Pines Living Pty Ltd v John O’Brien & Walton Construction Pty Ltd [2013] ACTSC 156

Pines Living Pty Ltd v John O’Brien & Walton Construction Pty Ltd [2013] ACTSC 156

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BUILDING AND CONSTRUCTION – adjudication of progress payment claims under Building and Construction Industry (Security of Payment) Act 2009 (ACT) – whether an extension of time and leave to appeal from an adjudicator’s decision should be granted – whether jurisdictional or non-jurisdictional error

ADMINISTRATIVE LAW – relief in the nature of certiorari – scope of supervisory jurisdiction – effect ofBuilding and Construction Industry (Security of Payment) Act 2009 (ACT) s 43

Australian Capital Territory (Self-Government) Act 1988 (Cth)48A
Building and Construction Industry (Security of Payment) Act 2009 (ACT) ss 10, 11, 15, 16, 17, 18, 19, 22, 23, 26, 27, 43
Building and Construction Industry Security of Payment Act 1999 (NSW)
Commercial Arbitration Act 1986 (ACT) s 38(5)
Court Procedures Rules 2006 (ACT) r 3557

Chase Oyster Bar Proprietary Ltd v Hamo Industries Proprietary Ltd (2010) 78 NSWLR 393
Craig v South Australia (1995) 184 CLR 163
Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190
Grid Projects NSW Pty Ltd v Proyalbi Organic Set Plaster Pty Ltd [2012] NSWSC 15
Faull v Commissioner for Social Housing [2013] ACTSC 121
Gordian Runoff Ltd v Westport Insurance Corporation (2010) 267 ALR 74
Kirk v Industrial Court of New South Wales (2010) 239 CLR 531
Promenade Investments Pty Ltd v New South Wales (1992) 26 NSWLR 203
Walton Construction Pty Ltd v Pines Living Pty Ltd [2013] ACTSC 114

Watpac Constructions v Austin Corp [2010] NSWSC 168

 

No.  SCA 34 of 2013
No.  SC 193 of 2013

 

Judge:             Master Mossop
Supreme Court of the ACT

Date:              8 August 2013
IN THE SUPREME COURT OF THE     )
  )          No. SCA 34 of 2013 and SC 193 of 2013
AUSTRALIAN CAPITAL TERRITORY           )

 

BETWEEN:PINES LIVING PTY LTD

Plaintiff

AND:       JOHN O’BRIEN

First Defendant

AND:       WALTON CONSTRUCTION PTY LTD

Second Defendant

 

ORDER

 

Judge:  Master Mossop
Date:  8 August 2013
Place:  Canberra

 

THE COURT ORDERS THAT:

  1. In proceedings SCA 34 of 2013, the application is dismissed with costs.
  2. In proceedings SC 193 of 2013, the proceedings are dismissed with costs.

 

  1. In these two proceedings the plaintiff seeks prerogative relief and leave to appeal under s 43 of theBuilding and Construction Industry (Security of Payment) Act 2009 in relation to a decision of an adjudicator appointed under that Act.
  2. Pines Living Pty Ltd (“Pines”) is the owner of a retirement village development which has been constructed by Walton Construction Pty Ltd (“Walton”) pursuant to a construction contract dated 20 June 2011.  The facility is located in Farrer in the Australian Capital Territory.
  3. Walton has made various claims pursuant to the Building and Construction Industry (Security of Payment) Act 2009 (ACT) (“SOP Act”).  Payment claim 28 (“PC28”) was made in October 2012.  PC28 claimed $206,359.74.  No payment schedule under s 16 of the Act was given by Pines in response to PC28. Payment claim 29 (“PC29”) was made on 22 January 2013.  PC29 claimed $294,254.98.  It included the contract works and variation works claimed in PC28 and additional contract works and variation works undertaken between October 2012 and 15 January 2013.
  4. On 6 February 2013 Pines sent a payment schedule under s 16 of the Act to Walton in response to PC29.  That payment schedule asserted that the amount to be paid was “$NIL”.  The reasons for withholding payment, required to be stated in the schedule by s 16(3) of the Act, were:

    a.           both the validity and valuation of variations claim is disputed;

    b.           the valuation of the balance of works is disputed;

    c.           the Respondent is entitled to deduct liquidated damages against the claimed amount (Contract, cl. 12.19) which exceed the claimed amount; and

    d.           the Claimant is in breach of its obligations under the Contract to correct defects (Contract, cl. 9.6).

  5. On 20 February 2013 Walton submitted an adjudication application.  The adjudicator, Mr John O’Brien of “Adjudicate Today”, received submissions from the parties and made an adjudication determination dated 18 March 2013.  On 22 March 2013 the adjudication determination was sent to the parties.  The adjudicator decided that the amount of the progress payment to be paid by Pines to Walton was $239,005.86.  He decided that the due date for payment was 6 February 2013 and that Pines was to pay 100% of the adjudicator’s fees.  The adjudicator gave reasons for his decision which extend over some 146 paragraphs.
  6. On 3 April 2013 Walton gave notice of intention to suspend works under s 26 of the SOP Act. Section 27 of the SOP Act permits an adjudication certificate to be filed as a judgment for a debt and permits it to be enforced in any court of competent jurisdiction.  Judgment was entered in the Supreme Court of the Australian Capital Territory on 11 April 2013 in an amount of $254,902.91.  That was the sum of the adjudicated amount, interest and adjudicator fees.  That judgment was only released by the Court on 23 April 2013.  On that same day Walton gave notice of the Court order and enforcement options by serving on Pines Form 2.49 “Notice about Court order and enforcement options” and Form 2.85 “Certificate of registration of enforceable order”.
  7. On 3 May 2013 Pines was served with a creditor’s statutory demand by Walton based on the Adjudication Certificate.  An application to set aside that statutory demand was filed in this Court on 24 May 2013.
  8. On 13 May 2013 the solicitors for Walton registered the judgment of the ACT Supreme Court in the Supreme Court of New South Wales.  As a consequence of the registration of the judgment Walton was able to apply by notice of motion for a garnishee order from the New South Wales Supreme Court.  That process did not require the giving of further notice to Pines.  A garnishee order was issued to the Commonwealth Bank of Australia and served on 28 May 2013 and that led to the payment of $258,296.96 from the account of Pines at the bank.
  9. On 11 June 2013 I dismissed an application by Pines for an interlocutory injunction requiring repayment of the amount that had been garnisheed: see Walton Construction Pty Ltd v Pines Living Pty Ltd [2013] ACTSC 114.  The position is therefore that Walton has been paid the amount determined to be payable by the adjudicator under the SOP Act.
  10. Pines seeks an order in the nature of certiorari to quash the adjudicator’s decision dated 18 March 2013 (proceedings SC 193 of 2013).  Those proceedings were filed on 22 May 2013.  Pines has also made application for leave to appeal and leave to do so out of time from the adjudicator’s decision pursuant to s 43 of the SOP Act (proceedings SCA 34 of 2013).
  11. Section 43 of the SOP Act permits an appeal to be made to the Supreme Court on “any question of law arising out of the adjudication decision”.  In circumstances where there is no consent by the parties to the bringing of an appeal, such an appeal can only be brought with the leave of the Supreme Court: see s 43(3). There are significant hurdles that must be met before the Supreme Court may grant leave.  Section 43(4) provides:

    (4) The Supreme Court must not grant leave under subsection (3)(b) unless it considers that—

    (a) having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of 1 or more parties to the adjudication decision; and

    (b) there is—

    (i) a manifest error of law on the face of the adjudication decision; or
    (ii) strong evidence that the adjudicator made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of the law.

  12. The grounds sought to be agitated in the s 43 appeal and in the certiorari proceedings are similar.  In both proceedings they involve the assertion by the plaintiff that the adjudicator fell into jurisdictional error or alternatively non-jurisdictional errors of law.
  13. The certiorari proceedings have been brought in order to avoid the hurdles to an applicant under s 43 of the SOP Act and the consequences of the fact that the application for leave to appeal is out of time.  There is, however, also an argument that the certiorari proceedings are out of time because they have been filed “later than 60 days after the date when the grounds for the grant of the relief sought first arose”: Court Procedure Rules r 3557(2).  Rule 3557(4) provides that the Court may extend that time but only in “special circumstances”.
  14. I was not taken to any material which provides an explanation for the delay by Pines in seeking to contest the validity of the adjudicator’s decision.
  15. Therefore the issues to be determined are:

    a)           Should the plaintiff be given an extension of time and leave to appeal pursuant to s 43 of the SOP Act?

    b)           Is the plaintiff out of time in bringing its application for prerogative relief and, if so, whether the time specified under r 3557(2) should be extended?

    c)           Did the adjudicator fall into jurisdictional error?

    d)           Did the adjudicator make non-jurisdictional errors of law?

    e)           If the answer to (d) is yes, are there any consequences of those errors?

  16. The merits of the case were argued in full so that the substantive matter could be determined in the event that any required extensions of time and leave to appeal were granted.  Having regard to the significance of the merits of the plaintiff’s arguments for any decision as to whether or not to grant an extension of time or leave to appeal I will address the merits of the plaintiff’s arguments first and then turn to the questions of extensions of time and leave to appeal after that.

Introduction to the Act

  1. The SOP Act was passed in 2009.  That proposal for ACT legislation had first been advanced in 2007 but its enactment was delayed as a consequence of consultation with industry.  In his Presentation Speech, the relevant minister, Mr Hargreaves said:

    The Building and Construction Industry (Security of Payment) Bill 2009 establishes a statutory mechanism for operators in the building and construction industries to quickly resolve payment disputes through an adjudication process. It provides an alternative to costly and protracted court proceedings that often present a barrier to subcontractors and small business operators.

    Mr Speaker, the New South Wales and Queensland security of payments acts have been operational since 1999 and 2004 respectively. They are now considered benchmark models for security of payment legislation. These acts together provide a blueprint for this scheme. However, because of the ACT’s geo-economic position, the ACT scheme is more closely aligned with the New South Wales model, which is a tried and tested legislative framework.

    In essence, this bill will facilitate for the ACT building and construction industry timely payments between parties to construction and related contracts, rapid resolution of disputes concerning such contracts, and mechanism for the rapid recovery of payments of such contracts.

    Major studies into the building and construction industry have concluded that failure to pay subcontractors moneys due to them has a substantial impact on their capacity to operate as small to medium business enterprises. This in turn impacts on the security of their employees. Relatively low capital backing and a heavy reliance on cash flows to sustain business typify the industry.

    The structure of the building and construction industry is a multi-tiered hierarchy of principals, agents, contractors, subcontractors and suppliers, with cascading payment obligations. The failure of any one party in the contractual chain to pass on moneys owed can cause a domino effect on other parties in the chain, with those at the bottom most at risk. The consequences to the affected parties include restricted cash flow and, in some cases, insolvency.

    Difficulty in ensuring that subcontractors and others are paid fully, and on time, is not unique to the building and construction industry. The impact, however, is often worse than in other industries that generally do not depend to such an extent on subcontracting.

  2. Consistently with the Minister’s statement, the SOP Act is very similar to the New South Wales Building and Construction Industry Security of Payment Act 1999 (“NSW SOP Act”).  As is made clear in the Presentation Speech, the existence of a “tried and tested legislative framework” was one of the reasons that the legislature copied the New South Wales model.  Clearly, given the similarities between the SOP Act and the NSW SOP Act, and the fact that the NSW SOP Act has been in force for a substantial period of time and the subject of very detailed consideration in the NSW Supreme Court and Court of Appeal, the decisions of those courts will be of significant utility in interpreting the SOP Act: see alsoGett v Tabet [2009] 254 ALR 504 at [289].
  3. The significant difference between the SOP Act and the NSW SOP Act which is of relevance to the present case is the availability of a limited capacity to appeal from an adjudicator’s decision which is present in s 43 of the SOP Act to which there is no equivalent in the New South Wales Act.  The Explanatory Statement says, in relation to the clause which became s 43:

    The provision is modelled closely on the appeal provision under section 38, Part 5 of the Commercial Arbitration Act 1986, save for one respect, in that the period in which an adjudicator must make our new decision has been reduced to 10 business days after the decision has been remitted.

    As will be apparent, there is no clear explanation why the legislature thought it was appropriate to include such a judicial review provision when there is no such provision in the NSW SOP Act.  I will return to the operation of s 43 below.

  4. In order to understand the balance of these reasons it is necessary to give a brief overview of the relevant provisions of the SOP Act relating to payment claims.
  5. The Act provides a right to a building contractor to obtain a progress payment on each “reference date” under a construction contract: s 10.  Any such payment is made on an interim basis subject to resolution on a final basis of all claims under the contract and does not affect the parties’ rights in relation to those claims except, of course, that payments made under the Act must be take into account: s 38.  The Act permits a “payment claim” to be made for payment of progress claims: s 15.  When a payment claim is made the respondent to the claim may reply by giving the claimant a “payment schedule” indicating how much is being paid and, if it is not the whole of the amount claimed, indicating why amounts have been withheld: s 16.  If the respondent gives a payment schedule which indicates that the whole amount claimed is not being paid or does not give a payment schedule and does not pay the full amount claimed then the claimant may have the matter adjudicated by an adjudicator under the Act: ss 17-19.  There is a process for the making of a decision by an adjudicator which, consistent with the purpose of the Act, involves short timeframes: ss 22-23.  The adjudicator must decide the amount of the progress payment to be paid, the day on which it became or becomes payable and the rate of interest payable on the amount: s 24.  The decision must be in writing and include reasons for decision unless the adjudicator is asked by the parties not to include reasons: s 24(3).
  6. If the adjudicated amount is not paid then the claimant may obtain an adjudication certificate and may suspend work under the construction contract: ss 26(2), 29.  An adjudication certificate may be “filed as a judgment for a debt, and may be enforced, in any court of competent jurisdiction”: s 27(1).  Consistently with the purpose of the Act there are severe restrictions on the matters which may be raised by a respondent in any application to have the judgment set aside.  The respondent may not bring any cross-claim, raise any defence arising under the construction contract or challenge the adjudicator’s decision: s 27(4).
  7. Where a respondent does not provide a payment schedule and does not pay the amount claimed, then the claimant may recover the unpaid amount “as a debt due to the claimant, in any court of competent jurisdiction”.  Once again a respondent is not entitled to bring a cross-claim or raise a defence in relation to matters arising under the construction contract: s 17(3). The claimant may also suspend work under the construction contract: ss 17(2)(b), 29.
  8. Where a respondent does provide a payment schedule but does not pay the amount identified in the payment schedule to be payable then the unpaid amount may be recovered as a debt in a court of competent jurisdiction, the respondent is not entitled to bring a cross-claim or raise a defence in relation to matters arising under the construction contract and may suspend work under the contract: ss 18, 29.
  9. Where amounts are not paid, the difference that the conduct of an adjudication makes is that it allows the certificate of adjudication to be filed “as a judgment for a debt”, whereas if there has been no adjudication then the statute deems a debt to exist and limits defences to a claim for a debt but still requires proceedings to be commenced and prosecuted to judgment.

Prerogative relief in relation to adjudicator’s decision

  1. In Chase Oyster Bar Proprietary Ltd v Hamo Industries Proprietary Ltd (2010) 78 NSWLR 393 the New South Wales Court of Appeal held that the decision of an adjudicator under NSW SOP Act involved the exercise of a public power and accordingly determinations by an adjudicator were, in principle, amenable to orders in the nature of certiorari.  It held that there was no requirement that a decision-maker have a duty to act judicially before being amenable to certiorari.
  2. The reasoning, but not the result, in Chase Oyster Bar requires some modification in the Territory.  The decision in Chase Oyster Bar was particularly influenced by the decision of the High Court in Kirk v Industrial Court of New South Wales (2010) 239 CLR 531.  In that case the High Court found that State legislation which would take from a State Supreme Court power to grant relief for jurisdictional error on the part of inferior courts and tribunal was beyond State legislative power.  That was because Chapter III of the Commonwealth Constitution requires that there be a body fitting the description of “the Supreme Court of a State” and its supervisory jurisdiction enforcing the limits on the exercise of State executive and judicial power is a defining characteristic of such a body.
  3. In the Territory the same position is achieved as a consequence of the entrenchment of s 48A of theAustralian Capital Territory (Self-Government) Act 1988 (Cth) vis a vis the Territory legislature: see Faull v Commissioner for Social Housing [2013] ACTSC 121 at [109].  It means that the power of the Court to exercise its supervisory jurisdiction with respect to the exercise of statutory powers and the conduct of statutory procedures is an entrenched one which cannot be taken away by actions of the Legislative Assembly.  The plaintiff in the present case sought to argue that the position in Kirk in relation to the States was achieved in relation to the Territory by reason of the decision in Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 and North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146.  Having regard to the existence of s 48A it is not necessary to address that argument in the present case.
  4. As a consequence, the plaintiff argued that this Court had power, in its supervisory jurisdiction, to review the exercise of power by a statutory adjudicator under the SOP Act and that this power was in addition to any statutory power under that Act to review the decisions of adjudicators.  The defendant said nothing in opposition to that submission and, for the reasons outlined above, I accept that it is correct.
  5. The position in relation to non-jurisdictional error is however not without difficulty.  Section 43 of the Actprovides:

    (1) Except as provided for in this part, a court does not have jurisdiction to set aside or remit an adjudication decision on the ground of error of fact or law on the face of the decision.

  6. That subsection purports to limit the jurisdiction of the Supreme Court to grant an order to the effect of a writ of certiorari in so far as the order is based upon an error of law on the face of the decision.  An error of law on the face of the record is one of the established grounds for the grant of a writ of certiorari: seeCraig v South Australia (1995) 184 CLR 163 at 175-176.  Whilst, in the Territory, there is no statutory provision which defines or expands the scope of what constitutes “the record” for the purposes of the writ of certiorari (cf. Supreme Court Act 1970 (NSW) s 69(4); Administrative Law Act 1978 (Vic)10), the fact that the decision of an adjudicator “must… include the reasons for the decision” means that it is at least arguable that the reasons form part of the record for the purposes of certiorari.  If that is correct, then the scope to review, by way of certiorari, a decision of an adjudicator under the SOP Act is quite broad.  What section 43(1) purports to do would be to remove from the jurisdiction of the Court one of the recognised bases upon which a decision may be quashed.  It was recognised in Kirk (at [100]) that legislation which denies the availability of relief for non-jurisdictional error of law appearing on the face of the record is not beyond the power of State legislators. In New South Wales it has been held that the legislative scheme of the NSW SOP Act was inconsistent with the availability of review for non-jurisdictional error of law: Musico and Ors v Davenport and Ors [2003] NSWSC 977 at [54]; Multiplex Constructions Pty Ltd v Luikens & Anor [2003] NSWSC 1140 at [42]; Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421 at [51]; Clyde Bergemann v Varley Power [2011] NSWSC 1039 at [39]. However, neither Kirk nor the New South Wales authorities address the issue which is relevant in the Territory, namely, whether such a restriction is consistent with the jurisdiction granted by s 48A of the Australian Capital Territory (Self-Government) Act 1988 (Cth).  In other words, does section 48A prevent the Territory legislature from excluding from the jurisdiction of the Supreme Court the power to quash a decision of a statutory decision-maker on the ground of error of law on the face of the record?  Having regard to my conclusions as to the third and fourth errors of law addressed below, which might be characterised as non-jurisdictional errors of law, I do not need to resolve this issue in order to decide this case.

First alleged error

  1. The first argument propounded by Mr Erskine SC, who appeared for the plaintiff, is one of considerable subtlety.  I will endeavour to articulate it as best I can before explaining why I do not accept it.  Central to the argument are the terms of s 15 of the Act which provides:

    15 Payment claim

    (1) A person who is or who claims to be entitled to a progress payment under section 10 (1) (theclaimant) may give a payment claim to the person who, under the construction contract concerned, is or may be liable to make the payment (the respondent).
    Note 1 If a form is approved under s 47 for a payment claim, the form must be
    used.

    Note 2 For how documents may be served, see the Legislation Act, pt 19.5.

    (2) A payment claim must—

    (a) identify the construction work or related goods and services to which the progress payment relates; and
    (b) state the amount of the progress payment that the claimant claims is payable (the claimed amount); and

    (c) state that it is made under this Act.

    (3) The claimed amount may include any amount—

    (a) that the respondent is liable to pay the claimant under section 29 (3); or
    (b) that is held under the construction contract by the respondent and that the claimant claims is due for release.

    (4) A payment claim may be given only before the later of—

    (a) the end of the period worked out under the construction contract; and
    (b) the end of the period of 12 months after the construction work to which the claim relates was last carried out or the related goods and services to which the claim relates were last supplied.

    (5) A claimant must not give more than 1 payment claim for each reference date under the construction contract.

    (6) However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim.

  2. The plaintiff’s argument starts with the proposition that there is a tension between s 15(5) and s 15(6) of the Act.  That tension is said to arise because subsection (5) says that a claimant “must not give more than 1 payment claim for each reference date” whereas subsection (6) says that an amount that has been the subject of a previous payment claim can be included in a later one.  The plaintiff’s arguments is that tension arises because the repeated making of claims for the same work would appear to be inconsistent with s 15(5) whereas s 15(6), at least on a broad reading, appears to permit it because a claim made in relation to a previous reference date can be made again as part of a later claim.
  3. The plaintiff therefore says that the reference to “an amount” in s 15(6) should be interpreted as only permitting the statement of an amount previously claimed and not permitting the full incorporation of the construction work relating to that previous amount as part of the statutory payment claim.  This would mean that the previously claimed amount was only included for reference in the subsequent claim as if the payment claim involved the statement of a running balance.  This was said to be consistent with the contractual background onto which the Act was superimposed, namely, progress claims under a construction contract which might show a running balance.
  4. The consequence of this argument would be that the amount included as part of a previous payment claim did not form part of the later payment claim which had any statutory effect.  Applied to the facts of the present case it would mean that PC29 was not a payment claim under the Act or, to the extent that it incorporated an amount previously claimed in PC28, it was not such a statutory claim.
  5. The plaintiff submitted that this result was consistent with the policy disclosed by the Act which was said in the plaintiff’s submissions to be not encouraging “a multiplicity of claims, adjudications and enforcements”.
  6. The effect of this argument would be that when a payment claim had been delivered by a claimant then, whether or not a payment schedule was received from the respondent, a claimant would be required to make an election as to whether or not to send its claim to adjudication.  Having had that opportunity once, the claimant would not get that opportunity again.  That is because it was only entitled to include in a subsequent payment claim the amount of the previous payment claim as a reference and the inclusion of that reference was not effective to permit the claimant to access the statutory process of adjudication in relation to the amount from the previous payment claim.
  7. The consideration of the plaintiff’s argument must start with the text of the SOP Act.  Section 15 of theAct must be read in its context which includes s 11.  Section 11 provides that “[t]he amount of a progress payment to which a person is entitled” is either the amount worked out under the contract or the amount worked out on the basis of the value of the construction work or related goods and services supplied or undertaken to be supplied under the contract.  Section 15(2) sets out the requirements for a progress claim, namely, that it identify the construction work, state “the amount of the progress payment” and state that it is made under the Act.
  8. Section 15(3) makes it clear that the “claimed amount” may be made up of component “amounts”.  It says “[t]he claimed amount may include any amount…” and then refers to two different categories of amount which may be included as components of a payment claim.  Thus the section contemplates a total “amount” claimed by the payment claim which is made up of other “amounts”.  Section 15(5) limits the frequency of payment claims to one claim for each reference date.  Section 15(6) refers back to s 15(5).  The opening word of subsection (6), “[h]owever”, indicates that subsection (6) is a qualification of what might be seen to flow from subsection (5).
  9. As is made clear by the use of the word “amount” in subsection (3), an amount referred to in subsection (6) may be a component amount of the overall amount claimed in the progress claim.  That is reinforced by the reference to “including” such an amount in a payment claim.  That aspect of the text which Pines’ argument gives inadequate weight is “including in a payment claim an amount”.  If such an amount is included in a payment claim then it forms part of the payment claim.  It is more consistent with the text of the section to see it as a reference to amounts included in the statutory claim, rather than a reference to including an amount on the same document but not in any way that makes it part of the claim that has a status and particular statutory consequences under the Act.
  10. Thus the reference to an amount in subsection (6) is dealing with what forms part of the payment claim and is not about what other information might be included in the same document.
  11. Read in that way, the intention of subsection (6) is clear.  It is to avoid any implication from subsection (5) that including previously claimed amounts as part of a subsequent claim infringes the “one payment claim per reference date” rule.  Such an implication might have arisen because of an argument that to include an amount for construction work in a later claim when it had been included in an earlier claim was, in substance, to make more than one claim for the reference date because the construction work was “tied” to the reference date in which it was first claimed.
  12. Subsection (6) performs a useful purpose by excluding such an implication, making it clear that an amount claimed in a claim was not thereby “tied” only to that reference date and, assuming it had not been paid, could be claimed again as part of a later payment claim.
  13. This interpretation of the function of subsection (6) makes more sense than the explanation given by the Plaintiff for the subsection.  The plaintiff’s explanation was that it existed to ensure that the inclusion, by way of information rather than for its statutory effect, of a reference to an amount previously claimed would not invalidate a payment claim.  Not only is it hard to see why the legislature would be addressing this extra-statutory possibility when addressing the statutory form of a payment claim but also, if such an interpretation was adopted, subsection (6) would not be operating as a qualification on subsection (5) because it would be dealing with information on a payment claim which, ex hypothesi, was not actually a statutory part of that claim.
  14. Finally, the submission made by the plaintiff is inconsistent with s 24(4) of the SOP Act.  That section provides that if an adjudicator values construction work or related goods and services under s 12 of theAct, the adjudicator and any other adjudicator must, in a later adjudication, give the work or goods and services the same value as the value decided earlier by the adjudicator unless one of the parties satisfies the adjudicator that the value of work or the goods and services has changed since the valuation.  The existence of that provision is a conclusive indication that the statute contemplates that there might be two adjudications involving valuation of the same construction work.  That could only occur if, contrary to the submission of the plaintiff, a subsequent payment claim which included an amount attributable to work that had been subject to an earlier payment claim was capable of enlivening the statutory process that could lead to an adjudication.
  15. For these reasons I do not consider that the text of s 15 is consistent with the plaintiff’s argument.  In my view, s 15(6) has the effect I have outlined above and does not prevent the inclusion of construction work claimed as part of PC28 in PC29.
  16. This conclusion is, in my view, consistent with the judgments in the three authorities upon which the plaintiff relied, namely, Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190, WatpacConstructions v Austin Corp [2010] NSWSC 168 and Grid Projects NSW Pty Ltd v Proyalbi Organic Set Plaster Pty Ltd [2012] NSWSC 15.  Each of these cases relates to the NSW legislation upon which the ACT Act is based.
  17. While examination of these authorities involves a somewhat lengthy diversion it is necessary in order to show that the conclusion reached above is consistent with those authorities and it will also provide useful background when addressing the plaintiff’s second claimed jurisdictional error below.
  18. Dualcorp involved two payment claims, each of which attached the same six invoices.  Both claims were made after the builder had left the site.  The first payment claim was responded to with a payment schedule and the amounts claimed in four of the invoices were the subject of an adjudication.  The claimant then made a further claim which was based on the same six invoices.  No payment schedule was served and the issue was whether the claimant was entitled to summary judgment in the District Court based on its second claim.  The District Court judge refused summary judgment in relation to the amounts claimed in the four invoices that were the subject of the adjudication but was prepared to enter summary judgment for the two invoices which were not the subject of the adjudication.  The Court of Appeal unanimously upheld the decision.  Handley AJA agree with the reasons of Macfarlan JA.  Allsop P came to the same result as the other judges but by a different route.
  19. The passage in the judgment of Allsop P relied upon by the plaintiff is in paragraph [8].  The whole of that paragraph provides:

    As can be seen from the Building and Construction Industry Security of
    Payment Act, s 13(5), a claimant is limited to one payment claim in respect of
    each reference date. Section 13(6) permits, however, inclusion in another
    payment claim (necessarily by reference to another reference date) of an
    amount that has been the subject of a previous claim. Amongst other usual and
    uncontroversial examples, this permits the submission of cumulative payment
    claims by reference to later reference dates, which include an amount the
    subject of a previous claim. In such circumstances, if there has been an
    adjudication, s 22(4) will apply to require the same value to be given to such
    work, subject to the qualification in that subsection.

  20. Section 13 of the NSW SOP Act is the equivalent of s 15 of the SOP Act.  It is clear from his Honour’s decision that he sees no objection to a claimant including an amount previously claimed even if it has been the subject of an adjudication.  The vice, according to Allsop P, in what the claimant had done inDualcorp was purporting to create fresh reference dates by lodging the same claim for the same completed works in successive payment claims: see [13].  That was notwithstanding that the Act permitted claims to be made for up to 12 months after the completion of construction work: s 13(4)(b).  His Honour’s decision is therefore based on the inability of the claimant to make the second payment claim because it did not relate to a new reference date.
  21. The plaintiff claimed that paragraph [8] of Allsop P’s decision supported the plaintiff’s interpretation of s 15(6), namely that it only permits the inclusion of a reference to the amount that was subject to the earlier payment claim.  In my view, his Honour’s judgment does not support the plaintiff’s interpretation.  His Honour makes specific reference in [8] to the operation of s 22(4) of the NSW SOP Act (the equivalent of s 24(4) of the SOP Act) which contemplates that there may be an adjudication covering amounts that had been subject to a previous payment claim.  Necessarily involved in that is the proposition that the first payment claim which had been made was adjudicated and that a second payment claim that included the amount was also adjudicated.  That is inconsistent with the plaintiff’s submission that, having had the opportunity to adjudicate an amount in the first claim, that award could not be adjudicated when included in the second claim.
  22. The decision of Macfarlan JA, with whom Handley AJA agreed, was based on issue estoppel.  Having regard to the features of the Act, His Honour considered that the determination of an adjudicator was final and binding between the parties as to the issues determined, except to the extent that the NSW SOP Act allowed the determination to be revisited: [60].  In the course of his reasons, his Honour expressed the view that although s 13(5) (the equivalent of s 15(5) in the SOP Act) permitted claims for amounts the subject of a previous claim, that could not be done where the amount had been the subject of an earlier adjudication: [53].  This appears to be different from the approach of Allsop P who expressly contemplated that it could be included and was subject to some commentary in Watpac to which I will refer below.
  23. As to paragraph 22(4) (the equivalent of s 24(4) in the SOP Act), his Honour set out and approved the reasoning of McDougall J in Rothnere Pty Ltd v Quasar Constructions NSW Pty Ltd [2004] NSWSC 1151 and John Goss Projects Pty Ltd v Leighton Contractors (2006) 66 NSWLR 707.  The effect of that approach is that s 22(4) only deals with issues of quantification of the value of construction work as distinct from questions of entitlement to payment.  Those issues of valuation, once determined by an adjudicator bind the parties, subject only to the terms of s 22(4) itself which allows a subsequent adjudicator to give them a different value if the value of the work has changed since the previous determination.  Allsop P agreed with this aspect of Macfarlan JA’s judgment: [16].
  24. However Macfarlan JA considered that the Act, when read as a whole, manifested an intention to preclude reagitation of the same issues so that if questions of entitlement have been resolved by an adjudication determination, those findings may not be reopened upon a subsequent adjudication: [67].  Likewise, if no subsequent adjudication occurs but a claimant proceeds to seek judgment following upon the failure of the other party to serve a payment schedule, as was the case in Dualcorp, the claimant should be denied judgment to the extent that what it seeks is inconsistent with the findings of the adjudicator: [67].
  25. Consistently with that reasoning his Honour also found that it would be an abuse of process for the claimant to rely upon a later payment claim in response to which no payment schedule was served to obtain judgment on a basis conflicting with issues resolved in the earlier determination: [69].  These remarks about abuse of process were obiter dicta: Urban Traders v Paul Michael [2009] NSWSC 1072 at [26].
  26. In Watpac McDougall J confessed to some difficulty in understanding what Macfarlan J said in Dualcorpat [53] to the effect that a subsequent payment claim could not include an amount claimed previously if it had been the subject of an adjudication.  That was because of the terms of s 13(6) and s 22(4), the latter expressly contemplating reconsideration of the valuation of amount subject to an earlier adjudication.  His Honour adopted a more limited implication from the terms of the Act more consistent with what Allsop P said in Dualcorp namely that s 13(6) does not contemplate resubmission of a payment claim to the extent that it has been rejected: [63], [78]-[84].  Ultimately he stated that if there was some prohibition on the repetition of claims (where that occurs in the context of ongoing work under the construction contract) that have been the subject of earlier claims and adjudication, then that prohibition was limited to circumstances not expressly covered by s 22(4), namely, where the prior adjudicator has considered the claim and, in the course of performing the statutory function of deciding the amount of any progress payment has determined that there was no entitlement to recover: [85].
  27. Grid Projects involved two payment claims.  The first was not subject to an adjudication application.  The second, which related to work on the same dates as the first, was found not to be a valid claim.  Stevenson J adopted the reasoning of Allsop P in Dualcorp namely that where work had been completed and no new work was done, a new reference date could not be created by the making of a fresh claim.
  28. In my view these authorities do not assist the plaintiff.  As pointed out above, Allsop P’s judgment does not support the plaintiff’s contention.  Further, the decisions of Macfarlan JA in Dualcorp and McDougall J in Watpac are both inconsistent with the plaintiff’s submission in that they recognise that, subject to questions of issue estoppel, a later payment claim may incorporate amounts claimed in earlier payment claims in a manner that enlivens the statutory processes and not merely as a matter of reference:Dualcorp at [63]-[67]; Watpac at [84]-[85].  I agree with McDougall J’s comments in Watpac about paragraph [53] of Macfarlan J’s decision in Dualcorp and consider that the paragraph needs to be read in the light of the balance of his Honour’s judgment.
  29. Finally, the conclusion that I have reached at [42]-[43] above as to the purpose and operation of s 15 is consistent with the approach taken to the equivalent provision under the Building and Construction Industry Payments Act 2004 (Qld). In Spankie and Ors v James Trowse Constructions Pty Ltd [2010] QCA 355 the Queensland Court of Appeal held that the provision equivalent to s 15(6) did not prevent a subsequent claim from claim claiming exactly the same as had been claimed in an earlier claim: [22]-[23]; see also VK Property Group Pty Ltd & Ors v Conias Properties Pty Ltd and Anor [2011] QSC 54 at[24].

Second alleged error

  1. The plaintiff has a second argument as to jurisdictional error.  It submits that Walton was required to elect whether or not to invoke any of the procedures for enforcement of PC28 and, if it chose to do so, was not entitled to invoke any of those procedures in relation to PC29 at least in so far as PC29 repeated the claim is made in PC28.  Pines submits “the Act does not permit it to enforce both, either simultaneously or serially.”  No sections of the Act or any authority were cited in support of this submission.
  2. In the present case, Walton took steps to suspend work as a consequence of PC28 and, having made PC29 and received a payment schedule, had the claim adjudicated.  Pines says that this was not permitted and led to an absence of jurisdiction on the part of the adjudicator.  Alternatively, it submitted that this conduct amounted to an abuse of the process under the Act, leading to the application for adjudication being “void”.
  3. Having rejected the plaintiff’s first argument, the starting point for consideration of this argument must be that, subject to the question of issue estoppel, where construction work is continuing, it is open to a claimant to include an amount in a later payment claim that has been included in an earlier claim.
  4. There is nothing in the text of the Act which articulates a requirement for a claimant to make an election either to enforce a payment claim or to make a new claim including amounts contained in the earlier claim and to enforce that later claim.
  5. There is no question of an issue estoppel arising out of the first claim because no issues have been determined in a way that, having regard to the basis for an issue estoppel as explained in Dualcorp, would give rise to such an estoppel.
  6. The taking of enforcement action by way of suspension of work where that is one of the statutory options available to a claimant does not enliven any other principle which would operate to preclude the prima facie entitlement of the claimant to take the action permitted by s 17(2)(b) and s 29.  The claimant is not, for example, approbating and reprobating, but instead is taking consistent steps in order to recover, as an interim payment, the amount that is alleged to be owing.
  7. As a consequence, Walton was not, by reason of its suspension of work pursuant to PC28 prevented from making and enforcing PC29.  The earlier suspension of work did not affect the jurisdiction of the adjudicator and did not constitute an abuse of the process available to Walton under the SOP Act.
  8. This conclusion is consistent with the decision in State Asphalt Services Pty Ltd v Leighton Contractors Pty Ltd [2013] NSWSC 528 in which Stevenson J held that there was nothing in the NSW SOP Act that would prevent a party enforcing an earlier payment claim in relation to which no payment schedule was given rather than pursuing an adjudication in relation to a later claim including the same amount and in relation to which a payment schedule was served. His Honour said at [53]: “[b]oth opportunities can “co-exist” unless there is wording in the statute that removes the first, once the second arises. I see no such wording.”
  9. Although it is not necessary for the conclusion stated above, there was a reasonable explanation for Walton’s decision to make and pursue PC29 in circumstances where no payment schedule had been given in relation to PC28.  In correspondence, Pines had contested the validity of PC28 on the grounds that it had not been properly served.  As a consequence, given the allegation of what would be, if it was made out, a fundamental defect with PC28 (see Brookhollow Pty Ltd v R & R Consultants Pty Ltd [2006] NSWSC 1 at [41]) there was an obvious reason why Walton might choose to make PC29, including in that claim the amounts claimed earlier in PC28, and pursue the later payment claim by way of adjudication.
  10. For these reasons, the second jurisdictional error alleged by Pines is not made out.

    Third alleged error – liquidated damages

  11. The plaintiff argues that the manner in which the adjudicator dealt with the issue of liquidated damages involved a jurisdictional error or alternatively a non-jurisdictional error of law.
  12. Clause 13.7 of the construction contract between the parties provides that liquidated damages were payable for every day after the Date for Completion and that an amount so payable was a debt due from the Contractor to the Owner.
  13. The Adjudicator’s reasons on this issue were as follows:

    123.  In the Payment Schedule, the Respondent said simply: “The Respondent is entitled to deduct [LDs] against the claimed amount (Contract Clause 12.19) which exceed the claimed amount”.  As the Claimant says in the AA, the Respondent made no attempt to quantify its entitlement or to establish why it was entitled to claim LDs or to actually set off a calculated amount.

    124.  The Claimant says that delays to the Works are the result of design errors and ongoing variations and changes to the scope of that are “driving the construction program and preventing OC”.

    125.  The Respondent has provided at Tab 7 of the AR correspondence which, it says, provide details of the Respondent’s “present entitlement” to LDs.  In my view, these documents do no more than assert the Respondents alleged entitlement to LDs based on delays to completion.  They certainly do not establish that the Claimant is responsible for all or any delays so as to establish a clear entitlement under the Contract.  It may be that the Respondent can establish that the liability but it has yet to do so.

    126.  The Respondent has not quantified LDs and of course it will be unable to do so until such time as the Works reach Practical Completion.  The Respondent has been unable to quantify its LDs therefore and I too am unable to do so.

    127.  I decide that, at least at this stage, for the purposes of this Decision under the Act, the Respondent has been unable to establish and entitlement to set off LD is in an amount “which exceed the claimed amount” or any amount.

  14. The plaintiff submits that Pines was entitled to set-off against or deduct from any outstanding balance the amount of liquidated damages that was owed.  The plaintiff submits the works were not required to be complete forthe entitlement to liquidated damages to be made out.  It submitted that it was essential to the adjudicator’s jurisdiction that he value Walton’s payment claim “under the contract”.  It submitted that the adjudicator exceeded his jurisdiction by “superimposing a requirement, foreign to the construction contract, that Pines establish that Walton was “responsible” for delays in order to set off or deduct liquidated damages”.  That was said to go beyond the requirements of the contract in circumstances where there was prima facie evidence that the dates for completion had been properly adjusted and were well past.
  15. The defendant submitted that the reasoning of the adjudicator was correct.  It submitted that there was no evidence to make good the plaintiff’s contention.  The date for completion was uncertain because the parties were in dispute, the defendant contending that delays had been occasioned by sub-standard design coordination and because the plaintiff had made significant design changes.
  16. Further, the defendant says that the legal arguments deployed in support of the plaintiff’s current claims in relation to liquidated damages were not advanced before the adjudicator.  It says, at the very least, that this is an issue which is relevant to whether or not leave should be granted to allow the argument to be run.
  17. Finally it submits that if there is an error then it is non-jurisdictional.
  18. As pointed out in the decision of the adjudicator, the payment schedule sent by Pines involved a mere assertion of an entitlement to deduct liquidated damages exceeding the claimed amount.  There were no details set out in the schedule itself.  In Walton’s adjudication application Walton dealt with the issue in some detail pointing out the reasons why liquidated damages could not be claimed.  Amongst other matters it put in dispute was whether or not the precondition for the application of liquidated damages namely that there had been delays to the project beyond the “Date for Completion” attributable to the claimant.  It pointed to a signed statement of Mr John Kiprioti, the project manager for Walton, which described in detail the claims for extensions of time which identified the basis for asserting a much later Date for Completion when that date was properly adjusted under the contract.  The adjudication response filed by Pines detailed in an annexure the basis for a present entitlement to liquidated damages.  That document did provide some detail of the claim for liquidated damages but provided no contradiction of the material provided by Mr Kiprioti.  It is clear from the statement of reasons that the adjudicator was unpersuaded by the material set out by Pines.  There was clearly a dispute between the parties as to who was responsible for the delays in the project and whether or not Walton was entitled to an extension of time beyond those identified by Pines.  The adjudicator recognised that in due course an entitlement to liquidated damages might be established by Pines.  However the material before him did not satisfy him at that stage and hence he was not prepared to make an allowance for liquidated damages.  In my view there was no error of law in his decision.  I do not think that the adjudicator wrongly placed an onus on Pines to prove that Walton was responsible for the delays. Rather recognising that Pines’ assertions of an entitlement was contradicted by the more detailed evidence from Mr Kiprioti, he proceeded quite reasonably on the basis that there was some burden on Pines to displace the position established by the evidence of Mr Kiprioti, namely, that there was no entitlement to liquidated damages. Ultimately, he was not satisfied that there was an entitlement to liquidated damages established by Pines. The reasons quite properly recognised that his conclusion was an interim one, only for the purposes of his role under the Act and that ultimately (if the matter was litigated in due course) the position might be different.
  19. Walton also sought to run an argument, not run before the adjudicator that there could be no entitlement to set-off liquidated damages until the final payment claim because the right to set-off only arose when money was “due” from the Contractor to the Owner.  It relied upon the decision in Merritt Cairns Constructions Pty Ltd v Wulguru Heights Pty Ltd [1995] 2 Qd R 521 to the effect that no amount of money was due if it was only contingently due and that in the present case having regard to the possibility that a unilateral extension of time might be granted it could not be said to be now due.  In the light of the conclusion I have reached above it is not necessary to consider this argument further.

    Fourth alleged error – defects

  20. Finally the plaintiff argues that the manner in which the adjudicator dealt with the issue of defects involved a jurisdictional error or alternatively a non-jurisdictional error of law.
  21. On the issue of defects, the reasons of the adjudicator were as follows:

    128.  The Respondent said in the Payment Schedule only: “The Claimant is in breach of its obligations under the Contract to correct defects (Contract, cl 9.6)”.

    129. That clause provides: “If prior to the expiration of the Defects Liability Period [DLP] [my italics] for the Works or a Stage, the Contract Administrator discovers or believes there is a Defect, the Contract Administrator may give the Contractor an instruction specifying the Defect and …” requiring the Contractor to rectify the defect; requiring the Contractor to correct it by way of variation or notifying the Contractor that the owner will accept the work despite the defect.

    130. The Claimant says in the AA that the Respondent has; “not provided sufficient detail of the alleged defects and/or not provided the Claimant with sufficient time to respond [to] a recent schedule dated 4 February 2013. I note that the Quality Management Report was not relied upon in the Payment Schedule dated 6 February 2013 even though it pre-dated it.

    131. The Claimant says that the Respondent has not issued a direction to the Claimant to rectify or notified it of its intention to have alleged defective work carried out by others.

    132. The Claimant points out that: “in any event ‘OC’ and “PC’ can be achieved with ‘minor defects and omissions’ outstanding and the Claimant is entitled to deal with these during the [DLP]”. I agree. There is no evidence or even a suggestion that OC and PC are being held up as a result of alleged defective work. The Contract provides specifically for such issues to be dealt with during the DLP.

    133. I have read the “Quality Management Report” of Mr. Carroll dated 4 February 2013. Considering that the Contract Works have been compelte for some time, I agree with the Claimant that it has had little time to respond to that document, which was provided to it after the date that Payment Claim was served on 22 January 2013.

    134. I agree with the Claimant that the items list, even if they can be established as defective work, which they have not at this point, are matters which can appropriately be resolved during the DLP. Most of them are relatively trivial in the context of the value of the Contract Works overall.

    135. I am not satisfied that the amount estimated by Mr. Carroll as constituting the cost of rectifying alleged defective work may be set off against the amount to which the Claimant is otherwise entitled pursuant to Payment Claim #29. I have no evidence that the Respondent has actually incurred any loss as a result of having been obliged to rectify alleged defective work.

    136. Accordingly, I decide that the Respondent has not established an entitlement to set off any amount for alleged defective work.

  22. In relation to defects, Pines submits that the adjudicator exceeded his jurisdiction by disregarding, in the exercise of valuation under the contract, defects which had been the subject of an instruction for rectification prior to the date of the payment claim but then not rectified by Walton within the time specified in the instruction.
  23. Walton submits that the adjudicator was right when he concluded that the plaintiff had not established that the works were defective.  It submits that the approach of the adjudicator was correct, that if it was not correct it did not amount to a jurisdictional error.  It also makes various submissions in relation to whether or not leave should be granted to agitate this argument, in particular the modest quantum of the claim for defects, $92,500 and the fact that the schedule of alleged defects was not served with the payment schedule and hence Walton did not have a proper opportunity to deal with the contents of that schedule.
  24. In the payment schedule Pines simply said “the Claimant is in breach of its obligations under the Contract to correct defects (Contract, clause 9.6).”  No further detail was provided.  In the adjudication application Walton asserted that Pines had not provided sufficient detail or time to respond in relation to defects, noting that a schedule dated 4 February 2013 had recently been issued.  It asserted that no direction had been issued claiming a failure to correct defects within a specified period of time and Pines had not, on default, notified Walton that it would be having the works carried out by others.  It pointed to the fact that the defects could be characterised as minor defects and omissions which could be remedied in the defects liability period and that none of the preconditions to entitle Pines to set off the cost of rectification had been met.  In its adjudication response, Pines included a schedule of defects.  Those were schedules prepared by a Mr Ian Carroll identifying defects as at 4 February 2013 and 5 February 2013, identifying a due date and a cost estimate of the cost to rectify them.  There was no evidence to which I was taken that indicated any formal instruction had been given under the contract or providing a basis for the accuracy of the cost estimates set out in those documents.  There was no evidence that any actual cost had been incurred by Pines in rectifying them.
  25. In assessing the allegation of jurisdictional error and error of law it is important to note how Pines put its case in both the payment schedule and before the adjudicator.  Pines submitted that Walton was in breach of its obligations under the contract to correct defects.  What was alleged was a breach of the contractual obligation under clause 9.6 to rectify defects.  The articulation of this claim was not significantly developed in the adjudication response because most of the adjudication response was devoted to legal arguments and the defects claim was included, according to the adjudication response, “to demonstrate the respondent’s good faith, and notwithstanding that payment claim 29 is clearly not a payment claim within the meaning of the Act…”.  Thus the claim, in so far as it was articulated, was a set-off for breach of contract rather than an issue going to the valuation of the works.
  26. The adjudicator:

    a)           was not satisfied that the works identified were, in fact, defective work: [134];

    b)           agreed with Walton’s submission that any such defects could be dealt within the defects liability period: [132], [134];

    c)           found that the claimant had had little or no time to consider the report of Mr Carroll: [133]; and,

    d)           found that he had no evidence that Pines had actually incurred any loss as a result of being obliged to rectify the alleged defects and that he was not satisfied that the amount estimated by Mr Carroll could be set off against the amount to which the Walton was entitled under PC29.

  27. The approach of the adjudicator was, therefore:

    a)           to not be satisfied that the alleged defects were in fact defects; and,

    b)           to find that no damage had been suffered because the alleged defects were matters which could be dealt with during the defects liability period and there was no evidence of any actual damages having been incurred by Pines because it had not, itself, had to rectify the alleged defects.

  28. In my view, in dealing with the issue in this way, the adjudicator did not commit any error of law.  Fundamentally that was because he was not satisfied that the alleged defects were in fact defects.  That is an issue of fact and, in the light of the limited material put forward by Pines, was a conclusion open to the adjudicator.  It was fatal to Pines’ claimed entitlement to a set-off.
  29. However, leaving aside the factual issue, the adjudicator did not fall into error in rejecting the claim to the set-off on the basis summarised at (b) above.  Given that the claim was to damages for breach of contract, no breach had been established and no damages proven.
  30. I have emphasised the fact that Pines put its arguments to the adjudicator on the basis of an entitlement to set-off damages for breach of the obligation to rectify defects because the issue of defects might also have been relevant to the question of valuation.  Valuation was part of the adjudicator’s task under s 24of the Act because the amount of the progress payment to which a party is entitled is, in a case where it is not worked out in accordance with the contract, based on the value of the construction work: s 11.  That value of the construction work is to be determined “having regard to”, “if any of the work is defective, the estimated cost of rectifying the defect”: s 12(1).  Had the issue of defects been put in the payment schedule and put to the adjudicator not as an issue arising from a breach of the obligation to rectify but rather as a matter going to the valuation of the works, there would have been a better argument that the adjudicator had misconceived his statutory function, as Pines now alleges.  However, in my view in dealing with this matter in a manner consistent with the way in which Pines put its case in the payment schedule and adjudication response, the adjudicator did not fall into jurisdictional error or commit any error of law.  In any event, the answer to the logically anterior question, namely, whether or not the defects existed, was fatal to Pines’ contentions.

    Leave to appeal and extensions of time

  31. In the light of my conclusions in relation to Pines’ contentions that the decision involved jurisdictional errors or errors of law, the question of extensions of time and leave to appeal become relatively straightforward and I can state my conclusions briefly.
  32. In relation to the claim that the application for certiorari was lodged outside the time permitted by the rules, I do not need to determine this issue because I am satisfied that the grounds for certiorari are not made out.  That is the case whether or not the jurisdiction of the Court extends to granting an order in the nature of certiorari on the grounds of error of law on the face of the record: see [31] above.  It is therefore not necessary to determine the means of the expression in r 3557(2) of the Court Procedures Rules “the grounds for the grant of relief sought first arose”.  In particular it is not necessary to determine:

    a)           whether the grounds for relief arise upon the making of the decision or only when the decision is given to a party in a way that triggers the obligation to pay under s 25 of the SOP Act;

    b)           whether the existence of s 48A is of any relevance to the operation of r 3557(2); or

    c)           whether or not the circumstances were such as to amount to special circumstances and to warrant an extension of time under rule 3557(4).

  33. In relation to the extension of time in which to bring the application for leave to appeal, having regard to the absence of any explanation for the failure to bring the application for leave within the 28 days permitted by r 5072 and the fact that, in my view, the jurisdictional errors and errors of law alleged by Pines are not made out I would refuse an extension of time in which to make the application for leave.
  34. Had I granted an extension of time in which to bring the application for leave to appeal I would have been satisfied that leave should be refused.  Section 43(4), which is set out at [11] above, picks up the test for leave to appeal in s 38(5) of the Commercial Arbitration Act 1986 (ACT).  That provision was considered by Miles CJ in Commonwealth v Rian Financial Services (1991) 105 FLR 239.  An identical New South Wales equivalent provision was considered by the New South Wales Court of Appeal inPromenade Investments Pty Ltd v New South Wales (1992) 26 NSWLR 203 and, more recently, inGordian Runoff Ltd v Westport Insurance Corporation (2010) 267 ALR 74.  The procedural point made in Promenade Investments at 223 and 226-227 and Gordian at 98 as to how applications for leave should be dealt with was not argued before me and, in the context of the SOP Act, will need to be considered in the light of the availability, without a grant of leave, of prerogative relief.  Similarly, no submissions were made as to how the reference to “substantially affect the rights of one or more parties to the adjudication decision” should be interpreted in a context where, in contrast to an arbitration decision, payments ordered to be made by an adjudicator under the SOP Act are interim payments expressly stated by the Act not to affect the rights of the parties: s 38.  Clearly, having regard to the conclusions on the substantive points that I have outlined above, the test in s 43 is not made out since there is not a “manifest error on the face of the adjudication decision” or “strong evidence” of an error law that may add or be likely to add “substantially to the certainty of the law.”

Disposition

  1. For the reasons I have given each of the errors alleged by the plaintiff have not been made out. In summary the issues that I identified in [15] above are resolved as follows:

    (a)          Should the plaintiff be given an extension of time and leave to appeal pursuant to s 43 of the SOP Act?

    No.

    (b)          Is the plaintiff out of time in bringing its application for prerogative relief and, if so, whether the time specified under r 3557(2) should be extended?

    Unnecessary to decide.

    (c)          Did the adjudicator fall into jurisdictional error?

    No.

    (d)          Did the adjudicator make non-jurisdictional errors of law?

    No.

    (e)          If the answer to (d) is yes, are there any consequences of those errors?

    Unnecessary to decide.

  2. As a consequence the appropriate orders are as follows:

    (a)    in proceedings SCA 34 of 2013 (the application for leave to appeal under s 43 of the SOP Act) the order of the Court is that the application is dismissed with costs.

    (b)   in proceedings SC 193 of 2013 (the certiorari proceedings) the order of the Court is that the proceedings be dismissed with costs.

    I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment herein of Master Mossop.

    Associate:

    Date:    8 August 2013

     

Counsel for the plaintiff:  Mr C M Erskine SC
Solicitor for the plaintiff:  J S O’Connor, Harris & Co
Counsel for the defendant:  Mr M K Condon SC
Solicitor for the defendant:  Crisp Legal
Dates of hearing:  21 June and 1 July 2013
Date of judgment:  8 August 2013

 

 

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