Chevron Park Pty Ltd v Groupline Constructions Pty Ltd - [2024] QSC 202

SUPREME COURT OF QUEENSLAND

CITATION:

Chevron Park Pty Ltd v Groupline Constructions Pty Ltd & Ors [2024] QSC 202

PARTIES:

CHEVRON PARK PTY LTD
(ACN 650 297 126)
(applicant)
v
GROUPLINE CONSTRUCTIONS PTY LTD
(ACN 168 247 621)

(first respondent)

and

JOHN LANGTON

(second respondent)

and

THE ADJUDICATION REGISTRAR (QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION)
(third respondent)

FILE NO/S:

BS 7830/24

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

18 September 2024

DELIVERED AT:

Brisbane

HEARING DATE:

7 August 2024

JUDGE:

Treston J

ORDER:

1.   The application is dismissed.

2.   The applicant is to pay the first respondent’s costs of the application on the standard basis.

3.   The second and third respondents are granted liberty to apply on three days’ notice should they seek an order as to costs.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS – ADJUDICATION OF PAYMENT CLAIMS – where the applicant, as principal, entered into a contractual relationship with the first respondent in relation to the construction of a residential building – where the first respondent served a payment claim on the applicant – where the first respondent delivered to the applicant a payment schedule containing a lower net certified amount – where the dispute was thereafter adjudicated – where, prior to the adjudication, the applicant made payments that it contended were in respect of the payment claim – whether the proper construction of the phrase “to be paid” in s 88 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) requires the adjudicator to reconcile the amount claimed against the amounts known to have been paid in respect of the amount claimed

ADMINISTRATIVE LAW – JUDICIAL REVIEW – where the applicant contended that the adjudicator failed to afford procedural fairness by not seeking submissions on what he found to be a jurisdictional point, not seeking submissions on what he regarded as new reasons, and failing to decide the correct amount to be paid and in doing so failed to provide adequate reasons – whether the adjudication decision should be set aside on the basis that the adjudicator failed to afford procedural fairness

Building Industry Fairness (Security of Payment) Act 2017 (Qld) s 3, s 65, s 66, s 67, s 68, s 69, s 70, s 73, s 76, s 77, s 79, s 82, s 83, s 88

Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd (2020) QR 410, cited
BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd (2022) 108 NSWLR 350, cited
Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393, cited
Demex Pty Ltd v McNab Building Services Pty Ltd [2023] NSWCA 261, cited
John Holland Pty Ltd v TAC Pacific Pty Ltd [2009] QSC 205
Lendlease Building Pty Ltd v BCF Airport Systems Pty Ltd & Ors [2024] QSC 164, cited
Livingstone Shire Council v…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] QSC 202
Decision Date: 18 September 2024

CaseChat Overview and Summary

The case of Chevron Park Pty Ltd v Groupline Constructions Pty Ltd involved a dispute between Chevron, the principal, and Groupline Constructions, the contractor, concerning the adjudication of progress payments under the Building Industry Fairness (Security of Payment) Act 2017 (Qld). Groupline submitted a payment claim to Chevron, which was subsequently adjudicated. Chevron contended that the adjudicator failed to consider certain payments made before and after the payment claim was submitted, and that the adjudicator did not afford procedural fairness by not seeking submissions on certain points and failing to provide adequate reasons for the adjudication decision. Chevron sought to have the adjudication decision set aside on these grounds.

The primary legal issues the court had to decide were whether the adjudicator was required to reconcile the amount claimed against the amounts paid in determining the adjudicated amount, and whether the adjudicator failed to afford procedural fairness by not considering certain submissions and failing to provide adequate reasons. The court examined the statutory framework for adjudication under the Payment Act, including the requirements for jurisdictional error and procedural fairness. Chevron argued that the adjudicator’s failure to consider the payments made before and after the payment claim resulted in an “absurd result” where the adjudication certificate could issue for a grossly incorrect amount. The court rejected this argument, holding that the adjudication amount is a point in time analysis of the sums owed based on the payment claim and that the adjudicator was not required to reconcile the amount claimed against the amounts paid.

The court found that the adjudicator did not err jurisdictionally or fail to provide procedural fairness. The adjudicator considered the matters required by s 88 of the Payment Act and provided reasons for the adjudication decision. The court held that the adjudicator’s decision was not flawed by the failure to consider the payments made before and after the payment claim, nor by any failure to provide procedural fairness. The court dismissed Chevron’s application and ordered Chevron to pay the costs of the application.

The court’s decision clarified the scope of an adjudicator’s role in determining the adjudicated amount under the Payment Act and the standards for jurisdictional error and procedural fairness in adjudication proceedings. The court emphasised that the adjudication amount is a point in time analysis and that the adjudicator is not required to reconcile the amount claimed against the amounts paid. The court also confirmed that the adjudicator’s decision was not flawed by the failure to consider the payments made before and after the payment claim, nor by any failure to provide procedural fairness.

Orders

Orders of the court

1. The application is dismissed.

2. The applicant is to pay the first respondent’s costs of the application on the standard basis.

3. The second and third respondents are granted liberty to apply on three days’ notice should they seek an order as to costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

On 6 June 2024,[2] the adjudicator made his decision, and the adjudicated amount was $1,420,090.24 (including GST) (the Adjudication Decision), calculated as follows: … [2]An extension of time was required for this time frame, which was agreed. The adjudicator therefore adopted the correct amount claimed by Groupline as set out at [4] above, $2,462,119.03 including GST, and Chevron’s net certified amount of $919,007.91 including GST set out at [5] above. There is, in substance, only one complaint made by Chevron about the adjudication. It is confined to the question of the necessity for the Adjudicator to take into account part payments that Chevron has made during the contract. The first part of the complaint is that before the adjudication application was made, Chevron had made payments which it contends were in reduction of the amount claimed PC19 the subject of the Adjudication Decision. Specifically, Chevron contends that:(a)as at 28 December 2023, it had paid $11,063,539.41 excluding GST (or $12,169,893.35 including GST); and(b)a further $58,256.91 excluding GST (or $64,082.60 including GST) which was paid on 10 January 2024. Groupline agrees that those payments were made on the dates set out above. It classifies those payments as the “Past Payments”. In doing so, Groupline seeks to identify that those payments were all ones preceding the date of PC19 given on 16 January 2024. Chevron contends that the adjudicator has failed to take these payments into account “at all”. The second part of Chevron’s complaint relates to the fact that post-dating PC19 (16 January 2024) and PS19 (31 January 2024), further payments were made by Chevron, being:(a)$716,759.70 (excluding GST) which Chevron asserts, and Groupline accepts, was:(i)the amount which Chevron certified as being payable to Groupline in PS19; and(ii)in fact, paid on 8 February 2024.(b)$10,896.62, $28,662.15 and $8,250 (all excluding GST) in respect of certain variations which were paid on 15 February 2024. Groupline refers to these as the “Subsequent Payments”. In doing so, Groupline seeks to identify that those payments were all ones post-dating PC19 (16 January 2024) and PS19 (31 January 2024). There is a dispute as to whether the amounts in [16](b) above were in fact in respect of PC19 or PC20,[3] but for the purpose of these proceedings only, I will proceed (without deciding) on the basis that the payments were in respect of PC19. For reasons which will become apparent, it does not change the outcome.[3]Which was made on 28 January 2024. I have adopted the terminology of the Past Payments and Subsequent Payments in respect of the amounts and dates referred to above. The primary issue is that Chevron contends that the adjudicator was obliged to take the Past Payments and the Subsequent Payments into account when making the Adjudication Decision because it submits that the adjudicator’s role:(a)involved a determination of how much of the amount claimed is remaining to be paid at the date of the decision; and(b)is to determine the balance “to be paid” after reconciling the accounts and deducting the payments already made.

Ratio Decidendi

Legal Principle Established

Chevron identifies that there are three reasons to set aside the Adjudication Decision:(a)first, that the adjudicator failed to consider submissions that were properly made regarding payments that were made both before and after PC19 had been provided (the consideration ground);(b)second, that the adjudicator failed to afford procedural fairness by:(i)not seeking submissions on what he found to be a jurisdictional point;(ii)not seeking submissions on what he regarded as new reasons; and(iii)failing to decide the correct amount to be paid and in doing so failed to provide adequate reasons;(together, the natural justice ground); and(c)third, that the adjudicator failed to provide adequate reasons (the reasons ground) which overlaps with 23(b)(iii) above. In accordance with the usual practice, the second and third respondents took no part in the proceeding and will abide the order of the court. Unlike many such proceedings, no part of the appeal is in relation to the works performed. The only issue in the appeal is whether the adjudicator ought to have taken into account the Past Payments and the Subsequent Payments that Chevron alleges it has paid in reduction of PC19. In summary form, what is in issue is the proper construction of s 88 of the Payment Act. This question involves the consideration of not just the matters which the adjudicator is to consider (s 88(2)) or not consider (s 88(3)), but more specifically, how the adjudicator ought to decide the amount of the progress payment, if any, to be paid in order to reach a decision regarding “the adjudicated amount” within the meaning of s 88(1)(a). Chevron submits that in deciding the adjudicated amount, it is “axiomatic that there must be a reconciliation of the amount claimed against amounts known to be paid in respect of the amount claimed”. If it were otherwise, Chevron submits, it would lead to “absurd results” where an adjudication certificate could be issued for a “grossly incorrect amount” ultimately leading to an incorrect sum for judgment and interest. I do not accept that construction. The adjudication amount is a point in time analysis of the sums which were owed by reference to a payment claim made. Naturally there will be circumstances where payments (whether they be part payments, pre-payments or otherwise) will need to be taken into account, but the inflexible approach that Chevron’s submission adopts is not to be read into s 88. Furthermore, s 93 of the Payment Act addresses the ‘absurdity’ issue which Chevron identifies. I deal with each of those issues in more detail below. There is no provision to appeal an adjudicator’s decision under the Payment Act. Accordingly, a decision can, most commonly, only be reviewed for jurisdictional error by the adjudicator in the performance of the adjudication function. What constitutes jurisdictional error under the Payment Act was set out by Bond J, as his Honour then was, in Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd,[5] as follows:[5](2020) QR 410. (a)the valid exercise of an adjudicator’s jurisdiction is conditioned on the decision having complied with at least the “basic and essential” statutory requirements of the Payment Act at ss 64, 68, 70, 75, 79(4), 80, 81, 88 and 150;[6][6]Ibid at 422 [34].(b)the valid exercise of an adjudicator’s jurisdiction is conditioned on the adjudicator having arrived at their conclusion by a process which considers the matters set out in s 88(2) of the Payment Act, noting:[7][7]Ibid at 422–3 [35].(i)the valid exercise of the adjudicator’s jurisdiction is not conditioned on the adjudicator reaching what is objectively the correct conclusion of all the questions of fact or law required by the consideration of the matters set out in s 88(2);(ii)the question is not whether the court would have come to the same conclusion as the adjudicator, but whether the adjudicator arrived at their conclusion by a process which failed to consider the matters set out in s 88(2);(iii)an error in the identification of the terms of the contract or their interpretation will not be a jurisdictional error;(iv)there is a difference between an error which is not a jurisdictional error and that which is; and(v)if it can be demonstrated that the adjudicator has not gone about their task by carrying out the active process of intellectual engagement with the issues and the submissions before them that the Payment Act requires, then they will have fallen into jurisdictional error because they will not have done the very thing that s 88(2) requires them to do.(c)the valid exercise of the adjudicator’s jurisdiction is conditioned on the adjudicator having arrived at their conclusion by a process which does not involve consideration of the matter set out in s 88(3)(b), being those matters which the adjudicator is required to ignore;[8](d)failure to provide written reasons for the decision in compliance with s 88(5)(b) is a jurisdictional error;[9](e)a valid exercise of an adjudicator’s jurisdiction requires the adjudicator having provided parties with “the necessary level of procedural fairness”;[10] and(f)the valid exercise of the adjudicator’s jurisdiction is conditioned on the adjudicator having made a good faith attempt to perform the function specified in s 88.[11][8]Ibid at 424 [36].[9]Ibid at 426 [37].[10]Ibid at 427–8 [41] and the cases referred to therein.[11]Ibid at 428 [42].The Payment Act

CITATION:	Chevron Park Pty Ltd v Groupline Constructions Pty Ltd & Ors [2024] QSC 202
PARTIES:	CHEVRON PARK PTY LTD (ACN 650 297 126) (applicant) v GROUPLINE CONSTRUCTIONS PTY LTD (ACN 168 247 621) (first respondent) and JOHN LANGTON (second respondent) and THE ADJUDICATION REGISTRAR (QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION) (third respondent)
FILE NO/S:	BS 7830/24
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	18 September 2024
DELIVERED AT:	Brisbane
HEARING DATE:	7 August 2024
JUDGE:	Treston J
ORDER:	1. The application is dismissed. 2. The applicant is to pay the first respondent’s costs of the application on the standard basis. 3. The second and third respondents are granted liberty to apply on three days’ notice should they seek an order as to costs.
CATCHWORDS:	CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS – ADJUDICATION OF PAYMENT CLAIMS – where the applicant, as principal, entered into a contractual relationship with the first respondent in relation to the construction of a residential building – where the first respondent served a payment claim on the applicant – where the first respondent delivered to the applicant a payment schedule containing a lower net certified amount – where the dispute was thereafter adjudicated – where, prior to the adjudication, the applicant made payments that it contended were in respect of the payment claim – whether the proper construction of the phrase “to be paid” in s 88 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) requires the adjudicator to reconcile the amount claimed against the amounts known to have been paid in respect of the amount claimed ADMINISTRATIVE LAW – JUDICIAL REVIEW – where the applicant contended that the adjudicator failed to afford procedural fairness by not seeking submissions on what he found to be a jurisdictional point, not seeking submissions on what he regarded as new reasons, and failing to decide the correct amount to be paid and in doing so failed to provide adequate reasons – whether the adjudication decision should be set aside on the basis that the adjudicator failed to afford procedural fairness Building Industry Fairness (Security of Payment) Act 2017 (Qld) s 3, s 65, s 66, s 67, s 68, s 69, s 70, s 73, s 76, s 77, s 79, s 82, s 83, s 88 Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd (2020) QR 410, cited BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd (2022) 108 NSWLR 350, cited Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393, cited Demex Pty Ltd v McNab Building Services Pty Ltd [2023] NSWCA 261, cited John Holland Pty Ltd v TAC Pacific Pty Ltd [2009] QSC 205 Lendlease Building Pty Ltd v BCF Airport Systems Pty Ltd & Ors [2024] QSC 164, cited Livingstone Shire Council v…