BGC CONTRACTING PTY LTD and RALMANA PTY LTD T/A RJ VINCENT & CO - [2015] WASAT 128

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

ACT: CONSTRUCTION CONTRACTS ACT 2004 (WA)

CITATION: BGC CONTRACTING PTY LTD and RALMANA PTY LTD T/A RJ VINCENT & CO [2015] WASAT 128

MEMBER: MS N OWEN-CONWAY (MEMBER)

HEARD: 30 JULY 2015

DELIVERED : 13 NOVEMBER 2015

FILE NO/S: CC 800 of 2015

BETWEEN: BGC CONTRACTING PTY LTD
Applicant
AND
RALMANA PTY LTD T/A RJ VINCENT & CO
Respondent

Catchwords:

Payment claim Principal's claim against contractor Advance notice of possible claim by principal No demand, request or claim 'for payment' made by principal in letter of notice of a possible claim that may be made in the future Meaning of 'order' in s 31(2)(a)(ii) and s 25(b) of the Construction Contracts Act 2004 (WA) 'order, judgment or other finding' does not include a purely procedural order by a court No evidence before the adjudicator or the Tribunal on review of any coincidence between the subject of the application for adjudication and any judicial proceedings

Legislation:

Construction Contracts Act 2004 (WA), s 3, s 6, s 16, s 25(b), s 26, s 31(2)(a), s 38, s 42, s 45(2), s 46(1), s 46(2), Sch 1, Div 4, cl 5(2)
State Administrative Tribunal Act 2004 (WA), s 17, s 29, s 29(3)(c)(ii)

Result:

Decision set aside and returned to the adjudicator to determine

Summary of Tribunal's decision:

The adjudicator's decision to dismiss the application for adjudication was set aside by the Tribunal upon review and the adjudicator was directed to determine the application in accordance with the Construction Contracts Act 2004 (WA). The Tribunal concluded that the adjudicator was not compelled to dismiss the application for adjudication by reason of the Supreme Court of Western Australia having made an order for directions in CIV 1156, being proceedings commenced by the respondent against the applicant. The Tribunal concluded that the adjudicator should not have dismissed the application for adjudication pursuant to s 31(2)(a)(ii) of the Construction Contracts Act 2004. The Tribunal also concluded that the payment dispute, the subject of the application for adjudication, was concerned with the applicant's payment claim dated 6 March 2015 which was the date on which a claim for the payment of money under the construction contract was made by the applicant against the respondent. An earlier letter from the applicant to the respondent was notice to the respondent of the applicant's rights under the construction contract between them and notice that it may make a claim but was not a claim for payment because no payment was requested, demanded or sought thereby. As such, the Tribunal concluded that, in its terms, the letter dated 3 December 2014 was not a 'payment claim' as defined by s 6 of the Construction Contracts Act 2004. As the adjudicator had considered all other bases for dismissal pursuant to s 31(2)(a) of the Construction Contracts Act 2004 and concluded that he was not compelled to dismiss the application for adjudication on any other basis, the Tribunal did not have jurisdiction to review the adjudicator's decision not to dismiss the application for adjudication for any of those reasons considered by the adjudicator.

Category: B

Representation:

Counsel:

Applicant: Mr M D Cuerden SC and Ms T D'Uva
Respondent: Mr C Sullivan and Ms M Cacqughey

Solicitors:

Applicant: Lavan Legal
Respondent: HopgoodGanim Lawyers

Case(s) referred to in decision(s):

Ah Toy v Registrar of Companies of the Northern Territory [1985] FCA 237
Dunstan v Simmie & Co Pty Ltd [1978] VR 669
John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) CLR 503
Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
R v Ireland [1970] HCA 21; (1970) 126 CLR 321
Tolofson v Jensen [1994] 3 SCR 1022
Tormaz Pty Ltd and High Rise Painting Contractors Pty Ltd [2012] WASAT 166

REASONS FOR DECISION OF THE TRIBUNAL:

Application for review to the Tribunal

On 25 May 2015, BGC Contracting Pty Ltd (applicant) filed in the Tribunal an application for review of a decision by an adjudicator made on 4 May 2015, dismissing the applicant's application for adjudication of a payment dispute with Ralmana Pty Ltd (respondent) (review application). The application for adjudication was made on 10 April 2015.
The review application was filed in the Tribunal pursuant to s 46(1) of the Construction Contacts Act 2004 (WA)(CC Act). The applicant has sought the following orders pursuant to s 46(2) of the CC Act:
(a)the adjudicator's decision dismissing the application for adjudication of the payment dispute arising from the applicant's payment claim, be set aside.
(b)the application for adjudication be remitted to the adjudicator to determine the same on the merits pursuant to the CC Act.

The adjudicator's decision on 4 May 2015 and reasons

On 4 May 2015, the adjudicator communicated his dismissal of the application for adjudication for the following alternative reasons:
(a)The application for adjudication was made by the applicant on 10 April 2015 in respect of a payment dispute which arose on 5 December 2014 (and not on 13 March 2015 as contended by the applicant) and therefore the application for adjudication was not prepared and served pursuant to s 26 of the CC Act (because the application for adjudication was not prepared and served within 28 days after the dispute arose as required by s 26 of the CC Act). As such, the adjudicator concluded that he was compelled to dismiss the application for adjudication by reason of s 31(2)(a)(ii) of the CC Act.
(b)On 2 April 2015, the Supreme Court of Western Australia (Supreme Court) made an order for directions in CIV 1156 of 2015 (CIV 1156), an action commenced by the respondent (as plaintiff) and applicant (as defendant). The adjudicator acknowledged that the order made on 2 April 2015 (Order) was an interim order and not a final order of the Supreme Court, but he concluded that the CC Act, as construed by him, did not distinguish between interim and final orders and he was compelled to dismiss the application for adjudication pursuant to s 31(2)(a)(iii) of the CC Act.
The adjudicator considered the other specific contentions in support of the conclusion that the adjudicator was bound to dismiss the application for adjudication made by the respondent in response to the application for adjudication. The adjudicator rejected the following of the respondent's contentions in support for dismissal of the application for adjudication (rejected contentions):
(a)The applicant is not entitled to issue a payment claim or make a claim for recovery of an amount by way of set off because such a claim does not arise 'under' the construction contract in issue (s 31(2)(a)(i) of the CC Act).
(b)The applicant's 'payment claim' for losses incurred by way of a set off was not compliant with the terms implied into a relevant construction contract by reason of s 16 of the CC Act and Sch 1 Div 4 cl 5(ii)(g) (s 31(2)(a)(ii) and s 26 of the CC Act).
(c)It was not possible for the adjudicator to fairly determine the payment dispute in the prescribed time or any extension thereof because of the complexity of the matter (s 31(2)(a)(iv) of the CC Act).
On review by this Tribunal, the rejected contentions were revived and advanced by the respondent in support of its contention that the Tribunal should not set aside the adjudicator's decision to dismiss the application for adjudication.

The Tribunal's review jurisdiction and powers

Section 46(1) of the CC Act confers on the Tribunal the jurisdiction to review 'a decision made under section 31(2)(a)' of the CC Act. The application falls within the Tribunal's review jurisdiction conferred by the CC Act (s 17 of the State Administrative Tribunal Act2004 (WA) (SAT Act)). The review may only be made by a person 'aggrieved' by such a decision. A decision made under s 31(2)(a) of the CC Act is a decision to 'dismiss' the application for adjudication brought by the applicant, without making a determination on the merits, if the application falls into one of the categories identified in s 31(2)(a)(i)(iv) of the CC Act (Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217 (Perrinepod) per Murphy JA at [79] (with whom Martin CJ agreed) and McLure P at [15]. Although it is possible that a respondent to an application for adjudication may be aggrieved for the purposes of s 46(2) of the CC Act (Perrinepod per Murphy JA at [82]), in this case it is the applicant who is aggrieved, as it is the applicant's application for adjudication of its disputed payment claim that was dismissed rather than determined on the merits.
The jurisdiction to review the adjudicator's decision to dismiss the applicant's application for adjudication of the payment dispute is by way of hearing de novo (s 29 of the SAT Act). Neither party has sought to adduce additional evidence or information other than submissions.

The rejected contentions

Whilst the adjudicator ultimately dismissed the application for adjudication, in considering each of s 31(2)(a)(i)(iv) of the CC Act, he decided not to dismiss the application for the reasons contended by the respondent and referred to in these reasons as the rejected contentions.
The CC Act does not confer on the Tribunal the jurisdiction to review an adjudicator's decision not to dismiss (Perrinepod per Murphy JA at [79]; Tormaz Pty Ltd and High Rise Painting Contractors Pty Ltd [2012] WASAT 166).
In this proceeding, the adjudicator refused to dismiss the application for adjudication based upon the rejected contentions referred to above. The respondent revived the rejected contentions in this proceeding. This Tribunal has no jurisdiction to review the adjudicator's decision not to dismiss the application for adjudication based upon any of the rejected contentions.

The issues

In the context of the parties to a construction contract, the following issues arise for determination upon the review:
1)Does a court's order for directions that has no dispositive effect on the rights and liabilities of the parties or on the matter before that court in extant proceedings compel an adjudicator to dismiss and application for adjudication concerning the same parties to those court proceedings? The Tribunal concludes 'No'.
2)Does a written claim of a right that contains no claim for the payment of any money, constitute a 'payment claim' within the meaning of that term as provided for by s 6 of the CC Act? The Tribunal concludes 'No'.

The review

Section 31(2)(a)(iii) of the CC Act and the order for directions made by the Supreme Court of Western Australia on 2 April 2015

The relevant statutory provisions

The CC Act anticipates curial (and arbitral and other) proceedings concerning, amongst other issues, the payment dispute, at the heart of the application for adjudication, being instituted before the application for adjudication is made (s 25(b) of the CC Act); during the course of an application for adjudication (s 31(2)(a)(iii) and s 45(2) of the CC Act) and after the application for adjudication is determined (s 38 of the CC Act). In this proceeding the application for adjudication was commenced after proceedings were commenced by the respondent against the applicant in the Supreme Court.
Section 31(2)(a)(iii) and s 25(b) of the CC Act dictate the impact of an 'order, judgment or other finding' by a court on:
(a)the right to make an application for adjudication where the order, judgment or other finding occurs before the application for adjudication is made (s 25(b) of the CC Act); and
(b)the application for adjudication when the order, judgment or other finding is made during the adjudication process but before the application for adjudication is determined by the adjudicator.
Although the adjudicator did not refer to it, s 25(b) of the CC Act provides:
… any party to the contract may apply to that the dispute adjudicated under this Part unless
(a)…
(b)the dispute is the subject of an order, judgment or other finding by … a court … dealing with a matter arising under a construction contract. (Tribunal emphasis)
Section 31(2)(a)(iii) of the CC Act provides that an appointed adjudication must within 14 days after the date on which a response is served or required to be served (s 31(1) of the CC Act):
(a)dismiss the application [for adjudication] without making a determination of its merits if
…
(iii)… a court … dealing with a matter arising under a construction contract makes an order, judgment or other finding about the dispute that is the subject of the application [for adjudication][.] (Tribunal emphasis)
By use of the verb 'makes' (present indicative), s 31(2)(a)(iii) of the CC Act applies where a relevant 'order, judgment or other finding' comes into existence during the application for adjudication process (that is, after one is commenced) but before it is concluded.
The Tribunal notes that the Order came into existence before the application for adjudication was made

The adjudicator's reasoning and conclusions

The adjudicator concluded that reference to the words 'judgment or finding' in s 31(2)(a)(iii) of the CC Act:
… [assumes] that the court … has come to a final ruling over the matter and until that final ruling the adjudicator may make a determination or decision.
Of the use of the word 'order' in s 31(2)(a)(iii) of the CC Act he concluded, without more, that it:
… does not necessarily suggest finality.
The adjudicator recognised that the Order is interlocutory in nature and that it did not dispose of the matter within CIV 1156. However, he concluded that:
(a)the Supreme Court made an order 'about the dispute that is the subject of the application' for adjudication;
(b)an order for directions is 'the commencement of a process that will ultimately lead to a ruling';
(c)the CC Act does not 'differentiate between interim orders and final orders'; and
(d)the issue of any order (interlocutory or otherwise) at the commencement of the court or arbitral process is the point at which the court or arbitrator 'takes over the case and the adjudicator ceases to have jurisdiction'.
The adjudicator concluded that the Order, although interlocutory and not dispositive of the matter within CIV 1156, compelled him to dismiss the application for adjudication. No regard was had to the facts of the matter within CIV 1156 or the relationship between that matter and the payment dispute which is the subject of the application for adjudication under consideration. In other words, the adjudicator assumed that the Order was 'about' the payment dispute, which is the subject of the application for adjudication.

The parties' submissions on the decision to dismiss pursuant to s 31(2)(a)(iii) of the CC Act

The applicant asserts that, as a matter of law, the adjudicator is wrong and 'order, judgment or other finding' applies only to final orders. In this proceeding the respondent asserts that the adjudicator was correct in his conclusion that the 'order, judgment or other finding' may be any order.
The respondent advanced the following propositions:
1.The fact that the legislature intended to use the word 'order' suggests something other than a final determination was intended by the legislature;
2.The use of the word 'other finding' also suggests that it was not just a final judgment or determination that the legislature intended to be 'caught within these provisions';
3.The term 'order' has been defined as to be contrasted with a judgment or final judgment a 'judicial' or 'ministerial direction' or 'conclusion' on matters outside the record; and
4.The term 'judgment' in its technical sense means a decision that concludes and action, while an 'order' is any other judicial determination.
(Paragraphs 27 and 28 of the respondent's submissions).
Both parties focused their submissions on the meaning of 'order' in s 31(2)(a)(iii) of the CC Act and whether it was limited to an order that finally disposed of the matter before the court or whether it encompassed any order procedural or substantive. Neither party addressed the provisions of s 25(b) of the CC Act and the fact that the Order predated the application for adjudication and the consequences. Neither party addressed the issue of the evidence before the adjudicator concerning the matter before the Supreme Court in CIV 1156 and whether it encompassed the payment dispute which is the subject of the application for adjudication.

The evidence before the adjudicator

The evidence before the adjudicator established that on 4 February 2015, the respondent, as plaintiff, filed a generally indorsed Writ of Summons in the Supreme Court against the applicant, as defendant in CIV 1156. On 2 April 2015, the Order was made in CIV 1156 at a directions hearing, directing the parties to take certain procedural steps to advance the matter brought by the respondent, as plaintiff, against the applicant as defendant, in CIV 1156 to a further directions hearing.
A copy of the engrossed Order was not before the adjudicator. The adjudicator had before him a copy of the respondent's (as plaintiff) minute of proposed orders for directions in CIV 1156, which had been 'hand amended to the effect that orders were given as amended'. On balance, the adjudicator stated that he was 'satisfied that an order was made' in terms of the minute as amended. None of the directions in the Order concern final relief concerning the matter or matters within CIV 1156.
The respondent, in its solicitor's letter to the adjudicator dated 16 April 2015, informed the adjudicator of the respondent's issue of a generally indorsed Supreme Court Writ of Summons in CIV 1156 (and provided the adjudicator with a copy of the same) and the issue of the Order (and provided the adjudicator with a copy of the same). The respondent's solicitor also stated in the letter dated 16 April 2015 that the respondent anticipated that the applicant would file a defence and a counterclaim in CIV 1156 and that the same would be based upon the applicant's payment dispute, the subject of the applicant's application for adjudication. The respondent's letter further stated:
… the matters raised by the Applicant in its adjudication application should properly be determined in the court proceedings.
The reference to the 'court proceedings' is a reference to CIV 1156. These statements are the extent of the respondent's submission to the adjudicator on the relevance of the orders for direction made on 2 April 2015 in CIV 1156.
The copy of the generally indorsed Supreme Court Writ of Summons in CIV 1156 establishes that the matter comprised in CIV 1156 constituted a claim by the respondent as the plaintiff, against the applicant as defendant, arising from the construction contract for judgment in the sum of $33,092,991.74 (excluding GST) as at 31 October 2014 as a liquidated sum; additional sums due for delay costs under the construction contract between them as liquidated sums to be specified; damages to be assessed; interest; costs and any further relief considered fit by the Supreme Court.
The evidence before the adjudicator is that, as at 16 April 2015, the respondent as plaintiff, expected the applicant, to file a defence to the claim made by the respondent as plaintiff, and a counterclaim against the respondent as plaintiff, in terms of the payment claim in dispute which is the subject of the application for adjudication.
No other evidence or submission was advanced by the respondent in its response made on 24 April 2015 concerning CIV 1156 or the Order.
As at the date of the decision under review on 25 May 2015, being the relevant date for the purpose of s 31(2)(a)(iii) of the CC Act, there was no evidence of any defence or a counterclaim filed at all by the applicant as defendant in CIV 1156, let alone any evidence of the nature of a defence or counterclaim. In short, as at the date of the adjudicator's decision there was no evidence that the payment dispute which is the subject of the application for adjudication before him was encompassed within the matter before the Supreme Court in CIV 1156. As at the date of the adjudicator's decision, there was nothing more than the respondent's solicitor's prediction of the applicant's response as defendant in CIV 1156 and an expectation that the payment dispute that is the subject of the application for adjudication would be advanced as a defence and/or counterclaim by the applicant as defendant in CIV 1156.

The Tribunal's consideration and conclusion on the issue arising from the Order in CIV 1156 and s 31(2)(a)(iii)

The respondent's solicitor's statement that the '… matters raised by the Applicant in its adjudication application should properly be determined in the court proceedings' (meaning CIV 1156) is irrelevant to the adjudication process. There is no doubt that the Supreme Court has the jurisdiction to finally (and presumably 'properly') determine the rights and liabilities of the parties in a matter before that court. By contrast, the CC Act concerns a statutory process designed and intended to dispose only of an applicant's claim to immediate payment of monies claimed under a construction contract. The CC Act provides for adjustments by courts for adjudicated determinations when making dispositive orders in proceedings where there is a coincidence between the subject of the determination and the matter before the court. There is no provision in the CC Act which enables, entitles or compels the adjudicator to dismiss an application for adjudication on the basis that the preferable forum for final (and presumably proper) determination of a legal right is a court. Sections 38 and 45 of the CC Act presuppose that there may be final conclusions made of the parties' respective rights and liabilities by a court at some point and the CC Act provides for how the interim payments directed to be made pursuant to adjudicated determinations are be accommodated in any final relief granted by a court. Extant court proceedings of themselves have no impact on an adjudicator's jurisdiction to determine an application for adjudication.
CIV 1156 concerns the respondent's claim for monies from the applicant. The payment dispute that is the subject of the application for adjudication is the applicant's claim for monies from the respondent. The claims are different in nature and are counter opposed. The payment claim which is the subject of the adjudication is not, on the evidence, relevant to or comprised in CIV 1156 of 2015. There was therefore no evidence to support the adjudicator's conclusion that the Order made in CIV 1156 was 'about the dispute that is the subject of the application [for adjudication]' as required by s 31(2)(a)(iii) CC Act.
Even if the Tribunal accepted that the phrase 'order, judgment or other finding' is intended to include an interlocutory order with no dispositive effect on the matter before the court, on this analysis, there is no foundation to the adjudicator's conclusion at paragraph 57 of his decision that:
… the Supreme Court has made an order about the dispute that is the subject of the application [for adjudication]. (Tribunal emphasis)
For this reason alone, the Tribunal concludes that the adjudicator should not have dismissed the application for adjudication pursuant to s 31(2)(a)(iii) of the CC Act.
The adjudicator recognised that an order may be an interlocutory or 'interim' order or a final order. The applicant relied upon authority that final relief by a court may be granted by 'order' rather than 'judgment' and the distinction is based upon historical distinction between the nature of the proceeding (see: Dunstan v Simmie & Co Pty Ltd [1978] VR 669). However, s 31(2)(a)(iii) of the CC Act describes what the 'order' must be about for s 31(2)(a)(iii) of the CC Act to apply. The 'order, judgment or other finding' referred to in s 31(2)(a)(iii) of the CC Act must be 'about the dispute that is the subject of the application' for adjudication, not merely about the procedure by which the dispute will be advanced to a hearing before the court, after which a final dispositive judgment or other order will be made, depending on the nature of the claim. This is a fundamental distinction between substantive decisions, orders and laws and procedural decisions, orders and laws. Procedural laws and orders are those which 'make the machinery of the forum court run smoothly' as opposed to substantive laws and orders which are 'determinative of the rights of both parties' (Tolofson v Jensen [1994] 3 SCR 1022 at 1071 1072; relied upon in John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) CLR 503 at [131] [134]). Whilst it is acknowledged that there is no 'bright line' between 'substantive' and 'procedural' decisions, orders and laws in the spectrum where one commences and the other ends, the Order is not substantive in the sense of being determinative of the rights and liabilities of the parties in relation to the matter comprised in CIV 1156. The Order simply directs the parties in the manner in which they must proceed so as to have the matter heard and determined by the Supreme Court. The Tribunal concludes that the Order in CIV 1156 is entirely about how the matter will proceed through to a final hearing and not 'about' the substantive matter of CIV 1156.
Therefore, even if there had been evidence before the adjudicator that the applicant as defendant/counterclaimant had filed a defence and counterclaim in CIV 1156 concerning the payment dispute (the subject of the application for adjudication) the Order in CIV 1156 was not 'about' that payment dispute and the Order is not one that compelled the adjudicator to dismiss the application for adjudication. For this reason also, the Tribunal concludes that the adjudicator should not have dismissed the application for adjudication pursuant to s 31(2)(a)(iii) of the CC Act.
Even if the Tribunal is incorrect in its conclusions that:
(a)there is no evidence that the matter comprised in CIV 1156 included or concerns the payment dispute that is the subject of the application for adjudication; and
(b)if the payment dispute that is the subject of the application for adjudication were comprised in CIV 1156, the Order is not 'about' that payment dispute because the Order directs the parties on how the matter will be heard not what the parties' rights are in relation thereto;
the Tribunal concludes that 'order' in the context of s 31(2)(a)(iii) of the CC Act is intended to refer to a final dispositive order by a court and not an interlocutory order for directions. The authorities that refer to the terms 'judgment', 'order' and 'finding' in the wider 'accepted legal meaning' exclude 'procedural' orders such as an order for directions on the procedures that the parties must comply with an order for the court to hear and finally determine the matter between the parties. Principal among those authorities, albeit dicta, is the statement by Barwick J in R v Ireland [1970] HCA 21; (1970) 126 CLR 321 (R v Ireland) at 330 that 'judgment' has an accepted legal meaning which is:
… the formal order made by a court which disposes of, or deals with, the proceeding then before it.
His Honour also stated:
In a proper use of terms, the only judgment given by a court is the order it makes.
In Ah Toy v Registrar of Companies of the Northern Territory [1985] FCA 237 (Ah Toy), the Federal Court held at [24]:
These dicta make it clear that … a judgment must be binding upon parties and definitive of their legal rights and that a judgment is the formal order whereby a court disposes of the matter before it[.]
The Tribunal concludes that the word 'order' in the phrase 'order, judgment or other finding' in the context of the scope, object and purpose of the CC Act as referred to herein, should be given the accepted legal meaning referred to by Barwick J in R v Ireland for the reasons referred to above.
Although not necessary for the Tribunal to consider in this case, the reference to 'other finding' in the phrase is, consistently with what has been held 'the kind of finding that brings finality and inevitability to the order for judgment'. As stated in Ah Toy at [26]:
… While those findings have not been incorporated in the formal judgment of the Court, they are all … matters that might fairly be the subject of declaratory relief and in truth this is the part they have played in his Honour's reasons for judgment[.]
The purpose of the CC Act in referring to 'other findings' in s 31(2)(a)(iii) of the CC Act (and also s 25(b) of the CC Act) is to avoid the situation of a court's finding being in conflict with that of an adjudicator that is, such a court finding is determinative of the rights and liabilities of the parties on the issue of the payment dispute where the payment dispute forms part of the matter before the court.
The Tribunal concludes therefore, that the phrase 'order, judgment or other finding' should be interpreted, consistently with authority and the context of the CC Act, to refer to final and substantively determinative orders, judgments and findings of courts.
For all of these reasons and each of them, the Tribunal concludes that the Order which concerns procedural directions preparatory to a trial in a court in a matter between the same parties, is not intended to compel an adjudicator to dismiss an application for adjudication, even if the payment dispute comprises the matter within that court proceeding. To conclude otherwise would provide limited operation of the CC Act as there is no useful purpose to be served in establishing a system for rapid adjudication of payment claims that may be defeated by a party commencing proceedings against the other and obtaining a procedural order from a court. This is the antithesis of the object of the CC Act. As an interpretation consistent with the object, scope and purpose of the legislation in question should be adopted (Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355), the Tribunal concludes that the word 'order' in s 31(2)(a)(iii) of the CC Act does not include interim or interlocutory orders that are procedural in nature and effect and do not finally determine the rights and liabilities of both parties to the court proceedings. Section 31(2)(a)(iii) of the CC Act does therefore distinguish between the types of orders that are relevant to the adjudicator's decision to dismiss an application for adjudication.
For these reasons, the adjudicator's decision to dismiss the application for adjudication pursuant to s 31(2)(a)(iii) of the CC Act should be set aside pursuant to s 29 of the SAT Act and s 46(2) of the CC Act.

Is the applicant's letter dated 3 December 2014 a payment claim, so as to render the application for adjudication out of time for the purposes of s 26 and s 31(2)(a)(ii) of the CC Act

The evidence before the adjudicator

Clause 37.8 of the construction contract between the parties confers a right on the applicant (as principal) to 'set off' any monies that the applicant (principal) claims is owed under the contract or at law, against any monies owed by the applicant (principal) to the respondent (contractor) or claimed to be owed to the respondent (contractor). Clause 37.8 of the construction contract expressly provides (notwithstanding its heading of 'Right of Setoff'):
The rights given to BGC under this clause 37.8 are in addition to and not limited or affect any other rights of BGC under the Subcontract or at law and nothing in the clause affects the right of BGC to recover from the Subcontractor the whole of the debt of Claim in question or any balance that remains owing. (Tribunal emphasis)
The applicant wrote to the respondent on 3 December 2014 and referred to an 'intended' set off by the applicant as principal, under the construction contract between them, against the respondent as contractor. The letter dated 3 December 2014, does not make a demand for payment of money at all. In its express terms, the letter dated 3 December 2014 gives notice of the applicant's then presently stated intention to affect a claim against the respondent in the future when the respondent makes its next progress claim. The letter states:
… we wish to provide details of the following amounts which BGC intends to 'setoff' within the next Progress Certificate in accordance with Subcontract clause 37.1(c)(iii). (Tribunal emphasis)
The letter also states that the sums identified may be set off under the subcontract.
In fact, the respondent did not make a claim for the next progress payment (number 15) under the construction contract until the issue of its progress certificate on 15 February 2015. On that date, the respondent (contractor) claimed $65,515,054.15 plus GST from the applicant (principal). It was in response to the respondent's progress claim 15 that the applicant asserted that the respondent owed the applicant only $462,805.09 (the difference between the applicant's assessment of the contract value of the work performed at $29,506,771.69 and the applicant's assessment of the amount paid to date at $29,043,966.60) of the sum claimed by the respondent in its claim on 15 February 2015. However, the applicant also asserted that the amounts owed by the respondent to the applicant pursuant to clause 37.8 totalled $11,903,302.04. The excess of the applicant's claim over and above the $462,805.09 assessed by the applicant as owed to the respondent on its progress claim 15, is $11,440,496.94 ($11,903,302.04 less $462,805.09). It is this latter sum that constitutes the applicant's payment claim that is disputed by the respondent and the subject of the application for adjudication. The applicant's payment claim made on 6 March 2015 is the subject of an invoice, payment certificate 15 assessment and letter dated 6 March 2015. The letter dated 6 March 2015 and the invoice, claim the payment of the sum of $11,440,496.94 plus GST. The applicant's letter and invoice dated 6 March 2015, claim payment of that sum in respect of the respondent's alleged nonperformance of the terms of the construction contract.

The adjudicator's reasoning

The adjudicator reasoned that because the letter dated 3 December 2014 met all of the requirements of form identified in Sch 1 Div 4 cl 5(2) of the CC Act, it was a payment claim within the meaning of that term as provided for by s 3 of the CC Act. The adjudicator did not however deal with the question whether the letter dated 3 December 2014 met the substantive requirements of a payment claim as defined by the CC Act. The adjudicator concluded that the letter dated 3 December 2014 constituted a payment claim and the respondent's rejection letter dated 5 December 2014 was the action which created the payment dispute. The adjudicator concluded that the 28 day period permitted by s 26 of the CC Act for making an application for adjudication had expired before the application for adjudication was made and that the 'payment dispute is out of time'.

The Tribunal's consideration and conclusion on the issue of the date of the payment claim

The relevant definition of a payment claim as provided for by s 3 of the CC Act specifies that a claim made by a principal (the applicant in this proceeding) against the contractor (the respondent in this proceeding) must be of a particular kind. First, the claim must be one that 'relates to the performance or nonperformance by the contractor of its obligations under the contract'. That has been dealt with by the adjudicator and he concluded that the substance of the applicant's claim is one that may be the subject of a payment claim. In any event, it is clear on the face of the letter dated 3 December 2014 that the applicant's entitlement as referred to in that letter, is limited to contractual entitlements, even though clause 37.8 of the construction contract extends the right to claim for other unrelated matters. Secondly, and most significantly, the claim must also be 'for payment'. The letter dated 3 December 2014 does not demand or seek payment. The letter dated 3 December 2014 merely foreshadows a possible claim in the future if and when the respondent issued its next claim for a progress payment under the construction contract. The applicant could have demanded payment by the letter dated 3 December 2014 because clause 37.8 of the construction contract permits the applicant to claim payment. However, on reading the whole of the letter dated 3 December 2014, and particularly the second paragraph, the Tribunal concludes that the applicant did not make a claim or demand for payment from the respondent and did not intend to make a demand for payment thereby. Further, in its terms, the letter dated 3 December 2015 is couched in nonconclusive expressions of the amount that 'may be Set Off under the Subcontract' (Tribunal emphasis). The fact that the letter dated 3 December 2014 meets all of the formal requirements of Sch 1 Div 4 cl 5(2) of the CC Act is a separate issue from the issue of whether it meets the substantive requirements of a 'payment claim', as defined by the CC Act.
For these reasons, and on the facts of this case and in particular the terms of the letter dated 3 December 2014, the Tribunal concludes that the letter dated 3 December 2014 is not a payment claim and that the respondent's response on 5 December 2014 was not a rejection of a payment claim. The Tribunal concludes that the payment claim was made on 6 March 2015, and was rejected on 13 March 2015 by the respondent. The application for adjudication was made within the 28 day period permitted by s 26 of the CC Act and the application for adjudication should not have been dismissed by the adjudicator pursuant to s 31(2)(a)(ii) of the CC Act.

Conclusion of review

The Tribunal concludes, on review, that the adjudicator's conclusions that the application for adjudication should be dismissed pursuant to s 31(2)(a)(ii) and (iii) of the CC Act are both incorrect. The adjudicator considered all other bases for dismissal and concluded that the application for adjudication could not be dismissed for those other reasons. Those decisions not to dismiss are not reviewable by the Tribunal pursuant to s 46 of the CC Act for the reasons referred to above.
Accordingly, the Tribunal, on review, concludes that the adjudicator's decision to dismiss the application for adjudication should be set aside and the application for adjudication should be remitted to the adjudicator with a direction to determine the matter in accordance with s 46(2) of the CC Act.

Orders

Upon review pursuant to s 46(2) of the CC Act and s 29(3)(c)(ii) of the SAT Act:
1.The adjudicator's decision to dismiss the applicant's application for adjudication made 10 April 2015 is set aside.
2.The application for adjudication made 10 April 2015 is remitted to the adjudicator and the adjudicator is directed to make a determination under s 31(2)(b) of the Construction Contracts Act 2004 (WA) within 14 days of the date of this order or any extension of that time consented to by the parties.

I certify that this and the preceding [56] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MS N OWEN-CONWAY, MEMBER