Orders
Orders of the court
Held:
1. (a) Mr Allan’s jurisdiction was dependent upon objective compliance of the payment claim with section 13(2) (at [64]-[79]).
(b) The payment claim was sufficiently comprehensible notwithstanding arithmetical errors and redundancies (at [81]-[83]).
(c) The Act does not require a payment claim to be calculated on an incremental, as opposed to a cumulative, basis (at [89]-[108]).
(d) The payment claim complied with section 13(2) (at [109]).
2. (a) Mr Allan did not grant to Tali Engineering unliquidated damages (at [114]).
(b) Mr Allan did not grant to Tali Engineering an extension of time (at [118]).
(c) Tali Engineering was entitled to rely on answers to Built Environs’ liquidated damages set-off notwithstanding the answers had not been identified or articulated in its payment claim (at [123]-[125]).
(d) Mr Allan did not entertain claims that Tali Engineering was not entitled to make (at [126]).
3. (a) Mr Allan denied natural justice to Built Environs by determining the claim by application of the prevention principle without Built Environs having had a proper opportunity to adduce evidence or make submissions on the issues (at [155]-[183]).
(b) This denial vitiated Mr Allan’s adjudication (at [184]).
4. (a) There was a reasonable apprehension of bias on the part of Nominator because its general manager, in his capacity as chief executive officer of another entity, had been advising Tali Engineering in connection with its dispute with Built Environs (at [192]-[203]).
(b) There was no reasonable apprehension of bias on the part of Mr Allan per se (at [205]-[207]).
(c) The reasonable apprehension of bias on the part of Nominator vitiated Mr Allan’s adjudication (at [203]).
5. Built Environs is entitled to a declaration that Mr Allan’s determination is a nullity and an order setting it aside (at [218]).
Background
Background to the litigation
Built Environs relies on six grounds for judicial review.1.Tali’s payment claim did not comply with section 13(2) of the Act and this deprived Mr Allan of jurisdiction to undertake an adjudication.2.Mr Allan exceeded his jurisdiction by:(a) entertaining a claim for unliquidated damages;(b) assuming the jurisdiction of the Subcontract Superintendent to grant an extension of time to Tali to achieve substantial completion;(c) entertaining claims not made in Tali’s payment claim.3.There was a denial of natural justice because Mr Allan did not invite further submissions or evidence from the parties.4.There was a denial of natural justice due to a reasonable apprehension of bias of Nominator and/or Mr Allan.5.Mr Allan made errors of law invalidating his determination.6.Mr Allan did not act in good faith because he did not attempt in good faith to consider the submissions put by the parties or call for further submissions and identify, understand and determine the issues in accordance with the Act and the contract.Background factsThe parties and personnel Built Environs is a building contactor. It is the head contractor for the construction of the Woolworths Walkerville Shopping Centre. Tali is a structural steel manufacturer and erector. It is the structural steel subcontractor for the Woolworths Walkerville Shopping Centre. In February 2013 it engaged Edward Sain & Associates (“ESA”) to advise and assist it concerning contractual issues with Built Environs on the Woolworths Walkerville project. Nominator is an authorised nominating authority under section 29 of the Act. Its sole director and shareholder is Mr Busolin (a former project manager at Built Environs between 2002 and 2004). Nominator’s manager is Mr Sain. Its registered office is the address of accountants Rugari & Associates. Mr Rugari was Nominator’s acting manager for a specific purpose explained below. Mr Sain is also the chief executive officer of ESA. ESA is a construction contract consultant, project manager and engineer. It undertakes, inter alia, consultancy, programming, estimation and cost reviews for contractors. It offers services in connection with payment claims under the Act, including preparation of payment claims, payment schedules, applications and submissions for adjudication and provision of support and assistance throughout the adjudication process. ESA’s website has a link to Nominator’s website. ESA conducts adjudication training courses on behalf of Nominator. ESA trained, on behalf of Nominator, both Mr Allan and Mr Rugari as adjudicators. Mr Allan has the qualifications required under section 18 of the Act to act as an adjudicator. He was employed as project manager and engineering division manager by Built Environs between 1991 and 2005. Nominator and Mr Allan did not take an active role in the action, but rather agreed to abide the event.The Woolworths Walkerville project Built Environs entered into a contract with the owner or developer for the construction of a shopping centre on the corner of Walkerville Terrace and Victoria Terrace, Walkerville (“the Main Contract”). The shopping centre comprises a Woolworths Supermarket, a mall and specialty retail stores, and canopy roof.
Decision
Reasons for decision
BLUE J
Tali does not contend that, if Built Environs succeeds on one of its grounds for review, I should not exercise my discretion to grant declaratory and prerogative relief. In any event, I exercise my discretion to grant the relief sought by Built Environs.Conclusion Built Environs fails on its first and second grounds of review. It succeeds on its third and fourth grounds. It is unnecessary to decide its fifth and sixth grounds. Mr Allan’s determination dated 14 February 2013 is void. Built Environs is entitled to a declaration to that effect. Built Environs is entitled to an order in the nature of certiorari setting aside the determination. I will hear the parties as to the terms of the orders to be made.Built EnvironmentsAnnexure1. Interpretation and Construction of SubcontractNo Claim means no claim for any monies for or any adjustment to the subcontract sum or for any EOT for Practical Completion or for costs, expense, or loss or damage on any basis whatsoever including, no claim:(a)pursuant to subcontract;(b)in tort (including negligence);(c)on a quantum meruit;(d)pursuant to quasi contract;(e)for unjust enrichment; or (f)(without limitation) pursuant to any other principle of law or equity;…qualifying cause of delay(a)any act, default or omission of the Subcontract Superintendent, the Main Contractor or its consultants, agents or other contractors (not being employed by the Subcontractor) not being an act or omission:(i)expressly permitted or allowed by the Subcontract;(ii)which is within a timeframe expressly permitted, or allowed by the Subcontractor; or(iii)to the extent the act or omission is caused or contributed to by a breach of the Subcontract by the Subcontractor or any negligent, or [sic](iv)[sic] unlawful, act or omission of the Subcontract or;(b)state-wide industrial dispute, being a dispute in the building industry which is not restricted to the site or the subcontract works and involved, as parties to the dispute, other subcontractors other than the Subcontractor or any of its secondary subcontractors;(c)latent conditions;(d)variations directed under clause 36;(e)inclement weather; and(f)changes to legislative requirements affecting the WUS.…substantial completion is that stage in the carrying out and completion of WUS when:(a) the Subcontract Works are complete except for minor defects:(i) which do not prevent the Subcontract Works from being reasonably capable of being used for their stated purpose;(ii) which the Subcontract Superintendent determines the Subcontractor has reasonable grounds for not promptly rectifying; and(iii) the rectification of which will not prejudice the convenient use of the Subcontract Works;(b)those tests which are required by the Subcontractor to be carried out and passed before the Subcontract Works reach substantial completion have been carried out and passed; and(c)documents and other information required under the Subcontract which, in the Subcontract Superintendent’s opinion, are essential for the use, operation and maintenance of the Subcontract Works have been supplied.WUS means the work which the Subcontractor is or may be required to carry out and complete under the Subcontract and includes variations, remedial work, construction plant and temporary works,20 Subcontract SuperintendentThe Main Contractor shall ensure that at all times there is a Subcontract Superintendent, and that the Subcontract Superintendent fulfils all aspects of the role and functions reasonably and in good faith.…34Time and progress34.1 ProgressThe Subcontractor shall commence and execute the WUS in a manner and at a rate of progress satisfactory to the Main Contractor, and otherwise in accordance with the requirements of the latest version of the co-ordination program, so as to ensure that the WUS reaches substantial completion by the date for substantial completion, that any milestone dates shown in the construction program (as amended by the latest version of the co-ordination program) are met and that the Main Contractor is not hindered or prevented by any act or omission of the Subcontractor from achieving practical completion by the date for practical completion.…34.2 Notice of delayA party becoming aware of anything which will probably cause delay to WUS shall promptly give the Subcontract Superintendent and the other party written notice of that cause and the estimated delay. For the purposes of this clause, the issuing of any co-ordination programs or revised construction programs by the Subcontract Superintendent that my [sic] cause delay to the WUS shall be a deemed notice. 34.3Claim(a)Subject to clauses 34.3(d) and 36.1A(b), the Subcontractor shall only be entitled to such extension of time for carrying out WUS (including reaching substantial completion) as the Subcontract Superintendent assesses (“EOT”), if:(i)the Subcontractor is or will be delayed in reaching substantial completion of Separable Portion 1 … by a qualifying cause of delay; or(ii)for substantial completion of any Separable Portion other than Separable Portion 1 … if the Subcontractor is or will be delayed:(A.)Subject to clause 34.3(d), by a cause described in paragraphs (b), (c), (d), (e) or (f) of the definition of qualifying cause of delay but only if such cause occurs before the date of substantial completion of Separable Portion 1;(B.)by a cause described in paragraph (a) of the definition of qualifying cause of delay regardless of whether such cause occurs before or after the date of practical [sic]completion of Separable Portion 1;(iii) the Subcontractor gives the Subcontract Superintendent, no later than 3 days after the Subcontractor first became aware or the Subcontractor should reasonably have become aware of that causation occurring, a written claim for an EOT for substantial completion, setting out:(A.)a detailed statement of the facts on which the claim is based;(B.)a precise identification of the activities affected and critical to the Subcontractor’s activities on the construction program; and(C.)the date on which the cause of delay first arose;(iv) the Subcontractor satisfies the Subcontract Superintendent that:(A.)the matters referred to in clause 34.3(iii)(B) are apparent from an assessment of the critical path of the current revision of the construction program when the delay first arose;(B.)[sic] has consistently taken all reasonable steps to minimise the delay and to reprogram and expedite the sequence of activities;(C.)the Subcontractor has taken proper and reasonable steps both to preclude the occurrence of the cause of delay and/or to minimise the consequences of the cause of delay; and (D.)the cause of the delay is not in anyway connected with an act or omission of the Subcontract [sic]; and (b)If the Subcontractor fails to give a notice strictly in accordance with clause 34.3(a)(ii), then the Subcontractor shall have No Claim arising out of or connected with or in any way brought about by that delay.(c)If further delay results from a qualifying cause of delay evidenced in a claim under clause 34.3(a)(ii), the Subcontractor shall claim an EOT for such delay by promptly giving the Subcontract Superintendent a written claim evidencing the facts of that delay.34.4 AssessmentWhere more than one event causes concurrent delays and the cause of at least one of those events, but not all of them, is not a qualifying cause of delay, then to the extent that the delays are concurrent, the Subcontractor shall not be entitled to an EOT for substantial completion.34.5 Extension of timeWithin 35 days after receiving the Subcontractor’s claim for an EOT, the Subcontract Superintendent shall give to the Subcontractor and the Main Contractor a written direction evidencing the EOT so assessed. A delay by the Main Contractor, or the failure of the Subcontract Superintendent to assess an EOT within 35 days, shall not extend the date for substantial completion or set time at large, but nothing in this paragraph will prejudice any right of the Subcontractor to damages.Notwithstanding that the Subcontractor is not entitled to or has not claimed an EOT, the Subcontract Superintendent may at any time and from time to time before issuing the final certificate direct an EOT.Notwithstanding any other provisions of this clause 34, the Subcontractor shall not be entitled to any EOT unless it shall have taken proper and reasonable steps to:(a) Preclude the occurrence of any delay; and/or(b) Avoid or minimize the consequences thereof.Where an EOT claimed by the subcontractor is for the same delay that is the cause of an EOT claim that is made by the Main Contractor under the main contract, then the Subcontractor shall not be entitled to an EOT that exceeds the EOT that is determined by the Superintendent for the main contract delay.34.5A Independent discretion to extend time(a)If there is a delay to any WUS for which the Subcontractor is not entitled to an EOT, the Subcontract Superintendent may grant an EOT but has no obligation to grant, or to consider whether it should grant, an EOT.(b)If the Subcontract Superintendent grants an EOT under clause 34.5A(a):(i) it shall give the Subcontractor written notice, which expressly refers to clause 34.5(a); and(ii) the Subcontractor is not entitled to any compensation for the delay.34.6 Substantial completionThe Subcontractor shall give the Subcontract Superintendent at least 14 days written notice of the date upon which the Subcontractor anticipates that substantial completion will be reached.When the Subcontractor is of the opinion that substantial completion has been reached the Subcontractor shall in writing request the Subcontract Superintendent to issue a certificate of substantial completion. Within 14 days after receiving the request, the Subcontract Superintendent shall give the Subcontractor and the Main Contractor either a certificate of substantial completion evidencing the date of substantial completion or written reasons for not doing so.If the Subcontract Superintendent is of the opinion that substantial completion has been reached, the Subcontract Superintendent may issue a certificate of substantial completion even though no request has been made.The Subcontract Superintendent may in its absolute sole discretion issue a certificate of substantial completion notwithstanding the failure by the Subcontractor to comply with all of the requirements for substantial completion. The issue by the Subcontract Superintendent of such a Certificate of Substantial Completion in such circumstances shall not release the Subcontractor from his obligations to comply with all of the requirements contained within the definition of Substantial Completion.34.6A Practical CompletionUpon issue of the certificate of practical completion, by the Superintendent under the main contract, to the Main Contractor, the Main Contractor shall provide to the Subcontractor a copy of the certificate of practical completion.34.7 Liquidated Damages(a)If the Subcontractor fails to achieve substantial completion by the date for substantial completion, the Subcontract Superintendent shall certify, as due and payable to the Main Contractor, liquidated damages in Item 27 for every day after the date for substantial completion, or termination of the Subcontract or the Main Contractor taking WUS out of the hands of the Subcontractor, and the Main Contractor may recover all liquidated damages payable as a debt.…(c)If an EOT is directed after the Subcontractor has paid or the Main Contractor has set off liquidated damages, the Main Contractor shall repay to the Subcontractor such of those liquidated damages as represent the days the subject of the EOT.(d)Should the date for substantial completion pass without the subcontract works achieving substantial completion, the Subcontract Superintendent when issuing any progress certificate may issue with it a provisional assessment in writing of the amount then provisionally due by way of liquidated damages and the Main Contractor may deduct such amount from the amount certified and the amount so deducted shall be taken in partial satisfaction of any indebtedness of the Subcontractor to the Main Contractor for the amount subsequently certified pursuant to this clause 34.7.…34.7A IndemnityIf the main contract works do not reach practical completion by their date for practical completion, for which the proximate cause is delay by the Subcontractor in completing WUS, the Subcontractor shall indemnify the Main Contractor against:a)liquidated damages under the main contract stated in Item 27(b) certified by the Superintendent; andb)damages, other than liquidated damages, which have become due and payable by the Main Contactor to the Principal.If the Subcontractor’s delay is not the sole cause of the Main Contractor’s liability for damages, the Subcontractor shall indemnify the Main Contractor only in proportion to the Subcontractor’s delay, which shall be certified by the Subcontract Superintendent, as moneys due to the Main Contractor by the Subcontractor.If an EOT is directed after the Subcontractor has paid or the Main Contractor has set off liquidated damages, the Main Contractor shall forthwith repay to the Subcontractor such of those liquidated damages as represent the days the subject of the EOT.The Subcontractor’s indebtedness under this subclause is not included in the liquidated damages applicable to subclause 34.7.Should the date for substantial completion pass without the subcontract works achieving substantial completion, the Subcontract Superintendent when issuing any progress certificate may issue with it a provisional assessment in writing of the amount the Subcontract Superintendent reasonably considers is equivalent to the Main Contractor’s potential liquidated damages exposure under the main contract due to the WUS not reaching substantial completion by the date for substantial completion (“Liquidated Damages Amount”). The Main Contractor may deduct such amount from the amount certified and the amount so deducted shall be taken in partial satisfaction of any indebtedness of the Subcontractor to the Main Contractor for the amount subsequently certified pursuant to this clause 34.7A.If the Superintendent certifies liquidated damages as due and payable by the Main Contractor to the Principal under the main contract for which the proximate cause is failure by the Subcontractor to achieve substantial completion by the date for substantial completion the Liquidated Damages Amount may be applied by the Main Contractor against its indebtedness to the Principal. If the Superintendent does not so certify, the Liquidated Damages Amount will be released to the Subcontractor within 30 days of the issue of the certificate of practical completion.…34.11 No EntitlementIf there is a delay to the WUS for which the Subcontractor is not entitled to an EOT, the Subcontractor:(a)shall achieve substantial completion by the date for substantial completion;(b)does not have any remedy against the Main Contractor for the delay, including any entitlement to damage [sic] for breach of the Subcontract; and(c)is not relieved of any liability to the Main Contractor for any failure to achieve substantial completion by the date for substantial completion by reason of the delay, including any liability to pay liquidated damages.37 Payment37.1 Progress claimsThe Subcontractor shall claim payment progressively in accordance with Item 31.An early progress claim shall be deemed to have been made on the date for making that claim.Each progress claim shall be given in writing to the Subcontract Superintendent and shall include details of the value of WUS done and may include details of other moneys then due to the Subcontractor pursuant to provisions of the Subcontract.The Subcontractor’s entitlement to a progress payment shall be calculated having regard to:(a)the value of work executed being a value based on completed work assessed against the subcontract sum, including any adjustments made pursuant to the Subcontract;(b)the amount of any adjustment to the subcontract sum (whether upwards or downwards) calculated strictly in accordance with and subject to the terms of the Subcontract;(c)any deduction by way of set-off or otherwise having regard to any monies due or claimed to be due from the Subcontractor to the Main Contractor.All payment claims or progress claims delivered by the Subcontractor shall be typewritten and include:(d)the Subcontractor’s valuation of work executed being a value based on work complete assessed against the subcontract sum;(e)the amount and particulars of any adjustments to the subcontract sum in accordance with and subject to the terms of the Subcontract;(f)any deduction by way of set-off or otherwise having regard to the Subcontractor’s knowledge of any monies due or claimed to be due from the Subcontractor to the Main Contractor;(g)the total amount previously certified pursuant to this clause;(h)the total amount previously paid or in terms of the Subcontract deemed to have been paid to the Subcontractor;(i)the amount then claimed by the Subcontractor;(j)completed copies of the Progress Claim Criteria Checklist as set out in Appendix 8;(k)a statutory declaration in the form set out in Appendix 10;(l)any other statements required under applicable state or territory law as set out in Appendix 14 clause 2; and(m)any other documentation required by the Subcontract or the Subcontract Superintendent.For the avoidance of doubt the amount of any progress payment to which the Subcontractor is entitled shall not be calculated simply on the basis of the value of construction work carried out or undertaken to be carried out by the Subcontractor. The amount of the progress payment entitlement shall be calculated strictly in accordance with the Subcontract and shall include deductions for claims by the Main Contractor.All progress claims shall be submitted to the Subcontract Superintendent in the format shown in Appendix 7 or any similar format approved by the Main Contractor. Any progress claim received that is not in the approved format or is not accompanied with the necessary forms shall not be considered for payment.…For the avoidance of doubt, no payment at all is due and payable unless the progress claim is submitted in the approved format, accompanied by the monthly documentation required under this Subcontract and submitted to the Subcontract Superintendent with copy to the Contracts Administrator.37.2 CertificatesThe Subcontract Superintendent shall, after receiving such a progress claim, issue to the Subcontractor by the 18th day of the month following the month to which the progress claim applies, a progress certificate in the form of a Recipient Created Tax Invoice (“RCTI”) covering the same month as the month to which the progress claim applies evidencing the approved payment. The RCTI shall identify the progress payment due and any retention monies or other monies withheld pursuant to the Subcontract. The Subcontractor must not issue Tax Invoices to the Main Contractor in respect of progress claims.If the Subcontractor does not make a progress claim in accordance with Item 31, the Subcontract Superintendent may at its absolute sole discretion and without any obligation to do so, issue an RCTI for a progress payment, as calculated by the Subcontract Superintendent.The Main Contractor shall pay the Subcontractor the progress payment amount identified in the RCTI by the 5th day of the month following the month in which the RCTI is issued by the Subcontract Superintendent. For clarity, an RCTI issued by 18th August, in respect of a progress claim made in July for work performed in July, is due to be paid by 5th September.Neither a progress certificate nor a payment of moneys shall be evidence that the subject WUS has been carried out satisfactorily. Payment other than final payment shall be payment on account only.