The case of Nigro v EVS Group Pty Ltd  NSWSC 1545
was in connection with two related companies involved in the
development of a site in NSW which involved the construction of
multiple residential units. The two developer companies had a
common director (the Respondent). The Claimant was a provider of
security personnel services at the site but there was disagreement
as to whether one of the developer companies or the Respondent
personally contracted with the Claimant to provide the security
services at the site in question.
Because such security services came within the definition of
"related goods and services" under the Security of
Payment legislation, the Claimant was entitled to serve a
payment claim under the legislation on the other party to the
After it issued a payment claim to the Respondent the Claimant
commenced an adjudication against the Respondent under the
Security of Payment legislation. In the adjudication, the
Respondent said that he was not the party to the construction
contract and instead it was one of the developer companies that
contracted with the Claimant. The adjudicator's decision was
that the construction contract was with the Respondent and that he
had to pay the Claimant some $44,000 on account of the security
personnel services provided.
When that amount was not paid, the Claimant pursued its rights
under the legislation to get an adjudication certificate and then
proceed to file that as a judgment in court, and, then obtain an
order from the court (called a garnishee order) entitling the
Claimant to obtain moneys out of the Respondent's bank account
in part payment of the adjudication determination.
At this point the Respondent had a possible remedy of applying
to the court to set aside the adjudicator's determination. That
would have been on the basis that the adjudicator had no
jurisdiction under the legislation to make the determination as the
relevant construction contract was not between the Respondent and
the Claimant but rather between one of the developer companies and
However, the Respondent chose not to make that type of
application but instead issued different court proceedings relying
on s.32 of the NSW Security of Payment legislation to seek
restitution of the amount paid together with interest and costs on
the basis that the respondent was not a party to the construction
Section 32 provides that:
"...nothing in this Part [of
the Security of Payment legislation] affects any right that a party
to a construction contract:
may have under the contract, or
may have under Part 2 [of the Security of Payment
legislation] in respect of the contract, or
may have apart from [the Security of Payment legislation]
in respect of anything done or omitted to be done under the
Earlier court decisions interpreting s.32 had stressed the
interim nature of adjudication determinations, for example, an
earlier decision of the court said in respect of s.32 that:
"its place in the scheme of
the Act is to reinforce the interim nature of adjudication
determinations, and to provide that parties' legal rights (as
decided by a court or tribunal) are given full effect
notwithstanding what may have been determined by an adjudicator and
what may have been done in pursuance of, or obedience to, that
determination...The legislature intended the process of dealing
with progress claims to be speedy. In many human activities, speed
and error are natural companions. S.32 is the legislative
recognition of the potential application of that truism to the
scheme of adjudication of disputes."
However, the Respondent failed to recover from the Claimant the
amounts that the Claimant obtained out of the Respondent's bank
This was because the rights in s.32 were rights of a party
"to a construction contract". Therefore, before a party
could exercise the rights provided by s.32 it required as an
essential prerequisite the existence of a construction contract
between the parties to the court proceeding. The court determined
that as "the foundation of the Respondent's case is that
he was not a party to a construction contract" he could not
rely on s.32.
Nigro v EVS Group Pty Ltd is a reminder that payment
claims and adjudications under the Security of Payment
legislation need to be taken seriously. Although a party who is
dissatisfied with an adjudication determination has rights to
challenge it, the method of challenge needs to be carefully
considered so that it is appropriate to the facts of the case.
Although this was a NSW case, the Security of Payment
legislation in the other states and territories (apart from the
Northern Territory and Western Australia) all have substantially
similar wording on this issue.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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