Classic Stone (Qld) Pty Ltd and Julie Mauretta Pitcher
[2012] WASAT 80
•27 APRIL 2012
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: CONSTRUCTION CONTRACTS ACT 2004 (WA)
CITATION: CLASSIC STONE (QLD) PTY LTD and JULIE MAURETTA PITCHER [2012] WASAT 80
MEMBER: MR C RAYMOND (SENIOR MEMBER)
HEARD: 10 FEBRUARY 2012
DELIVERED : 27 APRIL 2012
FILE NO/S: CC 1958 of 2011
BETWEEN: CLASSIC STONE (QLD) PTY LTD
Applicant
AND
JULIE MAURETTA PITCHER
Respondent
Catchwords:
Construction Contracts Act 2004 (WA) Whether decision amenable to review Identification of parties to contract Whether application for review should fail on basis that complexity in determining identity of parties and contractual terms makes it impossible to determine merits fairly
Legislation:
Construction Contracts Act 2004 (WA), s 25, s 26, s 31(2), s 31(2)(a), s 31(2)(b), s 32(3)(a), s 46, s 46(1), s 46(2), Div 4, Sch 1
Business Names Act 1962 (WA)
Result:
Decision under review affirmed
Category: B
Representation:
Counsel:
Applicant: Mr C Williams
Respondent: Ms A Dowley
Solicitors:
Applicant: Solomon Brothers
Respondent: Contract Intelligence Pty Ltd
Case(s) referred to in decision(s):
Match Projects Pty Ltd and Arccon WA Pty Ltd [2009] WASAT 134
Merym Pty Ltd and Methodist Ladies' College [2008] WASAT 164
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
The applicant applied under s 46(1) of the Construction Contracts Act 2004 (WA) to review, what it contended was, a decision made by an adjudicator to dismiss the adjudication application under s 31(2)(a) of that legislation.
The respondent denied that the matter was amenable to review on the basis that it constituted a determination on the merits, or, alternatively, was neither a decision to dismiss under s 31(2)(a) nor a determination of the merits under s 31(2)(b) of the Construction Contracts Act 2004. The adjudicator had found that there was no contractual relationship between the applicant and respondent, which, on its face, did not fall within any of the categories listed under s 31(2)(a), which, if satisfied, required the adjudicator to dismiss the decision, which would then be reviewable under s 46 of the Construction Contracts Act 2004.
The Tribunal was critical of the lack of reasoning and the deficiencies in logic of the adjudicator's written reasons, which did not touch upon any of the considerations necessary to make a decision to dismiss under s 31(2)(a) of the legislation. Nevertheless, the Tribunal concluded that the basis of dismissal was to be properly characterised as a decision to dismiss under s 31(2)(a)(ii), namely, that the application had not been prepared and served in accordance with s 26 of the Construction Contracts Act 2004, which required, amongst other things, that the adjudication application be served on each party to the contract. Consequently, the Tribunal found that the decision was amenable to review. The Tribunal rejected the respondent's argument that it was possible to make any decision concerning an adjudication application which did not fall within either s 31(2)(a) or s 31(2)(b) of the Construction Contracts Act 2004, because if the matter was not dismissed on any of the stipulated grounds, a determination whether or not any party to the payment dispute was liable to make a payment could be made for any other reason whatsoever.
The Tribunal analysed the evidence which was before the adjudicator, and concluded that, on a balance of probability, it was not established that there was any contractual relationship between the parties. Consequently, the correct and preferable decision was to dismiss the application under s 31(2)(a)(ii) on the basis that, as the application had not been served on each party to the contract, it had not been properly served. Although not strictly necessary to do so, the Tribunal went on to consider other issues raised by the application for review. The Tribunal's analysis of the evidence had identified significant deficiencies, such that, it was not possible to identify the written terms of contract between the parties. Because the written terms could not be identified, it was not possible to determine whether the statutory implied terms had any application. In these circumstances, and if the Tribunal was wrong in arriving at the above decision, the Tribunal concluded that, in any event, the application would fall to be dismissed under s 31(2)(a)(iv) on the basis that it was not possible to fairly make a determination because of the complexity of the matter.
Introduction
The applicant applies under s 46(1) of the Construction Contracts Act 2004 (WA) (CC Act) to review, what it contends is, a decision made by an adjudicator under s 31(2)(a) of the CC Act.
The applicant is a Queensland based company and, at the time of making the application, had no legal practitioner on record as its representative. The original grounds of the application asserted matters which did not appear to fall readily within the scope of grounds which might be relevant to the review of a decision made under s 31(2)(a) of the CC Act. Pursuant to directions made by the Tribunal, the applicant was required to file and serve a written outline of submissions in support of the application for review. The respondent took issue with the submissions, and the matter was listed for a special appointment on 19 January 2012. The applicant was represented at that hearing by its present legal representatives, who gave notice of their appointment to represent the applicant. It was indicated that the matter would be argued on a different basis, and the Tribunal gave leave for substituted submissions to be filed. The case was thereafter conducted on the basis of the substituted submissions filed on behalf of the applicant on 1 February 2012.
The substituted submissions, firstly, seek to establish that a contractual relationship exists between the parties contrary to the finding of the adjudicator. Thereafter, the submissions set out the applicant's contentions that a set of invoices, bearing numbers 404, 407, 411, 415 and 416, did not constitute payment claims under the CC Act, and that the only payment claim made was one which consolidated all of the invoices, because that was the only claim which met with all of the requirements of contractual terms which it was contended were to be implied under Div 4, Sch 1 of the CC Act. Further, and in any event, it was contended that an application for adjudication could deal with more than one payment claim. It was, accordingly, further submitted that the decision under review should be set aside, and that the adjudication application should be remitted to a new adjudicator. However, during this course of submissions, the applicant's counsel responded to the respondent's submissions by indicating it did not press remittal to a new adjudicator a course which would be inconsistent with s 46(2) of the CC Act.
The adjudication
The adjudication was conducted by Mr Alex Durning, and resulted in the publication of a document headed 'Adjudicator's Determination', and which immediately thereafter stated:
I, Alex Durning, as an adjudicator pursuant to the Construction Contracts Act 2004 (the Act) determine, for the reasons stated herein, that:
1.The application is dismissed.
2.The respondent is to pay to the applicant the adjudicator's fee, which is $2,612.50 plus GST.
3.Unless otherwise stated all monetary figures identified within this determination are exclusive of GST.
Later in the written reasons there is a description of the documents considered in 'Making the Determination'. Towards the conclusion of the written reasons (para 36), the adjudicator states 'my determination has been arrived at solely by turning my mind to the question of whether there is any contract between the parties … '. Following the first three paragraphs of the numbered reasons for decision set out above, there follows paras 4 20 which, within one and a third pages, set out, what the adjudicator sees as, the relevant facts. Paras 31 36 set out a summary of what are seen as the relevant issues. The rationale for the adjudicator's final conclusions occupy paras 37 41 comprising one page. It is convenient to set out the reasons in full:
37.The Applicant asserts that it is in contract with the Respondent, rather than Vue Developments for the following reasons:
a.The Applicant believed that the Respondent was trading as Vue Developments.
b.The Respondent always presented herself as the proprietor of Vue Developments.
c.The Applicant has received no communication denoting an ABN or ACN Number for Vue Developments.
d.The above 3 points were raised in the Payment Claim and not disputed by the Respondent in a manner contemplated by the Act.
38.Whilst there is no express statement to this effect in the Application, the inference from the above is that the Applicant's logic is that Vue Developments is not a valid trading entity and therefore the Applicant's contract is with the Respondent.
39.The Response identifies that:
a.The Applicant was aware that when it was communicating with the Respondent it was dealing with Vue Developments and, moreover, that Vue Developments was a properly registered business.
b.A search of Australian Securities & Investments Commission information, conducted on 2 November 2011, identifies that Vue Developments is a properly registered business and that Vue Developments Company Officer is John Charles Pitcher.
40.For the following reasons I find there to be no contract between the Applicant and the Respondent. This means the Payment Claim is not a valid payment claim in the context of the Act and the Application is invalid.
a.Vue Developments is a registered business.
b.The Applicant's contract is with Vue Developments (not the Respondent).
41.Given my finding that there is no contract between the Applicant and the Respondent, I place no relevance on whether the Respondent issued a proper response to the payment Claim.
The remaining four paragraphs deal with the question of costs.
The issues for determination
The submissions of the parties reveal the following principal issues:
1)Whether there is a decision amenable to review.
2)Whether the respondent is a party to the relevant contract.
3)Whether the separate invoices constitute several or a single payment claim.
4)Whether several payment claims/disputes can be included in a single adjudication without the consent of both parties.
5)Whether the adjudication is either out of time or premature in any respects.
Issue 4 above will not need to be considered if issue 3 is determined on the basis that the separate invoices form part of, and constitute, a single payment claim. A further issue raised and addressed with counsel for the applicant was whether, in any event, the factual confusion concerning whether the respondent is a party to the relevant contract, and the uncertainty as to the terms of the contract, are such that, if the decision is a reviewable decision, the adjudication decision should, in any event, be dismissed under s 31(2)(iv) of the CC Act.
A brief background
The applicant is based in Queensland and, it appears, specialises in the installation, and possibly the supply, of marble, granite, ceramic and terracotta tiles.
The respondent is an employee of Vue Developments Pty Ltd, which trades as Vue Developments. She is not a director or shareholder of the company. An extract from Australian Securities & Investments Commission (ASIC) records reveals that the directors of the company are: John Charles Pitcher and Michael William Vermey. Mr Pitcher is the sole shareholder. The applicant asserts that it knew none of the aforegoing information at the time of contracting and that the respondent held herself out as the proprietor of a business trading as Vue Developments.
The applicant asserts that a contract was concluded with the respondent in Queensland in December 2010. In a statement provided to support the adjudication application, Mr Derek Paul Anderson, the Chief Executive Officer and a director of the applicant, refers to negotiations which took place between him and the respondent, face to face, in Queensland at the applicant's place of business, and states that 'during the course of negotiations [the respondent] subsequently agreed to the applicant's schedule of rates and instructed the applicant to perform the installation of limestone tiles and slabs as part of the construction of a luxury home being constructed by the respondent at Applecross, Perth'. Mr Anderson states that at all times, the respondent held herself out as carrying on business under the style or name of Vue Developments. He makes reference to the business card presented to him by the respondent (although he does not say when) which referred to 'Vue' and gave an email address, [email protected]. Other business cards provided by the respondent referred to her as 'Director'.
According to Mr Anderson's statement, the contract was partly oral and partly written and partly by conduct. He does not state which terms were agreed orally, but says that insofar as the construction contract was oral, it consisted of understandings reached with the respondent during telephone conversations he had with the respondent before and after the applicant had commenced performance of the works, and during face to face meetings which Mr Darren Frances McMahon had with the respondent's project manager (who is not named). Mr Anderson states that the written part 'of the understandings' can be found in the applicant's schedule of rates and accompanying terms of trade, and that the applicant and respondent understood and agreed to the terms of the agreement including the schedule of rates and accompanying terms of trade. He states that the respondent finalised the terms of the contract in December 2010 when she was in Queensland. In that context, it is not clear what negotiations were conducted face to face between Mr Anderson and the respondent. With reference to the occasion when the respondent was in Queensland in December 2010, Mr Anderson states that he communicated the applicant's willingness to enter into a construction contract for the installation of tiles, and the respondent communicated that she was willing to enter into a construction contract.
It will be necessary to make reference in far greater detail to the course of dealings between the parties when addressing the specific issues requiring determination.
The applicant, in due course, commenced and alleges that it has completed the contracted limestone tiling works subject only to the possible need to carry out a light buffing of external tiling to remove 'skudo marks' on the tiling. Mr Anderson states these marks are a consequence of moisture being trapped under the stone surface which causes a stain but which should disappear. If it does not, he states it will be addressed by a light grid buff.
The applicant has issued five invoices as follows:
Invoice No
Date
Amount
(inclusive of GST)
404
30 June 2011
$55,895.95
407
15 July 2011
$74,327.55
411
16 August 2011
$55,836.00
415
29 September 2011
$42,500.93
416
30 September 2011
$29,706.47
Total
$258,266.90
The applicant asserts that the respondent has paid $100,000 of this amount, and that there is, accordingly, $158,266.90 outstanding. The applicant also asserts that it is entitled to interest in accordance with its standard trading terms and conditions at a rate of 15% per annum, and that under the trading terms and conditions it is also entitled to claim reasonable costs (for enforcement) of $9,900.
The respondent denies that she entered into any contract with the applicant. She asserts that at all times she was acting as an employee of Vue Developments Pty Ltd, and that a purchase order dated 1 April 2010 from Vue Developments Pty Ltd alleged to have been emailed to the applicant on 1 April 2010, reflects the company as the contracting entity. Further, that the applicant acted upon the order and that the contract for the supply and installation of the stonework is between the applicant and Vue Developments Pty Ltd. The respondent denies that she represented herself to be a sole trader, and points out that the purchase order describes Vue Developments Pty Ltd as the builder. In a statement provided by way of a response to the adjudication application both the respondent and Mr Pitcher state that the schedule of rates provided to them consisted of a single page. The schedule of rates on which the applicant relies consists of two pages, and it is the second page which makes reference to the need for GST to be added to the square metre rates provided, and to the payment terms being 'every 14 days from invice [sic] 15th & 30th of each month'. Further, they both say that the terms of trade relied upon by the applicant in the adjudication application were never provided to Vue Developments Pty Ltd or the respondent, and had never been seen until the adjudication application. The respondent denies being in Queensland in December 2010.
The respondent asserts that, as early as 21 July 2011, queries were raised concerning the charges made by the applicant. Further queries were made subsequently, and attempts were made by the parties to reconcile the invoices against the charges with those which had been agreed. This is reflected in email communications between the parties. No agreement could be reached. By October 2011 Mr Pitcher states that he had notified the applicant of what he regarded as major defects and continued noncompliance of the works with the Building Code of Australia. Again, email communications evidence the parties' contentions in relation to these complaints.
On 4 October 2011 the applicant made a formal payment claim under the CC Act claiming the amount identified above, namely $158,266.90 (including GST), interest calculated in the sum of $6,181 and costs of $9,900. The respondent provided a response and, on 16 November 2011, the adjudicator published his dismissal of the adjudication application and his reasons for doing so.
Is there a reviewable decision?
The adjudication
By undated letter, but attached to an email dated 31 October 2011, the adjudicator acknowledged receipt of the application for adjudication and requested the parties advise him in writing by close of business on 3 November 2011 whether they disagreed with any of the matters set out by him in the following paragraphs lettered (A) (L). Under para (E) the adjudicator requested that neither party unreasonably reject a request to extend time prescribed for making a determination pursuant to s 32(3)(a) of the CC Act.
By letter dated 1 November 2011 the respondent's legal representative replied raising concerns that the application contained five separate payment claims, and noted that the respondent did not consent to simultaneous adjudication. An issue was also raised that the payment claims were recycled and out of time, so that the adjudication application had not been prepared in accordance with s 26 of the CC Act. The respondent did not address the request to be advised whether or not there was agreement or disagreement concerning the matters raised in paras (A) (L) of the adjudicator's letter.
The applicant responded by letter dated 2 November 2011 indicating that it did not disagree with the matters raised in paras (A) (L), and otherwise advanced arguments opposing the issues raised in the respondent's letter of 1 November 2011.
The result of the above is that, pursuant to the CC Act, the adjudicator was obliged to either dismiss the adjudication application or determine on the balance of probabilities whether any party to the payment dispute was liable to make a payment within 14 days after the date of service of the response to the adjudication application. The response was served on 3 November 2011.
The rationale of the decision, which has been set out in full above, is not only limited in length but it is poor in logic and does not address the issues raised in a manner which is consistent with the requirements of the CC Act. The scheme of the CC Act has been set out in numerous decisions of the Tribunal and should be well known to registered adjudicators. I, accordingly, do not intend to set out the relevant provisions again, but I refer, by way of example, to the statutory framework as set out in Match Projects Pty Ltd and Arccon WA Pty Ltd [2009] WASAT 134 at [9] [24], and I further refer to [45] [48], inclusive, of that decision which focussed on the significance of the distinction drawn throughout the legislation between the reference to the dismissal of an adjudication as opposed to a determination of the merits of an adjudication.
As already noted, the adjudicator makes references throughout his written reasons to his 'determination'. At para 36 of the reasons, the adjudicator states that his determination has been arrived at solely by turning his mind to the question of whether there is any contract between the parties and, accordingly, whether the applicant was properly entitled to submit the payment claim and the application. There is nothing to indicate by the language used that the adjudicator has applied his mind to whether he is bound to dismiss the matter under s 31(2)(a) of the CC Act, without making a determination of the merits by reason of the existence of any of the circumstances set out in s 31(2)(a)(i) (iv).
On the other hand, if the adjudicator had entered into a determination of the merits, one would have expected that his determination would reflect that there is no payment due by the respondent to the applicant by reason that there exists no contractual relationship between them.
Counsel for the applicant submits that it is necessary to look beyond the terminology of the reasons for decision in order to characterise what had been done as either a dismissal under s 31(2)(a) of the CC Act, or a determination under s 31(2)(b) of the CC Act. I accept that submission as being plainly correct. The Tribunal took a similar approach in Merym Pty Ltd and Methodist Ladies' College [2008] WASAT 164.
On this basis, I return to a consideration of the adjudication. The rationale expressed provides little assistance. There is no basis for the adjudicator drawing an inference that the applicant's logic is that Vue Developments (which is the style or trading name under which either the respondent or Vue Developments Pty Ltd operated) is not a valid trading entity and that, therefore, the applicant's contract is with the respondent. The applicant's case was not made out on any basis that would support that inference. The applicant's case is simply that the respondent held herself out as the proprietor of Vue Developments, that there was no indication to the applicant that Vue Developments Pty Ltd was the proprietor. Neither party has provided the adjudicator with a business name search under the Business Names Act 1962 (WA), which would answer that question definitively.
This illogical inference then influences what must be regarded as the adjudicator's findings in para 39, that the response identifies that the applicant was aware it was communicating with Vue Developments, and that Vue Developments was a properly registered business. Further, the adjudicator referred to the ASIC search and stated that this identifies that Vue Developments is a properly registered business.
There is no evidence that Vue Developments is a registered business name. The ASIC search establishes no more than that Vue Developments Pty Ltd is a duly registered company. But again, the adjudicator misses the point, that what needed to be determined was whether or not the respondent held herself out as the proprietor of a business trading as Vue Developments. If the reasons set out immediately above reflected that the applicant was aware that, when it was communicating with the respondent it was dealing with Vue Developments Pty Ltd, that would justify the conclusion by the adjudicator that there is no contract between the applicant and respondent. Footnote 10 to the written reasons refers to the purchase order dated 1 April 2010 denoting the ABN of Vue Developments. It does not; it reflects the ABN of Vue Developments Pty Ltd.
Nevertheless, based on the finding that there was no contract between the applicant and the respondent, the adjudicator went on to find that this meant that the 'Payment Claim' is not a valid payment claim in the context of the CC Act, and the application is invalid. There is absolutely no rationale provided to support this conclusion.
Under s 31(2) of the CC Act an adjudicator can only get to a determination on the merits after deciding that there is no basis to dismiss the application under s 31(2)(a). It is clear under s 31(2)(a) that the adjudicator must dismiss the application if any of the circumstances set out under subsection 31(2)(a)(i) (iv) exist, and otherwise, must determine on the balance of probabilities under s 31(2)(b) whether any party to the payment dispute is liable to make a payment or to return any security. The adjudicator, at para 35, elected not to determine whether there were any recycled claims, or whether the adjudication required determination of more than one payment dispute, because of his conclusion that there was no contractual relationship between the parties. A conclusion in relation to any of those matters favourable to the respondent would have compelled the adjudicator to dismiss the adjudication application under s 31(2)(ii), because an application to have a payment dispute adjudicated had not been prepared and served as required under s 26 of the CC Act.
It is submitted for the applicant that the only bases on which the adjudicator could have dismissed, although not so formulated, is under either s 31(2)(a)(i) on the basis that the contract concerned is not a construction contract, or under subsection (ii) that the application has not been prepared and served in accordance with s 26 of the CC Act.
There is no doubt that there is a construction contract in existence and that is common cause between the parties. The applicant submits that it is implicit that the construction contract must be between the parties, and so that one can dismiss under subsection 31(2)(a)(i) if that is not the case. I do not accept that submission. The legislation deals at length with what work is included within a construction contract and, in my view, this power to dismiss is intended to be applied after consideration of whether the requirements of what is or is not included within construction work have been met or not. However, I accept that there is an obvious basis upon which to dismiss under s 31(2)(a)(ii) of the CC Act, where there is no contractual nexus between the parties. Under s 25 of the CC Act, any party to the contract may apply to have a dispute adjudicated. However, s 26 of the CC Act requires that the application for adjudication be served on each other party to the contract. If it is not, the adjudicator is bound to dismiss the application under s 31(2)(a)(ii) of the CC Act. The adjudicator's rationale should have disclosed that this is what he was doing. In my view, it is the only basis on which to arrive at a dismissal based on the adjudicator's conclusion that there was no contract between the parties.
It follows that, properly characterised, the adjudicator has made a decision to dismiss under s 31(2)(a)(ii) of the CC Act, and that gives rise to a decision which is amenable to review under s 46(1) of the CC Act.
It is unfortunate that the adjudicator has not used language both in the form and substantive content of his written reasons consistent with a decision to dismiss, which would have avoided the debate on this issue. As a matter of practice, it may be that consideration should be given by adjudicators to ensuring that the form of a decision to dismiss is headed in those terms rather than as a determination.
In coming to this conclusion, I have taken into account the submissions made orally by counsel for the respondent, firstly, favouring a conclusion that the adjudicator had made a decision on the merits, but, secondly, to the effect that what the adjudicator has done does not fall under either s 31(2)(a) or s 31(2)(b) of the CC Act, and that the legislature simply did not contemplate that this type of situation might arise. It is not necessary to say any more in relation to whether or not there has been a determination on the merits. However, I reject the submission that it is possible that there be a decision made by an adjudicator which is either not a decision to dismiss under s 31(2)(a) of the CC Act, or a determination on the merits under s 31(2)(b) of the CC Act. If there is no basis for dismissal which can fit within the grounds for dismissal stipulated in s 31(2)(a)(i) (iv) of the CC Act, the adjudicator must determine the merits of the application. That determination may well result in a conclusion that there is no liability to pay money for any reason whatsoever.
Is the respondent a party to the contract?
A chronology of events filed by the respondent shows that the parties commenced dealing with each other by at least July 2009. The respondent had many communications with 'Derek' who is understood to be Mr Anderson. She received quotations from another supplier, and, on 14 September 2009, received a lump sum figure for stone supply. The chronology reflects that on 30 March 2010 there were dealings between the parties concerning the provision of a purchase order. The details provided in the chronology are not particularly clear because the dates and line details do not always seem to coincide. It appears that on 30 March 2010 the respondent emailed quantities and floor plans to Mr Anderson, and requested confirmation of quantity calculations and then an order would be forwarded. The next entry appears to be that on 6 April 2010 the respondent emailed requesting confirmation that the purchase order had been received, and noted that no response had been received in relation to a request for quantities confirmation.
One of the difficulties in dealing with the matter is that it is obvious there has been a lengthy history of dealings between the parties. However, the parties have been quite selective in the provision of emails in support of their respective cases.
In this instance there are emails provided which, at about this period, are relevant. The emails are attached to the adjudication response. The first is an email dated 31 March 2010 from the respondent to Select Stone Gallery. The email commences 'Hi Derek' [Mr Anderson]. It ends with an indication that the respondent would send a purchase order for the quantities 'we've done here'. There is then an email response on the same date from Select Stone Gallery, addressed to the respondent by Mr Anderson. It refers to having received files from Marshall Wells (a person who, it appears, assists the respondent) indicating that he would commence a quantity check the next day, and that, if she wished to issue a purchase order, he could advise the overseas supplier:
of the order/quantities and order now in order to lock in the 'pastel beige 450 x 900 at $100.80 per square metre plus GST and confirm final quantities after Easter break.
Both of those emails were then forwarded by the respondent to [email protected], which must be taken to be the email address of Mr Marshall Wells. The email states:
Hi Marsh, the attached email contains the product info. ie Limestone Pastel Beige at $100.80 per square metre plus GST. Can you separate the internal (polished) and the external (honed) quants. Please make the purchase order 750 square metres polished and 450 square metres honed.
The next document is a purchase order from Vue Developments Pty Ltd addressed to Select Stone Gallery at No 1/74 Township Drive, West Burley, Queensland 4219. It is to be noted that the address and the facsimile number given for Select Stone Gallery on the purchase order are the same as those given on the payment claim and the adjudication application for the applicant. A telephone number is given on the purchase order which is different, but it is a 1300 (free call number) whereas the telephone number disclosed on the payment claim and adjudication application is an ordinary land line.
Neither party has explained the relationship between Select Stone Gallery and the applicant, although it is obvious there is one. Subsequent email communications continue to show emails addressed to the respondent from Select Stone Gallery, even where the subject of discussion is invoices from the applicant.
The purchase order is entirely consistent with the email exchanges referred to above, and reflects the separation of the internal and external quantities which the respondent requested be made by Mr Marshall. The total value of the order was $133,056. It advised that accounts 'EOM 30 days', and stated that on acceptance of the purchase order the contractor agrees to the conditions of the 'Trade Contract' agreement as supplied by the builder, which is taken to be a reference to Vue Developments Pty Ltd.
Neither party has furnished any evidence of a 'Trade Contract' agreement which may have been supplied by Vue Developments Pty Ltd.
In its submissions, counsel for the applicant points out that there is no email from Mr Marshall or any other written evidence establishing that the purchase order was actually sent to the applicant. The respondent does no more than state that it was sent. Further, there is no reference to the purchase order being sent in the chronology. However, close examination of the chronology shows that it only deals with email communications between the respondent and Mr Anderson, at least until August 2011 when there were some communications between Mr Pitcher and Mr Anderson.
The thrust of the applicant's submissions relevant to this issue are that it is necessary for an adjudicator to be positively persuaded of the circumstances described in s 31(2)(a) of the CC Act before it is permissible to dismiss the application, and that, in the above circumstances, there should be doubt that the purchase order was sent.
There are, however, other indicators that the purchase order was sent. Firstly, it is clear from the email exchanges that Mr Anderson required the purchase order so that he could lock in arrangements with the overseas supplier. If the purchase order was not sent, one would expect that there would have been calls from Mr Anderson for it to be provided, but there is no indication that occurred. In addition, before the invoices in dispute were ever issued, there was an email from the respondent to Mr Anderson (Select Stone Gallery) which addressed a number of topics in the ordinary course of carrying out the works. After dealing with issues relating to the lift face and the obtaining of spa costings, the respondent moved onto a different topic. The relevant portion of the email reads:
You guys will need to sort out the batching variation for the Pastel Beige … I'm not sure why, but you guys short ordered the amount of pastel beige from our purchase order to you. If you check up our purchase order to you and the amount we have received, their [sic] is a difference. Why this was done I'm not sure, but let's hope that this doesn't create yet another problem in this process.
If the applicant had never received the purchase order, one would have expected that Mr Anderson would have immediately said so. Again, there is no indication that he did. This email is strong corroboration of the respondent's version, because she was specifically calling on Mr Anderson to check the purchase order in order to address the quantities ordered as compared to those covered by the purchase order.
The chronology then reflects that the materials ordered arrived by container shipment. It is noted that on 8 September 2010 Mr Anderson emailed and requested the balance of payment for the first container. There is no evidence provided by either party of any invoices to cover these payments, or to show whether they were issued by Select Stone Gallery or the applicant, nor to whom they were addressed.
By late 2010 the chronology reflects that costings were being provided for stone work to the stairs and kitchen bench, and that arrangements were being made for arrival of the first team of installers. There is a note that on 30 November 2010 Mr Anderson emailed a copy of a schedule of rates, and that on 1 December 2010 the respondent acknowledged receipt of the schedule. However, as the response to the adjudication reflects, the respondent indicated that the schedule received consisted of only one page. The schedule on which the applicant relies consists of two pages, as mentioned above, and it is on the second page where there is a reference to the need to add GST and to the payment terms being every 14 days from invoice on the 15th and 30th of each month.
It is to be noted that there are only two cost items reflected on the second page of the schedule of rates, both dealing with external cobbles to the driveway. The first page deals with internal and external common areas tiling, bathroom and wet areas, hourly rates, manufacturing rates, floor protection and floor grinding charges, and contains some 27 items. If there was a significant number of items on the second page, one would expect that it would have become obvious as the works progressed that charges were being made for work not included in the schedule. As there were only two items contained on the second page it is, perhaps, understandable that it may not have been noticed by the respondent.
Attached to the adjudication application immediately following the schedule of rates, is the applicant's standard terms and conditions. It refers to the standard terms and conditions applying to construction work, or the supply of related goods and services, or both, performed under a construction contract by Classic Stone (Qld) Pty Ltd. While the second page of the schedule of rates contains the term relating to payment within 14 days of invoice, the standard terms and conditions are relied upon to permit the recovery of interest and enforcement expenses. There is, however, absolutely no evidence to show that the terms and conditions were ever provided to the respondent, other than the bald statement by Mr Anderson that the written understandings between the parties consisted of the applicant's schedule of rates accompanied by the applicant's terms of trade, both of which were agreed to by the parties in Queensland before the payment commenced performance of the project in Western Australia. It is the respondent who has provided an email from Select Stone Gallery dated 1 December 2010 which establishes that a schedule of rates, interestingly referred to as a Classic Stone schedule of rates, which was supplied on 1 December 2010. This was a considerable period of time after the parties' initial dealings in Queensland. There is nothing in the respondent's chronology, or elsewhere, to suggest that the respondent was in Queensland in or about December 2010. More significantly, the email makes no reference to any accompanying terms of trade. None of the emails from the respondent indicate that they were sent using a smartphone remote from the respondent's place of employment in Perth.
It is conceivable that there are two discrete contracts existing, with the parties in one contract being Select Stone Gallery and the other party being either the respondent or Vue Developments Pty Ltd, and the second contract being between the applicant and either the respondent or Vue Developments Pty Ltd. The proprietor of Select Stone Gallery is not identified, and, perhaps, the proprietor may be the applicant. The position is far from clear. However, on the one hand, there is no more than a submission made by the applicant that there is no direct evidence that the purchase order of 1 April 2010 was provided to the applicant. It is sufficiently clear to me that, at least on a balance of probabilities, the purchase order was sent on behalf of Vue Developments Pty Ltd, and must have been received by Select Stone Gallery. Further, Mr Anderson was happy to act on that purchase order so that, whatever the relationship between Select Stone Gallery and the applicant, he regarded that there was an enforceable contract in place. As that contract was with Vue Developments Pty Ltd, the argument about the respondent holding herself out as the proprietor of Vue Developments loses all traction and is rejected.
A party commencing an adjudication has an onerous responsibility to provide sufficient evidence to support their case. The time within which an adjudication process must be completed is such that there can be no guarantee that there will be an opportunity given to reply. It is incumbent, therefore, on an applicant to provide as watertight a case as possible. In this instance the applicant made bald assertions without providing evidence on crucial issues which were foreseeable.
The documentation shows that, before the adjudication commenced, Vue Developments Pty Ltd had sent a series of credit notes setting out the value to which it believed it was entitled to a credit against the invoices raised by the applicant. The applicant, even if it had overlooked or mislaid the original purchase order, therefore had some warning that there would be an issue if it contended that the respondent was personally liable. In a footnote to the payment claim, the applicant set out a basis for contending that the respondent would be estopped from asserting that the claimant is not permitted to serve a payment claim on her. As the chronology reflects, there were dealings between the parties for a considerable period, and invoices were previously raised relating to the supply of the stone. All of this relevant evidence should have been placed before the adjudicator. The evidence before the adjudicator is sufficient to establish, on a balance of probability, that the respondent did not contract in a personal capacity.
I, accordingly, find that the respondent is not a party to the contract upon which the adjudication is based. It therefore follows that the application has never been properly served in terms of s 26 of the CC Act, and that the adjudication application must, therefore, be dismissed pursuant to s 31(2)(a)(ii) of the CC Act. The decision of the adjudicator falls to be affirmed.
Although it is therefore not necessary to consider the remaining issues which would otherwise require to be determined, it is appropriate to express the Tribunal's further conclusions below, in case the matter should go any further.
The remaining issues and complexity
The initial contract between the applicant and Vue Developments Pty Ltd is based upon the latter's purchase order dated 1 April 2010. The purchase order incorporates terms and conditions which have not been identified in evidence. That contract was for the supply of limestone.
It is evident that the parties had still to enter into a contractual relationship for the installation of the stone work. The schedule of rates relied upon by the applicant provides labour rates for that work. There are some records supporting the respondent's contention that the second page of the schedule of rates was not received. In an email from the respondent to Mr Anderson (Select Stone Gallery) dated 3 August 2011, reference was made to it being assumed prices were inclusive of GST as there was nothing in the schedule of rates to indicate otherwise. As will be recalled, the reference to GST and payment terms were on the missing second page of the schedule of rates so a response was invited and should have been sent referring to the second page. Further, it is unlikely that the parties were then aware of the possible significance of whether or not the term applied that payment was due 14 days after invoicing on either the 15th or last day of each month.
In any event, as the original contractual relationship was between the applicant and Vue Developments Pty Ltd based on the purchase order, what evidence is there to indicate that there was to be any change in the contracting parties for the installation of the limestone? There is none, although, as already observed, it is possible that there could have been one contract with Select Stone Gallery to supply (assuming it was a different legal entity), and a later contract with the applicant for the installation. There is no evidence to clarify the relationship between Select Stone Gallery and the applicant.
In addition, the chronology reflects that, although a schedule of rates was provided, the rates were queried within a day as being inconsistent with previous discussions and not reflecting any discount based on volume. Apart from the brief statement in the chronology to this effect on 2 December 2010, there is no other evidence on the issue, although it is apparent that there were ongoing queries about rates being applied throughout the job. As already observed, the chronology reflects that invoices were issued prior to those the subject of the current dispute.
There are unsatisfactory aspects to each of the parties' cases. The applicant has, as already observed, made many bald statements without providing any supporting evidence relating to the formation of any contractual relationship. It is not known on what basis the applicant contends that its terms of trade document was ever accepted by the respondent (or Vue Developments Pty Ltd). Reference has also been made to the chronology not reflecting any particular basis on which the purchase order was sent to the applicant, although there are other factors supporting the probability that it was sent as discussed above. How, in these circumstances, does either the adjudicator or this Tribunal identify the true contractual terms between the parties? The statutory implied terms only apply if there is no express term applicable. It is therefore necessary to identify the express terms that apply.
The starting point for this quagmire lies at the feet of the applicant for the apparently unbusinesslike manner in which it allowed the contract to proceed without being properly documented. Then further, in making the adjudication application, the applicant has failed to address the obvious issues in relation to which there are deficiencies in the evidence as discussed above. It might be said that the respondent has contributed to the situation by also not providing adequate evidence, but, in the end, the lack of detail does not work against the respondent.
It is impossible to know whether the missing evidence would add clarity, or simply further demonstrate that the true identity of the contracting parties (if I am wrong in my above conclusions) is unclear, and that the identity of the parties and the terms on which the parties contracted cannot be established without full discovery and crossexamination of the protagonists.
It is not appropriate to attempt to address the outstanding issues against such a confused factual background. It is, in my view, precisely the type of circumstance contemplated by s 31(2)(a)(iv) of the CC Act, which requires that an adjudication application must be dismissed if the adjudicator is satisfied that it is not possible to fairly make a determination because of the complexity of the matter.
If the evidence is sufficient to find positively, as I have done, that the respondent was not a party to the contract, that is fine, and it leads to dismissal on the basis that the adjudication application was not served on all of the parties to the contract under s 26 of the CC Act. But, if the evidence were to be regarded as insufficient to support that conclusion, I regard that the deficiencies in evidence are such that a fair determination on the merits is not possible. It cannot be fair to determine the merits when the evidence cannot establish a contractual relationship and where there is uncertainty of this degree about the payment terms, including the applicable rates.
Accordingly, if the contractual relationship is between the applicant and the respondent, contrary to my conclusions above, I would, nevertheless, affirm the decision under review that the adjudication application be dismissed, albeit on different grounds to those relied on by the adjudicator, namely that it is not possible to make a fair determination because of the complexity presented by the deficiencies in evidence.
Conclusion and orders
For the above reasons an order will issue affirming the decision under review.
The respondent has intimated that, depending upon the outcome of the application for review, it would like to make submissions in support of an order for costs. Orders will, accordingly, issue providing the respondent with an opportunity to do so, and for opposing submissions to be filed. Subject to further orders of the Tribunal, and any submissions which the parties might wish to make in that regard, the costs application will be determined on the documents.
The Tribunal will, accordingly, issue orders as follows:
1.The decision under review is affirmed.
2.On or before 11 May 2012 the applicant must file and serve:
(a)a schedule of the costs which the respondent wishes to claim, with sufficient details of the services provided and the rates charged to enable the Tribunal to fix the costs, if any costs be awarded; and
(b)its written submissions in support of any award of costs and the quantum of costs claimed.
3.On or before 25 May 2012 the applicant must file and serve its submissions opposing the application for costs and the quantum of costs claimed, if so advised.
4.Subject to further order of the Tribunal, and taking into account any submissions which the parties may make, any application for costs shall be determined on the documents.
I certify that this and the preceding [75] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR C RAYMOND, SENIOR MEMBER
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: CONSTRUCTION CONTRACTS ACT 2004 (WA)
CITATION: CLASSIC STONE (QLD) PTY LTD and JULIE MAURETTA PITCHER [2012] WASAT 80 (S)
MEMBER: MR C RAYMOND (SENIOR MEMBER)
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 23 AUGUST 2012
FILE NO/S: CC 1958 of 2011
BETWEEN: CLASSIC STONE (QLD) PTY LTD
Applicant
AND
JULIE MAURETTA PITCHER
Respondent
Catchwords:
Construction Contracts Act 2004 (WA) - Adjudication - Application for costs
Legislation:
Construction Contracts Act 2004 (WA), s 31(2)(a), s 46(1), s 46(2)
Legal Profession Act 2008 (WA)
State Administrative Tribunal Act 2004 (WA), s 39(1)(a), s 39(e), s 87(2)
Result:
Application for costs dismissed
Category: B
Representation:
Counsel:
Applicant: Mr C Williams
Respondent: Ms A Dowley
Solicitors:
Applicant: Solomon Brothers
Respondent: Contract Intelligence Pty Ltd
Case(s) referred to in decision(s):
Classic Stone (Qld) Pty Ltd and Julie Mauretta Pitcher [2012] WASAT 80
J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S)
Koupatsiaris and Pepper Home Loans [2010] WASAT 146
Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S)
Re Malley SM; ex parte Gardner [2001] WASC 83
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
The respondent had successfully opposed an application for the review of an adjudication decision under s 46(1) of the Construction Contracts Act 2004 (WA) and then applied for an indemnity costs order in respect of part of the proceedings and for a costs order on a party and party basis in relation to the balance of the proceedings.
The Tribunal observed that indemnity costs should be awarded only in exceptional circumstances: see Re Malley SM; ex parte Gardner [2001] WASC 83 and the discussion in Civil Procedure Western Australia, Vol 1 by Kendall and Curthoys, LexisNexis Butterworths, Australia 1990 at para 66.1.16.1. The costs in relation to which indemnity was sought was based on: the applicant having filed submissions alleging fraud; the role played by the applicant's former representative; and the substitution of the written submissions first relied upon by the applicant. The total indemnity costs claimed amounted to the sum of $4,950. The costs claimed for the conduct of the balance of the proceedings was $6,255.
In analysing the cost details provided, the Tribunal observed that the significant bulk of indemnity costs related to an investigation of the person who had appeared at the first directions hearing as an agent on behalf of the applicant. The result of the investigation suggested, but did not establish, that the person concerned was admitted to practice in Queensland under another name. The Tribunal considered that it was unreasonable to incur these costs.
Further, the Tribunal considered that the applicant had acted sufficiently promptly in engaging legal representation once objection was taken to the submissions, and had then immediately abandoned the original basis of the application and the submissions to which objection had been taken. Leave was granted for substituted submissions to be filed, and the matter proceeded to hearing on that basis.
The Tribunal referred to a practice within the Tribunal rarely to award costs against a party not represented by a legal representative who, upon becoming aware of a fundamental flaw in its application, seeks leave to withdraw or amend the proceedings without any undue delay, as underlying the basis for the decision in Koupatsiaris and Pepper Home Loans [2010] WASAT 146. As the fraud allegations were abandoned promptly by the applicant, the Tribunal concluded there was no basis on which to make an indemnity costs order. It also rejected the respondent's contentions that indemnity costs should be ordered because of the substitution of the submissions. Any costs arising therefrom fell to be dealt with under the general costs application.
In relation to the general costs claim, the Tribunal rejected the respondent's contentions that the proceedings were obviously unmeritorious. The Tribunal also rejected that costs should be awarded in these proceedings because, having been unsuccessful before the original adjudicator, primarily on the basis that no contractual relationship existed with the respondent, it had commenced fresh adjudication proceedings against the party identified by the respondent as having contracted with the applicant. The Tribunal noted that there is no mechanism under the Construction Contracts Act 2004 which enabled claims to be made against parties in the alternative.
Consequently, both the application for indemnity costs and for costs on a party and party basis were dismissed.
The application for costs and relevant history
The applicant applied under s 46(1) of the Construction Contracts Act 2004 (WA) (CC Act) to review an adjudication decision. On 27 April 2012, the Tribunal published its reasons for decision dismissing the review application: Classic Stone (Qld) Pty Ltd and Julie Mauretta Pitcher [2012] WASAT 80.
At the same time, the Tribunal issued directions for the filing by the respondent of a costs schedule set out in sufficient detail to enable the Tribunal to fix costs, if any costs be awarded, and for the parties to file submissions relating thereto.
The respondent seeks orders that the applicant pay the respondent's costs:
a)on a party and party basis in respect of the proceedings, excluding the costs referred to in (b) below, fixed in the sum of $6,255; and
b)on an indemnity basis in the sum of $4,950 relating to:
i)the representation of the applicant in the early stages of the proceedings prior to the applicant's present legal representatives coming on record;
ii)the making of allegations of fraud in the original submissions filed prior to the applicant's current legal representatives coming on record; and
iii)the substitution of submissions subsequently filed by the applicant's current legal representatives.
Immediately prior to the directions hearing, the respondent's solicitors wrote by letter dated 13 December 2011 to the applicant setting out a contention that the application was fundamentally flawed, firstly, because an order was sought that the matter be remitted to a new adjudicator and, secondly, because the grounds raised, being based on natural justice issues, were not within the jurisdiction of the Tribunal. The applicant advised that unless the proceeding was withdrawn, the letter would be brought to the attention of the Tribunal. The applicant has not endeavoured, however, to support a costs order relying on this letter. Given that the original basis of the application was abandoned at a relatively early stage, for the reasons referred to below, this letter would not have justified an award of costs.
At the initial directions hearing held in the matter, Mr John Sinclair, who described himself as a contract administrator, appeared as agent for the respondent. Mr Sinclair indicated that it was intended that he act as a representative for the applicant in the proceedings. There was some uncertainty about the capacity in which Mr Sinclair might do so, and the Tribunal indicated that it would not consent to him doing so under s 39(e) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) if he were to be remunerated for doing so. Although the Tribunal made no specific order at the time, it indicated that this issue should be addressed at the commencement of the hearing of the review application if Mr Sinclair was to represent the applicant.
On 11 January 2012, the applicant filed and served on the respondent a statement to the effect that Mr Sinclair had been employed by the applicant, together with submissions that Mr Sinclair therefore had a right to appear under s 39(1)(a) of the SAT Act. On the following day, the applicant filed and served on the respondent an outline of submissions dealing with the merits of the review application.
On 18 January 2012, the Tribunal received a facsimile letter of that date from the respondent's legal representatives stating, relevantly:
… a few matters of extreme concern have come to light in recent days which lead us to believe that it is inappropriate for the applicant's submissions to stand and it is inappropriate for the respondent to file submissions that respond to those submissions that have been filed by the applicant.
Please consider the material in the attached Affidavit of Elisha Rose and we ask that this matter be listed for an urgent directions hearing prior to the date for the filing of the respondent's submissions (or alternatively that the Tribunal extended the time for filing of the respondent's submissions to a date after the next available directions hearing).
The attached affidavit of Elisha Lee Rose deposed to what had occurred at the first directions hearing and outlined steps which had been taken initially by the respondent and later by Ms Rose on the respondent's behalf concerning an investigation of Mr Sinclair. Ms Rose further deposed to a person answering a telephone call to a telephone number recorded by the Bar Association of Queensland website as being that of an admitted legal practitioner, who identified himself as John Sinclair and confirmed that he was now employed by the applicant. The name of the admitted legal practitioner reflected in the website was not John Sinclair. Further, Ms Rose deposed that the Queensland Law Society had advised that no-one by the name of John Sinclair was admitted to practice (in that State).
It appears from the respondent's written submissions filed in support of the current costs application that contact was made by Ms Rose on 17 January 2012 with unidentified solicitors said to be representing the applicant (although they conveyed they were no longer acting for the applicant), and also with Mr Anderson of the applicant. Ms Rose advised that unless the submissions were replaced, the respondent would seek the costs of obtaining an order to that effect from the Tribunal. The submissions reflect that the solicitors, who were no longer acting, stated that the submissions would not be withdrawn (which it appears they had no authority to state), but there is no indication of how Mr Anderson responded.
The Tribunal acceded to the request and convened a directions hearing on 19 January 2012. The applicant's current legal representatives attended the directions hearing and advised that they had been instructed to represent the applicant.
Counsel for the respondent raised that serious allegations of fraudulent conduct were made in the applicant's submissions against both the respondent and its legal representatives. It was not necessary for counsel for the respondent to develop the point at all, because counsel for the applicant indicated that the applicant wished to file substituted submissions and to support the application for review on an entirely different basis. It was therefore also not necessary to develop any argument in relation to whatever problem may or may not have existed in relation to Mr Sinclair representing the applicant. The Tribunal accordingly made directions relating to the filing of the substituted submissions, providing the applicant with a time within which to file and serve its opposing submissions and reserving the question of costs of the respondent's application. It is in respect of that application that the respondent seeks indemnity costs.
The applicant subsequently filed its substituted submissions and the matter proceeded to hearing in the ordinary course.
The schedule of costs filed by the applicant sets out the relevant attendances, the charges and the rates charged therefor.
The principles to be applied
The principles applicable to the award of costs are summarised in Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S) (Marvelle) at [15] [32], inclusive.
In the light of the costs determinations applicable to the Tribunal, published under the Legal Profession Act 2008 (WA), unless a cost agreement is proved establishing an entitlement to a higher rate as between solicitor and client, it is unlikely, in most cases, that there will be any real difference between the rates allowed in assessing indemnity costs and the maximum party and party costs which might be permitted. Marvelle at [45] outlines that the determinations are a useful guide to what rates might be allowed as a maximum party and party rate. It is to be noted in this case that the rates charged, when comparing the work claimed in respect of the services the subject of the application for indemnity costs, and the services provided otherwise in the proceedings, appear to be the same. In any event, it would generally only be appropriate to make an order for indemnity costs in exceptional circumstances: see Re Malley SM; ex parte Gardner [2001] WASC 83 and the discussion in Civil Procedure Western Australia, Vol 1, by Kendall and Curthoys, LexisNexis Butterworths, Australia 1990 at para 66.1.16.1. The difference is simply that, on an indemnity basis, costs will be allowed unless they are unreasonable in amount, or are unreasonably incurred.
Finally, there is a practice in the Tribunal which does not appear to have been referred to in any previous published decision. Costs will rarely be awarded against a party not represented by a legal representative who, upon becoming aware of a fundamental flaw in its application, seeks leave to withdraw or to amend the proceedings without any undue delay. The reason for this principle is that proceedings, particularly in the Commercial and Civil stream, are often commenced by parties without the benefit of legal representation in the genuine belief that there is an entitlement to the orders sought. Given the Tribunal's usual costs regime, that each party should bear its own costs, it has not been thought appropriate to order costs in the circumstances outlined. On the other hand, if a party is made aware of an obvious obstacle to their application succeeding but persists in pursuing a case which, properly advised, should not be pursued, that may be a circumstance which supports an award of costs. It is evident that this is the principle which led to an award of costs in Koupatsiaris and Pepper Home Loans [2010] WASAT 146 from the date of a directions hearing when the applicant was made aware of a jurisdictional difficulty, but not in respect of costs incurred prior thereto.
Should costs be awarded?
Consideration will be given firstly to the indemnity costs application. It is convenient to deal with the first two grounds together on which the indemnity costs order is sought, because they are closely related.
Indemnity costs based on fraud allegations in original submissions and the role of the applicant's first representative
The letter of 18 January 2012, which was treated as an interim application by the respondent, did not alert the Tribunal to the concern over fraud allegations. There was a general reference to inappropriate submissions and a request for the Tribunal to consider the material in the attached affidavit of Elisha Lee Rose. The affidavit deposed to the investigation conducted in relation to Mr Sinclair.
It appears that counsel for the respondent has charged her time at a rate of $300 per hour. The total time spent by counsel in relation to preparation directly related to the fraud allegations is .25 of an hour, on 19 January 2012, for settling submissions on fraud and costs, and .25 of an hour, on 19 January 2012, for preparation for appearance. A charge of $300 was made in respect of counsel's appearance before the Tribunal on that day. Other charges that directly relate to the fraud allegations appear to be $540 incurred by a person, presumably an articled clerk or a law clerk, charged at a rate of $90 per hour on 18 January 2012. The vast bulk of time charged in relation to the indemnity cost claim appears to relate to the investigation concerning Mr Sinclair.
It is not at all clear as to why the respondent launched into this investigation. At that point, it had been asserted that Mr Sinclair was employed by the applicant and that he therefore had an automatic right to represent the applicant. It is not clear that the applicant was necessarily correct in so contending, because it is at least doubtful as to whether Mr Sinclair was an officer of the company as required by s 39(1)(a) of the SAT Act. The investigation, in any event, disclosed circumstances which suggested that Mr Sinclair was admitted to practice under another name in Queensland (although there might be other explanations for why he could be contacted at a telephone number listed for a barrister). If that is the point which the respondent intended to establish, the situation is, as the applicant has submitted, bizarre, because why would a legal practitioner, who could appear on the applicant's behalf in the proceedings in the Tribunal as of right, knowingly seek to pass himself off as a different person who had no right of appearance and who then had to establish some other basis upon which to represent the applicant? When one considers that the total costs incurred on this issue was the bulk of the $4,950 compared to the cost of the actual review proceeding of $6,255, it demonstrates that it was unreasonable to launch the investigation and incur the costs which the respondent did on this issue.
Insofar as the fraud allegations are concerned, it is evident that the entire basis upon which the application was founded was abandoned promptly and at an early stage in the proceedings as soon as the applicant had the benefit of advice from its current legal representatives.
In these circumstances, an indemnity cost order is not justified on either of the above two grounds. The costs incurred directly related to the fraud allegations would be covered in principle, subject to assessment, if costs were to be awarded generally in the matter. The bulk of the costs claimed of $4,950 related to the investigation of Mr Sinclair, and even if costs were to be awarded generally, the 'investigation' costs would be disallowed as being unreasonably incurred. The objectives of the Tribunal require that costs to the parties be minimised and that proceedings be conducted accordingly: see J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S).
Indemnity costs based on substitution of submissions
The respondent's costs schedule does not show that any costs were incurred preparing a response to the original submissions which were substituted. Indeed, the directions hearing on 19 January 2012 was listed, in part, because it was submitted that it would be inappropriate to respond to those submissions. As there are no wasted costs demonstrated, there can be no costs connected with the second submissions which might be the subject of an indemnity order. Those costs should be dealt with as part of the general costs of opposition and, according to the costs schedule, have been included in those costs claimed of $6,255.
It is therefore necessary to address the general claim for costs.
General costs claim
Central to the applicant's argument, in order to take the case out of the normal regime under s 87(2) of the SAT Act that each party pay its own costs, is reliance on communications between the respective legal representatives on 2 and 3 February 2012. The correspondence focused on the issue of whether or not a number of invoices issued by the applicant constituted payment claims under the CC Act.
As it turned out, this was not a point that it was necessary for the Tribunal to determine. The Tribunal found that the respondent was not a party to the contract with the applicant and, consequently, that the adjudication application had never been properly served, but went on to indicate that if that decision is wrong, in any event, uncertainty as to the contractual terms had the effect that the application would fall to be dismissed on the basis that it was not possible to fairly make a determination because of the complexity of the matter.
There is therefore no finding of the Tribunal to support the respondent's submission that costs should be awarded because of the pursuit of the application to hearing in the light of these communications, nor that the second submissions were obviously unmeritorious on this point. To the contrary, the point is arguable either way, but without being able to determine the contractual terms which applied and which might regulate how to make a payment claim, this issue between the parties could not be resolved.
The respondent further submits that costs should be awarded because the proceedings had been pursued at the same time as a second adjudication application, commenced by the applicant against a party identified in these proceedings by the respondent as the party with whom the applicant had contracted. It is difficult to understand why the respondent should be critical of this course. The applicant had commenced adjudication against the respondent, thinking that the respondent was the correct party. An adjudicator had held otherwise and the applicant had sought to review that decision.
The respondent's submissions include the adjudication determination which was handed down in favour of the applicant. But the applicant could not have been sure that it would succeed in those proceedings, given the technicality of adjudication proceedings and the obvious difficulties highlighted in these proceedings. However, having succeeded in the later adjudication, if this review had succeeded, it would obviously have been inappropriate to pursue this matter on its referral back to the adjudicator.
The adjudication process is not one which would have permitted the applicant to commence adjudication against this respondent and the other respondent in the later adjudication proceedings, in the alternative, as could have been done in court proceedings. While the applicant might have been able to delay the second adjudication until the review proceedings had been finalised, depending on when it had served a payment claim (which is not known), it was not an abuse of these proceedings to have persisted with the review.
The original basis of the application appeared flawed. Concerns were raised by the respondent's legal representatives on 13 December 2011 shortly prior to the first directions hearing. Further objection was then taken on 17 January 2012 to the original submissions filed by the applicant. The applicant was not then legally represented in the proceedings. Mr Sinclair's status is, at best, unclear. As soon as the applicant had engaged its current legal representatives, it was clear the applicant abandoned the original basis of the application and the offending submissions. This was within two days of the latter objections. The order sought referring the adjudication back to a new adjudicator was obviously contrary to s 46(2) of the CC Act and was not pursued at the hearing. The claim for this order says more about the applicant's understanding, or the understanding of Mr Sinclair, of the legislation than anything else. It could not have been regarded by the respondent as a significant issue.
In the result, while the respondent is the substantially successful party in relation to the review proceedings, there is an insufficient basis upon which to move from the usual costs regime that each party pay its own costs.
Orders
For the above reasons, the Tribunal will cause orders to issue as follows:
1.The respondent's applications:
(a)for indemnity costs; and
(b)for costs otherwise as between party and party;
are dismissed.
I certify that this and the preceding [40] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR C RAYMOND, SENIOR MEMBER
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