Dickson Developments Precinct 5 Pty Ltd v Core Building Group Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Dickson Developments Precinct 5 Pty Ltd v Core Building Group Pty Ltd [2024] FCA 86  

File number(s): ACD 66 of 2023
Judgment of: JACKMAN J
Date of judgment: 15 February 2024
Catchwords: ADMINISTRATIVE LAW – application for judicial review of adjudicator determination in relation to construction contract – whether jurisdictional error – whether reference date for payment claim – whether separable part – whether estoppel by convention
Legislation:

Building and Construction Industry (Security of Payment) Act 2009 (ACT) ss 6, 10, 11, 15, 16, 22, 43

Building and Construction Industry Security of Payment Act 1999 (NSW)
Cases cited:

Brolton Group Pty Ltd v Hanson Construction Materials Pty Ltd [2020] NSWCA 63

Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69; (2009) 74 NSWLR 190

Moratic Pty Ltd v Gordon [2007] NSWSC 5

Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4; (2018) 264 CLR 1

Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd [2016] HCA 52; (2016) 260 CLR 340

Waterman v Gerling Australia Insurance Company Pty Ltd [2005] NSWSC 1066; (2005) 65 NSWLR 300
Division: General Division
Registry: Australian Capital Territory
National Practice Area: Administrative and Constitutional Law and Human Rights
Number of paragraphs: 69
Date of hearing: 2 February 2024
Counsel for the Applicant: Mr M Dempsey SC, Mr B Buckland and Ms C Harris
Solicitor for the Applicant HFW Australia
Counsel for the First Respondent Mr D Cook SC and Mr M Lyons
Solicitor for the First Respondent Crisp Law

ORDERS

ACD 66 of 2023
BETWEEN:

DICKSON DEVELOPMENTS PRECINCT 5 PTY LTD

Applicant
AND:

CORE BUILDING GROUP PTY LTD

First Respondent

MAX TONKIN

Second Respondent

ORDER MADE BY:

JACKMAN J

DATE OF ORDER:

15 FEBRUARY 2024

THE COURT DECLARES THAT:

1.The determination made on 3 November 2023 in respect of adjudication application 2023ACTAT065 (as amended on 7 November 2023) pursuant to the Building and Construction Industry (Security of Payment) Act 2009 (ACT) is void.

THE COURT ORDERS THAT:

2.The first respondent pay the applicant’s costs of the proceeding.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

JACKMAN J

Introduction

  1. This matter concerns the construction and application of the Building and Construction Industry (Security of Payment) Act 2009 (ACT) (the Act). The applicant, Dickson Developments Precinct 5 Pty Ltd (Dickson) seeks judicial review of an adjudication determination (Determination) by the second respondent, Mr Max Tonkin (Adjudicator). The Determination (as amended on 7 November 2023) requires Dickson to pay the amount of $5,530,114.95 to the first respondent, Core Building Group Pty Ltd (Core). I set out the jurisdictional basis for the Federal Court hearing and determining such a matter in Dickson Developments Precinct 1 Pty Ltd v Core Building Group Pty Ltd [2023] FCA 1473 at [2]. I will follow the course adopted by the parties in the present…

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Details
Case
[2024] FCA 86
Decision Date

CaseChat Overview and Summary

The case of Dickson Developments Precinct 5 Pty Ltd v Core Building Group Pty Ltd concerns a judicial review of an adjudicator’s determination in relation to a construction contract. The primary issue was whether there had been a jurisdictional error in the adjudicator’s determination regarding the reference date for a payment claim, whether a particular part of the works was separable, and whether an estoppel by convention applied. The adjudicator had ruled in favour of Core, but Dickson sought to overturn that decision.

The court examined whether a jurisdictional error had been made by the adjudicator. It considered whether Core was entitled to make progress claims after the Certificate of Practical Completion had been issued, and if so, whether Dickson had adopted the same assumption. The court found that while Core had adopted the assumption, Dickson had not, and therefore no conventional estoppel arose. Furthermore, the court noted that Dickson had not accepted the legal validity of Core's claims, instead reserving the right to claim repayment. The court also scrutinised the adjudicator’s reasoning on the reference date for the payment claim and found no evidence that Dickson had assumed the validity of the claim in that regard.

In light of these findings, the court concluded that the adjudicator’s determination contained a jurisdictional error. Consequently, the application for judicial review was allowed, and the adjudicator’s determination was set aside. The first respondent, Core Building Group Pty Ltd, was ordered to pay the applicant’s costs of the proceeding.

Orders

Orders of the court

2. The first respondent pay the applicant’s costs of the proceeding.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The term “Separable Part” is defined in cl 1.1 as meaning:any part of the Works capable of occupation and use prior to Practical Completion of the whole of the Works.Salient Facts Dickson’s project brief describing the scope of the Works, as attached at Schedule 5 of the Contract, included a number of documents relating to the “Estate Development Plan”, providing for Core to carry out off-site works to service the entire Soho precinct, which comprised multiple buildings including Mulberry, Kashmir, Calypso, Vermillion and existing heritage buildings which were to be retained (the EDP Works). The affidavit of Mr Staniland, the Construction Manager of Core, dated 13 December 2023, describes the EDP Works at [14] as including: (a)supply, install and maintain environmental controls;(b)disconnection and/or diversion of water mains;(c)disconnection and/or diversion of sewer infrastructure including ties;(d)disconnection and/or diversion of stormwater services;(e)installation of temporary sewer and stormwater diversions around Mulberry to allow basement works to progress;(f)supply and install stormwater services;(g)supply and install sewer services; and(h)supply and installation of a common trench for gas, communication and electrical services. The construction program for the Mulberry Project dated 28 August 2019, which was submitted to the Superintendent on 12 September 2019, recorded that the EDP Works were planned to take place in one stage from 16 September 2019 to 15 February 2020 (prior to Practical Completion): Mr Staniland’s affidavit at [15]–[17]. Part of the EDP Works involved the installation of stormwater services on Northbourne Avenue. One of those stormwater services was 1350 mm in diameter and was to run across Northbourne Avenue, the other was 450 mm in diameter and was to service the Kashmir area: Mr Staniland’s affidavit at [18]. On 3 August 2021, Mr Maloney of Core sent a Notice of Delay to the Superintendent in relation to delays to stormwater services. The delays arose from a redesign of the stormwater services due to clashes with existing services, including water main, gas and telecommunications. The notice recorded that, until the redesign was completed, Core could not install those stormwater lines or carry out the associated works (i.e. road reinstatement, landscaping, footpath works, and reinstatement works) which would delay Transport Canberra and City Services’ (TCCS) acceptance and therefore Practical Completion. The notice stated that it was likely to take 12 weeks to complete the redesign and obtain necessary approvals, and as the date for Practical Completion was 14 weeks away, that would leave only two weeks to complete the works. On 10 August 2021, Mr Maloney from Core sent a claim for an extension of time (referred to as EOT 24) in relation to delays to Practical Completion due to the redesign. On 12 August 2021, the Superintendent replied by email stating: As discussed the EOT [Extension of Time] as noted is now not applicable due to the Deed Manager confirming that the works will not be required to be completed for Mulberry Practical Completion.The attached drawing has been approved by the Deed Manager as works excluded from Mulberry achieving Practical Completion.1. 1350 mm stormwater “Area A”2. 450 mm stormwater on Northbourne Ave “Area B”The drawing attached to that email marked up the two particular stormwater services.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In my view, no such conventional estoppel arose. While I accept that Core adopted the assumption that it was entitled to make progress claims pursuant to Schedule 2(a) even after the Certificate of Practical Completion had been issued, it has failed to establish that Dickson adopted the same assumption. As to PC 34, Dickson did not make any response to that claim for more than six months, and even then Dickson did not accept the legal validity of the claim but decided (for whatever reason) to pay the claim in any event, and in doing so reserved the right to claim repayment. As to PC 35, Dickson expressly stated that it was not a valid claim pursuant to the Act because it was not made in relation to a valid reference date (para 3.1 of the Superintendent’s letter of 4 August 2023). That letter did not engage in any detailed analysis as to why Dickson advanced that proposition, but the generality with which the proposition was expressed was wide enough to include the contention that Schedule 2(a) was not available after the issue of the Certificate of Practical Completion. The Superintendent’s letter of 4 August 2023 did refer to the Progress Claim Date being the 28th of each month, whereas PC 35 was issued on 26 July 2023 and not on the Progress Claim Date, but that proposition was only advanced in support of the different contention that PC 35 was not delivered as required by cl 17.3. The letter did not state or indicate that that was the basis on which the separate argument was made that PC 35 was not a valid claim at law pursuant to the Act because it was not made in relation to a valid reference date. Dickson’s reasoning on cl 17.3, including its reference to the 28th of each month, may well have been in the alternative to its position on whether there was a valid reference date. Hence, no relevant assumption can be inferred from Dickson’s response to PC 35. The same reasoning applies to the response on behalf of Dickson to PC 36, and in that context the conclusion is fortified by the fact that the adjudication response by Dickson expressly contended that the reference dates provided for Practical Completion and Final Completion were intended to be exhaustive reference dates following completion of the Works, and reference dates no longer accrued on the 28th day of each month after the date of Practical Completion or after the end of the Defects Liability Period (at [40]). There is no evidence that Core contended that such an argument would contravene s 22(4) of the Act, which prevents the respondent from including in the adjudication response any reasons for withholding payment which have not already been included in the payment schedule provided to the claimant. The lack of any such contention reinforces the conclusion as to the width of para 3.1 of the Superintendent’s letter of 5 September 2023, responding to PC 36, and saying (in the same way as had been done on 4 August 2023 in relation to PC 35) that PC 36 was not made in relation to a valid reference date.Conclusion

Ratio Decidendi

Legal Principle Established

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