CONBRIO CONSTRUCTION & MAINTENANCE PTY LTD T/A DWG CONTRACTING and ABB AUSTRALIA PTY LIMITED
[2015] WASAT 122
•2 NOVEMBER 2015
CONBRIO CONSTRUCTION & MAINTENANCE PTY LTD T/A DWG CONTRACTING and ABB AUSTRALIA PTY LIMITED [2015] WASAT 122
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2015] WASAT 122 | |
| CONSTRUCTION CONTRACTS ACT 2004 (WA) | |||
| Case No: | CC:345/2015 | 11 JUNE 2015 | |
| Coram: | JUSTICE J C CURTHOYS (PRESIDENT) | 2/11/15 | |
| 39 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | CONBRIO CONSTRUCTION & MAINTENANCE PTY LTD T/A DWG CONTRACTING ABB AUSTRALIA PTY LIMITED |
Catchwords: | Payment claim Payment dispute Informal process |
Legislation: | Construction Contracts Act 2004 (WA), s 3, s 6(a), s 26(1), s 31(2), s 46 State Administrative Tribunal Act 2004 (WA), s 27 |
Case References: | Blackadder Scaffolding Services (Aust) Pty Ltd and Mirvac Homes (WA) Pty Ltd [2009] WASAT 133 Field Deployment Solutions Pty Ltd v SC Projects Australia Pty Ltd [2015] WASC 60 Laing O'Rourke Australia Construction Pty Ltd v Samsung C & T Corporation [2015] WASC 237 Marine & Civil Bauer Joint Venture and Leighton Kumagai Joint Venture [2005] WASAT 269 |
Orders | On the application heard on 11 June 2015 by the President, Justice Curthoys, it is on 2 November 2015 ordered that:,1. The application is dismissed. |
Summary | In July 2010, Conbrio Construction & Maintenance Pty Ltd trading as DWG Contracting and ABB Australia Pty Ltd entered into a contract for the performance by DWG of works relating to substations at two separate sites. DWG sent a series of emails relating to claims in August 2012 which ABB rejected.,On 12 December 2014, DWG made a claim for payment to ABB. On 18 December 2014, ABB rejected this claim.,ABB rejected the claim on the basis that DWG had already made a payment claim for this work in August 2012 which ABB had rejected. ABB submitted that a payment dispute had arisen in September 2012.,In January 2015, DWG made an application for payment of its December 2014 claim under the Construction Contracts Act 2004 (WA). The Act requires an application to be filed within 28 days of a payment dispute arising.,An adjudicator was appointed under the Act. DWG submitted that no payment claim had been made previously since the parties were only following an 'informal process' prior to the claim. The adjudicator found that DWG had made a payment claim for the same work on 20 August 2012 and that that claim was rejected by ABB on 4 September 2012. The adjudicator rejected DWG's claim. He held that the December 2014 claim did not comply with s 26(1) of the Act in that DWG did not prepare and serve the application within 28 days of the payment dispute arising. Therefore, the payment dispute arose on 4 September 2012 and the present claim was well out of time under the Act.,The Tribunal determined that the adjudicator's decision to dismiss the application was correct and the adjudicator's decision to dismiss the application under s 31(2)(a)(ii) of the Act was affirmed. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL ACT : CONSTRUCTION CONTRACTS ACT 2004 (WA) CITATION : CONBRIO CONSTRUCTION & MAINTENANCE PTY LTD T/A DWG CONTRACTING and ABB AUSTRALIA PTY LIMITED [2015] WASAT 122 MEMBER : JUSTICE J C CURTHOYS (PRESIDENT) HEARD : 11 JUNE 2015 DELIVERED : 2 NOVEMBER 2015 FILE NO/S : CC 345 of 2015 BETWEEN : CONBRIO CONSTRUCTION & MAINTENANCE PTY LTD T/A DWG CONTRACTING
- Applicant
AND
ABB AUSTRALIA PTY LIMITED
Respondent
Catchwords:
Payment claim - Payment dispute - Informal process
Legislation:
Construction Contracts Act 2004 (WA), s 3, s 6(a), s 26(1), s 31(2), s 46
State Administrative Tribunal Act 2004 (WA), s 27
Result:
Application dismissed
Summary of Tribunal's decision:
In July 2010, Conbrio Construction & Maintenance Pty Ltd trading as DWG Contracting and ABB Australia Pty Ltd entered into a contract for the performance by DWG of works relating to substations at two separate sites. DWG sent a series of emails relating to claims in August 2012 which ABB rejected.
On 12 December 2014, DWG made a claim for payment to ABB. On 18 December 2014, ABB rejected this claim.
ABB rejected the claim on the basis that DWG had already made a payment claim for this work in August 2012 which ABB had rejected. ABB submitted that a payment dispute had arisen in September 2012.
In January 2015, DWG made an application for payment of its December 2014 claim under the Construction Contracts Act 2004 (WA). The Act requires an application to be filed within 28 days of a payment dispute arising.
An adjudicator was appointed under the Act. DWG submitted that no payment claim had been made previously since the parties were only following an 'informal process' prior to the claim. The adjudicator found that DWG had made a payment claim for the same work on 20 August 2012 and that that claim was rejected by ABB on 4 September 2012. The adjudicator rejected DWG's claim. He held that the December 2014 claim did not comply with s 26(1) of the Act in that DWG did not prepare and serve the application within 28 days of the payment dispute arising. Therefore, the payment dispute arose on 4 September 2012 and the present claim was well out of time under the Act.
The Tribunal determined that the adjudicator's decision to dismiss the application was correct and the adjudicator's decision to dismiss the application under s 31(2)(a)(ii) of the Act was affirmed.
Category: B
Representation:
Counsel:
Applicant : Mr MD Cuerden SC and Ms M McCubbin
Respondent : Mr J Garas and Mr E Teng
Solicitors:
Applicant : Lavan Legal
Respondent : Squire Patton Boggs (AU)
Case(s) referred to in decision(s):
Blackadder Scaffolding Services (Aust) Pty Ltd and Mirvac Homes (WA) Pty Ltd [2009] WASAT 133
Field Deployment Solutions Pty Ltd v SC Projects Australia Pty Ltd [2015] WASC 60
Laing O'Rourke Australia Construction Pty Ltd v Samsung C & T Corporation [2015] WASC 237
Marine & Civil Bauer Joint Venture and Leighton Kumagai Joint Venture [2005] WASAT 269
Introduction
1 In July 2010, Conbrio Construction & Maintenance Pty Ltd trading as DWG Contracting (DWG) and ABB Australia Pty Ltd (ABB) entered into a contract for the performance by DWG of works (the Works) relating to substations at two separate sites, Pegs Creek and Bulgarra (the Contract) (DWG's Book of Documents (BOD) Vol A, page 147 [9]).
2 DWG sent a series of emails relating to claims in August 2012 which ABB rejected.
3 On 12 December 2014, DWG made a claim for payment to ABB. On 18 December 2014, ABB rejected the claim.
4 ABB rejected the claim on the basis that DWG had already made a payment claim for this work in August 2012 which ABB had rejected. ABB submitted that a payment dispute had arisen in September 2012.
5 In January 2015, DWG made an application for payment of its December 2014 claim by ABB under the Construction Contracts Act2004 (WA) (CCA). The CCA requires an application to be filed within 28 days of a payment dispute arising.
6 An adjudicator was appointed under the CCA. DWG submitted that no payment claim had been made previously since the parties were only following an 'informal process' prior to a payment claim. The adjudicator found that DWG had made a payment claim for the same work on 20 August 2012 and that that claim was rejected by ABB on 4 September 2012. The adjudicator rejected DWG's claim. He held that the December 2014 claim did not comply with s 26(1) of the CCA in that DWG did not prepare and serve the application within 28 days of the payment dispute arising. Therefore, the payment dispute arose on 4 September 2012 and the present claim was well out of time under the CCA.
7 DWG seeks a review of the adjudicator's decision.
The procedural history
8 DWG's statement of issues, facts and contentions was filed on 30 April 2015 (DWG SIFC).
9 ABB's statement of issues, facts and contentions was filed on 4 June 2015 (ABB SIFC).
The statutory scheme of the CCA and the relevant authorities
10 Section 3 of the CCA provides:
paymentclaim means a claim made under a construction contract
(a) by the contractor to the principal for payment of an amount in relation to the performance by the contractor of its obligations under the contract; or
(b) by the principal to the contractor for payment of an amount in relation to the performance or non performance by the contractor of its obligations under the contract[.]
11 In Blackadder Scaffolding Services (Aust) Pty Ltd and Mirvac Homes (WA) Pty Ltd [2009] WASAT 133, the Tribunal, referring to an earlier decision in Marine & Civil Bauer Joint Venture and Leighton Kumagai Joint Venture [2005] WASAT 269 (Marine), said (at [68] [69]):
[T]he definition of 'payment claim' to a claim made under a construction contract is intended to be descriptive only and that the object of the adjudication is to determine whether the rejection of the payment claim, in whole or in part, is justified. Further, all the legislation intended to convey was that the claim must be one which arises under a construction contract. It is a means to confine adjudication to construction contract claims.
Some assistance was also gleaned from the corresponding definition of 'payment claim' in Sch 1 Div 5 where 'payment claim' is defined to mean a claim by the contractor to the principal for payment of an amount in relation to the performance by the contractor of its obligations under 'this' contract. The emphasis is there on a payment claim for performance of the obligations under the contract, rather than the claim itself[.]
(Emphasis added)
12 Section 6(a) of the CCA provides:
For the purposes of this Act, a payment dispute arises if by the time when the amount claimed in a payment claim is due to be paid under the contract, the amount has not been paid in full, or the claim has been rejected or wholly or partly disputed[.]
13 In Laing O'Rourke Australia Construction Pty Ltd v Samsung C & T Corporation [2015] WASC 237 (Laing O'Rourke), Mitchell J stated at [6]:
[Subsection] 6(a) of the Act should be construed as providing that a payment dispute arises when a payment claim is rejected or disputed, even if the time for payment under the construction contract has not yet arisen[.]
14 Section 26(1) of the CCA provides that a claimant must prepare and serve a payment claim within 28 days after the dispute arises.
15 Section 31(2) of the CCA provides
An appointed adjudicator must, within the prescribed time dismiss the application without making a determination of its merits if the application has not been prepared and served in accordance with section 26[.]
December 2014 payment claim
16 On 12 December 2014, DWG made a payment claim for contract and variation works performed at both sites totalling $1,724,492.00 (excluding GST) to ABB. The payment claim was supported by two files of documents (December 2014 Payment Claim) (DWG SIFC [29]; ABB SIFC [29]).
17 On 18 December 2014, ABB rejected the payment claim on the basis that the payment claim had been made out of time and that the Contract had 'come to an end' (DWG SIFC [30]; ABB SIFC [29]).
The adjudicator's findings
18 DWG prepared an application for adjudication under the CCA (DWG's Application), and served it in January 2015.
19 The adjudicator handed down his determination to the parties on 15 February 2015 (the Determination).
20 The adjudicator dismissed DWG's Application under s 31(2)(a)(ii) of the CCA, on the basis that it had not been prepared and served in accordance with s 26 (i.e. within 28 days after the payment dispute arose).
21 The adjudicator found that
a) the 20 August 2012 email from DWG to ABB was a 'payment claim';
b) the 'payment claim' was rejected by ABB by email dated 4 September 2012;
c) the relevant payment dispute essentially occurred no later than 4 September 2012 when ABB rejected the 20 August 2012 'payment claim';
d) the Application was therefore not served within 28 days of the payment dispute; and
e) the December 2014 Payment Claim was a 'recycled' claim given that the majority of the construction work the subject of the December 2014 Payment Claim was claimed within the '2012 Claim'.
SAT's jurisdiction
22 Section 46 of the CCA provides a person who is aggrieved by a decision made by an adjudicator under s 31(2)(a) may apply to the Tribunal for a review of the decision.
23 The review is by way of a hearing de novo to produce the correct and preferable decision: s 27 of the State Administrative Tribunal Act 2004 (WA) (SAT Act); Field Deployment Solutions Pty Ltd v SC Projects Australia Pty Ltd [2015] WASC 60 (Field Deployment Solutions at [49].
The issues
24 The issue as put by DWG is whether DWG, by any one or more of its emails to ABB from 13 June 2011 to 20 August 2012 (and if so, which), made a 'payment claim' within the meaning of s 3 of the CCA (DWG SIFC [42]). The Tribunal notes that, if it is found that the 20 August 2012 email was a 'payment claim', it is unnecessary to consider any of the earlier emails.
25 ABB accepts that paragraph 42 of DWG's SIFC correctly identifies one issue.
26 ABB says that there are 2 further issues:
a) whether, by reason of clause 23.3 of the Contract, DWG was precluded from making any payment claim at the time it made the December 2014 payment claim; and
b) whether, in making the December 2014 payment claim, DWG merely 'repriced' the value of works that it previously claimed under the four progress claims that were certified and paid by ABB.
27 The Tribunal can consider other grounds for dismissal in s 31(2) of the CCA apart from or in addition to those considered by the adjudicator in dismissing the application: Field Deployment Solutions at [48] - [50].
28 DWG conceded that if the Tribunal finds that a payment claim was made in 2011/12, then the December 2014 claim should be dismissed on the basis that it is a claim for the same work (T: 17), that is, if it arises, DWG concedes the second further issue raised by ABB.
The relevant contractual provisions
29 The relevant clauses of the Contract are as follows:
30 'Date of practical completion' means:
a) the date evidenced in a certificate of practical completion as the date upon which practical completion was reached; or
b) where another date is determined in any arbitration or litigation as the date upon which practical completion was reached, that other date[.]
31 'Practical completion':
is that stage in the carrying out and completion of WUC when the Works are complete except for minor defects[.]
32 'WUC' (from 'work under the contract'):
means the work which the contractor is or may be required to carry out and complete under the Contract and includes variations, remedial work, construction plant and temporary works,
and like words have a corresponding meaning.
33 Clause 20.4 'Practical completion' states:
Within 14 days after receiving a request by the Contractor for the issue of a certificate of practical completion, the Principal shall give to the Contractor either a certificate of practical completion evidencing the date of practical completion or written reasons for not doing so.
If the Principal is of the opinion that practical completion has been reached, the Principal may issue a certificate of practical completion even though no request has been made.
34 Clause 21 'Defects liability' states:
The defects liability period stated in Item 13 [12 months] shall commence on the date of practical completion at 4:00 pm.
The Contractor shall carry out rectification of defects at times and in a manner causing as little inconvenience to the occupants or users of the Works as is reasonably possible.
As soon as possible after the date of practical completion, the Contractor shall rectify all defects existing at the date of practical completion.
During the defects liability period, the Principal may give the Contractor a direction to rectify a defect. The direction shall identify the defect and state reasonable dates for commencement and completion of its rectification.
If the rectification is not commenced or completed by the stated dates, the Principal may have the rectification carried out by others but without prejudice to any other rights and remedies the Principal may have. The cost thereby incurred shall be moneys due and payable to the Principal.
35 Clause 22 'Variations' states:
22.1 Directing variations
The Contractor shall not vary WUC except as directed in writing.
The Principal, before the date of practical completion, may direct the Contractor to vary WUC or execute additional work but such variation shall be of a character and extent contemplated by, and capable of being carried out under the provisions of the Contract.
22.2 Pricing
The Principal shall, as soon as possible, price each variation using the following order of precedence:
(a) prior agreement;
(b) applicable rates or prices in the Contract;
(c) rates or prices in a schedule of rates or schedule of prices, even though not Contract documents, to the extent that it is reasonable to use them; and
(d) reasonable rates or prices, which shall include a reasonable amount for profit and overheads[.]
36 Clause 23 'Payment' states:
23.1 Progress claims
The Contractor shall claim payment progressively in accordance with Item 14 [on the last day of each month].
An early progress claim shall be deemed to have been made on the date for making that claim.
Each progress claim shall be given in writing to the Principal and shall include details of the value of the WUC done and may include details of other moneys then due to the Contractor pursuant to provisions of the Contract.
23.2 Certificates
The Principal shall, within 14 days after receiving such a progress claim, assess the claim and shall issue a progress certificate stating the moneys due to the Contractor or the Principal, as the case may be. The Principal shall set out in the progress certificate the calculations employed to arrive at the amount certified and, if the amount is more or less than the amount claimed by the Contractor, the reasons for the difference.
Within 21 days after receipt by the Principal of such a progress claim, the Principal or the Contractor, as the case may be, shall pay:
(a) the amount certified, if the Principal has issued a progress certificate with respect to the progress claim; or
(b) the amount of the progress claim, if the Principal has not so certified.
Neither a progress certificate nor a payment of moneys shall be evidence that the subject WUC has been carried out satisfactorily. Payment other than final payment shall be payment on account only.
Except as provided elsewhere in the Contract, the Principal shall not be obliged to pay for unfixed plant and materials.
23.3 Final payment claim and certificate
Within 28 days after the expiry of the defects liability period, the Contractor shall give the Principal a written final payment claim endorsed 'Final Payment Claim' being a progress claim together with all other claims whatsoever in connection with the subject matter of the Contract.
Within 42 days after the expiry of the defects liability period, the Principal shall issue to the Contractor a final certificate evidencing the moneys finally due and payable between the Contractor and the Principal on any account whatsoever in connection with the subject matter of the Contract.
Those moneys certified as due and payable shall be paid by the Principal or the Contractor, as the case may be, within 7 days after the debtor receives the final certificate.
The final certificate shall be conclusive evidence of accord and satisfaction, and in discharge of each party's obligations in connection with the subject matter of the Contract except for:
(a) fraud or dishonesty relating to WUC or any part thereof or to any matter dealt with in the final certificate;
(b) any defect or omission in the Works or any part thereof which was not apparent at the end of the defects liability period, or which would not have been disclosed upon reasonable inspection at the time of the issue of the final certificate;
(c) any accidental or erroneous inclusion or exclusion of any work or figures in any computation or any arithmetical error in any computation; and
(d) unresolved issues the subject of any notice of dispute pursuant to clause 27, served before the 7th day after the issue of the final certificate.
37 'Contractor's Invoice':
means the invoice to be provided by the Contractor pursuant to clause 23, seeking progress payment of the contract sum.
38 Clause 26 'Notification of Claims' states:
26.1 Communication of claims
As soon as practicable after a party becomes aware of any claim in connection with the subject matter of the Contract the communication of which is not required by another provision of the Contract, that party shall give to the other party a written notice of claim with particulars or a notice of dispute under subclause 27.1.
26.2 Liability for failure to communicate
The failure of a party to comply with the provisions of this clause (or) to communicate a claim in accordance with the relevant provision of the Contract shall, inter alia, entitle the other party to damages for breach of the Contract but shall neither bar nor invalidate the claim.
26.3 Resolution
If the claim has not been resolved within 21 days of giving the notice of claim, that notice of claim shall be deemed to be a notice of dispute under subclause 27.1.
39 Clause 28 'Waiver' states:
A failure to exercise, or any delay in exercising any right, power or remedy by a party does not operate as a waiver. A single or partial exercise of any right, power or remedy does not preclude any other or further exercise of that or any other right, power or remedy. A waiver is hot valid or binding on the Party granting that waiver unless made in writing.
Final certificate
40 At no stage was a final payment claim made to ABB by DWG pursuant to clause 23.3 of the Contract, and at no stage in time has a final certificate been issued by ABB to DWG pursuant to clause 23.3 (DWG SIFC [7]; ABB SIFC [7]).
41 ABB's position is, in effect, that no further payment was due after the expiration of the defects liability claim because all monies due and payable by ABB had been paid prior to the expiration of the defects liability period.
Relationship between DWG and ABB
42 DWG alleged that DWG and ABB had worked on a substantial number of projects together over the course of the last 10 years (DWG [8]). ABB whilst accepting that the parties had worked together, denied that it was a substantial number of projects over 10 years. ABB further denied that these matters were relevant (ABB SIFC [8]).
43 DWG submitted that, over time, DWG and ABB adopted certain informal processes for the management of various aspects of the projects they have worked on together - including, but not limited to, the lodgement of schedules outlining anticipated costs associated with the performance of items of work, the assessment of those anticipated costs and the final lodgement of progress claims at the culmination of that conferral process (DWG SIFC [9]). ABB says that at all times, clause 23 governed the contract process and payment claims were dealt with under clause 23 of the Contract.
Negotiation process regarding costs on prior projects the informal process
44 DWG alleged that in other projects, DWG and ABB would engage in an informal cost conferral process that involved:
1) the provision by DWG of schedules with tax invoices, the schedules setting out the items of work performed by DWG, the percentage of works completed by DWG and the costs attributable to each item of work (the schedules were materially similar in form to Schedule A1: Work Costing - Bulgarra and Pegs Creek)(DWG BOD Vol D, pages 916 919 and 927 930; DWG BOD Vol A, page 54 [30.1].
2) ABB:
a) agreeing with the amounts set out in the schedules; or
b) by Mr Ramtin Ghodsi (Mr Ghodsi) or any other project manager from ABB, calling the General Manager of DWG to discuss the amounts set out in the schedules as attributed to each item of works.
(DWG SIFC [10])
46 DWG alleged that prior to the commencement of the Pegs Creek and Bulgarra job, the General Manager of DWG, Mr Peter Tarbotton (Mr Tarbotton), was asked by Mr Ghodsi, or another employee of ABB, not to issue any invoices to ABB until the schedules setting out the costs had been reviewed and agreed by ABB. Mr Tarbotton complied with this request (DWG SIFC [11]).
47 ABB says that:
(i) none of the allegations in paragraph 11 of the SOFIC are relevant to this review application;
(ii) the creation of tax invoices was not a requirement under the contract, but rather was necessary under GST laws; and
(iii) the issue of tax invoices was deferred until ABB had certified the amount due to DWG in respect of each payment claim, to avoid unnecessary extra administration in the event that the certified amount differed from the progress claim (in that credit notes and new tax invoices would not have to be issued, if the amounts differed).
(ABB SIFC [11(b)])
48 DWG has not alleged that the effect of the 'informal process' even if one were found to exist, had the effect of varying the Contract terms. Nor has DWG alleged that there was any estoppel. In essence, DWG seeks to ascribe a certain character to the relations between the parties. It follows that the relations between the parties were ultimately governed by the Contract. Therefore, even if an 'informal process' were found to have operated at some point, there was nothing to prevent the application of the Contract by a return to the provisions of the Contract.
The rival contentions
49 DWG contended that, when properly understood in the context of the contractual scheme and the processes adopted by the parties, none of the email communications from DWG to ABB between 13 June 2011 and 20 August 2012 (the Revised Pricing Emails), amounted to a 'payment claim' within the meaning of s 3 of the CCA (DWG SIFC [55]). DWG alleged that, properly understood in the context including the relevant contractual regime, DWG did not, by those emails, make a 'payment claim' and, accordingly, no prior 'payment dispute' arose.
50 ABB's submissions correctly state that the crux of DWG's case is that the Revised Pricing Emails were not a payment claim because:
a) the parties had adopted an informal process by which they would agree, or attempt to agree, the 'quantum of an amount payable' before DWG made a 'claim for payment' of 'that amount' in the form of a tax invoice – the tax invoice being the payment claim. DWG does not say what 'that amount' is where no agreement was reached;
b) agreement on quantum was either by reference to the value of works performed to be the subject of a progress payment (dealt with in clause 23.1) or the pricing of variations performed (dealt with in clause 22.2); and
c) the Revised Pricing Emails rose no higher than making a 'claim' (in the sense of a request) to negotiate and agree the quantum of the amount payable (that is, a request to initiate the alleged informal process); that they did not make a 'claim for payment' of an agreed payable amount and no tax invoice for such an amount was issued - with the consequence that there were no payment claims.
51 ABB contends that:
1) the documentary evidence of DWG's progress claims establishes that no such informal process was adopted. Rather, in conformance with clause 23 of the Contract, DWG submitted progress claims (setting out, in an orthodox way, the percentage progress of work completed and value claimed), which ABB then assessed and certified an amount due. On occasion, ABB had discussions with DWG while assessing the validity of the progress and value claimed by DWG. After ABB certified the amount due, DWG issued tax invoices for that certified amount;
2) against that background, a proper analysis of the content of DWG's emails from 13 June 2011 to 20 August 2012, reveals that DWG made (and repeated or continued to agitate) claims for payment for works, on the basis of what DWG described as its 'revised pricing';
3) by its emails of 13 June 2011, DWG gave two prices the 'revised pricing' figure, which was the value of works actually claimed; and a much higher 'costs plus' figure, which DWG did not claim but said was within its rights to do so. In doing this, DWG's clear intention was to elicit from ABB a favourable assessment and certification (under clause 23 of the Contract) of the 'revised pricing' figure consistently with that being the claimed amount; and
4) the language used by DWG in its emails like 'what is the progress of this claim' and 'these are our final claims' leaves no room for doubt; that DWG was claiming the 'repriced' value of the works in accordance with clause 23 of the Contract.
The procedure for making payment claims under the Contract
52 Clause 23.1 Progress claims - required DWG to claim payment progressively on the last day of each month.
53 DWG made a claim for payment by giving ABB details of the value of the works done for the relevant period (together with other monies then due pursuant to the Contract).
54 Each progress claim was to be given in writing to ABB and include details of the value of the WUC done and might include details of other monies then due to DWG pursuant to the provisions of the Contract.
55 Clause 23.2 – Certificates - required ABB, within 14 days after receiving such a progress claim, to assess the claim and issue a progress certificate stating the monies due to DWG or ABB. ABB was required to set out the calculations employed to arrive at the amount certified and, if the amount was more or less than the amount claimed by DWG, the reasons for the difference. Within 21 days after receipt by ABB of such a progress claim, ABB or DWG, as the case was, was required to pay:
a) the amount certified, if ABB had issued a progress certificate with respect to the progress claim (clause 23.2(a)); or
b) the amount of the progress claim, if ABB had not so certified (clause 23.2(b)).
56 Payment other than final payment was payment 'on account only'.
Practical completion
57 The Works were prolonged for a period due to variations ABB instructed DWG to perform.
58 Both parties contend that the Works, the subject of the Contract, were substantially completed by about 5 December 2010, or alternatively by about 10 February 2011 (DWG SIFC [6]; ABB SIFC [6(a)]).
59 ABB says further that:
(i) the 'date of practical completion' under the Contract was no later 10 February 2011;
(ii) the defects liability period under the Contract expired no later 10 February 2012; and
(iii) by around 5 December 2010 DWG had demobilised from site. DWG remobilised in about late January 2010 to complete the sealing of the road at Pegs Creek, and demobilised again in February 2011.
(ABB SIFC [6(b)])
60 No formal document was ever sent by DWG to ABB regarding the date of practical completion and no document was sent from ABB to DWG regarding the date of practical completion under clause 20.4 of the Contract (DWG SIFC [5]; ABB SIFC [5]).
61 The date on which the Works reached practical completion is a question of fact. A certificate of practical completion is only a means of evidencing the date. It cannot be said that practical completion has not occurred simply because a certificate had not been issued.
62 Accordingly, whether or not a certificate of practical completion was issued is irrelevant in determining the matter.
63 The only work done after 5 December 2010, was the resealing of a road. Mr Tarbotton of DWG, estimates that the Works reached practical completion on 5 December 2010 (Exhibit A page 148 [12]). His evidence was not contested by ABB. (See also DWG's email of 27 November 2010 (Exhibit A pages 86 87))
64 The Tribunal finds that the Works were practically complete on 5 December 2010. Accordingly, the defects liability period ended on 5 December 2011.
Invoices P525/01, P525/02 and P525/03
65 DWG alleges that at the outset of the project, ABB sent DWG copies of proforma schedules for DWG to use for Pegs Creek and Bulgarra when DWG intended to lodge its proposed costs for review by ABB (DWG BOD Vol A, page 55 [35]) (DWG SIFC [12]).
66 ABB says that it provided DWG with modified versions of Schedule A1 of the Contract (Progress Claim Schedules), for the purpose of making progress claims and to aid the process of assessing (including tracking progress from claim to claim) and certifying amounts for payment (ABB SIFC [12]).
67 Schedule A1 of the Contract 'Works Costings' appears at Exhibit D pages 887 and 899 900. Schedule A1 is an unremarkable form for making progress claims. The provision of proforma schedules by ABB to DWG in this form is consistent with the procedure for progress claims specified under clause 23.1 of the Contract.
68 It is difficult to see how the fact that ABB provided DWG with modified versions of A1 of the Contract could be seen as modifying the contract provisions.
69 DWG says that when compiling DWG's proposed costs for a given month, DWG would populate an edition of the proforma schedules and send that to ABB. When preparing the proforma schedules DWG would look at the percentage of materials supplied to site that month, the percentage of the work completed for each individual item in the proforma schedules for that month and attribute costs to each individual item in the proforma schedules (DWG BOD Vol A, page 55 [37]) (DWG SIFC [13]).
70 DWG alleged that once it had compiled the proforma schedules for the given month, he would send the documents to ABB for review (DWG SIFC [14]).
71 ABB says that it:
(a) accepts that ABB received from DWG populated copies of the Progress Claim Schedules, setting out percentage completion figures and monetary amounts in relation to individual items, together with totals;
(b) says that DWG provided the completed Progress Claim Schedules to ABB as progress claims pursuant to cl 23.1 of the Contract[.]
(ABB SIFC [14])
The procedure
72 DWG alleges that normally, if ABB agreed with the proposed costs contained in the completed schedules, ABB would send DWG an email requesting that DWG invoice ABB for the relevant figure. DWG would then issue ABB with:
1) a tax invoice for the amount ABB had specified; and
2) a populated copy of the pro forma schedules for the given month.
- DWG SIFC [15]; ABB SIFC [15]).
(a) accepts that ABB sent emails to DWG requesting DWG to invoice ABB for specified amounts, and says that those were the amounts certified by ABB in accordance with cl 23.2 of the contract;
(b) accepts that DWG issued ABB with:
(i) tax invoices for the total of the amounts specified by ABB, being the amounts certified by ABB under cl 23.2; and
(ii) a further copy of the Progress Claim Schedules, which ABB says reflected the quantity and value of works certified by ABB to the end of the period claimed by DWG, for use in any subsequent progress claims;
(c) rejects each and every other allegation; and
(d) says that DWG made 4 progress claims, each of which was assessed and an amount certified in accordance with cl 23, and that the certified amount was subsequently invoiced[.]
74 DWG alleges that where ABB did not agree with the proposed costs, Mr Ghodsi would usually telephone Mr Tarbotton and ask him to discuss the amounts set out in the schedule with a view to agreeing the total costs payable by ABB for that month. This would normally involve Mr Tarbotton and Mr Ghodsi discussing day works sheets and work records and using those as the basis for attempting to agree what ABB would pay (DWG SIFC [16]).
75 ABB says that it accepts that there were some discussions in relation to progress claims 2 and 4, but says that they were discussions to assist ABB in assessing and certifying the value of the works claimed by DWG (ABB SIFC [16]).
Progress claim No 1
76 On 9 September 2010, at 13:56, DWG sent an email to ABB attaching populated copies of documents entitled 'Progress Claim No' for each site showing, for individual items of work, the percentage of work completed and the value of that completed work (that is, in the form of Schedule A1. The subject line of the email is 'DWG Contracting Progress Claim'.
77 The email stated 'please see attached. Can we invoice this'.
78 The attached schedules are described as 'DWG Contract Progress Claim'. The first row of each schedule is titled 'Progress Claim 1' (Exhibit H).
79 The claim amounts were $376,185.13 (for Pegs Creek) and $399,254.50 (for Bulgarra).
80 On 9 September 2010, at 14:52, DWG sent an email attaching an invoice, P525/01 for 'PROGRESS CLAIM NUMBER ONE' with a copy of the schedules (Exhibit F, page 1512 1520).
81 The email stated 'please process at your earliest convenience'.
82 Invoice P525/01, dated 31 August 2010, was accompanied by copies of the Progress Claim Schedules recording the quantity and value of works certified by ABB. The amounts in the final schedules and the total amount invoiced were the same as the amounts claimed by DWG in the schedules attached to the email of 9 September 2010 at 13:56.
Progress claim No 2
83 On 5 October 2010, at 15:10, DWG sent an email to ABB attaching populated copies of documents entitled 'Progress claim No' in the same form as that attached to the email of 9 September 2010 at 13:56 (Exhibit I).
84 The subject line of the email is 'DWG Progress claim Emailing: P525 Progress Claim 2 Bulgarra, P525 Progress Claim 2 Pegs Creek'.
85 The covering email stated 'Please see attached for your approval for invoice'.
86 The total amounts claimed for each site were $243,630.60 for Bulgarra and $322,053.60 for Pegs Creek.
87 On 27 October 2010, DWG sent an email asking 'is it okay to invoice the attached' (Exhibit A page 72). Implicit in that request was the recognition that it fell solely to ABB to certify the amount due.
88 On 27 October 2010, ABB sent an email to DWG in reply, stating that Mr Ghodsi will 'go through [the progress claim schedules] tomorrow. I would like one or two hours with [Tarbotton] on Friday to have a few things discussed' (Exhibit A page 72). Those remarks are consistent with ABB assessing the value of the works as claimed by DWG and, for that purpose, Mr Ghodsi wishing to discuss aspects of the value of works claimed.
89 On 29 October 2010, ABB sent an email saying 'please invoice us for: $243,630.60 for Bulgarra [and] $322,053.60 for Pegs Creek' (Exhibit A page 74). The amount was the same as the amount claimed by DWG in Exhibit I. The email attached copies of the same progress claim schedules (Exhibit A page 74).
90 On 5 November 2010, DWG sent an email attaching invoice P525/02 for 'PROGRESS CLAIM NUMBER TWO' dated 30 September 2010 with a copy of the schedules (Exhibit F pages 1521 1527).
91 Practical completion occurred on 5 December 2010.
Progress claim No 3
92 The preliminary documentation regarding DWG's original progress claim 3 was not in evidence because it was not able to be located.
93 On 14 December 2010, DWG sent an email attaching invoice P525/03 for 'PROGRESS CLAIM NUMBER THREE' dated 30 November 2010, accompanied by copies of the schedules recording the quantity and value of works certified by ABB (Exhibit A pages 1528 1534).
94 DWG sent the invoice for progress claim No 3 after correspondence had commenced concerning the variation in late November.
95 There is nothing to suggest that the procedure for progress claim No 3 was any different to those for progress claims 1 and 2.
Progress claims Nos 1 3
96 There is nothing in the procedure outlined in relation to progress claims 1 and 2 to support a contention that the procedure was other than would be expected for progress claims in any construction contract. The schedules that DWG gave to ABB in writing setting out its claim for the value of works for the relevant period were in accordance with clause 23.1 of the Contract.
97 The Tribunal accepts that the remarks in the covering email – 'please see attached for your approval to invoice' - were, in effect, a polite request to assess and certify the amount due in accordance with clause 23.2 of the Contract. These amounts were invoiced by DWG plus GST for GST purposes.
98 ABB certified the amount due, in accordance with clause 23.2 of the Contract. The request for a tax invoice is for the certified amount. That is simply a request for an invoice to meet the requirement of a GST tax invoice.
99 The entire language of progress claims 1 and 2 is consistent with clause 23 of the Contract.
DWG variation claim No 1 / ABB progress claim No 4 - $566,557.91
100 On 17 November 2010, ABB sent an email to DWG confirming details of a meeting for 23 November 2010 to discuss 'all variations to date'. The email stated: 'please ensure you have all the information you have so we can finalise the costs' (Exhibit A page 76).
101 The email attached a spreadsheet headed 'Civil Variation Spreadsheet', described in the subject line as 'HP'. Mr Ghodsi said:
Please find attached my take on the variations to date based on:
1 - All day work sheets
2 - The quantity surveyor costings.
102 This email clearly indicates that ABB has considered the claim.
103 On 23 November 2010, ABB (Mr Ghodsi) and DWG (Mr Tarbotton) met.
104 The fact that the parties met to discuss the claim is unremarkable. A discussion about the contents of a claim is simply a normal incident of the management of a contract claim. Such discussions/negotiations do not take a claim out of the normal contractual process into an 'informal process'.
105 On 23 November 2010, ABB sent an email to DWG attaching an updated spreadsheet. The email said:
As requested please find attached Civil Variation spreadsheet updated.
Please note we have finalised the following:
1- Pegs Creek variation due to for change in drawings from tender to for construction is $107,263[.]
2- Bulgarra variation due to change in drawings from tender to for construction is $26,652.75[.]
a) There are 5 worksheets to this spreadsheet.
b) Two variations for each site based on DWG day work sheets.
c) Two are item 1 and 2 above.
d) One is a summary of all costs.
I have included all day work sheets signed by law to date.
... please update [the spreadsheet] and provide all evidence of the costs and send back to me no later than COB Wednesday (1/12/10) next week. I would like to finalise all costs by end of next week.
(Exhibit A page 77)
106 The fifth worksheet of the Civil Variation Spreadsheet was in the following terms:
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107 A similar email was sent by ABB on 24 November 2010 (Exhibit F pages 1542 1547).
108 The emails of 23/24 November 2010 from ABB to DWG invited DWG to submit all further claims for payment with supporting evidence. The emails made clear ABB's wish to finalise the Contract. The date when practical completion occurred was drawing near at this time.
109 Practical completion occurred on 5 December 2010.
110 On 25 January 2011, ABB sent an email to DWG requesting DWG to send 'all variations other than what was approved in our last meeting' (Exhibit F page 1548).
111 On 4 February 2011, DWG sent an email to ABB attaching 'Day Work Sheets for Pegs Creek' and said:
I will forward Bulgarra [day work sheets] in a separate email[.]
I will then send the spreadsheet you made completed with the dayworks[.]
Please note I will send the Changes costs for drawings for as built on Monday[.]
And will complete the spreadsheet as well[.]
These costs are considerably higher than you envisage and I think this explains why we had so much expenditure on this job. I will also attach my original pricing on the same spreadsheet so you can compare where these costs have come from and I think this will then be self explanatory.
They are also costs for Electrician, plumber, survey, site amenities (waste removal, bins and supply of septics etc).
(Exhibit F page 1549)
112 Later, on 4 February 2011, DWG sent an email to ABB attaching the Civil Variation Spreadsheet 'HP Civil Variations 1'. The email stated:
This has only been completed for Day Works and I will send the variations for as built on Monday.
(Exhibit A page 78)
113 On 22 March ABB emailed DWG 'Lets talk about this today' (Exhibit A page 80).
114 On 22 March 2011, ABB and DWG discussed the variation costs.
115 On 24 March 2011 at 8.40 am, ABB sent an email to DWG attaching the Civil Variation Spreadsheet which said:
Further to our discussion on Tuesday [22 March 2011] and my email dated 23/11/2010 titled 'Civil Variation discussion on 23-11-10. Please find attached your submission of all day work sheets for this portion of the work.
ABB has assessed all your variations and approved the value of $566,557 Dollar to be the total variation. Please invoice ABB as soon as possible.
(Tribunal underlining)
(Exhibit F page 1597)
116 The email states that ABB has 'assessed all your variations'. ABB's assessment was based on the completed spreadsheets sent by DWG. There was a request by ABB to DWG to invoice it.
117 As summarised in the fifth worksheet of the Civil Variation Spreadsheet, the value of variations based on 'day work sheets' were certified for $127,614 and $305,028.16. The 'change in drawings costs' did not change from the amounts previously certified by ABB.
Variations | Change in drawing Cost | Total | |
Pegs Creek | 127,614.00 | 107,623.00 | 234,877.00 |
Bulgarra | 305,028.16 | 26,652.75 | 331,680.91 |
$566,557.91 |
118 The language of the email of 20 March 2011 is unequivocal. It states the amount ABB is prepared to pay.
119 On 24 March 2011, DWG sent an email to ABB attaching a file titled 'P525 Pegs Creek as Built compared to as tendered' and said:
Please see attached spreadsheets and invoices for Pegs Creek I have included our pricing spreadsheet which shown original pricing on the right hand side and the revised pricing on the left hand side with the dimensions changed to give the new price I have also included a file of invoices which we have to charge for and also a list of all we have spent on this project I am now doing Bulgarra I will do a full explanation for when you get back from holiday.
(Tribunal underlining)
(Exhibit A page 81)
120 On 25 March 2011, DWG invoiced ABB for $566,557.91 plus GST, being the amount for variation claims certified by ABB. The Civil Variations Spreadsheet was attached to the invoice and the invoice contained the note:
Costs Associated with Variations as per Attached Spreadsheet.
(Exhibit F page 1536)
121 On 23 May 2011, DWG sent an email to ABB attaching DWG's previous email of 24 March 2011 which stated (relevantly):
As per email below. What is the progress of this claim. We are over a million dollars out on this job and that is without any overheads or profit Charges for machines on site[.]
(Exhibit A page 82)
122 The use of the word 'claim', particularly in the context of a concern about 'a million dollars' is the language of a claim for payment. How else would a request for payment be expressed?
The revised pricing emails
123 On 13 June 2011 at 15:35, DWG sent an email to ABB which stated:
I have sent costs repriced to match as built drawings and also a spreadsheet that shows the cost should we charge the whole job as dayworks which with all the changes I believe we are within our rights to do so. As you will be able to see we are over a million dollars behind on this project and we cannot carry this loss which has occurred through no fault of ours.
Please advise what course of action we/you would like to take.
It is my hope that we can sort this out amicably.
(Tribunal underlining)
(Exhibit F page 1606)
124 DWG sent a number of emails, which ABB described as, including various schedules:
(i) a spreadsheet with DWG's revised prices for the works at the Pegs Creek site as built, which were compared in the same spreadsheet to prices as originally tendered;
(ii) a spreadsheet with DWG's revised prices for the works at the Bulgarra site as built, which were compared in the same spreadsheet to prices as originally tendered;
(iii) invoices from DWG's suppliers that DWG was charging to ABB, plus 15% for overhead and profits, together with a summary showing the total for the invoices as $230,841.15 and the total charge, including the 15% markup, as $265,467.32;
(iv) a spreadsheet setting out various charges and described in the covering email (email number seven) in the terms 'this shows ... what invoicing would be if done on cost plus basis';
(v) a spreadsheet described as 'P525 Scope changes and invoicing Table comparisons' with the following information:
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(vi) a spreadsheet summarising the 4 progress claims paid by ABB, totalling $2,795,105.42, excluding GST - such that the difference between the 'revised pricing' and the claims paid was $1,420,486.16.
(Exhibit G page 1687)
126 The other three items include amounts that ABB had signalled it would claim during February and March 2011 - for variation costs due to changes in drawings (included in the revised prices for each site) and the supplier costs plus 15% markup.
127 It might perhaps be argued that the earlier emails did not include all the claims for Bulgarra, but these emails clearly did.
128 DWG submitted that DWG's first email of 13 June 2011 was sent only some four months after the works were substantially completed, and within what would have been the 12 month defects liability period even if ABB had issued a certificate of practical completion. It was therefore well prior to the time that DWG would reasonably have expected to issue a final payment claim under clause 23.3 of the Contract (DWG SIFC [78]).
129 There is, of course, nothing to prevent the parties making claims resolving matters earlier. Laing O'Rourke makes it clear that the time for payment is not a prerequisite to a payment claim or a payment dispute arising.
130 DWG submitted that, despite the references to needing the amounts to be 'payed' (sic) or 'reimbursed', properly construed, and in the context of the contractual regime, the informal processes of the parties, and the earlier correspondence (the existence and terms of which was known to the parties and formed part of the objective background against which the subsequent correspondence was properly understood), this was not a 'claim for payment', but a continuation of DWG's attempts to get ABB to price or agree the value of the variation works so that that amount could be claimed. DWG submitted that this is apparent from the following:
1) DWG said 'we are going to invoice' the spreadsheets (ie, the amount shown in the spreadsheets). If DWG had already made a claim for payment, either by the email of 20 January 2012 or earlier, then the stated intention to 'invoice' that amount was redundant. That is, the stated intention to 'invoice' that amount is properly construed as a threat to claim payment of the stated amount if the respondent continued to refuse to engage in the process of agreeing the variations.
2) Although DWG did say that these were 'valid claims' which DWG needed 'to be payed (sic)', and that the applicant needed to be 'reimbursed', in context this was a reference to the applicant's frustration at being kept out of pocket, and to the end result of the process in which DWG was seeking to engage ABB, that is, payment of the amounts which would ultimately be claimed.
3) DWG's email stated: 'If you cannot approve this then please advise who we need to speak to'. This is significant for three reasons. First, DWG was again seeking ABB's 'approval', as a precursor to the issuing of an invoice (and thereby the making of a claim for payment) and the payment thereof. That is, by this correspondence, he was not claiming or demanding payment, but rather seeking ABB's approval to the amount.
4) Secondly, Mr Tarbotton was checking Mr Ghodsi of ABB's authority to approve the amount, and inquiring as to who, on behalf of ABB, had authority to approve it if Mr Ghodsi did not, so that he could speak to that person with authority. Again, that is inconsistent with the proposition that DWG was making a 'claim for payment' (in which case questions of authority within the respondent would be irrelevant), and was consistent only with the fact that DWG was seeking to identify the person within the respondent who had authority to approve the amount so that it could then be claimed.
5) Thirdly, his request to be informed as to who on behalf of ABB had authority evokes reference to clause 27.2 of the Contract, which provides that within 14 days after receiving a notice of dispute the parties shall confer and shall be represented by a person having authority to agree. For the reasons above, a better construction to be placed on the correspondence to this point is that (viewed objectively) DWG regarded his email correspondence to this point as constituting a notice of dispute under clause 27.1 as to the pricing or quantification of the variations rather than a claim for payment, and his request for details of the person with authority on behalf of ABB is consistent with clause 27.2.
- (DWG SIFC [93])
(i) the contention that an invoice was required to constitute a payment claim is wholly misconceived. The processes adopted by the parties conformed to the Contract, which involved the making a payment claim by DWG (cl 23.1), assessment and certification of the amount due, often described by DWG as 'approval' (cl 23.2) and the issue of an invoice for the amount certified.
DWG's remark that 'we are going to invoice' was just a hollow threat, suggesting that DWG would proceed as though the entire amount of its payment claim was due, for the purpose of any dispute resolution or enforcement proceeding;
(ii) DWG's references to 'valid claims', the need to be 'payed (sic)' and wanting 'reimbursement' are unequivocal articulations of a claim for payment;
(iii) as appears in the initial progress claims, DWG used the term 'approval' synonymously with certification of the amount due by ABB. The question about who DWG needed to speak to, if Mr Ghodsi 'cannot approve', was directed to escalating the claim for payment to a more senior person who might certify the payment claim and authorise payment; and
(iv) no dispute process under the Contract was initiated, nor is that a reasonable characterisation of the communication.
132 The schedules attached to the emails of 13 June 2011 clearly detail and quantify the amounts sought by DWG.
133 On 14 June 2011 ABB sent an email to DWG acknowledging receipt of its emails and stating:
You have sent me a lot of emails, regarding your costs and your internal invoices. I do not know why you have done that. Please let me know if ABB has not paid your issued invoice.
(Exhibit G page 1773)
134 In considering the context in which the 13 June emails were sent, it needs to be borne in mind that at this point DWG was 'over a million dollars behind', that is, in serious financial difficulties.
135 This was the second email emphasising DWG's dire financial position.
136 In considering whether the emails of 13 June 2011 were a claim for payment:
a) DWG's language is unequivocally that of a claim for payment;
b) it is entirely understandable that DWG's general tone in the email was conciliatory, it wanted payment, it does not follow that the email was simply a request to pursue an informal process; and
c) the request for someone more senior to deal with the matter is simply an alternative attempt to have payment approved.137 DWG's language is that of a claim for payment not of the consideration of an 'informal process'.
138 It is difficult to accept, as DWG suggests, that either party would have gone through a dispute process without a resolution as to payment.
139 ABB's email of 14 June 2011 clearly rejects DWG's claim of 13 June 2011.
140 Even if the procedure adopted by the parties could be said to be continuation of an informal process, it was obvious from ABB's reaction that the informal process had failed in June 2011.
141 By 5 December 2011, the defects liability period had expired.
142 On 22 December 2011, DWG sent an email to ABB attaching copies of survey reports for Pegs Creek and Bulgarra. DWG also asked ABB:
Have you reviewed the variation claims sent months ago as we have to pursue these and non-paymentis causing us quite a lot of financial pressure ... These are all legitimate claims which we have to pursue ...
(Tribunal underlining)
(Exhibit G pages 1774 1851)
143 DWG's language is clearly that of a claim for payment of definite amounts.
144 On 23 December 2011, ABB sent an email to DWG which stated:
All variations for Bulgarra and Pegs Creek were finalised on March 2011 as you and I discussed and agreed on the value of $566,557.00. The attached email of 24/03/2011 clearly stated the final variation for the HP project to be $566,557.00 (This included a two part variation: 1 All changes to the drawings ... and 2 All the remaining scope changes based on day works sheets sent to me by you on February).
As such ABB has not received any claims from DWG other than above except some internal invoices by DWG sent to me in June 2011 which I responded to, see attached.
Note that ABB has finalised all claims to this project and the contract is completed.
(Exhibit G page 1852)
145 On 23 December 2011, DWG sent an email to ABB which stated:
I sent the variations to you for approval and have not had that approval if you look at them you will see that the costs claimed are justified[.]
You can't expect DWG Contracting to carry these costs which were incurred due to plan changes and requests for other works to be completed and items/suppliers sourced[.]
These are our final claims.
(Tribunal underlining)
(Exhibit G pages 1859 1860)
146 The words of this email speak for themselves.
147 Even if it could be said that the email exchange of midJune 2011 is part of the 'informal process', the late December 2011 email exchange clearly evidences the failure of the informal process.
148 Even if ABB was not, as DWG alleges, acting in accordance with the correct contractual provisions, the contract provisions do not have to be adhered to exactly before it can be said that there is a payment dispute. The emphasis under the CCA is on a payment claim for performance of the obligations under the contract, rather than the claim itself (Marine at [69]). The CCA requires substance to be considered over form.
149 Under clause 23.2 of the Contract, DWG should have made a written final payment claim by no later than early January 2012.
150 Although the claim is required to be headed 'Final Payment Claim' it cannot be argued that a failure to issue a claim in that manner makes it invalid. DWG's email of 23 December 2011 states 'These are our final claims'.
151 On 20 January 2012, DWG sent an email to ABB, attaching a spreadsheet composed of populated copies of the proforma schedules, which contrasted the as tendered costs for performing the works with the as built costs for performing the works and which showed the total proposed cost DWG had calculated for those works.
152 The attachments included:
a) copies of schedule A1 of the Contract for each of the sites, together with modified versions of those schedules setting out DWG's revised pricing on the basis of the works as built; and
b) a schedule of invoices from DWG's suppliers that DWG was charging to ABB, with the charges totalling to $230,841.15 and $265,467.32 with a 15% markup for overhead and profits.
(Exhibit G pages 1864 1904)
153 The email stated:
Please see attached spreadsheet for Pegs Creek and Bulgarra which we are going to invoice
As per emails sent on the 13 June, 2011 I have not resend these as they are large files
These are all valid claims and we need these to be payed (sic)
If you look at them you will see that the values are
Pegs creek
$749,834.33
Bulgarra
$653,622.93
Assorted invoices as per the attached spreadsheet $265,467.32
As we have outlayed this money on your project we need to be reimbursed
The attached spreadsheet comparison is proof of the extra costs involved due to plan changes and cannot be refuted
If you cannot approve this then advise who we need to speak to
This has been dragging on for too long and DWG Contracting are the ones suffering financially because of this.
154 On 24 January 2012, ABB sent DWG an email stating:
1 - The two projects are closed.
2- The costs for these two projects were finalised in March 2011.
3 - DWG was given an opportunity to present all its costs in February 2011. ABB will not consider any claims on these project[s].
(Tribunal underlining)
(Exhibit G page 1862)
155 By the end of January 2012, at the latest, DWG should have sent ABB a final payment certificate. DWG did not have to wait until the last moment. In fact, DWG had finalised claims according to its email of 23 December 2011.
156 On 1 February 2012 DWG sent an email to ABB which stated:
We cannot afford to pay out the monies and all are legitimate claims and expenses
They need to be looked at
I have sent all the information to show these are valid claims
Can you please look at them as non payment is causing us financial hardship and if claims are not accepted then we will have to seek advice from another party which we obviously do not want to do.
(Exhibit G page 1905)
157 DWG submits that the email of 1 February 2012 evinces frustration at ABB's responses and the fact that DWG was being kept out of pocket as a result of the variations, but DWG asserted that 'the monies' were all 'legitimate claims and expenses' and, significantly, that they needed 'to be looked at'. That is, he was still not making a claim for payment' of the amount identified, but was again insisting that ABB 'look at' the information provided. The description of the amounts as 'legitimate claims' or 'valid claims' was, in context, a description of the reasonableness of the amounts identified which DWG wanted ABB to 'look at'. Finally, DWG threatened to 'seek advice from another party' if the 'claims' were 'not accepted'. Again, by this correspondence DWG was requesting the ABB to 'accept' the amount, following which DWG would claim payment, consistent with the contractual regime and the parties' agreed informal process (DWG SIFC [95]).
158 Once again, DWG's language is that of a claim for payment of specific amounts. However DWG attempts to characterise the language as that of an informal process, the language of its emails speaks otherwise.
159 ABB responded the same day, in similar terms to the email of 1 February 2012 (DWG SIFC [96]).
160 On 20 August 2012 DWG sent an email to ABB which stated:
... DWG Contracting incurred significant costs in performing the works, the additional costs were incurred as a result of instruction to increase the scope and direction of the works. I have previously sent several items of correspondence indicating the value of the additional costs DWG contracting incurred in performing the works, and we are seeking recoveryof those amounts. DWG has reviewed the amounts incurred which were previously indicated to ABB, and reconfirm that the additional amounts are valued at $1,668,933.58 plus GST.
Can you please contact me so we can arrange a meeting to resolve outstanding amounts.
(Tribunal underlining)
(Exhibit G page 1909)
161 This was the email that the adjudicator held constituted the 'payment claim', and the rejection of which by ABB on 4 September 2012 gave rise to the 'payment dispute' within the meaning of s 6 of the CCA (DWG SIFC [97]).
162 DWG submits that, having regard to the terms of that email, viewed in context of the earlier correspondence, the relevant contractual regime including clause 22, clause 23 and clause 27, and the parties' informal process for the approval of claims before claiming payment, the proper construction is that DWG was not making a claim for payment (DWG SIFC [99]).
163 DWG further submits that the email referred to DWG's earlier correspondence, and must be read in light of it. It does not use the word 'claim'. In its terms, DWG was pressing upon ABB the cogency of DWG's figures and its request to have ABB review the information it had provided and approve the variation costs. It does say that DWG was seeking 'recovery of those amounts', but again, recovery of those amounts was simply the end result of the process in which DWG was seeking to engage ABB, in order to obtain ABB's pricing or approval of the variation works costs; it does not mean that by that correspondence DWG was making a 'claim for payment' (DWG SIFC [100]).
164 DWG submits that, rather than making a 'claim for payment', the email concluded with a request to ABB to contact DWG 'so we can arrange a meeting to resolve outstanding amounts'. Again, DWG was seeking to resolve the issue so that a tax invoice could be raised making the claim to payment (DWG SIFC [101]).
165 DWG appears to proceed on the basis that polite language is inconsistent with a claim for payment of definite amounts. Such language is not inconsistent. The objective language is that of a payment claim.
166 Even though the word 'claim' is not used in the email of 20 August 2012, when read in light of DWG's earlier emails which do refer to a 'claim' it is a payment claim.
167 The Tribunal accepts ABB's submission that:
DWG's references to 'seeking recovery' of the 'value' of works and there being 'outstanding amounts' are clear indications of a claim for payment under cl 23.1 for the value of works done, which DWG considered outstanding in the sense of not yet paid.
168 The parties accept that the Contract did not require the submission of a tax invoice to qualify as a progress claim under the Contract. DWG submits that that is not to the point, as the informal process adopted by the parties by which a claim was made by way of submission of a tax invoice after agreement as to the amount is relevant as part of the objective factual matrix in determining how the parties' correspondence is to be objectively construed and understood (DWG SIFC [103]).
169 The fact that a tax invoice was required for GST purposes explains the procedure, but it does not, as DWG purports it to do, take the correspondence outside of normal process in accordance with the terms of the Contract.
170 DWG submits that if one is to rely on the strict contractual regime, that included the contractual regime for claiming payment for variations under clause 22.2 and clause 23.1, referred to above, under which ABB was first required to 'price' the variations before DWG made a claim for payment, and clause 27 under which any dispute about that issue was to be resolved including by way of conferral (DWG SIFC [104]).
171 ABB had priced the variations in the sense that it rejected the claims. It was not required to assess the claims at 'nil'.
172 On 4 September 2012, DWG sent a further email to ABB stating 'I am still awaiting a reply to the above' (Exhibit G page 1908).
173 Later that day DWG received an email from ABB which stated:
Please note that:
1- These two projects are closed
2- The costs for these two projects were finalised in March 2011
3- DWG was given an opportunity to present all its costs in Feb 2011
Please remember that these projects were completed in December 2010, and even the warranty period for the projects are over. ABB will not consider any invoices a year after the project has been completed and practical completion has been reached.
ABB will not consider any claims on these project[s].
174 A payment claim was made by DWG on 20 August 2012, that it repeated on 4 September 2012. That payment claim was rejected by ABB on 4 September 2012. A payment dispute under the CCA occurred no later than 4 September 2012. DWG's December 2014 payment claim was well out of time.
The pricing of variations
175 Variations were included in 'WUC', ie, 'work under the contract' (see clause 1 of the Contract). Pursuant to clause 2.1, DWG was required to carry out and complete WUC (ie, including variations) in accordance with the Contract and directions authorised by the Contract (DWG SIFC [69]).
176 The pricing of variations was governed by clause 22.2 of the Contract which provided that the respondent shall, as soon as possible, price each variation in accordance with clause 22.2, and that the price shall be added to or deducted from the contract sum (DWG SIFC [70]).
177 DWG submitted that any dispute as to ABB's pricing of a variation (or its failure to price the variation) fell to be resolved in accordance with clause 27 of the Contract ('Dispute resolution'). Notwithstanding the existence of a dispute, however, the parties were required to continue to perform the Contract (clause 27.1). Under clause 27.2 of the Contract, the parties were required to confer at least once, within 14 days after receiving a notice of dispute, to resolve the dispute or to agree on methods of doing so. At every such conference, each party shall be represented by a person having authority to agree to such resolution or methods (DWG SIFC [71]).
178 DWG submits that it is apparent that under the regime created by clause 22 and clause 23.1 of the Contract, DWG would make progress claims based on its assessment of the value of WUC done including any variations as priced by ABB (but subject to DWG's right to dispute ABB's pricing under clause 27). That is, ABB was required to price the variations before DWG would make a progress claim under clause 23.1 in respect of those variations (DWG SIFC [73]).
179 DWG's submission that it could not make a progress claim in relation to variation, before the variation had been priced under clause 22.2 is not correct.
180 All progress claim payments are, expressly pursuant to clause 23.2, 'on account only'.
181 The Tribunal accepts ABB's submission that, provided a variation was validly directed under clause 22.1, DWG was entitled to claim the value of variation works done under a progress claim. The pricing of variations under clause 22.2 is not a precondition to making a progress claim under clause 23 for the variations.
Had the Contract ended by December 2014?
182 In any event, the December 2014 Payment Claim was precluded by clause 23.3 of the Contract which required a final payment claim within 24 days of the expiry of the defects liability period (Laing O'Rourke at [161 [166] per Mitchell J).
The objectives of the CCA
183 In the matter of Field Deployment Solutions the objectives of the CCA were set out by Kenneth Martin J at [26] [[30]:
It is of fundamental importance, in my view, to understand that the object of this legislation was to attempt to reform earlier unacceptable scenarios of inequality of bargaining power in the construction contract environment. Contractors were highly vulnerable to being hurt by being kept out of funds due to them by an ongoing legal dispute in circumstances where they had performed the contracted work, but had not been paid. It is easy to see how a contractor who is leveraged and pressed for funds may lack the time, opportunity or resources to press its position to a result in a drawn out fight for payment against a well resourced principal, in a protracted arbitration or contested litigation. The speedy and informal procedures delivered as reforms by the [Act] do not make the adjudicator's decision on the payment of funds final (save as to the capacity to obtain and enforce payment).
184 The CCA is not intended to be an alternative source of debt collection. There was a long delay after the Work under the Contract was completed and the defects liability period had expired. To bring an application under the CCA is incompatible with the speedy and informal processes of the CCA.
Conclusion
185 The adjudicator's decision to dismiss the application was correct. The adjudicator's decision to dismiss the application under s 31(2)(a)(ii) of the CCA is affirmed.
Order
1. The application is dismissed.
I certify that this and the preceding [185] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE J C CURTHOYS, PRESIDENT
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