Downer EDI Works Pty Ltd v Steensma - [2022] WASC 396

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   DOWNER EDI WORKS PTY LTD -v- STEENSMA [2022] WASC 396
CORAM:   ALLANSON J
HEARD:   17 NOVEMBER 2022
DELIVERED          :   24 NOVEMBER 2022
FILE NO/S:   CIV 1664 of 2022
BETWEEN:   DOWNER EDI WORKS PTY LTD
Applicant
AND
DR AUKE STEENSMA
Respondent
RCA CIVIL GROUP PTY LTD
Other Party

Catchwords:

Judicial review - Adjudication determination under construction contract - Where respondent to adjudication had applied set off against other contracts before payment claim made - Where respondent did not claim set off as defence to claim in adjudication - Where applicant for adjudication sought payment of set off sum in adjudication - Whether set off was part of payment claim and payment dispute - Whether adjudicator had jurisdiction to order payment of set off sum to applicant

Legislation:

Construction Contracts (Former Provisions) Act 2004 (WA)

Result:

Application allowed
Paragraphs 2 and 3 of the of the adjudicator's determination quashed

Category: B

Representation:

Counsel:

Applicant	:	L N Firios
Respondent	:	No appearance
Other Party	:	C S Gough

Solicitors:

Applicant	:	Ashurst Australia
Respondent	:	Steensma Lawyers
Other Party	:	Mills Oakley

Case(s) referred to in decision(s):

Alliance Contracting Pty Ltd v James [2014] WASC 212
Cheatley v The Queen [1972] HCA 63; (1972) 127 CLR 291
Cooper & Oxley Builders Pty Ltd v Steensma [2016] WASC 386
Duro Felguera Australia Pty Ltd v Samsung C&T Corporation [2018] WASCA 28; (2018) 52 WAR 323
Laing O'Rourke Australia Construction Pty Ltd v Samsung C&T Corp [2016] WASCA 130; (2016) 50 WAR 399
Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217; (2011) 43 WAR 319
Re Narula, Ng & Hammersley; Ex parte Atanasoski [2003] WASCA 156

ALLANSON J:

Introduction

The respondent to this application is an adjudicator under the Construction Contracts (Former Provisions) Act 2004 (WA).[1] On 17 June 2022, he determined a payment dispute between RCA Civil Group Pty Ltd and Downer EDI Works Pty Ltd. Downer (the respondent in the adjudication) now applies for judicial review of that determination, alleging the adjudicator fell into jurisdictional error on four grounds.
[1] The Act was renamed by the Building and Construction Industry (Security of Payments) Act 2021 (WA), s 136. Unless stated otherwise, references to legislation in these reasons are to the Construction Contracts (Former Provisions) Act.
The adjudicator filed a submitting appearance. RCA appeared to contest the application.

Background

Downer and RCA were parties to a Plant and Equipment Hire Agreement, pursuant to which RCA agreed to hire equipment and the services of an operator to Downer for payment at rates in accordance with the terms of the agreement.[2]
[2] See affidavit of Katherine Madeline Swann, affirmed 28 June 2022, CV-01, 800.
On 25 March 2022, RCA submitted a payment claim to Downer, claiming $148,973 divided into four subclaims:[3]
(1)Claim 6: September re-claim for $25,945;
(2)Claim 7: October re-claim for $16,402.50;
(3)Claim 8: October re-claim for $83,343,40; and
(4)Claim 9: December re-claim for $23,282,50.
[3]…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2022] WASC 396
Decision Date: 7 DECEMBER 2022

CaseChat Overview and Summary

Downer EDI Works Pty Ltd applied to the Supreme Court of Western Australia for judicial review of a determination made under the Construction Contracts (Former Provisions) Act 2004 (WA). The determination was made in relation to a payment dispute between Downer and RCA Civil Group Pty Ltd, a subcontractor. Downer sought to challenge the adjudicator's decision that it must pay RCA the amount of $116,975 plus interest. The legal issues before the court were whether the set-off sum was part of the payment claim and payment dispute, and whether the adjudicator had jurisdiction to order payment of the set-off sum to RCA.

The court held that the Act does not manifest a legislative intention that a determination must operate as an indivisible whole. Where part only of a decision of an administrative body is beyond power, and is capable of severance from the unexceptionable parts, the court may quash the part that is beyond power without interfering with the remainder. The determinations in paragraphs 2 and 3 of the adjudicator's determination were not dependent or conditioned upon the determination in paragraph 1. The adjudicator's jurisdiction was confined to the claim that Downer owed RCA the amount of $148,973.40 claimed in RCA's payment claim. The finding that Downer must pay the set-off amount and interest lies outside the adjudicator's power because it was not part of the payment claim and the payment dispute. The error identified is confined to a severable part of the determination, and there is no reason to disturb the determination on the payment dispute.

On 24 November 2022, the court allowed Downer's application for judicial review. It quashed that part of the determination that required Downer to pay to RCA the amount of $116,975 and interest of $1,442.16. The court did not make any order as to the repayment of the amount paid by Downer to RCA because the parties had reached an agreement to that effect.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The Act, properly construed, does not manifest a legislative intention that a determination must operate as an indivisible whole.[35][35] Duro Felguera Australia Pty Ltd v Samsung C&T Corporation [2018] WASCA 28; (2018) 52 WAR 323. The general rule is that where part only of a decision of an administrative body is beyond power, and is capable of severance from the unexceptionable parts, the court may quash the part that is beyond power without interfering with the remainder.[36][36] Cheatley v The Queen [1972] HCA 63; (1972) 127 CLR 291, 308 ‑ 309; Re Narula, Ng & Hammersley; Ex parte Atanasoski [2003] WASCA 156 [48] ‑ [51]. The determinations in paragraphs 2 and 3 of the adjudicator's determination are not dependent or conditioned upon the determination in paragraph 1. The adjudicator's jurisdiction was confined to the claim that Downer owed RCA the amount of $148,973.40 claimed in RCA's payment claim. The finding that Downer must pay the set‑off amount and interest lies outside the adjudicator's power because it was not part of the payment claim and the payment dispute. The error identified is confined to a severable part of the determination, and there is no reason (and no grounds have been advanced) to disturb the determination on the payment dispute. The application for judicial review should be allowed. The determination in paragraphs 2 and 3 of the adjudicator's determination, requiring Downer to pay to RCA the amount of $116,975 and interest of $1,442.16, should be quashed. On 24 November 2022, I allowed the application by Downer EDI Works Pty Ltd for judicial review of a determination under the Construction Contracts (Former Provisions) Act 2004 (WA). I quashed that part of the determination that required Downer to pay to RCA Civil Group Pty Ltd the amount of $116,975 and interest of $1,442.16. Downer sought an order in the judicial review proceedings that RCA repay the amount Downer had paid. RCA opposed repayment on the basis of an agreement entered into between Downer and RCA by letter dated 17 October 2022. Downer relied on the affidavit of Benjamin Norrish, Legal Counsel for the Downer Group, affirmed 29 November 2022. On 18 August 2022, RCA sent to the solicitors for Downer an email to which it attached a copy of a statutory demand, dated 18 August 2022, together with a copy of the Registration of a Judgment in the District Court of Western Australia, dated 4 August 2022. The statutory demand was served on Downer's registered office on 25 August 2022. Downer applied to set aside the statutory demand by originating process in this court, filed 7 September 2022. Mr Norrish prepared an agreement, dated 17 October 2022, set out in a letter addressed to Mr Steve Sutherland of RCA and also Yarta Civil Group Pty Ltd, another subcontractor. Mr Norrish understood Mr Sutherland to be the subcontractor's representative under contracts between Downer and both RCA and Yarta. On 25 October 2022, there were unsuccessful discussions between the parties.