Axis Plumbing N.T. Pty Ltd v Option Group (NT) Pty Ltd

Case [2014] NTSC 22

Axis Plumbing N.T. Pty Ltd v Option Group (NT) Pty Ltd and Anor [2014] NTSC 22

PARTIES:AXIS PLUMBING N.T. PTY LTD

(ACN 158 330 459)

v

OPTION GROUP (NT) PTY LTD

(ACN 142 817 767)

AND

BALDRY, David

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY

JURISDICTION:  SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING TERRITORY JURISDICTION

FILE NO:No 128 of 2013 (21356780)

DELIVERED:  6 June 2014

HEARING DATES:  17 & 21 February 2014

JUDGMENT OF:  HILEY J

CATCHWORDS:

ADMINISTRATIVE LAW – Construction – Security of payment – Determinations – Validity of – Jurisdictional error – Review by Supreme Court – Functions of Court on judicial review - Construction Contracts (Security of Payments) Act 2004 (NT) ss 27, 33(1)(a), 48(3)

ADMINISTRATIVE LAW – Construction – Security of payment – Adjudicators – Jurisdiction – Jurisdictional error – Statutory Criteria – Satisfaction as to – Must be reasonable – Must be legally correct –  Construction Contracts (Security of Payments) Act 2004 (NT) ss 33(1)(a), 48(3)

CONSTRUCTION – Security of payment – Determinations – Whether there is a “construction contract” - Construction Contracts (Security of Payments) Act 2004 (NT) s 33(1)(a)(i)

CONSTRUCTION – Security of payment – Determinations – Whether contract subject to condition precedent – Whether there is a payment dispute - Construction Contracts (Security of Payments) Act 2004 (NT) s 33(1)(a)(ii)

AJ Lucas Operations Pty Ltd v Mac-Attack Equipment Hire Pty Ltd and Anor [2009] NTCA 4; (2009) 25 NTLR 14; Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393; Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 – applied

K & J Burns Electrical Pty Ltd v GRD Group (NT) Pty Ltd and Anor [2011] NTCA 1; (2011) 29 NTLR 1 – considered

Gedeon v Commissioner of the NSW Crime Commission (2008) 236 CLR 120; Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611; Northern Territory of Australia v Urban and Rural Contracting Pty Ltd & Anor (2012) 31 NTLR 139; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; R v Connell; Ex parte Hetton Bellbird Collieries Ltd (1944) 69 CLR 407; R v Federal Court of Australia; Ex parte Pilkington ACI (Operations) Pty Ltd (1978) 142 CLR 113; Re Carey; Ex Parte Exclude Holdings Pty Ltd & Ors [2006] WASCA 219; Trans Australian Constructions Pty Ltd v Nilsen (SA) Pty Ltd (2008) 23 NTLR 123 – referred to

Constructions Contracts (Security of Payments) Act 2004 (NT) ss 27, 28, 28(1), 33, 33(1), 33(1)(a), 33(1)(a)(i), 33(1)(a)(i), 34, 48, 48(1) & 48(3)

REPRESENTATION:

Counsel:

Plaintiff:W. Roper

First Defendant:  N. Christrup

Solicitors:

Plaintiff:Colin Biggers & Paisley

First Defendant:  Paul Maher

Judgment category classification:   B

Judgment ID Number:  Hil1408

Number of pages:  29

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Axis Plumbing N.T. Pty Ltd v Option Group (NT) Pty…

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AGLC
Axis Plumbing N.T. Pty Ltd v Option Group (NT) Pty Ltd [2014] NTSC 22
Case
[2014] NTSC 22
Decision Date

CaseChat Overview and Summary

In the matter of Axis Plumbing N.T. Pty Ltd v Option Group (NT) Pty Ltd, the Supreme Court of the Northern Territory considered the validity of a determination made by an adjudicator under the Construction Contracts (Security of Payments) Act 2004 (NT). The plaintiff, Axis Plumbing N.T. Pty Ltd, sought a review of the adjudicator's decision, arguing that the determination contained jurisdictional errors. The defendant, Option Group (NT) Pty Ltd, contended that the adjudicator's decision was legally sound and free from any reviewable error. The core of the dispute revolved around whether the adjudicator correctly interpreted the existence and terms of the contract, particularly whether the contract was a construction contract and if it included a condition precedent for the commencement of the hire period.

The legal issues before the Court included whether the adjudicator had jurisdiction to determine the existence and terms of the contract and whether the adjudicator's conclusions were reasonable and legally correct. The Court had to determine if the adjudicator erred in his findings regarding the existence and terms of the contract and whether there was a valid payment claim due and payable. Furthermore, the Court needed to decide whether the adjudicator's decision contained any jurisdictional error that warranted judicial review.

The Court held that the adjudicator had jurisdiction to make a final and valid determination regarding the existence and terms of the contract. It was found that the adjudicator's opinions and conclusions about the contract's existence and terms were both reasonable and legally correct. The Court held that the adjudicator acted reasonably and in good faith in considering and deciding these issues. Therefore, there was no reviewable jurisdictional error. The Court further found that the Purchase Order constituted an offer and contained all relevant terms, with the only condition being the enabling and induction of personnel. The Court concluded that the contract was a construction contract and payment was due under the Payment Claim dated 9 August 2013.

The Court dismissed the plaintiff's application for judicial review, affirming the adjudicator's determination as valid and legally sound. The Court held that there was no basis for concluding that the adjudicator wrongly construed the Act or that his conclusions were not reasonable and legally correct. Consequently, the Court ruled that the adjudicator's decision was correct and that no reviewable jurisdictional error was present in the determination.

Orders

Orders of the court

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Background

Background to the litigation

The first defendant contends that the plaintiff has not demonstrated any reviewable error on the part of the Adjudicator, and that even if the Court was entitled to make its own determination on the merits the same conclusion would result.Main facts Axis had been contracted to provide plumbing works for the INPEX Blaydin Point LNG Plant by the head-contractor for the project, JKC Australia LNG Pty Ltd (JKC). The main people involved in the dispute between Option Group and Axis were Gerard Breen (Breen) a director of Option Group and Errol Alley (Alley) of Axis. Each of them made statutory declarations for the purposes of the adjudication, Breen on 10 October 2013 and Alley on 7 November 2013. On 15 March 2013, following discussions between representatives of the parties about Axis hiring dump trucks from Option Group, Breen sent an email to Axis setting out hire rates for various machinery including but not confined to dump trucks. Then followed discussions about Axis also using some of Option Group’s drivers and the need for them to be inducted by Axis. On 23 April 2013 Alley met Breen and others and discussed the hiring of vehicles from Option Group. Alley and Breen provided different accounts about what was said at that meeting. (a)In his statutory declaration (of 10 October 2013) Breen says that there were discussions about obtaining necessary tickets for dump truck drivers which would be acceptable to JKC.[6](b)Alley went into a lot more detail in his statutory declaration (of 7 November 2013).[7] He said that he explained to Breen “the step-by-step process about how plant would be deployed on the project site” and set out the effect of what he said. This included that:(i) “There are a few steps to work through here, with everything to be approved by the head contractor JKC before anything goes on site”(ii) “… A risk assessment for each plant will need to be completed and submitted to JKC for approval …”(iii) “If the plant is approved JKC will issue equipment labels and stickers.”(iv) “Then and only then can the trucks be permitted on the project site. That is when the hire period commences.”(c)Alley said that Breen said that he understood (that) and that Option Group would work with Axis to get the necessary approvals from JKC. Alley says that he went on to explain to Breen that the commencement of the hire period would be conditional upon satisfying JKC. Axis relied heavily upon these assertions by Alley to support its contention that the vehicles had to be approved by JKC before any contract was entered into. It seems that Breen did not have the opportunity to respond to these assertions made by Alley.[8] On 26 April 2013 Alley sent a Purchase Order (the Purchase Order) to Option Group with an email. The Purchase Order referred to the dry hire of 4 dump trucks at specified rates per hour and included the words “minimum 200 hours months each”, “hire to commence as personnel are enabled and inducted” and “payment terms 30 days EOM”. It said nothing about any other conditions, such as the prior approval of the vehicles by JKC.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Counsel for the plaintiff also relied on subsequent conduct between the parties including the email of 29 April that Breen did not receive, and later communications. Even if such (post contract) communications were admissible and relevant, none of them in my view leads to a conclusion that the Adjudicator was wrong about the existence and terms of the contract, let alone that his conclusions were not reasonable and legally correct. Indeed some of them, for example the absence of references to the alleged pre-condition in many of the emails, would seem to support the conclusions reached by the Adjudicator.Conclusions There is no basis for concluding that the Adjudicator wrongly construed the Act (on a question going to his jurisdiction to decide the adjudication on the merits).[41] I consider that the Adjudicator did have jurisdiction to make a final and valid determination regarding the existence and terms of the contract, including as to whether it was a construction contract and whether it contained the condition precedent alleged.[42] The Adjudicator’s opinions and conclusions in relation to the criteria prescribed in s 33(1)(a)(i) and (ii), in particular as to the existence and terms of the contract, are both reasonable and founded upon a correct understanding of the law.[43] He acted reasonably and in good faith in considering and deciding these issues.[44] Consequently, there was no reviewable jurisdictional error, either in relation to the existence of the contract or the conclusion that performance under it was not conditional. Thus there is no basis for concluding that there was not a valid payment claim that is due and payable,[45] this otherwise being a non-jurisdictional fact for the Adjudicator to decide, and consequently a payment dispute. Even if, contrary to my conclusions, the existence and terms of a contract alleged in an application under the Act are jurisdictional facts in the objective sense and thus examinable by this court, I am not persuaded that the Adjudicator erred in his findings regarding the existence and relevant terms of the contract alleged in the Application. Although additional or different facts and inferences may have emerged if there was an oral hearing and cross-examination, procedures not contemplated for the purpose of adjudications under the Act,[46] there was evidence before the Adjudicator upon which he was entitled to make the findings that he did, particularly as to what was said and not said during the conversations of 23 April and 27 or 28 April. These were findings of fact that enabled him to conclude that there was a contract and that it did not contain the condition precedent asserted. Nothing put before me indicated that the Adjudicator reached the wrong conclusion about this, even if the materials were considered objectively. On the basis of the materials that were before the Adjudicator and for reasons similar to those stated by the Adjudicator, I consider that the Purchase Order constituted an offer and contained all relevant terms, the only condition being the enabling and induction of personnel, and that the offer was accepted when Breen advised Alley that his drivers were “ready to go” and “were all now ticketed”. However, contrary to what the Adjudicator said at [35(c)] of the Determination about the consequences of Mr Alley’s version of the 23 April discussions being correct, I consider that whatever was said on 23 April was superceded by the clear wording of the Purchase Order, which made no mention of any conditions regarding approval of the vehicles. Accordingly, I consider that this was a construction contract and payment was due under the Payment Claim dated 9 August 2013.

Ratio Decidendi

Legal Principle Established

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