Duro Felguera Australia Pty Ltd v Samsung C&T Corporation

[2018] WASCA 28

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT :   THE COURT OF APPEAL (WA)

CITATION:   DURO FELGUERA AUSTRALIA PTY LTD -v- SAMSUNG C&T CORPORATION [2018] WASCA 28

CORAM:   MARTIN CJ

BUSS P
MURPHY JA

HEARD:   21 & 22 AUGUST 2017

DELIVERED          :   14 MARCH 2018

FILE NO/S:   CACV 108 of 2016

BETWEEN:   DURO FELGUERA AUSTRALIA PTY LTD

Appellant

AND

SAMSUNG C&T CORPORATION
First Respondent

PHILIP CORNELIUS LOOTS
Second Respondent

RICHARD MACHELL
Third Respondent

ON APPEAL FROM:

Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA

Coram  :BEECH J

Citation  :SAMSUNG C&T CORPORATION -v- LOOTS [2016] WASC 330

File No  :CIV 1257 of 2016, CIV 1284 of 2016, CIV 1596 of 2016, CIV 1719 of 2016

Catchwords:

Administrative law - Judicial review - Determination by adjudicator under Construction Contracts Act 2004 (WA) - Whether jurisdiction of adjudicator limited to determination of merits of payment claim giving rise to the payment dispute - Whether open to adjudicator to find that amount payable was to be increased on the basis of wrongful denial of liability in relation to an earlier payment claim - Whether court has power to sever invalid and valid portions of adjudicator's determination and enforce valid portion

Legislation:

Construction Contracts Act 2004 (WA)
Interpretation Act 1984 (WA)

Result:

Appeal allowed
Notice of contention in appeal allowed in part

Category:    A

Representation:

Counsel:

Appellant:     Mr S K Dharmananda SC & Mr T J Porter

First Respondent           :     Mr C G Colvin SC & Ms E Luck

Second Respondent      :     No appearance

Third Respondent          :     No appearance

Solicitors:

Appellant:     Jones Day

First Respondent           :     Herbert Smith Freehills

Second Respondent      :     No appearance

Third Respondent          :     No appearance

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

Alliance Contracting Pty Ltd v James [2014] WASC 212

Anderson Street Banksmeadow Pty Ltd v Helcon Contracting Australia Pty Ltd [2013] NSWSC 657

Anderson v Judges of the District Court of New South Wales [1992] 27 NSWLR 701

Attorney General (New South Wales) v Perpetual Trustee (Co) Ltd (1940) 63 CLR 209

Attorney‑General for the State of South Australia v Adelaide City Corporation [2013] HCA 3; (2013) 249 CLR 1

Australian Securities Commission v Marlborough Goldmines Ltd [1993] HCA 15; (1993) 177 CLR 485

Bank of New South Wales v The Commonwealth (1948) 76 CLR 1

BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2013] QCA 394; [2015] 1 Qd R 228

Bros Bins Systems Pty Ltd v Industrial Relations Commission of New South Wales [2008] NSWCA 292; (2008) 74 NSWLR 257

Cheatley v The Queen [1972] HCA 63; (1972) 127 CLR 291

Coco v The Queen (1994) 179 CLR 427

Cooper & Oxley Builders Pty Ltd v Steensma [2016] WASC 386

Director of Public Prosecutions (Cth) v Ede [2014] NSWCA 282

EC & M Pty Ltd v CTEC Pty Ltd [2013] WASAT 114

Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106

Harrington v Lowe (1996) 190 CLR 311

INPEX Operations Australia Pty Ltd v JKC Australia LNG Pty Ltd (No 2) [2017] NTSC 61

James Trowse Constructions Pty Ltd v ASAP Plasterers Pty Ltd [2011] QSC 145

Kindimindi Investments Pty Ltd v Lane Cove Council [2006] NSWCA 23

Lacey v Attorney‑General for the State of Queensland [2011] HCA 10; (2011) 242 CLR 553

Lewski v Commissioner of Taxation [2017] FCAFC 145

M+W Singapore Pte Ltd v Anstee-Brook [2016] WASC 310

Maxcon Constructions Pty Ltd v Vadasz (No 2) [2017] SASCFC 2; (2017) 127 SASR 193

Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5

Maxstra Constructions Pty Ltd v Joseph Gilbert [2013] VSC 243

Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199; (2010) 30 VR 141

Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597

Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140

O'Donnell Griffin Pty Ltd v John Holland Pty Ltd [2009] WASC 19

Owners of SS Kalibia v Wilson (1910) 11 CLR 689

Pidoto v The State of Victoria (1943) 68 CLR 87

Plaintiff M 79/2012 v Minister for Immigration and Citizenship [2013] HCA 24; (2013) 252 CLR 336

R v Commonwealth Court of Conciliation and Arbitration, Ex parte Whybrow (1910) 11 CLR 1

R v Hannan; Ex parte Abbott (1986) 83 FLR 177

Re Gray; Ex parte Marsh (1985) 157 CLR 351

Re McBain; Ex parte Australian Catholic Bishops Conference [2002] HCA 16; (2002) 209 CLR 372

Re Media, Entertainment & Arts Alliance; Ex parte Arnel [1994] HCA 1; (1994) 179 CLR 84

Re Narula, Ng & Hammersley; Ex parte Atanasoski [2003] WASCA 156

Re Skirving; Ex parte Forward (Unreported, WASC, Library No 980937, 18 December 1998)

Richard Crookes Construction Pty Ltd v CES Projects (Aust) Pty Ltd (No 2) [2016] NSWSC 1229

Roads and Traffic Authority in New South Wales v Higginson [2011] NSWCA 151

Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252

Samsung C&T Corporation v Duro Felguera Australia Pty Ltd [2018] WASCA 27

Samsung C&T Corporation v Loots [2016] WASC 330

SSC Plenty Road v Construction Engineering (Aust) (No 2) [2015] VSC 680

Syntech Resources Pty Ltd v Peter Campbell Earthmoving (Aust) Pty Ltd [2011] QSC 293

Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd [2012] QSC 373

Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd [2013] QSC 141

Torbey Investments Corporated Pty Ltd v Ferrara [2017] NSWCA 9

Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2007] NSWSC 1298

Waterside Workers' Federation of Australia v J W Alexander Ltd (1918) 25 CLR 434

Zurich Bay Holdings Pty Ltd v Brookfield Multiplex Engineering and Infrastructure Pty Ltd [2014] WASC 39

MARTIN CJ: 

Summary

1. The appellant, Duro Felguera Australia Pty Ltd (Duro), is a party to a subcontract with the first respondent, Samsung C&T Corporation (Samsung) for the performance by Duro of various works required for the Roy Hill Iron Ore Project (the Project).  Samsung is, with Roy Hill Holdings Pty Ltd, the head contractor for the Project, which involves the development of an open cut mine for the extraction of iron ore, with associated processing, rail and port facilities in the Pilbara region of Western Australia.

2. Disputes arose between Samsung and Duro with respect to Duro's entitlement to payment for work performed pursuant to the subcontract.  Duro referred a number of those disputes to adjudication pursuant to the provisions of the Construction Contracts Act 2004 (WA) (the CCA).[1]  One of the disputes the subject of this appeal was adjudicated by the second respondent, Mr P C Loots, and another by the third respondent, Mr R Machell.  Each adjudicator determined that Samsung was liable to make a payment to Duro, and determined the amount of the payment due.  Duro commenced proceedings for leave to enforce those determinations.  Samsung commenced judicial review proceedings in which it challenged the validity of the determinations made by the adjudicators on various grounds.

   [1] For the purposes of this appeal, the applicable version of the CCA is that which preceded the amendments made in November 2016.

3. In the case of the determination made by Mr Machell, one of the grounds upon which Samsung sought to quash the determination was the assertion that the adjudicator 'purported to bring to account a claim for an advance payment that was outside his jurisdiction'.  The trial judge upheld that ground and concluded that, as a consequence, Mr Machell's determination was invalid.  Accordingly, Samsung's application for judicial review was upheld and Duro's application for leave to enforce the determination was dismissed.  Duro appeals from both of those decisions.

4. Mr Loots determined that Samsung was liable to pay Duro $49,642,958.72 (plus GST).  That amount was made up of three components:

   (a)an amount said by Duro to have been certified as payable by Samsung but 'set off' ($34,186,114.38);

   (b)an amount claimed in respect of what was described as the 'car dumper claims' ($14,740,345.92); and

   (c)part of an amount claimed for commissioning of a control system ($716,498.42).

5. Samsung challenged this determination on the ground that the adjudicator exceeded his jurisdiction with respect to that component of his determination which included an award for the amount of approximately $34.2 million said to have been certified as payable by Samsung but 'set off'.  That ground was upheld by the trial judge.  As Duro accepts that the trial judge was correct to so hold, it is unnecessary to relate the trial judge's reasons for that conclusion.  It is sufficient for present purposes to note that those reasons are entirely unrelated to the other two components of the determination made by Mr Loots, which involved claims which are entirely separate and discrete from the claim in respect of which the adjudicator exceeded his jurisdiction.

6. In that context, Duro submitted that the trial judge could and should sever the invalid portion of the adjudicator's determination and leave the valid portions of the determination standing, and grant leave to enforce the determination revised in that way.  The trial judge rejected that submission.  He upheld Samsung's application for judicial review, quashed the determination made by Mr Loots and refused Duro's application for leave to enforce that determination.  Duro appeals from that portion of those decisions in which the trial judge rejected its contention that the components of the determination which were not affected by jurisdictional error should be upheld and enforced.

7. So, Duro's appeal raises two separate issues, which may be conveniently described as the set-off issue[2] (raised by ground 1 of the appeal) and the severance issue[3] (raised by ground 2 of the appeal).

   [2] Which relates to Mr Machell's determination.

   [3] Which relates to Mr Loots' determination.

8. For the reasons which follow, that part of Duro's appeal which relates to the set‑off issue should be upheld, and that part of Duro's appeal which relates to the severance issue should be dismissed.

The set-off issue

1. In the course of argument, the court was taken by counsel to the documents in evidence before the trial judge which were said to have given rise to the set‑off issue.  It must be said that those documents, and their consequences, are not pellucidly clear.  However, the issue of principle raised by this aspect of Duro's appeal does not depend upon a detailed analysis of the precise sequence of events, or the amounts involved.  Counsel for both parties were content to argue the matter on the basis of the factual findings made by the trial judge and these reasons will proceed on the same basis.

The trial judge's reasons - the set-off issue

1. The determination made by Mr Machell which gives rise to the set‑off issue is the determination described as the Second Determination by the trial judge in his reasons for decision[4] and relates to a progress claim made by Duro with respect to November 2015.[5] The trial judge notes that, in his reasons for that determination, the adjudicator found that Samsung had paid an amount of $6.66 million on account of its liabilities to Duro.  However, in his determination, the adjudicator did not allow Samsung credit for that payment in the amount due to Duro in respect of the relevant progress claim.

   [4] Samsung C&T Corporation v Loots [2016] WASC 330 (primary reasons).

   [5] There were two progress claims made by Duro with respect to November 2015 - the claim the subject of the 'Second Determination' is the later of the two.

2. That is because one of the continuing issues of contention between Duro and Samsung was Samsung's claim for liquidated damages pursuant to the subcontract, and its claim to be entitled to set off those liquidated damages against amounts otherwise due to Duro under the terms of the subcontract.  One of the amounts which Samsung had claimed by way of liquidated damages and set-off against a progress claim made by Duro in October 2015 was an amount of $13,171,349.00.[6]   The trial judge proceeded on the basis that the liquidated damages claimed by Samsung had in fact been deducted from the moneys that would otherwise have been payable to Duro pursuant to that claim.[7] The adjudicator considered that Samsung had not been entitled to deduct this amount from moneys otherwise payable to Duro in respect of the October 2015 progress claim.  As a result of that conclusion, it followed, according to the adjudicator, that Samsung was not entitled to set off the amount of $6.66 million it had paid 'on account' against the amounts claimed by Duro in the claim under consideration by the adjudicator, because the payment of that amount 'on account' did not result in a balance in favour of Samsung after account is taken of the amount previously withheld (wrongfully).

   [6] Samsung contends that, in fact, the amount of $13,171,349 was withheld against Duro's April progress claim, but nothing turns upon the identification of the particular previous claim from which this amount was deducted.

   [7] Primary reasons [266] - [272].

3. Duro contended that this process of reasoning, and the conclusion from it, were open to the adjudicator in the exercise of the jurisdiction conferred upon him by the CCA, which required him to determine 'whether any party to the payment dispute is liable to make a payment'.[8]  The trial judge rejected this contention on the basis that it was 'founded on an unduly broad view of the function and powers of an adjudicator'.[9]  In his view, the adjudicator's function of determining the amount of money payable by one party to the other was not at large but was confined, relevantly, by the payment claim founding the payment dispute.[10]  The trial judge drew support from his own earlier decision in Alliance Contracting Pty Ltd v James[11] for the proposition that the adjudicator's function was limited to the determination of the merits of the payment claim which gave rise to the payment dispute.[12]

   [8] CCA, s 31(2)(b).

   [9] Primary reasons [276].

   [10] Primary reasons [276].

   [11] Alliance Contracting Pty Ltd v James [2014] WASC 212 [60] (Alliance Contracting).

   [12] Primary reasons [277].

4. In the view of the trial judge, the function of the adjudicator was limited to the assessment of the merits of the relevant November progress claim made by Duro, and the merits of the grounds upon which Samsung disputed Duro's entitlement to payment of that claim.[13]  In his view, the adjudicator's statutory function and powers did not include consideration of the merits of claims and counterclaims made in respect of, or in response to, payment claims made earlier than the payment claim giving rise to the relevant payment dispute.[14]

   [13] Primary reasons [278].

   [14] Primary reasons [279].

5. The trial judge supported this conclusion with the observation that the scheme of the CCA revealed an intention to keep disputes with respect to each payment claim separate - as each dispute has its own time limit and each is to be the subject of a separate adjudication unless the parties agree otherwise.[15]  In his view it was not open to an adjudicator to find that the amount payable by a party in relation to a payment claim before the adjudicator was to be increased (or decreased) on the ground that a party wrongfully denied liability (or wrongfully made a claim) in relation to an earlier, different payment claim.[16]

   [15] Pursuant to CCA, s 32(3)(b).

   [16] Primary reasons [281].

6. For these reasons the trial judge concluded that the adjudicator had exceeded the jurisdiction conferred upon him by the CCA.  He upheld Samsung's application for judicial review, quashed the adjudicator's determination, and dismissed Duro's application for leave to enforce that determination.

Samsung's submissions

1. Samsung contends that the conclusion of the trial judge was correct, essentially for the reasons which he gave.  Samsung contends that the adjudicator had no jurisdiction with respect to any dispute concerning the earlier progress claims, because in its application to the adjudicator, Duro made no claim to payment based upon any claim other than the relevant November progress claim, and in any event, by the time it applied to the adjudicator, Duro was well out of time in respect of any claim based upon earlier progress claims.[17]  Samsung submits that the adjudicator's decision went beyond the determination of the merits of Samsung's claim to a set‑off in respect of the November progress claim and purported to determine, in effect, that Samsung owed Duro $13,171,349.00 in respect of earlier progress claims.  It submits that having determined, in effect, that Samsung had a right to set off the advance payment of $6.66 million, the adjudicator had no statutory authority or jurisdiction to determine that this amount should not be set off because of his view that a portion of an earlier progress claim remained due and payable.[18]

Duro's submissions

[17] Applications for adjudications must be brought within 28 days after a payment dispute arises - CCA, s 26(1).

[18] Respondent's submissions [10] - [13] (WAB 77 - 78).

1. Duro relies upon three principal submissions in support of its contention that the trial judge erred:

   (a)Samsung's entitlement to deduct the liquidated damages it had claimed against Duro was put squarely in issue by both parties, as being relevant to Duro's entitlement to be paid the amounts claimed in the relevant November progress claim;

   (b)in order to determine whether Samsung was liable to make a payment to Duro in respect of the relevant November progress claim,[19] it was necessary for the adjudicator to determine whether Samsung's payment of $6.66 million on account had in fact given rise to a credit in the balance of account between Samsung and Duro which could be set off against the amount which Duro claimed in the relevant November progress claim; and

   (c)the adjudicator correctly limited his determination to the question of whether Samsung was entitled to set off the amount of $6.66 million which it claimed in partial answer to Duro's payment claim, as is evident from the fact that the adjudicator did not include in his determination any amount reflecting the difference between the $6.66 million which Samsung claimed to set off and the $13.1 million which the adjudicator found Samsung had wrongly withheld.[20]

   [19] As required by CCA, s 31(2)(b).

   [20] Put in quaint legal terms, the adjudicator only allowed Duro to use Samsung's wrongful withholding of $13.1 million as a shield to Samsung's claim to set off $6.6 million - not as a sword.

2. Each basic proposition should be accepted.  They are developed more fully in the reasons for upholding this aspect of Duro's appeal which follow, and which are drawn largely from Duro's submissions.

The matters in issue before the adjudicator

1. There is no reason to doubt the observations made by the trial judge in Alliance Contracting,[21] or his observations in this case to the effect that the scheme of the CCA reveals an intention to require separate and distinct adjudications in respect of separate and distinct payment claims.  Nor is there any reason to doubt his assertion that the function of an adjudicator is to determine the merits of the payment claim, the non-payment or disputation of which gives rise to the payment dispute, including the merits of any matter upon which the recipient of the payment claim relies in order to deny liability to make the payment claimed.

   [21] Alliance Contracting [60].

2. Rather, those observations reinforce the need to focus attention upon the issues which the parties contended were relevant to the determination of the liability to make the payment claimed, and the amount of that liability.

The disputed payment claim

1. The relevant November progress claim was issued to Samsung by letter from Duro dated 14 December 2015.[22]  By letter dated 17 December 2015, Samsung rejected Duro's claim in its entirety.[23]  In that letter, Samsung stated:

   The Subcontractor is referred to the October 2015 Progress Certificate … and the November 2015 Progress Certificate … which detail monies owing from the Subcontractor to the Contractor.

   In accordance with clause 37.8 the full amount certified is to be set-off against the monies owing to the Contractor.

   [22] GAB 2, 167 - 171.

   [23] GAB 2, 174 - 178.

1. Clause 37.8 of the subcontract expressly permits Samsung to deduct any debt or other moneys due from Duro to Samsung under the subcontract (or otherwise) from any moneys otherwise due from Samsung to Duro.

2. The October 2015 progress certificate to which Samsung referred in its rejection of Duro's claim for payment includes, in the amounts said to be certified as due to Samsung, an amount of liquidated damages said to have been paid up to the previous month of $13,171,349.00, and a further amount of liquidated damages due that month of $51,042,537.40, giving rise to a total amount of liquidated damages of $64,213,886.40.[24]  It is clear from the correspondence in evidence that Samsung claimed that it would have been entitled to a greater amount of liquidated damages, but for the cap on such damages provided by the subcontract, being an amount equal to 10% of the subcontract sum.[25]

   [24] GAB 3, 437.

   [25] See, for example, GAB 3, 435.

3. The November 2015 progress certificate to which reference was also made by Samsung in the letter rejecting Duro's claim for payment shows, as an amount certified as due by Samsung up to the previous month, the amount of $64,213,886.40 by way of liquidated damages (being the total of the two amounts referred to in the October 2015 progress certificate).[26]

   [26] GAB 3, 451.

4. The letter from Samsung to Duro accompanying that progress certificate asserted that Duro had not made the payment of $51,042,537.40 certified by Samsung as due for payment in respect of liquidated damages and stated that Samsung was considering its rights in relation to that money.[27]  In this respect the terms of the letter are consistent with the conclusion by each of the adjudicator and the trial judge to the effect that the other component of the liquidated damages claimed by Samsung - namely, the component of $13,171,349.00 - had been satisfied by deduction from payments otherwise due to Duro.  The thrust of Samsung's letter in response to the relevant progress claim was to the effect that these and other sums owing to Samsung entirely extinguished any liability which Samsung may have had to make a payment to Duro.

The ambit of the payment dispute before the adjudicator

[27] GAB 3, 449.

1. Following Samsung's rejection of Duro's claim for payment in its entirety, on 14 January 2016 Duro brought an application[28] for adjudication which resulted in the determination made by Mr Machell.  In the submissions served with that application, Duro asserted:[29]

   Since April 2015, SCT [Samsung] has been rejecting most of DF's [Duro's] claims for payment and has purported to set off large amounts, primarily on the basis of untenable claims for liquidated damages (LDs) and defect rectification costs.  At the same time, SCT has Directed DF to perform additional works (primarily on site works), which go well beyond the scope of Duro's works under the Interim Subcontract (Duro Works).

   As a consequence, although the Duro Works are 99% complete, a significant proportion of the Subcontract Sum remains outstanding and DF continues to work without being paid.  SCT has stated that it intends to keep DF working at the Project until May 2017, without paying DF anything further.

   On 14 December 2015, against the backdrop of the above, DF issued a payment claim seeking payment … for having achieved certain milestones under particular subcontracts (Payment Claim).  In response, SCT issued a letter (Notice of Dispute) in which it refused to pay any of the amounts claimed in the Payment Claim.

   [28] GAB 2, 91.

   [29] GAB 2, 99.

2. Within those submissions, Duro provided detailed argument and submissions in relation to the amounts which Samsung had purported to certify as due and owing from Duro by way of liquidated damages.[30]  In that portion of the submissions, Duro refers to Samsung's set-off of liquidated damages in the amount of $13,171,349.00 in the April progress certificate, and to the issue of 63 separate letters on 10 November 2015 asserting that a further amount of $73,389,414.00 was due and payable in respect of liquidated damages (although that amount was reduced in the October progress certificate by reason of the cap on liability included in the subcontract).  Duro contended in the submissions in support of its application that Samsung had purported to rely on the set-off of the liquidated damages it claimed in each of the October and November progress certificates as a basis for rejecting Duro's claim for payment for the works the subject of the payment claim referred to adjudication.  Duro's submissions then set out elaborate reasons in support of its contention that Samsung had no entitlement to the liquidated damages claimed, or to set off those damages against its liability to Duro.

   [30] Part 5 of the submissions - GAB 2, 137 - 156.

3. Samsung provided its response to Duro's application on 28 January 2016.[31]  In that response, Samsung contended that the application should be summarily dismissed on the ground that the adjudicator lacked jurisdiction because no payment claim had been made in accordance with the terms of the subcontract, and because the application did not concern work of the kind defined in the definition of construction contract.[32]  Samsung further submitted that the adjudicator should summarily dismiss the application because the dispute was not capable of fair determination by adjudication[33] due to the complexity of the application and the issues raised.[34]

   [31] GAB 2, 179.

   [32] GAB 2, 186.

   [33] As required by s 31(2)(a)(iv) of the CCA.

   [34] GAB 2, 186.

4. Samsung further submitted that pursuant to cl 37.8 of the subcontract, it had a contractual right to set off amounts due to it by Duro, which included amounts which it had paid on account, and amounts to which it was entitled by way of liquidated damages.[35]

   [35] GAB 2, 186.

5. Samsung's claim to set off various amounts in satisfaction of Duro's claim for payment was elaborated in parts 10-17 of its response.[36]

   [36] GAB 2, 219 - 261.

6. In those portions of its response, Samsung enunciated its contractual entitlement to set off any moneys due to it from Duro, and asserted that it was within the jurisdiction of the adjudicator to consider its claims for set-off as a basis for satisfying Duro's claims for payment.[37]  Samsung also enunciated the particular amounts it claimed to set off in satisfaction of Duro's claim.  Those amounts included the amount of $6.66 million said to have been paid on account[38] and liquidated damages in the amount of $64,213.886.40 (being an amount equal to the cap of 10% of the subcontract sum and the amount certified in each of the October 2015 and November 2015 progress certificates).[39]  Samsung's response contained detailed submissions and argument in support of its claim for liquidated damages.[40]

   [37] GAB 2, 221, relying upon Zurich Bay Holdings Pty Ltd v Brookfield Multiplex Engineering and Infrastructure Pty Ltd [2014] WASC 39 [22] (Le Miere J) and EC & M Pty Ltd v CTEC Pty Ltd [2013] WASAT 114 [11], [13] (Senior Member Raymond).

   [38] GAB 2, 222.

   [39] GAB 2, 227 - 228.

   [40] GAB 2, 227 - 259.

7. This analysis of the circumstances giving rise to the payment dispute leaves no doubt that Samsung rejected Duro's claim for payment and maintained its entitlement to reject that claim in the proceedings before the adjudicator on the grounds that any liability to Duro had been entirely satisfied by its entitlement to set off various amounts against that liability including:

   (a)the amount of $6.66 million paid on account; and

   (b)its entitlement to liquidated damages in the amount of $64,213,886.40, $13,171,349.00 of which had been satisfied by deduction from earlier progress claims, and $51,042,537.40 of which remained available to be set off against any outstanding liability to Duro.

8. In the proceedings before the adjudicator, issue was squarely joined in relation to these matters and, in particular, as to whether Samsung had any entitlement to reduce or extinguish its liability to pay Duro by reason of the set‑offs which it claimed.  Samsung's entitlement to the liquidated damages it had claimed was a topic of considerable contention in the submissions exchanged by the parties, and neither party suggested that the adjudicator did not have jurisdiction to resolve that aspect of the payment dispute.  To the contrary, Samsung clearly and unequivocally submitted to the adjudicator that he was obliged to consider and resolve its claims to liquidated damages in order to resolve and determine its contention that any liability to Duro had been satisfied by set-off.

9. So, while the trial judge was correct to hold that the adjudicator's jurisdiction was limited to the payment dispute arising from the non‑satisfaction or disputation of the payment claim, when account is taken of the matters upon which Samsung relied to reject Duro's payment claim and the matters put in contention before the adjudicator, there can be no doubt that the payment dispute included not only Samsung's claim to be entitled to set off the amount of $6.66 million paid on account against any liability to Duro, but also Samsung's claim to be entitled to set off amounts due by way of liquidated damages against any such liability.  As Samsung relied upon those matters as a defence to Duro's claim, they were matters which the adjudicator was obliged to determine in the exercise of the jurisdiction conferred upon him by the CCA.  With respect, the trial judge erred in concluding otherwise.

Samsung's claimed set‑off

1. In the discharge of the jurisdiction conferred upon him by the CCA, the adjudicator concluded that the amount of $6.66 million paid by Samsung on account could give rise to an entitlement to set that amount off against any liability to Duro in respect of the amounts claimed in the relevant payment claim.  He also concluded that Samsung had no entitlement to set off the amounts which it claimed were due and owing by way of liquidated damages.  For the reasons I have already given, that determination was squarely within the jurisdiction conferred upon the adjudicator by the CCA.  It followed from that determination that Samsung had wrongfully deducted $13,171,349.00 from an amount previously due to Duro, and had no entitlement to set off the further amount of $51,042.537.40 which had been applied in reduction of Samsung's liability to Duro.

2. The matter which the adjudicator was required to determine was whether any party to the payment dispute was liable to make a payment and, if so, the amount liable to be paid.[41]  There is no reason to doubt the decisions at first instance to the effect that this obligation includes the obligation of determining whether the entitlement to payment has been satisfied, entirely or in part, by setting-off against that entitlement moneys due from the claimant to the respondent.[42] I respectfully agree with the judges in those cases that this conclusion comes about as a consequence of the combined operation of s 6, s 27, s 31(2)(b) and s 32(1)(a)(ii) of the CCA. Any such claim to set-off is to be considered and determined by the adjudicator as a defence to the applicant's claim for payment. So, the advancement of a counterclaim which is said to satisfy the claim by way of set-off cannot expand the ambit of the payment claim or the payment dispute and convert the respondent's shield into a sword resulting in a determination that money is due and payable to the respondent to the claim.[43]

   [41] CCA, s 31(2)(b).

   [42] Zurich Bay Holdings Pty Ltd v Brookfield Multiplex Engineering and Infrastructure Pty Ltd [2014] WASC 39 [22] (Le Miere J); Alliance Contracting [50] - [76] (Beech J); Cooper & Oxley Builders Pty Ltd v Steensma [2016] WASC 386 [22] (Le Miere J) (Steensma).

   [43] Alliance Contracting [50] - [76] (Beech J); Steensma [21] (Le Miere J).

3. Further, because the question which must be determined by the adjudicator is the question of whether any party to the payment dispute is liable to make a payment, the adjudicator is required to ascertain that liability as at the date of his or her determination.[44]  To give an obvious example, if the respondent had paid an amount to the claimant after the application for adjudication had been lodged, clearly an adjudicator would be required to take that payment into account in making his or her determination.  It follows that all evidence which is relevant to the amount of the liability, if any, as at the date of determination should be received by an adjudicator.  Provided the evidence is relevant to the amount of the liability to be determined with respect to the payment dispute, there is no temporal constraint upon the ambit of the material to be received by an adjudicator.[45]

   [44] Steensma [33].

   [45] Steensma [33].

4. In this case, Samsung disputed Duro's payment claim on the basis of its assertion that it was entitled to set-off against any such liability various amounts which it asserted were owing by Duro to it.  That assertion could only be made good, as and by way of a defence to Duro's claim for payment, if Samsung could establish that there was a net credit balance in its favour, capable of being set off against the amount claimed by Duro in its payment claim.  So, the amount of $6.66 million paid by Samsung on account could only give rise to a defence to Duro's payment claim if and to the extent that the payment created a net credit in Samsung's favour. 

5. Consistently with the principles I have just enunciated, because the adjudicator was required to determine the amount of liability as at the date of determination, the question he was required to determine was whether the payment of $6.66 million by Samsung had, as at that date, given rise to a net credit balance in favour of Samsung which could be applied in reduction of the liability otherwise due to Duro.  That is, in effect, what he did.  Having concluded that Samsung was not entitled to the liquidated damages it claimed to set off against any liability to Duro, and having found that Samsung had wrongfully withheld payment of $13,171,349.00 on that basis, it followed that Samsung's payment of $6.66 million on account did not create a balance in its favour which could be set off against Duro's payment claim.

The nature of the adjudicator's determination

1. The trial judge was, with respect, correct to observe that the ambit of Duro's payment claim could not be expanded to include a claim by Duro for the amount of $13,171,349.00 wrongly deducted by Samsung from a previous claim for payment.  Such a course would not be consistent with the scheme of the CCA, and would defeat the temporal limitations imposed by that Act with respect to the commencement of applications for adjudication.  However, that is not what occurred. 

2. As I have pointed out already, in its rejection of Duro's claim for payment, Samsung asserted that it was entitled to set off various amounts in satisfaction of any amount due to Duro.  The adjudicator was obliged to determine those assertions.  In that context, Duro was entitled to assert, as it did, that there was no net credit due to Samsung capable of reducing or extinguishing its entitlements.  Accordingly, Duro was entitled to submit that the payment of $6.66 million by Samsung did not give rise to a net credit balance in Samsung's favour because of the prior wrongful deduction of $13,171,349.00 from an amount due to Duro.  Of course, that did not entitle Duro to convert its shield to Samsung's claim to set-off into a sword in the form of a claim for payment of the difference between Samsung's payment on account of $6.66 million, and the amount wrongly withheld by Samsung.  However, Duro did not attempt to do so, nor did the adjudicator include in his determination any amount in respect of the money previously withheld by Samsung.  What the adjudicator did determine, in the regular exercise of his jurisdiction, was that by reason of the amount wrongly withheld by Samsung, its payment of $6.66 million on account did not give rise to any net credit balance in its favour capable of being set off against Duro's payment claim.  Had the adjudicator not taken that course, his determination would not have been the determination required by the CCA, namely, the amount which Samsung was liable to pay as at the date of the determination, but rather would have been a determination of some other amount.

Set-off issue - conclusion

1. For these reasons, the adjudicator did not exceed his jurisdiction by deciding that Samsung was not entitled to set off the amount of $6.66 million which it had paid on account because Samsung had wrongly withheld an amount of $13,171,349.00 from a payment previously due to Duro.  Ground 1 of Duro's appeal should be upheld, the decision of the trial judge relating to that ground set aside, Samsung's application for judicial review of Mr Machell's determination should be dismissed and Duro's application for leave to enforce that determination allowed, unless Samsung wishes to contend that events which have occurred since the decision at first instance would make it unjust to now grant leave to enforce that determination.

The severance issue

1. The circumstances giving rise to the severance issue have been described earlier in these reasons.  Nothing turns upon the particular circumstances in which the issue arises.  Essentially the issue is one of principle - namely, if the court concludes that an adjudicator exceeded his or her jurisdiction with respect to a portion of the amount determined to be due and owing, does the court have power to sever that part of the determination which was invalid because of jurisdictional error, with the result that those parts of the determination not affected by jurisdictional error remain valid and enforceable?[46]

The trial judge's reasons on the severance issue

[46] In this case being those parts of the determination relating to the car dumper claims and the amount claimed for commissioning of a control system - together amounting to approximately $15.4 million.

1. In his reasons for concluding that it was not open to the court to sever the invalid portion of the relevant determination and grant leave to enforce the determination revised to include only those components not affected by jurisdictional error, the trial judge noted that an adjudicator's determination must comply with the requirements imposed by s 36 of the CCA.[47]  That section requires a determination to be in writing, and to state the amount which is to be paid, and the date on or before which that amount is to be paid.[48]  In his view, the CCA provided for only one determination, not separate determinations in respect of the various components of the payment claim.[49]  It followed that, in his view, the court had no power to substitute a different adjudicated amount to reflect that portion of the determination which was unaffected by jurisdictional error.  That course would, in the trial judge's view, usurp a function which, under the CCA, is to be performed only by an adjudicator.  While it is open to the legislature to confer upon a court undertaking judicial review the power to step into the shoes of the repository of the statutory power, the CCA contains no provision to that effect.[50]

   [47] Primary reasons [415].

   [48] CCA, s 36(a) and s 36(c).

   [49] Primary reasons [415].

   [50] Primary reasons [416].

2. The trial judge noted his own earlier decision to the same effect in Alliance Contracting.[51]  He relied also upon the following passage from the decision of Palmer J in Multiplex Constructions Pty Ltd v Luikens[52] (dealing with the New South Wales security of payment legislation):

   It seems to me that because the Act requires a determination to produce only one amount for payment pursuant to a payment claim served under s 13(1), despite the fact that the payment claim might have comprised numerous claims for separate and distinct items of work, and because the Act does not provide for variation of the adjudicated amount, or the judgment debt, if the adjudicator's decision as to any component part of the adjudicated amount is shown to be liable to be set aside on judicial review, the consequence is that, subject to other discretionary considerations, the whole of the determination must be quashed if jurisdictional error infects any part of the process whereby the adjudication amount has been produced. This is, no doubt, a highly inconvenient result. However, I do not see any means of avoiding it, as the Act presently stands.

   [51] Alliance Contracting [84] - [91].

   [52] Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 [92] (Multiplex Constructions Pty Ltd), at primary reasons [417].

1. The trial judge noted that this passage had been cited with approval in subsequent decisions in New South Wales[53] and in Queensland.[54]

   [53] Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2007] NSWSC 1298 [16]; Anderson Street Banksmeadow Pty Ltd v Helcon Contracting Australia Pty Ltd [2013] NSWSC 657 [9].

   [54] Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd [2012] QSC 373 [61]; Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd [2013] QSC 141 [28] - [29]; James Trowse Constructions Pty Ltd v ASAP Plasterers Pty Ltd [2011] QSC 145 [55].

2. The trial judge also noted that in BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd,[55] the Queensland Court of Appeal unanimously upheld an appeal from a decision of a trial judge dismissing an application for judicial review of a determination on the basis of the respondent providing an undertaking to repay to the applicant that part of the adjudicated amount affected by jurisdiction error.  As the trial judge noted, Muir JA[56] held that once a court determined that an adjudicator's decision was affected by jurisdictional error, the decision was incapable of giving rise to legal consequences.[57]

   [55] BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2013] QCA 394; [2015] 1 Qd R 228 (BM Alliance Coal Operations Pty Ltd).

   [56] With whom Holmes JA and Lyons J agreed.

   [57] BM Alliance Coal Operations Pty Ltd [71].

3. The trial judge then directed his attention to the authorities upon which Duro relied in support of its submissions with respect to severance of the invalid portion of the adjudicator's determination, starting with Gantley Pty Ltd v Phoenix International Group Pty Ltd.[58]  The trial judge distinguished that decision on the basis that the Victorian legislation under consideration[59] expressly provided for the partial validity of an adjudicator's determination.[60]  In this respect the trial judge was in error, as the provisions to which he referred did not apply to the construction contracts the subject of the decision in Gantley, as each contract was entered into prior to the commencement date of those provisions.  It is therefore appropriate to give more detailed consideration to the decision in that case.

   [58] Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 (Gantley).

   [59] Building and Construction Industry Security of Payment Act 2002 (Vic), s 10B, s 23(2A) and s 23(2B).

   [60] Primary reasons [420].

4. The question at issue in Gantley was not the question of whether that portion of a determination affected by jurisdictional error could be severed from the portions unaffected by jurisdictional error, leaving the determination enforceable with respect to those portions. Rather, the question was whether those portions of a payment claim which did not satisfy the requirements of the legislation could be severed from the claim, with the result that the claim nevertheless provided a valid basis for the invocation of the adjudication provisions in the relevant Act. In that context, Vickery J reviewed a number of authorities in differing areas, including authorities relating to the validity of subordinate legislation and warrants. In his view, the common law principles relating to severance should be applied to the assessment of the validity of a payment claim unless excluded by the relevant statute. As there was no such exclusion in the relevant Victorian legislation, in his view that portion of the payment claim which met the requirements of the Act provided a valid basis for the initiation of the adjudication process.

5. In my respectful view, the issue addressed by Vickery J in Gantley is quite different to the issue which arises in this case.  Essentially the question in Gantley was whether the failure to identify the construction work to which the payment claim was said to relate with sufficient specificity had the consequence that the payment claim did not meet the description of such a claim provided by the relevant Act.  That is a very different issue to the question of whether the court has power to, in effect, treat the determination made by an adjudicator as if he or she had made a different determination, limited only to those amounts unaffected by jurisdictional error.  In my respectful view, the process of reasoning followed by Vickery J does not assist in the resolution of the latter question.

6. The trial judge then addressed another decision upon which Duro relied,  namely, Re Narula, Ng & Hammersley; Ex parte Atanasoski.[61]  The trial judge noted that, in that case, Roberts-Smith J observed that:[62]

   where part only of a decision of an administrative tribunal is beyond power, the court may quash that part without interfering with the remainder, provided the bad can be cleanly severed from the good.

   [61] Re Narula, Ng & Hammersley; Ex parte Atanasoski [2003] WASCA 156  (Re Narula) referred to in primary reasons at [421] - [424].

   [62] Re Narula [48].

7. It should be noted that Roberts-Smith J went on to observe that:[63]

   severance must not be used to achieve substantive alteration.

   [63] Re Narula [50].

8. In that context he observed:[64]

   If the impugned decision as a whole is dependant or conditioned upon the impugned element, or is one of several elements which are interrelated in that the flaw which affects the one, necessarily also affects the other or others, then the impugned element cannot be severed.  Where however they can stand apart and the flaw which affects one is confined to it, severance should be preferred.  On judicial review, an administrative decision should not be struck down to any greater extent than the defect has affected it.

   [64] Re Narula [51].

9. As the trial judge pointed out, in Re Narula, the impugned determination was made pursuant to the Workers Compensation and Rehabilitation Act 1981 (WA) and included separate components relating to the worker's physical disability and to his psychiatric disability.  In that context, the court considered that the portion of the determination relating to the physical disability of the worker could be severed from the portion relating to his psychiatric or psychological conditions - the former being quashed leaving the latter standing.

10. The trial judge expressed the view that the decision in Re Narula was distinguishable from the present case, because, consistently with the requirements of the CCA, the adjudicator had made a single determination, to the effect that a single amount was due and payable.[65]  In my respectful view, the trial judge was correct to distinguish the decision in Re Narula on this basis.

    [65] Primary reasons [423] - [424].

11. Finally, the trial judge dealt with a submission by Duro to the effect that the CCA's purpose of 'keeping the money flowing' would be better served by a flexible approach to judicial review which permitted severance.  The trial judge observed that the question which he was required to address was not whether severance would better advance the objects of the CCA but rather whether, on the proper construction of the CCA, the court had power to order that only part of a determination was rendered invalid by jurisdictional error affecting that part.  In his view, consistently with the authorities in other jurisdictions to which he referred, the CCA could not be construed in that manner.[66]

Duro's submissions

[66] Primary reasons [425].

1. In its written submissions, Duro relied upon Gantley[67] and M+W Singapore Pte Ltd v Anstee-Brook,[68] in which Pritchard J observed:[69]

   In a case where partial invalidity is established in judicial review proceedings, it is open to the court to quash only the invalid portion of the decision or order, provided that that portion is severable.

   [67] To which I have already referred - see [48] - [50] above.

   [68] M+W Singapore Pte Ltd v Anstee-Brook [2016] WASC 310 (M+W Singapore Pte Ltd).

   [69] M+W Singapore Pte Ltd [43].

2. In that case, a single application for adjudication was made in respect of three separate claims for payment described as Payment Schedules 27, 28 and 29, being claims made in May, June and July 2015 respectively.  The adjudicator determined the composite amount owing in respect of those three claims, having concluded that the adjudication application was brought within the time specified by the CCA.  The parties agreed, and the court confirmed, that in relation to the claims advanced in Payment Schedules 27 and 28, the adjudication application was not brought within the time specified by the CCA, with the result that the adjudicator had no jurisdiction to make a determination in respect of those claims.  The position was not so clear in relation to the claim made in Payment Schedule 29.  However, the parties submitted that even if the adjudicator had jurisdiction to determine that component of the matters before him, that component of his determination could not be severed from the invalid components of his determination.

3. Pritchard J accepted that proposition.  She observed:[70]

   In my view, the parties are correct to conclude that even if the Respondent did not err in concluding that the adjudication application had been made within 28 days of the payment dispute arising with respect to Payment Schedule 29, nevertheless that part of the Determination which dealt with that particular payment dispute is not severable from the balance of the Determination.  There was one Adjudication Application before the Respondent, although it pertained to Payment Schedules 27, 28 and 29.  The Respondent assessed each of the claims made by Brookfield in those Payment Schedules and reached a conclusion as to the total amount which was the subject of the claims Brookfield had established.  From that total, the Respondent deducted various sums, including (for example) the amounts recovered by Brookfield pursuant to bank guarantees provided by M+W.  By that process, the Respondent concluded that M+W was liable to pay Brookfield $800,397.00.  For that reason, the jurisdictional error which tainted the Determination as it pertained to Payment Schedules 27 and 28 cannot be severed from the Determination as it pertained to Payment Schedule 29.  The whole of the Determination should properly be set aside.

   [70] M+W Singapore Pte Ltd [44].

4. So, the decision in M+W Singapore Pte Ltd does not support Duro's contentions.  Rather, it provides direct support for the approach taken by the trial judge.

5. Duro's reliance in its written submissions upon various decisions specifying the criteria by which severance will be assessed do not, with respect, address the critical question in this case, which is whether a determination made under the CCA can be regarded as comprising separate components, with the result that those components of the determination which are invalid can be severed from those which are valid.  That is precisely the matter which was addressed in M+W Singapore Pte Ltd, and resolved in a manner contrary to Duro's contentions.  Further, as I have noted, the trial judge's conclusion that the CCA empowered an adjudicator to make a determination of the (singular) amount payable in respect of the payment claim was fatal to Duro's submissions with respect to severance.

6. Duro also submitted that the trial judge's insistence upon the need for a specific legislative provision authorising the court to uphold a determination as to part only reversed the normal presumption to the effect that a statute should not be taken to impair a party's rights unless specifically indicated by parliament.  However, the reasoning of the trial judge was to the effect that as the parliament had only empowered an adjudicator to make a single determination of the amount due and owing, specific legislative authority would be required for the court to, in effect, determine that a different amount was due and owing.  That approach does not reverse or interfere with any presumption applicable to statutory construction.

7. In its written submissions Duro also placed reliance upon an observation made by Daubney J in Syntech Resources Pty Ltd v Peter Campbell Earthmoving (Aust) Pty Ltd[71] in which he cited with approval part of the decision of Palmer J in Multiplex Constructions Pty Ltd which I have set out above, including the observation that the obligation of the court to set aside the whole of the determination was 'subject to other discretionary considerations'.  However, with respect, the qualification noted by Palmer J is not related to, and has no bearing upon, the issue of severance presently under consideration.  Rather, the observation reflects, consistent with long‑established authority, that the grant of remedies for judicial review is generally subject to discretionary considerations arising from such things as futility and delay, amongst other considerations.

   [71] Syntech Resources Pty Ltd v Peter Campbell Earthmoving (Aust) Pty Ltd [2011] QSC 293 [44].

8. In oral argument, counsel for Duro referred to the decision in Maxcon Constructions Pty Ltd v Vadasz (No 2).[72]  In that case, Blue J observed:[73]

   If jurisdictional error had been established, it does not follow that the entire adjudication determination was required to be quashed.  When what appears to be a single decision upon analysis is divisible into two separate elements such that as a matter of substance (rather than form) there are really two decisions, the jurisdictional error affects one element but not the other element and the two elements are independent, the element affected by jurisdictional error can be severed from the other element.  Even a single order can be the subject of division into two elements for this purpose.

   [72] Maxcon Constructions Pty Ltd v Vadasz (No 2) [2017] SASCFC 2 (Maxcon).

   [73] Maxcon [222] (Lovell & Hinton JJ agreeing).

9. In the case before the court, Blue J considered that the court would have power to sever the determination made by the adjudicator in respect of those components which were valid, and those which were invalid.  This decision therefore provides clear support for Duro's argument.[74]  As I have noted, all other Australian decisions[75] relating to determinations made by adjudicators under the CCA, or legislation with similar purposes and objects to the CCA, have been to contrary effect.

   [74] Although the case went on appeal to the High Court, because that Court concluded that the adjudicator had not erred, no question of severance of a partially valid award arose - see Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5.

   [75] At least all those which I have been able to identify.

10. Following the passage which I have set out above, Blue J identified the cases upon which he relied to support the proposition advanced.  The first such case was the decision of the High Court in Re Media, Entertainment & Arts Alliance; Ex parte Arnel.[76]  In that case, the Australian Industrial Relations Commission made an award fixing rates and conditions for employees which fixed different terms and conditions for adult employees and younger employees.  In proceedings commenced on behalf of the class of younger employees, the High Court held that there had been a denial of procedural fairness in respect of that component of the award, and that portion of the award was quashed.

    [76] Re Media, Entertainment & Arts Alliance; Ex parte Arnel [1994] HCA 1; (1994) 179 CLR 84 (Ex parte Arnel).

11. The decision in Ex parte Arnel appears, with respect, to be a conventional application of well-established principles relating to severance.  In my respectful view, it does not assist in the assessment of whether the determination of an adjudicator under the CCA[77] is a single determination which, if vitiated by jurisdictional error, is entirely invalid or, as Duro contends, is properly regarded as a composite determination made up of constituent parts, with the result that components of the determination affected by jurisdictional error can be severed from those not so affected.

    [77] Or analogous legislation.

12. Next, Blue J relied upon the decision in Re Narula, which I have considered above.  As I have already indicated, this is another case, like the decision in ex parte Arnel, which illustrates the application of well‑established principles to administrative decisions properly regarded as being severable into discrete components.  Like ex parte Arnel, it is not a decision that assists in the resolution of whether the determination of an adjudicator is such a decision.

13. Blue J relied also on the decisions in Roads and Traffic Authority in New South Wales v Higginson[78], and Director of Public Prosecutions (Cth) v Ede[79]. Each of those cases involved appeals against sentences imposed in criminal proceedings in which part of the sentence imposed was found to exceed the power of the court. However, with respect, each of those decisions can be distinguished on several grounds. First, each was concerned with the proper construction of the powers conferred upon a court determining an appeal by s 20 of the Crimes (Appeal and Review) Act 2001 (NSW). Second, the proper construction of the ambit of the powers conferred upon a court hearing an appeal against a sentence imposed in criminal proceedings is, with respect, a very different question to the question which arises for determination in this case.[80]

    [78] Roads and Traffic Authority in New South Wales v Higginson [2011] NSWCA 151.

    [79] Director of Public Prosecutions (Cth) v Ede [2014] NSWCA 282.

    [80] Or, with respect, the question for determination in Maxcon.

14. Blue J then referred by analogy to the decision of a tribunal or inferior court in the exercise of a jurisdiction to award damages but not interest, positing a scenario in which the tribunal or inferior court had awarded both damages and interest.  Blue J expressed the view that, in such a case, the decision could be regarded as a decision with two elements, one of which could be quashed, leaving the other in force.[81]  It is not clear from the reasons given by Blue J whether he was positing an appeal from the decision in his scenario, or judicial review on the ground of jurisdictional error, but in either case, it does not appear to me, with respect, that the analogy sheds much light upon the proper construction of the jurisdiction conferred upon an adjudicator by the CCA or analogous legislation.

    [81] Maxcon [227].

15. In support for his conclusion that the court could quash part of the determination and remit that part to the adjudicator to determine in accordance with law, Blue J expressed the view that:[82]

    The mere fact that section 22(1)(a) requires an adjudicator to determine 'the amount of the progress payment to be paid' does not entail that the adjudicator cannot make separate decisions leading to a single total amount.

    Apart from the analogy with civil litigation to which I have referred, the process of reasoning said to support this conclusion does not appear to be expressly enunciated.

    [82] Maxcon [231].

16. Immediately following that assertion, Blue J set out the passage from the decision of Palmer J in Multiplex Constructions Pty Ltd which I have set out above.  He noted that the decision had been followed in several decisions at first instance in New South Wales, Queensland and Western Australia.[83]  Significantly in my view, no reference is made in Maxcon to the decision of the Queensland Court of Appeal in BM Alliance Coal Operations Pty Ltd.  Consequently the decision of the court in Maxcon does not deal with the earlier contrary decision of an intermediate Court of Appeal in analogous circumstances.

    [83] Maxcon [232] - [233].

17. Blue J appears to distinguish the first instance decisions in New South Wales, Queensland and Western Australia to which he refers on the basis that those cases involved jurisdictional error, rather than error of law on the face of the record (which was the characterisation of the error in Maxcon).  However, with respect, in the passage I have set out above, Blue J asserts that even if jurisdictional error has been established, if what appears to be a single decision is, upon analysis as a matter of substance not form, really two decisions, severance is available.  That proposition is, with respect, directly contrary to the various decisions to which Blue J referred in three other Australian jurisdictions.

Remitter

1. In Maxcon, Blue J also observed that a court finding jurisdictional error will usually exercise its discretion to remit the matter to the decision-maker to make a decision according to law.[84]  So, one of the options theoretically available to the trial judge in this case would have been to quash the relevant determination and remit the matter to the adjudicator to determine in accordance with the reasons of the trial judge, which would presumably have resulted in a fresh determination limited to the amounts not affected by jurisdictional error.  However, neither party invited the trial judge to take that course, and there may well be issues as to the extent to which that course was available, given the provisions of the CCA relating to the time within which adjudicators must perform their functions.  There would also be issues as to the extent to which the adjudicator might be required to take into account other events which had occurred subsequent to the original determination, in order to arrive at the true amount due and owing as at the time of the fresh determination.  Because these issues were not agitated by either party at first instance or on appeal, it is not appropriate to express any view upon them. 

   [84] Maxcon [219].

2. However, I would observe that precisely the same issues would arise if Duro is correct in its assertion that the court has power to make orders which would have the effect of a revised determination being issued well outside the time limited by the CCA for the making of such a determination and without regard to events which have occurred between the time of the adjudicator's determination and the decision of the court.  Those considerations provide good reason for the court to be slow to attribute to the legislature an intention that a court could make orders which would, in effect, amount to the issue of a revised determination at a later date without regard to intervening events.

3. In oral submissions, counsel for Duro relied upon s 10 of the Interpretation Act 1984 (WA), which provides that words in the singular number include the plural, as support for the proposition that the conferral of power upon an adjudicator to make a 'determination' included the power to make 'determinations'.[85]  However, that section, like the other provisions in the Interpretation Act, does not apply if there is something in the subject or context of the relevant legislation which would be inconsistent with the application of the section.[86]  Because the CCA requires an adjudicator to determine the amount which is due and owing, a construction of the Act which would permit separate determinations would be inconsistent with its express terms. Further and in any event, even if the adjudicator had power to make separate determinations, in this case he did not purport to exercise that power. Rather, he made a single composite determination.

Samsung's submissions

[85] Appeal ts 79.

[86] Interpretation Act 1984 (WA), s 3(1)(b).

1. In its written submissions, Samsung relied, unsurprisingly, on the process of reasoning enunciated by the trial judge.  It drew attention to the cases in which courts had relied upon an express power to quash only part of an order,[87] some of which were relied upon by Blue J in Maxcon.

   [87] Director of Public Prosecutions (Cth) v Ede; Bros Bins Systems Pty Ltd v Industrial Relations Commission of New South Wales [2008] NSWCA 292; (2008) 74 NSWLR 257; Roads and Traffic Authority of NSW v Higginson.

2. In its written submissions, Samsung emphasises the proposition that the exercise of judicial review does not, of itself, empower the court to alter or remake the administrative decision - administrative power is entrusted to the executive arm of government and not to the courts.  In its submission, the courts should not, in the absence of express statutory authority, use some process of 'severance' to, in effect, usurp the administrative authority of a statutory decision‑maker. 

3. In oral submissions, counsel for Samsung referred the court to the recent decision in INPEX Operations Australia Pty Ltd v JKC Australia LNG Pty Ltd (No 2).[88]  In that case, Kelly J made orders having the effect of quashing the decision of the adjudicator, after which the defendant submitted that the court should remit the application to the adjudicator for him to perform his function under the relevant legislation of the Northern Territory.  After considering the practical issues that would arise in connection with such a remitter and the temporal constraints imposed by the legislation, Kelly J declined to make the order sought.  As I have already noted, the considerations upon which Kelly J relied to conclude that the matter should not be remitted to the adjudicator would be equally applicable if, as Duro contends, the court has power to make orders which would, in effect, result in a revised determination taking effect outside the time specified by the legislation and without regard to events occurring between the original determination and the decision of the court.  However, quite properly, counsel for Samsung drew the court's attention to a series of decisions at first instance in Victoria[89] in which matters were remitted to adjudicators for redetermination, albeit in a different statutory context.[90]  The court's attention was also drawn to a decision at first instance in New South Wales[91] in which an application to remit the matter to the adjudicator for redetermination was refused for various reasons.

   [88] INPEX Operations Australia Pty Ltd v JKC Australia LNG Pty Ltd (No 2) [2017] NTSC 61.

   [89] All decisions of Vickery J.

   [90] Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd [2010] VSC 199; (2010) 30 VR 141; Maxstra Constructions Pty Ltd v Joseph Gilbert [2013] VSC 243; SSC Plenty Road v Construction Engineering (Aust) (No 2) [2015] VSC 680.

   [91] Richard Crookes Construction Pty Ltd v CES Projects (Aust) Pty Ltd (No 2) [2016] NSWSC 1229 (McDougall J).

4. Samsung also relied upon the dissenting judgment of Hayne J in Plaintiff M 79/2012 v Minister for Immigration and Citizenship[92] in which he observed that because the impugned decision of the minister was one composite decision, it could not be severed into two separate decisions without radically recasting its nature and effect.  Accordingly, the entire decision had to be quashed and severance was not available.[93]

   [92] Plaintiff M 79/2012 v Minister for Immigration and Citizenship [2013] HCA 24; (2013) 252 CLR 336 (Plaintiff M 79/2012).

   [93] Plaintiff M 79/2012 [83]. The issue of severance was not considered by the other members of the court.

5. Counsel for Samsung also submitted that the reliance which Blue J placed upon the dissenting judgment of Walsh J in Cheatley v The Queen[94] was misplaced, given the very different circumstances of that case, which related to the power to quash only some of the orders made by a subordinate court.  I respectfully agree.

Disposition

[94] Cheatley v The Queen [1972] HCA 63; (1972) 127 CLR 291, 308 - 309.

1. The general principles relating to severance are well established and have been enunciated in the various cases to which the parties have referred.  However, the critical question for determination concerns the application of those general principles to the particular circumstances of a determination made pursuant to the provisions of the CCA.  In that context, decisions with respect to the application of those general principles in other statutory contexts will be of limited assistance. 

2. The nature and character of the statutory function conferred upon an adjudicator by the CCA is critical to the application of the general principles established by the cases to the question arising under the CCA.  In that context, there have been a number of decisions in Western Australia, New South Wales and Queensland (including a decision of the Queensland Court of Appeal) in which it has been held that the determination required of an adjudicator, being of the amount due and owing, is a single composite determination which cannot, and should not, be regarded as made up of severable and divisable components.  In my view those decisions are correct and should be followed by this court.

3. In arriving at this conclusion I have given full weight and respect to the contrary decision of the Full Court of the Supreme Court of South Australia in Maxcon.  However, in my respectful view, that decision places too great reliance upon general principles enunciated in other statutory contexts, and pays insufficient attention to the particular character and nature of a determination made by an adjudicator under the relevant legislation.  In my respectful view, the conclusion that the court has power to make orders which would, in effect, result in a different determination to that made by an adjudicator, taking effect at a time outside the time constraints imposed by the CCA, and without regard to any events which had taken place between the original determination and the decision of the court, would result not only in curial usurpation of the powers and functions conferred exclusively upon an administrative decision-maker, but would also be contrary to the general scheme and purpose of the legislation. 

4. Although the State and Territory legislation dealing with interim payments under construction contracts cannot be described as uniform national legislation to which the principles of deference enunciated in Australian Securities Commission v Marlborough Goldmines Ltd[95] apply, I note that I am faced with conflicting decisions of two intermediate Courts of Appeal.[96]  In my respectful view, the decision of the Queensland Court of Appeal in BM Alliance Coal Operations Pty Ltd should be followed in preference to the decision in Maxcon.

Conclusion - severance issue

[95] Australian Securities Commission v Marlborough Goldmines Ltd [1993] HCA 15; (1993) 177 CLR 485.

[96] Maxcon and BM Alliance Coal Operations Pty Ltd.

1. For these reasons, the trial judge was correct to reject Duro's submission that he had power to sever that part of Mr Loots' determination which was invalid, which would result in a different determination being made in respect of those components of Duro's claim which were unaffected by jurisdictional error.  Ground 2 of Duro's appeal should be dismissed.  The decision of the trial judge setting aside that

determination and refusing Duro's application for leave to enforce what it asserted to be the components of the determination which were unaffected by jurisdictional error should be affirmed. 

Samsung's notice of contention

1. Samsung has served a notice of contention in which it asserts that if either of Duro's grounds of appeal are upheld, and its appeal against the decision of the trial judge rejecting a particular aspect of Samsung's applications for judicial review is upheld,[97] the decision of the trial judge with respect to the determinations the subject of this appeal should be upheld for the same reason.  Because of my view that Samsung's appeal against the decision of the trial judge relating to its applications for judicial review should be dismissed, one of the hypotheses upon which the notice of contention is advanced is not made out, and, on my view of Samsung's appeal, the notice of contention should be dismissed for that reason.

   [97] Samsung C&T Corporation v Duro Felguera Australia Pty Ltd [2018] WASCA 27.

Summary and Conclusion

1. Ground 1 of Duro's appeal relating to what I have described as the 'set‑off issue' should be upheld.  The decision of the trial judge on that aspect of the matters before him should be set aside.  Samsung's application for judicial review of Mr Machell's determination should be dismissed and Duro's application for leave to enforce that determination allowed, unless Samsung wishes to contend that events which have occurred since the decision at first instance would make it unjust to now grant leave to enforce that determination.

2. Ground 2 of Duro's appeal relating to what I have described as the 'severance issue' should be dismissed, and the decision of the trial judge allowing Samsung's application for judicial review, quashing the determination made by Mr Loots, and dismissing Duro's application to enforce that determination should be affirmed.

3. Samsung's notice of contention should be dismissed.

   BUSS P & MURPHY JA: 

Introduction

1. This is an appeal by the appellant (Duro) against aspects of a decision of Beech J in Samsung C&T Corporation v Loots (primary

decision).[98]  The primary decision dealt with, amongst other things, challenges by the respondent (Samsung) to various determinations in favour of Duro by adjudicators under the Construction Contracts Act 2004 (WA) (the Act).

[98] Samsung C&T Corporation v Loots [2016] WASC 330 (primary decision).

1. There is a related appeal by Samsung against the primary decision in CACV 104 of 2016.[99]  We will refer to the present appeal as the 'Duro Appeal' and the related appeal as the 'Samsung Appeal'.

   [99] Samsung C&T Corporation v Duro Felguera Australia Pty Ltd [2018] WASCA 27.

2. The background to and arguments in the Duro Appeal are set out in the reasons of Martin CJ.  It is unnecessary to repeat them here, save to the extent necessary to provide a better understanding of these reasons.  As his Honour has indicated, there are effectively two issues in the appeal, described by his Honour as the 'set‑off issue' (raised by ground 1 of the appeal) and the 'severance issue' (raised by ground 2 of the appeal).  There is also a notice of contention by Samsung.

3. It is convenient to deal with the severance issue first. 

The severance issue - overview

1. In broad terms, as Martin CJ has indicated, Adjudicator Loots, in a determination dated 3 March 2016 described by the primary judge as the 'Third Determination', determined that Samsung was liable to pay to Duro $49,642,958.72 (plus GST).[100]  That amount was made up of three components:[101]

   1.an amount said by Duro to have been certified as payable by Samsung but 'set off' in the sum of $34,186,114.38;

   2.amounts claimed in respect of the 'car dumper claims' totalling $14,740,345.92; and

   3.part of an amount claimed for commissioning of a control system in the sum of $716,498.42.

   [100] Primary decision [26] ‑ [27].

   [101] Primary decision [144], [166]; GB 479.

2. As to the first of those components, the sum of $34,186,114.38 included the sum of $32,428,183, rounded down by the judge to $32.4 million.[102] 

   [102] Primary decision [187] ‑ [189], [199].  All figures in these reasons are approximate.

3. The primary judge found that Adjudicator Loots exceeded his jurisdiction in finding that the amount of $34,186,114.38 was payable to Duro.  That was because the sum of $32.4 million was included in the amount of $34,186,114.38, and Adjudicator Loots committed jurisdictional error in finding that Samsung was liable to pay Duro the amount of $32.4 million.[103]

   [103] Primary decision [205] ‑ [228].

4. There was no challenge to the Third Determination with respect to the other two amounts referred to in 2 and 3 of [95] above.  The other two amounts are entirely separate and discrete from the claim in respect of which the adjudicator exceeded his jurisdiction.

5. The primary judge held that the other two amounts were not severable from the adjudicator's decision and that the whole of the adjudicator's decision was invalid and of no force or effect.[104]

   [104] Primary judge's orders, par 7, BB 2 ‑ 3.

6. The primary judge's reasons included the following:[105]

   In my view, in proceedings for judicial review of an adjudication determination, the court has no power to substitute a different adjudicated amount to reflect that part of the amount that is unaffected by jurisdictional error. To do that would be to exercise a statutory power that is given only to an adjudicator. In proceedings for judicial review, it is not the court's function, and the court has no power, to step into the shoes of the repository of the statutory power the exercise of which is the subject of judicial review. Nothing in the Act gives the court any power to make a varied or substituted determination.

   The statement of the position that I have just made reflects views I expressed in Alliance Contracting v James.[106]  It also reflects the position adopted in other States to security of payment legislation in the absence of any specific legislative provision to the contrary.  In Multiplex Constructions Pty Ltd v Luikens,[107] Palmer J said as follows in relation to the New South Wales security of payment legislation:

   It seems to me that because the Act requires a determination to produce only one amount for payment pursuant to a payment claim served under s 13(1), despite the fact that the payment claim might have comprised numerous claims for separate and distinct items of work, and because the Act does not provide for variation of the adjudicated amount, or the judgment debt, if the adjudicator's decision as to any component part of the adjudicated amount is shown to be liable to be set aside on judicial review, the consequence is that, subject to other discretionary considerations, the whole of the determination must be quashed if jurisdictional error infects any part of the process whereby the adjudication amount has been produced. This is, no doubt, a highly inconvenient result. However, I do not see any means of avoiding it, as the Act presently stands.

   That passage has been cited with approval and adopted in many cases in New South Wales and in Queensland.  Thus, in cases concerned with security of payment legislation in other States, it has been consistently held that, absent specific legislative provision to the contrary, an adjudication determination that a party is liable to pay a specified amount that is affected by jurisdictional error is void in its entirety, even if the error infected only an identifiable part of the determined amount. (emphasis added)

   [105] Primary decision [416] ‑ [418].

   [106] Alliance Contracting Pty Ltd v James [2014] WASC 212.

   [107] Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140.

7. Duro contends that the primary judge erred in finding that severance was not permissible in respect of Adjudicator Loots' determination of the amounts referred to in 2 and 3 of [95] above. 

8. Appellate decisions in relation to legislation in other States dealing with the same subject matter and seeking to effectuate, in broad terms, the same purposes as the Act[108] indicate different approaches to the question of partial validity. The decisions are BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd[109] and Maxcon Constructions Pty Ltd v Vadasz (No 2).[110] Only the first of those was available when the primary judge delivered his reasons for judgment in this matter.

   [108] Although the legislation in other States is not the same as the Act.

   [109] BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2013] QCA 394; [2015] 1 Qd R 228.

   [110] Maxcon Constructions Pty Ltd v Vadasz (No 2) [2017] SASCFC 2; (2017) 127 SASR 193.

9. As the primary judge noted,[111] in BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd, the appellant alleged that an adjudicator's decision was vitiated by two jurisdictional errors, and sought a declaration that the decision was void.  There, the primary court upheld the claim in respect of only one of the errors, but refused to make a declaration of invalidity.  Instead, the primary court dismissed the application upon an undertaking by the respondent to repay to the appellant the portion of the adjudicated amount in respect of which the adjudicator had made a jurisdictional error.  The Queensland Court of Appeal unanimously upheld an appeal from that decision.  The court held that the appellant was entitled to a declaration of invalidity of the whole of the adjudication.  Muir JA (with whom Holmes JA & Lyons J agreed) held that once a court determines that an adjudication decision is affected by jurisdictional error, that decision cannot give rise to legal consequences.

   [111] Primary decision [419].

1. Re Skirving was applied by this court in Re Narula, Ng & Hammersley; Ex parte Atanasoski,[148] although that case concerned an error of law on the face of the record and not jurisdictional error.[149]  See also R v Hannan; Ex parte Abbott.[150]  In that case, Kearney J referred to Cheatley for the proposition that certiorari may issue to quash a penalty only, leaving a finding of guilt to stand.[151]  His Honour said, however, that in the type of case before him, 'in general, the whole conviction of the prosecutor - in the combined sense of the finding that the charge was proved and the penalty imposed - should be quashed'.[152]

   [148] Re Narula, Ng & Hammersley; Ex parte Atanasoski [2003] WASCA 156 [49] ‑ [51].

   [149] Narula [53].

   [150] R v Hannan; Ex parte Abbott (1986) 83 FLR 177.

   [151] Hannan (181 ‑ 182).

   [152] Hannan (182); see also Anderson v Judges of the District Court of New South Wales [1992] 27 NSWLR 701, 712 ‑ 713.

2. The case of Coco v The Queen[153] concerned a purported approval by a judge of the installation of a listening device under invasion of privacy legislation. Mason CJ, Brennan, Gaudron and McHugh JJ said:[154]

   It follows from what we have already said that [the judge] misapprehended the nature and scope of the power. By so doing, he misconstrued the statute which gave him jurisdiction, addressed an irrelevant consideration and exceeded his jurisdiction. This error might also be characterized as an error on the face of the record.

   The extraneous factor to which [the judge] had regard, namely, the perceived necessity to approve entry on to private property for the purpose of installing, maintaining, servicing and retrieving listening devices, not only contributed to the making of the decision to approve the use of the listening devices but it also took the form of an invalid authorization to enter on to private property. No doubt in some circumstances it is possible to disregard that part of the decision that goes beyond power and treat as valid that part of the decision which is within power. But that must become a much more contentious exercise when the invalid part of the decision has influenced the making of the valid part of the decision. In this case, the approval is expressed in such a way as to make it appear that authorization to enter private property was an integral and essential element in the approval to use the listening devices. So much is made clear by the reference to installation in both the paragraph which constitutes the approval and the first condition. In this situation there is no scope for speculation, on the assumption that speculation is legitimate, about what [the judge] would have done had he appreciated that authorization of entry on to private property was beyond power.

   If it were necessary to consider the question from the viewpoint of severance, we would come to the conclusion that it is not possible to sever. The fact that what is bad is an integral and essential element of what is good leads to the conclusion that the approval is wholly void. (emphasis added)

   [153] Coco v The Queen (1994) 179 CLR 427.

   [154] Coco (443 ‑ 444).

3. In Re Media, Entertainment and Arts Alliance; Ex parte Arnel,[155] a decision of the Industrial Relations Commission was challenged on the basis that it was reached in breach of the requirements of procedural fairness.  The High Court upheld the challenge.  Mason CJ, Brennan, Dawson and Gaudron JJ said:[156]

   The decision was … reached in breach of the requirements of procedural fairness, which requirements are an essential feature of arbitral power.  Accordingly, prohibition should issue to the members of the Full Bench directing them not to act on that decision so far as it affects the entitlement, if any, of the applicants to put a case for leave to intervene and, if granted, to put an argument with respect to differential rates for junior employees with twelve months service.  To the same extent, certiorari should issue to quash the decision.  (emphasis added)

   [155] Re Media, Entertainment and Arts Alliance; Ex parte Arnel (1994) 179 CLR 84.

   [156] Re Media (94).

4. The orders made by the court included the following:[157]

   Order that a writ of certiorari issue to the first respondents quashing the decision of 19 May 1993 to the extent that that decision affected the entitlement of the applicants to put a case for leave to intervene with respect to differential rates for junior employees.  (emphasis added)

   [157] Re Media (99).

5. In Buzzacott v Minister for Sustainability, Environment, Water, Population and Communities,[158] a condition imposed by a Minister on an approval was held to be unauthorised and invalid under (relevantly) the general law.  The Full Court said:[159]

   It is well established that an invalid condition may be severable where it is not fundamental to the whole of the approval, but where it is it cannot be severed and the whole of the approval is invalid: Kent County Council v Kingsway Investments (Kent) Ltd [1971] AC 72 at 90 per Lord Reid and 102-103 per Lord Morris; Parramatta City Council v Kriticos [1971] 1 NSWLR 140; Winn at [212] ‑ [216] per Stein JA (with whose reasons for judgment Spigelman CJ at [1] agreed); Kindimindi at [56] per Basten JA.[160] (emphasis added)

   [158] Buzzacott v Minister for Sustainability, Environment, Water, Population and Communities [2013] FCAFC 111; (2013) 215 FCR 301 [253] ‑ [256].

   [159] Buzzacott [255] .

   [160] Kindimindi Investments Pty Ltd v Lane Cove Council [2006] NSWCA 23.

Severance - disposition

1. In this case the question is not whether the Act, including having regard to the presumption referred to in [122] above, is to be read as a whole and indivisibly, but whether the Act, properly construed, reveals a legislative intention that an adjudicator's determination under s 31(2)(b) as recorded in or evidenced by his or her decision under s 36, is to operate as an organic and indivisible whole. There is no common law presumption that it does operate that way. Nor does the Act contain an express provision to that effect.

2. The question of legislative intention is to be understood in the manner explained by French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ in Lacey v Attorney‑General for the State of Queensland:[161]

   The objective of statutory construction was defined in Project Blue Sky Inc v Australian Broadcasting Authority as giving to the words of a statutory provision the meaning which the legislature is taken to have intended them to have. ... The legislative intention there referred to is not an objective collective mental state.  Such a state is a fiction which serves no useful purpose.  Ascertainment of legislative intention is asserted as a statement of compliance with the rules of construction, common law and statutory, which have been applied to reach the preferred results and which are known to parliamentary drafters and the courts. …

   The application of the rules will properly involve the identification of a statutory purpose, which may appear from an express statement in the relevant statute, by inference from its terms and by appropriate reference to extrinsic materials.  The purpose of a statute is not something which exists outside the statute.  It resides in its text and structure, albeit it may be identified by reference to common law and statutory rules of construction.  (footnotes omitted)

   [161] Lacey v Attorney‑General for the State of Queensland [2011] HCA 10; (2011) 242 CLR 553 [43] ‑ [44].

3. Similarly, in Saeed v Minister for Immigration and Citizenship,[162] French CJ, Gummow, Hayne, Crennan and Kiefel JJ said:

   As Gummow J observed in Wik Peoples v Queensland, it is necessary to keep in mind that when it is said the legislative 'intention' is to be ascertained, 'what is involved is the "intention manifested" by the legislation.'  (footnote omitted)

   [162] Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252 [31].

4. We are satisfied that the Act, on its proper construction, does not manifest an intention that an adjudicator's determination under s 31(2)(b), as recorded in or evidenced by his or her decision under s 36, is to operate (if at all) as an organic and indivisible whole. Our reasons are as follows.

5. First, the Act recognises that an adjudication of a 'payment dispute' may, and perhaps typically will, involve the determination of identifiable, divisible, amounts claimed. In other words, the essential statutory task of the adjudicator will commonly involve the adjudication and determination of divisible amounts.

6. Given that the statutory task will commonly involve the adjudication and determination of divisible amounts, and that where there is one final 'amount to be paid' (within the meaning of s 36(c)(i)), it is no more than the mathematical result of the determination of divisible amounts, it is, prima facie, doubtful that the legislature intended that the final, mathematical, result should itself be treated as an organic and indivisible whole.

7. In relation to this first point, the following matters seem to us to be of significance:

   1.A 'payment dispute' includes, and will no doubt commonly apply to, a dispute in respect of a 'payment claim'.[163]

   2.The definition of 'payment claim' includes the claim made under a construction contract for 'payment of an amount' in relation to the performance of the contractor's 'obligations'.[164]

   3.The phrase 'payment of an amount' is apt to include a reference to payment of 'amounts',[165] particularly in this context where, it may be inferred, the legislature understood that itemised progress claims are typically submitted for multiple aspects of work done by a contractor.

   4.Each itemised amount in a progress claim by a contractor may itself be a 'payment claim' as defined in the Act.[166] It is, however, doubtful that the Act requires (although it does not forbid) each such itemised amount to be treated as its own separate 'payment claim'. Were it otherwise, the contemporaneous adjudication of each such disputed amount in a progress claim would depend upon the operation of s 32(3)(b) and (c) of the Act. That would appear an unlikely intention to impute to Parliament. Rather, it appears that s 6(a) and pt 3 of the Act as a whole contemplate that a number of divisible amounts claimed for various aspects of work done in a progress claim may be added together and treated as part of the one 'payment claim', and thereby form part of the one 'payment dispute' if the progress claim is rejected by the principal.[167]

   5.The foregoing conclusion does not mean that a 'payment dispute' involving an itemised progress claim is somehow to be determined by an adjudicator as a whole without regard to its divisible components. On the contrary, s 31(2)(b), in its ordinary meaning and context, requires the adjudication of each separate component of a 'payment dispute' involving unpaid amounts pursuant to a progress claim. The determination of the 'amount to be paid' within the meaning of s 31(2)(b)(i) in its application to a progress claim comprising divisible amounts, is a mathematical exercise involving the totalling of each component amount for which a party is found to be 'liable to make a payment' within the meaning of s 31(2)(b). It will also involve the mathematical exercise of netting off where divisible amounts are determined as flowing each way.

   [163] Act, s 6(a).

   [164] Act, s 3.

   [165] Interpretation Act 2004 (WA), s 10(c)

   [166] Paragraph (a) of the definition of 'payment claim'.

   [167] cf O'Donnell Griffin Pty Ltd v John Holland Pty Ltd [2009] WASC 19 [76] ‑ [80].

8. Secondly, other provisions of the Act operate on the basis that a determination may involve a determination of divisible amounts with different consequences. Under s 33, Parliament evidently contemplates that where individual amounts comprise the 'amount to be paid' in s 31(2)(b)(i), some may, and others may not, be appropriately the subject of an order for interest. Also, the reference to 'the amount to be paid and the date on or before which it is to be paid' in s 36(c)(i) is apt to refer to the 'amount or amounts' to be paid[168] and, for each such amount, the date on or before which it is to be paid. Section 36(c)(i) contemplates that different amounts the subject of a determination may have different payment dates.

   [168] Interpretation Act 2004 (WA), s 10(c).

9. Thirdly, the effective operation of s 38 ‑ 43 of the Act does not depend upon the adjudicator's determination operating as an organic and indivisible whole. Each of those provisions operates effectively if a determination is confined to the amount or amounts properly determined by the adjudicator to be paid, excluding any severable amount or amounts purportedly determined in excess of jurisdiction.

10. Finally, and more generally, it is an Act, according to the long title, 'to provide a means for adjudicating payment disputes arising under construction contracts'. In relation to the adjudication of 'payment disputes' the Act is plainly beneficial legislation. Adjudicators may, but need not, be legally qualified and the prospect of jurisdictional error occurring at times is perhaps unavoidable. In this context, and given the relatively short time frames under which the adjudicator must work, and the 'primary aim of keeping the money flowing down the contractual chain',[169] the Parliamentary intention to be inferred is that decisions of adjudicators, to the extent that they deal with the adjudication of a 'payment dispute', within the meaning of s 31(2)(b), are to have the fullest operation.

    [169] Perrinepod [87].

11. In this case, Adjudicator Loots' determination that Samsung was liable to Duro in an amount of $34,186,114.38 is plainly severable, in accordance with the principles referred to earlier, from the other amounts the subject of his determination.  The invalid part of the adjudicator's determination did not influence the making of the valid part of his determination.  The invalid component was not an integral or essential element of the valid component or the determination as a whole.  Certiorari is available to quash the determination to the extent that the amount of $49,642,958.72 includes the amount of $34,186,114.38.  An order for mandamus would be an exercise in futility given the arithmetical nature of the correction involved.  

12. An order to that effect involves, at most, a 'notional interference'[170] with Adjudicator Loots' Third Determination.  In any event, as Deane J observed in Re Gray; Ex parte Marsh:[171]

    Mandamus and prohibition involve no intermeddling in, or assumption of, the jurisdiction of the court to which they are directed.  Where certiorari encompasses the making of an order which should have been made by a court to which the writ is directed, it involves the doing of what is within that court's jurisdiction.  Even in the ordinary case where certiorari is directed merely to quash, it will commonly involve an element of interference with the actual exercise of jurisdiction conferred on a court to which the writ is directed if that court is empowered to determine questions of law:  eg certiorari to correct an error of law on the face of the record even though it does not go to jurisdiction. (emphasis added)

    [170] Adopting the language of Basten JA (McColl and Simpson JJA agreeing), albeit in a different context, in Torbey Investments Corporated Pty Ltd v Ferrara [2017] NSWCA 9 [101].

    [171] Re Gray; Ex parte Marsh (1985) 157 CLR 351, 386.

13. An order to the above effect, in substance, gives effect to Adjudicator Loots' own determination of what was in law the relevant (and only) 'payment dispute' before him.[172]

    [172] cf the observations in SS Kalibia referred to in [128] above.

14. We now turn to deal with the set‑off issue.

The set-off issue

1. The set‑off issue relates to what the primary judge described as the 'Second Determination', concerning the 'November NC Progress Claim'.[173]   The 'Second Determination' is a determination of Adjudicator Machell on 10 February 2016.[174] 

   [173] Primary decision [23] ‑ [25], [260] ‑ [262].

   [174] Primary decision [25].

2. In these reasons we refer to the 'November NC Progress Claim' as the 'November NC Claim' for greater ease of differentiation from what the primary judge described as the 'Main November Progress Claim'.[175] 

   [175] Primary decision [262].

3. We agree with the Chief Justice, generally for the reasons he gives, that the primary judge erred in finding that Adjudicator Machell exceeded his jurisdiction in finding that Samsung was not entitled to set off, as against the amounts claimed by Duro in the November NC Claim, an amount in respect of an advance payment of $6.66 million.  We would also make the following specific observations on this aspect of the appeal.

Facts

1. For present purposes, the material facts may be summarised as follows.  Prior to Duro's November NC Claim, Samsung had certified in earlier Progress Certificates that Duro was liable to pay it $64.2 million for liquidated damages.[176]

   [176] See the October Progress Certificate GB 437 and the November Progress Certificate GB 451. 

2. The sum of $64.2 million comprised two amounts.  One was for $51 million arising in the month of October 2015 which remained unpaid.[177]  The other was for $13.2 million which had been withheld and applied by Samsung in the past against amounts otherwise due to Duro.[178] 

   [177] Primary decision [182]; GB 437.

   [178] Primary decision [267]; GB 437.

3. Further, Duro had a liability to Samsung for $6.66 million in respect of a payment in advance on account.[179] 

The adjudicator's decision and Samsung's challenge

[179] Primary decision [266]; GB 354.

1. In the 'Second Determination' Adjudicator Machell found, in effect, the following:

   1.Samsung is prima facie entitled to set off an amount of $6.66 million in respect of an advance payment made on account, against any money otherwise found to be due to Duro in its November NC Claim.[180]

   2.Samsung has no contractual entitlement to liquidated damages under the interim contract, and Samsung has no entitlement to set off the sum of $51 million allegedly remaining outstanding for liquidated damages.[181]

   3.Further, Samsung had incorrectly withheld $13.2 million for liquidated damages under previous Progress Certificates.[182]

   4.Despite Samsung's prima facie entitlement, Samsung had no actual right to set off the sum of $6.66 million against Duro's November NC Claim.  That was because, in effect, Samsung already owed Duro $13.2 million by reason of the wrongful set off of liquidated damages in the earlier Progress Certificates.[183]

   [180] Primary decision [266]; GB 354 ‑ 355.

   [181] GB 347, 350, 353.

   [182] GB 355.

   [183] GB 355.

2. Samsung alleged in the primary proceedings that by bringing to account Samsung's liability of $13.2 million (as found by the adjudicator), the adjudicator had exceeded his jurisdiction.[184]

Issue

[184] Primary decision [38(h)], [260], [273] ‑ [274]. It is not contended by Samsung that as a matter of fact, the parties' submissions to the adjudicator only addressed the outstanding sum of $51 million for liquidated damages, and did not extend to the question of any liability of Samsung for the repayment of the amount of $13.2 million previously withheld.

1. The issue before the primary judge was whether Adjudicator Machell exceeded his jurisdiction under s 31(2)(b) of the Act by finding, in effect, that Samsung had no entitlement to set off the claim for $6.66 million against Duro's November NC Claim, because Duro had its own pre‑existing entitlement to set off, as against its $6.66 million liability to Samsung, an amount of $13.2 million unlawfully withheld by Samsung for liquidated damages pursuant to earlier Progress Certificates.

The primary judge's reasons

1. The primary judge held that Adjudicator Machell's decision was affected by jurisdictional error.  His Honour said:[185]

   In the adjudication, Samsung claimed that it was entitled to set-off an amount for liquidated damages against amounts it owed to Duro in relation to the [November NC Claim]. The adjudicator determined that Samsung was not entitled to such a set-off. In so determining, the adjudicator was performing his statutory function under s 31(2)(b). What the adjudicator was not empowered to do was to apply his conclusion that Samsung was not entitled to a set-off for liquidated damages to Samsung's response to an earlier, separate payment claim, and then to credit Duro with the amount of that 'wrongful' set-off against Samsung's right to credit for its payment on account. 

   The scheme of the Act is founded on the fact that contractors under construction contracts will often make regular claims for progress payments. Generally, each progress claim will be a separate payment claim, the rejection or non‑payment of which gives rise to a separate payment dispute. It is an element of the scheme of the Act that disputes in respect of each payment claim are kept separate; each dispute has its own time limit under s 26(1) and each is to be the subject of a separate adjudication, unless the parties consent under s 32(3)(b). It is not open to an adjudicator to find that the amount payable by a party in relation to the payment claim before the adjudicator is to be increased (or decreased) on the ground that the adjudicator considers that a party wrongfully denied liability (or wrongfully made a claim) in relation to an earlier, different payment claim. That is what the adjudicator did in this case.

   …

   For the reasons I have given, the adjudicator's statutory function under s 31(2)(b) did not empower him to bring to account an amount in favour of one party on the ground that the other party had wrongfully claimed a set‑off in its response to an earlier and separate payment claim. (emphasis added)

Disposition

[185] Primary decision [280], [281], [284].

1. In our respectful view, the primary judge erred in this regard.

2. As part of the determination under s 31(2)(b), the adjudicator was required to determine whether Samsung was entitled to set off Duro's liability of $6.66 million against the amounts claimed by Duro in the November NC Claim.

3. Even if Samsung's (asserted) entitlement to withhold $13.2 million for liquidated damages under previous Progress Certificates had not been challenged previously, all that meant was that Duro had not previously sought repayment of that money, or a credit for that money, in earlier payment claims. 

4. If Samsung did not subsequently assert an entitlement to credit for other amounts, against which Samsung's (alleged) liability to Duro for having incorrectly withheld $13.2 million could be set off, then the risk to Duro for not previously challenging Samsung's retention of $13.2 million would be that Duro's cash flow would remain reduced by $13.2 million.

5. However, the Act does not, in terms or by necessary implication, preclude in these circumstances a contractor from raising an (alleged) existing liability of the principal in respect of the performance of the contractor's obligations, by way of set off, against a sum to which the principal, in response to a subsequent payment claim, alleges it is entitled to by way of a credit.

Samsung's notice of contention

Ground 1

1. By ground 1 of its notice of contention, Samsung refers to findings by the primary judge to the effect that the 'Second Determination' involved the determination of claims for work which are excluded from the definition of 'construction work' by s 4(3)(c) of the Act.[186]  The relevant findings relate to claims for amounts of €182,690.45 and $AUD333,119.[187]

   [186] Samsung's amended notice of contention, pars 1, 3 ‑ 6, WB 89 ‑ 90.

   [187] Primary decision [25], [387] ‑ [392].

2. Samsung contends that, even if Duro succeeds on ground 1 of the Duro Appeal, if Samsung succeeds in its appeal (ie, the Samsung Appeal), Adjudicator Machell's adjudication is affected by jurisdictional error and is void in any event.

3. Duro does not challenge the primary judge's findings referred to above.  Nor does Duro contend that Adjudicator Machell's decision is severable.  Given that Samsung should, in our view, succeed on ground 2 in the Samsung Appeal, we would uphold ground 1 of Samsung's notice of contention. 

Ground 2

1. By ground 2 of its notice of contention Samsung contends that if Duro succeeds on ground 2 in Duro's Appeal as to severance, and Samsung succeeds in the Samsung Appeal, then, even if there can be severance of the kind contended for in ground 2, 'there can be no severance to deal with the extent to which the subject of the Third Determination [by Adjudicator Loots] concerned a claim for payment that included work excluded under s 4(3) of the [Act] and the court should find that the work the subject of the Third Determination included a substantial part that was not capable of giving rise to a payment claim at all'.[188]

   [188] Samsung's notice of contention, par 2, WB 89.

2. The notice of contention in this regard proceeds on the assumption that Samsung succeeds on ground 1 of the Samsung Appeal, and that Adjudicator Loots was required to dismiss Duro's application for adjudication under s 31(2)(a)(ii) of the Act.[189]

   [189] Samsung's submissions, par 11, WB 91.

3. As Samsung has not succeeded on that point in the Samsung Appeal, this aspect of the notice of contention should be dismissed.

Final orders

1. The parties should be heard on the question of final orders conformable with these reasons.

Schedule

The long title provides that it is (amongst other things):

An Act -

…

•to provide a means for adjudicating payment disputes arising under construction contracts …

Section 3 defines 'determination' as follows:

determination means a determination, made on an adjudication under Part 3, of the merits of a payment dispute[.]

Section 6 defines 'payment dispute' as, relevantly:

6.       Payment dispute

For the purposes of this Act, a payment dispute arises if - 

(a)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[.]

The definition of 'payment claim' includes:

payment claim 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[.]

Section 30 provides:

30.Object of adjudication process

The object of an adjudication of a payment dispute is to determine the dispute fairly and as quickly, informally and inexpensively as possible.

Section 31(2)(b)(i) provides, relevantly:

31.Adjudicator's functions

…

(2)An appointed adjudicator must, within the prescribed time or any extension of it made under section 32(3)(a) -

…

(b)otherwise, determine on the balance of probabilities whether any party to the payment dispute is liable to make a payment, … and, if so, determine -

(i)the amount to be paid or returned and any interest payable on it under section 33; …

Section 32(3) ‑ (4) provides:

(3)An appointed adjudicator may -

(a)with the consent of the parties, extend the time prescribed by section 31(2) for making a determination;

(b)with the consent of the parties, adjudicate simultaneously 2 or more payment disputes between the parties;

(c)with the consent of all the parties concerned, adjudicate the payment dispute simultaneously with another payment dispute.

(4)If an appointed adjudicator adjudicates simultaneously 2 or more payment disputes, the adjudicator may, in adjudicating one, take into account information the adjudicator receives in relation to the other, and vice versa.

Section 33 provides:

33.Interest up to determination

(1)If an appointed adjudicator determines that a party to a payment dispute is liable to make a payment, he or she may also determine that interest is to be paid -

(a)if the payment is overdue under the construction contract, on the payment in accordance with the contract; or

(b)otherwise, on the whole or a part of the payment from the date the payment dispute arose at a rate not greater than the rate prescribed under the Civil Judgments Enforcement Act 2004 section 8(1)(a),

until and including the date of the determination.

(2)Subsection (1) does not authorise the awarding of interest upon interest.

Section 39 provides:

39.Payment of amount determined and interest

(1)A party that is liable to pay an amount under a determination must do so on or before the date specified in the determination.

(2)Unless the determination provides otherwise, interest at the rate prescribed under the Civil Judgments Enforcement Act 2004 section 8(1)(a) is to be paid on such of the amount as is unpaid after the date specified in the determination.

(3)The interest to be paid under subsection (2) forms part of the determination.

(4)If under s 43(2) a judgment is entered in the terms of a determination, interest under subsection (2) ceases to accrue.

Section 41 provides:

41.Determinations are final

(1)If on the adjudication of a payment dispute the appointed adjudicator makes a determination -

(a)the adjudicator cannot subsequently amend or cancel the determination except with the consent of the parties; and

(b)a party to the dispute may not apply subsequently for an adjudication of the dispute.

(2)Despite subsection (1)(a), if an adjudicator's determination contains -

(a)an accidental slip or omission; or

(b)a material arithmetic error; or

(c)a material mistake in the description of any person, thing or matter,

the adjudicator, on the application of a party or, after notifying the parties, on the adjudicator's own initiative, may correct the determination.

Section 42 provides:

42.Non-compliance by principal, contractor may suspend its obligations

(1)If a determination requires the principal to pay the contractor an amount and the principal does not pay in accordance with the determination, the contractor may give the principal notice of the contractor's intention to suspend the performance of its obligations.

(2)The notice must -

(a)be in writing; and

(b)be prepared in accordance with, and contain the information prescribed by, the regulations; and

(c)state the date on which the contractor intends to suspend the performance of its obligations; and

(d)be given to the principal at least 3 days before that date.

(3)If on the date stated under subsection (2)(c) in the notice the principal has not paid the contractor the amount in accordance with the determination, the contractor may suspend the performance of its obligations until no longer than 3 days after the date on which the amount is paid.

(4)Subsection (3) does not prevent the contractor from at any time resuming the performance of its obligations.

(5)A contractor that suspends the performance of its obligations in accordance with this section -

(a)is not liable for any loss or damage suffered by the principal or by any person claiming through the principal; and

(b)retains its rights under the contract, including any right to terminate the contract.

Section 43 provides:

43.Determinations may be enforced as judgments

(1)In this section -

court of competent jurisdiction, in relation to a determination, means a court with jurisdiction to deal with a claim for the recovery of a debt of the same amount as the amount that is payable under the determination.

(2)A determination may, with the leave of a court of competent jurisdiction, be enforced in the same manner as a judgment or order of the court to the same effect, and if such leave is given, judgment may be entered in terms of the determination.

(3)For the purposes of subsection (2), a determination signed by an adjudicator and certified by the Building Commissioner as having been made by a registered adjudicator under this Part is to be taken as having been made under this Part.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

MS
SECRETARY

13 JULY 2018