or an account of profits requiring the infringing party to forward all profits made from the material to the owner or licensee. The infringing party may also be ordered to pay legal costs.

When calculating damages, the Court may consider the infringing party’s conduct and whether it was deliberate or reckless, the benefit accrued to the infringing party and the need to deter others. Exemplary damages, which are additional damages, may be awarded for conduct that is flagrant and deliberate.

Conclusion

Copyright laws acknowledge that creators of original material should receive legal recognition and reward for their efforts and that third parties should not benefit unlawfully from a creator’s work.

Although copyright subsists for the benefit of the creator of an original work, architects must be proactive in protecting and enforcing these rights.

Builders should also be cautious when requested to work with clients who bring ‘their own’ architectural designs to be used in a proposed building project to ensure that use of the design has been authorised.

If you or someone you know wants more information or needs help or advice, please contact us on +61 2 9248 3450 or email info@bradburylegal.com.au