Empire Global Pty Ltd v SA Expert Designs Pty Ltd
[2019] ACTSC 244
•30 August 2019
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Empire Global Pty Ltd v SA Expert Designs Pty Ltd |
Citation: | [2019] ACTSC 244 |
Hearing Date: | 19 August 2019 |
DecisionDate: | 30 August 2019 |
Before: | Murrell CJ |
Decision: | Application dismissed. |
Catchwords: | BUILDING AND CONSTRUCTION – SECURITY OF PAYMENT – Judicial review of adjudication decision – Whether additional work was performed under the subcontract – Whether the subcontract precluded payment for additional work performed without prior written instructions – Whether interpretation of the contract is a jurisdictional fact – Whether the present case is distinguishable from Canberra Drilling Rigs Pty Ltd v Haides Pty Ltd [2019] ACTCA 15 |
Legislation Cited: | Building and Construction Industry (Security of Payment) Act 2009 (ACT) ss 15, 16, 19, 22, 25, 38, 43 Building and Construction Industry Security of Payment Act 1999 (NSW) s 14 Court Procedures Rules 2006 (ACT) r 5072 |
Cases Cited: | Canberra Drilling Rigs Pty Ltd v Haides Pty Ltd [2018] ACTSC 282 Canberra Drilling Rigs Pty Ltd v Haides Pty Ltd [2019] ACTCA 15 Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4; 92 ALJR 248 |
Texts Cited: | Marcus Jacobs, Security of Payment in the Australian Building and Construction Industry (Lawbook Co, 2017, 6th ed) |
Parties: | Empire Global Pty Ltd (ACN 156 553 785) (Plaintiff) SA Expert Designs Pty Ltd (ACN 609 096 406) (First Defendant) Robert Sundercombe (Second Defendant) |
Representation: | Counsel A J Greinke (Plaintiff) J P Doyles (First Defendant) Submitting appearance (Second Defendant) |
| Solicitors Meyer Vandenberg (Plaintiff) Doyles Construction Lawyers (First Defendant) Submitting appearance (Second Defendant) | |
File Number: | SC 117 of 2019 |
Murrell CJ
The Application
Empire Global Pty Ltd (Empire Global) sought an order in the nature of a writ of certiorari to set aside an adjudication decision in favour of SA Expert Designs (SA Expert) that had been made by the second defendant (the Adjudicator) under the Building and Construction Industry (Security of Payment) Act 2009 (ACT) (the SOP Act). Alternatively, Empire Global sought a declaration that the Adjudicator’s decision was void by reason of jurisdictional error.
Part 4 of the SOP Act provides a procedure for recovering progress payments that is initiated when a claimant makes a payment claim. A payment claim must relate to work performed “under the construction contract concerned”: s 15 of the SOP Act.
Having made an unsuccessful payment claim against Empire Global, SA Expert applied for adjudication of its claim and obtained a favourable adjudication decision in the sum of $82,243.34 (the decision).
In these proceedings, Empire Global contended that the decision was affected by jurisdictional error in that:
(a)As the construction contract between the parties had required that variations comprising additional work be the subject of prior written approval, and the work the subject of the decision had not received prior written approval, the claim had not concerned construction work carried out “under” a construction contract. Therefore, the Adjudicator had lacked jurisdiction to make the decision. SA Expert should have brought a quantum meruit claim, rather than a claim under the SOP Act.
(b)Alternatively, each item of additional work was the subject of a separate construction contract, and should have been the subject of a separate payment claim and a separate adjudication.
Background Facts
SA Expert tendered to carry out painting works for Empire Global at a building site in the Australian Capital Territory.
On 14 July 2017, the parties held a “post tender meeting” for the stated purpose of “[reviewing] and [assessing] tenders”.
On or about 25 July 2017, the parties entered into a written subcontract (the subcontract).
At the request of Empire Global’s site representative, SA Expert performed additional works in the course of the project that were not part of the original scope of works in the subcontract. In relation to each item of additional work, once the work had been done, SA Expert generated a docket entitled “Variation/Day Labour Notice”, which detailed the work in question. The docket was signed by the site representative. Subsequently, Empire Global issued a purchase order that corresponded to the docket.
Under s 15 the SOP Act, SA Expert made a payment claim relating both to work that was part of the original scope of works and to additional work that was the subject of the dockets and purchase orders. In the payment claim, SA Expert referred to the original contract value ($714,893.30) and the value of “variations 0006, 0007, 0008 and 0009” (said to be $83,788.95), and claimed the difference between the value of the original scope of works plus variations and the amount paid (said to be $87,083.34).
10. Empire Global resisted the payment claim. The General Manager of Empire Global responded to the payment claim on 25 January 2019 by email, stating:
We received your revised payment claim in relation to the below on 16/01/2019. Our response to this revised claim is as follows:
1. Your previously paid value is still not correct. Refer to the figure in the email below
2. Invoice 006 still shows a different value than what is shown in the below email, and previous email correspondence
3. Your [sic] have still not provided backup paperwork in relation to Invoice 009
4. You have added a backcharge amount for the boom hire on the revised payment claim, however the figure is incorrect.
Based on the above, we reject your payment claim as it has numerous errors.
11. Subsequently, this email (and the associated email chain) was treated as a payment schedule.
12. SA Expert applied for adjudication of the payment claim. The adjudication application identified the relevant construction contract as the subcontract of 25 July 2017. In part, the application stated:
1. On or around 25 July 2017 SA Expert Designs Pty Ltd (the Claimant) was engaged by Empire Global Pty Ltd (the Respondent) to carry out painting works at the project.
2. The Contract is not in dispute.
….
4. The project proceeded as per any traditional project; the Contract sum has generally been paid, the dispute is over variations and final payments.
…
9. There is no argument that the Claimant entered into a Contract with the Respondent.
13. SA Expert furnished the dockets and associated purchase orders that supported its claim for payment for the additional work.
14. On 13 February 2019, Empire Global provided an adjudication response, stating:
1. Prior to awarding the painting contractor SA Expert Designs (the Claimant), a post tender meeting was held with them on 14/07/17 to review, in part, the administration requirements for the project.
2. Throughout the course of the project, the Claimant has failed to follow administration tasks, even though these tasks were agreed and accepted during the tender interview.
3. Examples of this include that “All variations required the prior approval of the Client and will not be paid without prior written instructions”. Another example of this is that variations must be submitted within 14 days (i.e. time bar) of the subcontractor being made aware of the variation.
…
12. For a number of the variations submitted, we have requested further information however no further information was forthcoming …
Variations: Detailed Submissions
14. As noted in point 3 above, there was a process implemented on the project (and subsequently agreed to by the Claimant) whereby any variation identified on the project required prior approval of the Client (the Client being Empire Global). The majority of the Claimant’s variations were not submitted in accordance with this contractual requirement, which will be outlined in further detail below.
15. By this reason alone, the Respondent believes that the Adjudicator can rule that no payment is owed to the Claimant for outstanding costs.
16. A system whereby Purchase Orders are issued to Subcontractors was implemented on the project. Where the site team requires a Subcontractor to carry out additional works, the Purchase Order would detail the work in the agreed value of the additional work.
17. If there is no value listed on the Purchase Order, then the document is used to instruct a subcontractor to undertake work that may or may not already form part of the original contract scope of works. Site staff are not always aware of what the subcontractor has allowed in their original contract sum.
18. Listing of hours on a Purchase Order is not suggesting a cost, merely the amount of time taken to complete an activity.
…
26. … There was a contractual requirement was not followed by the Claimant … There was no amendment made to an agreed process, whereby all variations must be submitted and approved prior to proceeding with any additional works. The obvious failures of the Claimant by not following administration duties has contributed to the current situation …
15. The adjudication response then dealt in detail with the additional variation matters that were the subject of tax invoices 0006, 0007, 0008, and 0009, and the topic of “back charge” relating to the rectification of defective work, which had involved SA Expert utilising a boom that Empire Global kept on-site. By way of conclusion, the adjudication response continued:
51. In summary, we believe that based on the information above, including attached annexures, the total amount owing to the Claimant by the Respondent is $7,721.09 (including GST). This figure includes the back charge amount as noted in item 48 above.
…
54. We also believe that every effort has been made to resolve things with the Claimant without the need for adjudication … A fair outcome would be for both parties to pay an equal amount of the adjudication cost.
16. In other words, Empire Global asserted that, for additional work to be a variation under the subcontract, the work must have been the subject of prior written approval; it was not enough to show prior approval and subsequent written confirmation of approval. In support of the asserted requirement of prior written approval, Empire Global relied upon a discussion during the post tender meeting that had occurred approximately 10 days before the parties entered the subcontract.
17. The material before the Adjudicator showed that Empire Global’s site representative and SA Expert had agreed to a process for approval of additional works that differed from the process that had been discussed at the post tender meeting on 14 July 2017. The material also showed that Empire Global agreed that SA Expert should be paid for the additional works (but disagreed about the amount and the basis of its liability).
18. The Adjudicator was not provided with the written subcontract between the parties. Nor was he provided with the standard form of subcontract used by Empire Global. Other than to assert that the discussion at the post tender meeting had been incorporated into the subcontract by an unspecified means, the terms of the subcontract were not canvassed during the adjudication process.
19. Nevertheless, on this application, Empire Global said that the Adjudicator had made a jurisdictional error in relation to whether the additional works were variations under the subcontract.
20. I was provided with Empire Global’s standard form subcontract. There was evidence from a director of Empire Global that all subcontractors were required to sign a copy of the subcontract. However, I do not know whether SA Expert signed the standard form subcontract or, if it did, whether the standard form was amended before it signed.
21. The parties disagreed about whether, on a proper interpretation, the standard form subcontract required that variations comprising additional works be the subject of prior written approval (as opposed to written approval).
The Decision
22. The Adjudicator stated:
2. I have considered the form and the timing of the payment claim, the form and the timing of the payment schedule and the timing of the adjudication application and confirm that I have jurisdiction to decide the adjudication application.
…
6. On or about 25 July 2017 the parties entered into a Subcontract (the Subcontract) whereby the Claimant was to carry out painting on the respondent’s behalf at a site in the ACT (the Work).
7. The Claimant served on the Respondent a Payment Claim under the Act that indicated a claimed amount of $87,083.34 (inclusive of GST).
8. The Respondent has provided a Payment Schedule in accordance with s 16 of the Act that indicated a scheduled amount of $6,105.00.
9. The Claimant has made an adjudication application in accordance with s 19 of the Act.
[Footnotes omitted.]
23. After referring to the material submitted by SA Expert, the Adjudicator continued:
23. The Respondent has not raised any issues with the Claimant’s assertions nor explained why it did not elect to “reply” to the payment claim in a form that dealt with all the claimed amounts.
24. At [35], the Adjudicator noted that the subcontract lacked “an apparent method for valuing variation work”. At [36], the Adjudicated noted SA Expert’s submission that the work should be valued on “what it cost based on the hours used”. At [37], the Adjudicator observed that Empire Global had “offered an unexplained amount of nominally one third what has been claimed”.
25. The Adjudicator preferred to proceed on the basis of SA Expert’s submissions: at [38].
26. At [47]–[48] the Adjudicator recited [14]–[18] and [26] of Empire Global’s response of 13 February 2019 (set out at [14] above).
27. The Adjudicator’s consideration commenced at [49] of the decision.
28. At [50]–[55], the Adjudicator referred to the “Record of Post Tender Meeting”, observing that he could not be satisfied that the contents of the Record were incorporated into the subcontract.
29. At [56]–[60], the Adjudicator stated:
56. I have considered the Respondent’s submissions [to the effect that] its site personnel could issue the Claimant a Purchase Order to carry out work that it was already required to do under the Subcontract and cannot find this to be true.
57. Noting that the Respondent’s “complaint” is that the Purchase Order was given after the work was carried out the Respondent’s submissions simply do not survive any scrutiny.
58. Therefore, I prefer the Claimant’s submissions that it has entered into an arrangement with the Respondent’s site personnel under which the Claimant would carry out the works, get its “Docket” signed, and the Respondent would sign the “Docket” and issue a Purchase Order for the work.
59. The Claimant is entitled to rely on the Respondent’s issuing of a Purchase Order(s).
60. If the Respondent truly did not think that the Claimant had carried out additional work, it would not have issued the Purchase Order(s).
The SOP Act
30. The SOP Act is modelled on similar legislation in other Australian jurisdictions, including the Building and Construction Industry Security of Payment Act 1999 (NSW) (the NSW Act).
31. The essential features of the SOP Act were helpfully summarised in Pines Living Pty Ltd v John O’Brien & Walton Construction Pty Ltd [2013] ACTSC 156 at [21]:
The Act provides a right to a building contractor to obtain a progress payment on each “reference date” under a construction contract: s 10. Any such payment is made on an interim basis subject to resolution on a final basis of all claims under the contract and does not affect the parties’ rights in relation to those claims except, of course, that payments made under the Act must be take into account: s 38. The Act permits a “payment claim” to be made for payment of progress claims: s 15. When a payment claim is made the respondent to the claim may reply by giving the claimant a “payment schedule” indicating how much is being paid and, if it is not the whole of the amount claimed, indicating why amounts have been withheld: s 16. If the respondent gives a payment schedule which indicates that the whole amount claimed is not being paid or does not give a payment schedule and does not pay the full amount claimed then the claimant may have the matter adjudicated by an adjudicator under the Act: ss 17-19. There is a process for the making of a decision by an adjudicator which, consistent with the purpose of the Act, involves short timeframes: ss 22-23. The adjudicator must decide the amount of the progress payment to be paid, the day on which it became or becomes payable and the rate of interest payable on the amount: s 24. The decision must be in writing and include reasons for decision unless the adjudicator is asked by the parties not to include reasons: s 24(3).
32. The following provisions are relevant to the issues before the Court.
15Payment claim
(1)A person who is or who claims to be entitled to a progress payment under section 10 (1) (the claimant) may give a claim (a payment claim) to the person who, under the construction contract concerned, is or may be liable to make the payment (the respondent).
…
(2)A payment claim must—
(a)identify the construction work or related goods and services to which the progress payment relates; and
(b)state the amount of the progress payment that the claimant claims is payable (the claimed amount); and
…
16Payment schedule
(1)A respondent who is given a payment claim may reply to the claim by giving a schedule of proposed payment (a payment schedule) to the claimant.
…
(2)A payment schedule must—
(a)identify the payment claim to which it relates; and
(b)state the amount of the payment, if any, that the respondent proposes to make (the scheduled amount).
(3)If the scheduled amount is less than the claimed amount, the schedule must indicate—
(a)why the scheduled amount is less; and
(b)if the scheduled amount is less because the respondent is withholding payment for any reason—the respondent's reasons for withholding payment.
…
19Adjudication applications
(1)A claimant may apply to an authorised nominating authority, chosen by the claimant, for adjudication of a payment claim (an adjudication application) if—
(a)the respondent provides a payment schedule under this part, but—
(i) the scheduled amount indicated in the payment schedule is less than the claimed amount indicated in the payment claim; or
(ii) the respondent fails to pay the whole or any part of the scheduled amount to the claimant by the due date for payment of the amount; or
(b)the respondent fails—
(i) to provide a payment schedule under this part within the time allowed by section 16 (4); and
(ii) to pay the whole, or any part of, the claimed amount to the claimant by the due date.
…
(3)An adjudication application—
…
(f)must identify the payment claim and any payment schedule to which it relates; and
…
22Adjudication responses
(1)A respondent may give an adjudicator a response to a claimant's adjudication application (the adjudication response) …
…
(4)The respondent must not include in the adjudication response any reasons for withholding payment unless those reasons have already been included in the payment schedule provided to the claimant.
…
25Respondent must pay adjudicated amount
If an adjudicator decides that a respondent must pay an adjudicated amount to a claimant, the respondent must pay the amount to the claimant on or before—
(a)the day 5 business days after the day the adjudicator’s decision is given to the respondent; or
…
38Effect of part on civil proceedings
(1)Nothing in this part affects any right that a party to a construction contract—
(a)may have under the contract; or
…
(c)may have apart from this Act for anything done or omitted to be done under the contract.
(2)Nothing done under this part affects any civil proceeding arising under a construction contract, whether under this part or otherwise …
43Judicial review of adjudication decision
(1)Except as provided for in this part, a court does not have jurisdiction to set aside or remit an adjudication decision on the ground of error of fact or law on the face of the decision.
(2)An appeal may be made to the Supreme Court on any question of law arising out of an adjudication decision.
(3)An appeal under subsection (2) may be brought by any of the parties to adjudication decision –
(a) with the consent of the parties to the decision; or
(b) with the leave of the Supreme Court.
(4)The Supreme Court must not grant leave under subsection (3) (b) unless it considers that—
(a)having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of 1 or more parties to the adjudication decision; and
(b)there is—
(i) a manifest error of law on the face of the adjudication decision; or
(ii) strong evidence that the adjudicator made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of the law.
…
33. Pursuant to r 5072 of the Court Procedures Rules 2006 (ACT), leave must be sought within 28 days.
Jurisdiction
34. In the exercise of its supervisory jurisdiction, the Court may review the exercise of power by an adjudicator under the SOP Act. The Court may grant prerogative relief if it finds jurisdictional error by an adjudicator. This power is independent of the limited appellate power of the Court under s 43 of the SOP Act: Pines Living at [26]–[29].
35. In Hossain v Minister for Immigration and Border Protection [2018] HCA 34; 92 ALJR 780 at [24], Kiefel CJ, Gageler, and Keane JJ described jurisdictional error as:
a failure to comply with one or more statutory preconditions or conditions to an extent which results in a decision which has been made in fact lacking characteristics necessary for it to be given force and effect by the statute pursuant to which the decision-maker purported to make it.
36. Before non-compliance with a statutory precondition/condition will amount to a jurisdictional error, it must reach a threshold of materiality: Hossain at [29].
37. The interpretation of a construction contract is not a jurisdictional issue in the context of the SOP Act. As Gageler J observed in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4; 92 ALJR 248 (Probuild) at [80]:
The principal statutory object stated in s 3(1), to ensure that a person undertaking to carry out construction work under a construction contract "is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work", would be thwarted were mere error of law made by the adjudicator in the interpretation of the contract to vitiate the determination and thereby to render it liable to be quashed or declared invalid by the Supreme Court.
38. For non-jurisdictional errors on the face of record, the NSW Act prevents the Court from granting orders in the nature of certiorari: Probuild at [35]. However, the position is unsettled in this jurisdiction: Pines Living at [31]. In any event, in this case, Empire Global claimed that there had been a jurisdictional error.
A Preliminary Issue: Was There a Valid Payment Schedule?
39. In its adjudication application, SA Expert identified the email of 25 January 2019 as the relevant payment schedule. The Adjudicator proceeded under s 19(1)(a)(i), i.e. on the basis that a valid payment schedule had been provided via the 25 January email.
40. The 25 January email was vague and imprecise, making the adjudication more difficult. As noted above, the Adjudicator himself observed that Empire Global had not “explained why it did not elect to ‘reply’ to the payment claim in a form that dealt with all the claimed amounts”. In particular, it did not “state the amount of the payment, if any, that [Empire Global] proposes to make”: s 16(2)(b) of the SOP Act.
41. In Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 at [78], Palmer J said of s 14(3) of the NSW Act that:
… in requiring a respondent to “indicate” its reasons for withholding payment, [it] does not require that a payment schedule give full particulars of those reasons. The use of the word “indicate” rather than “state”, “specify” or “set out”, conveys an impression that some want of precision and particularity is permissible as long as the essence of “the reason” for withholding payment is made known sufficiently to enable the claimant to make a decision whether or not to pursue the claim and to understand the nature of the case it will have to meet in an adjudication.
42. This interpretation was approved in Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391; 64 NSWLR 448 at [27]–[31] and Perform (NSW) Pty Ltd v MEV-AUS Pty Ltd [2009] NSWCA 157 at [46]–[49].
43. Applying this line of reasoning, the 25 January email may have constituted a valid payment schedule, notwithstanding its vagueness.
44. However, there is an important difference between s 14 of the NSW Act and the corresponding s 16 of the SOP Act. Section 16(2)(b) of the SOP Act uses the word “state” rather than “indicate”, the word that is used in s 14(2)(b) of the NSW Act. By contrast, “indicate” is retained in s 16(3) of the SOP Act. In Marcus Jacobs, Security of Payment in the Australian Building and Construction Industry (Lawbook Co, 2017, 6th ed), the author observed at 235:
The change of wording as between s 16(2)(b) of the [SOP Act] on the one hand, and s 16(3) on the other, probably shows an altered legislative intention. The question that then arises is whether a payment schedule which does not “state” the amount of the payment, if any, that the respondent proposes to make, but merely “indicates” an amount, is a valid payment schedule and, if not, what the consequences may be.
45. As both parties and the Adjudicator proceeded on the basis that the email of 25 January 2019 was a valid payment schedule and the issue was not raised or argued on this application, I merely note it.
Submissions
Empire Global
46. Empire Global submitted that the Adjudicator had erred in finding that the additional works had been done “under” the subcontract because, under the subcontract, variation works required the prior written approval of Empire Global. Consequently, any claim for payment for the additional works should have been made on a quantum meruit basis rather than under the SOP Act.
47. Alternatively, Empire Global submitted that, in relation to each item of additional work, the associated dockets and purchase order evidenced a separate contract. As any payment claim under the SOP Act must relate to only one construction contract, SA Expert’s claim was invalid.
SA Expert
48. Two submissions made by SA Expert may be dealt with briefly.
49. First, SA Expert submitted that, as the Adjudicator’s finding at [6] of the decision (that on 25 July 2017, the parties had entered into a subcontract relating to work on a particular site) was a finding of fact, s 43 of the SOP Act precluded a challenge to that finding.
50. This submission was misconceived; as these proceedings were not brought under the SOP Act, s 43 does not limit the Court’s jurisdiction.
51. Second, SA Expert submitted that, as some material supporting Empire Global’s construction of the subcontract did not appear in the payment schedule and first appeared in the adjudication response, s 22(4) of the SOP Act prevented both the Adjudicator and the Court from considering the material.
52. Section 22(4) of the SOP Act is not concerned with jurisdictional facts. The existence of a jurisdictional fact is a “criterion, satisfaction of which enlivens the power of the decision-maker to exercise a discretion”: Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5; 199 CLR 135 at [28]. Whether a jurisdictional fact exists is a question of law reviewable by a superior court in the exercise of its supervisory jurisdiction, and the reviewing court is entitled to receive evidence about that fact and determine the question for itself: Mental Health Australia Ltd v Registrar, ACT Long Service Leave Authority [2019] ACTSC 188 at [44].
53. The only questions that require detailed consideration are: whether the Adjudicator’s implicit finding that the additional works were carried out “under a construction contract” (being the subcontract) was a finding of jurisdictional fact (i.e. whether its correctness was an essential precondition to the validity of the Adjudicator’s decision under the SOP Act), and, if so, whether the precondition was satisfied in this case.
Canberra Drilling
54. The answers to these questions are governed by the decision of the Court of Appeal in Canberra Drilling Rigs Pty Ltd v Haides Pty Ltd [2019] ACTCA 15 (Canberra Drilling Appeal).
55. The facts in that case were that Core had contracted work to Canberra Drilling, and Canberra Drilling had subcontracted work to Haides. A year after Haides had undertaken the principal work, it returned to the building site to perform more work at Core’s request without the knowledge of Canberra Drilling. An adjudicator found that Canberra Drilling was required to pay Haides for the additional work. Canberra Drilling sought judicial review, claiming that, as the additional work had not been carried out under the contract, the adjudicator’s decision was affected by jurisdictional error.
56. At first instance, McWilliam AsJ dismissed the application: Canberra Drilling Rigs Pty Ltd v Haides Pty Ltd [2018] ACTSC 282 (Canberra Drilling First Instance). At [61], her Honour stated:
It is sufficient for the purposes of enlivening the operation of the SOP Act that there was a construction contract between the two parties, that Haides claims the work was done under it, and that it is at least arguable that the work was either expressly incorporated or necessarily part of the work to be performed under the contract (noting that one of the arguments made by Haides was that destressing the anchors was an integral part of the installation of them).
57. At [65], her Honour concluded:
It follows that there was no legal error in the adjudicator proceeding to determine the third payment claim, even if it is ultimately found that the work the subject of that claim was not part of the contract, and the plaintiff was not liable to pay for it.
58. In Canberra Drilling Appeal at [22], the Court of Appeal identified the issue to be:
… whether it was sufficient to claim that the work has been done under the construction contract or whether the objective fact of the work being done under the construction contract is a condition of the adjudicator exercising jurisdiction.
[Emphasis in original.]
59. The Court agreed with the primary judge. At [34] the Court stated:
Both the text and the structure of the legislation indicate that the question of whether the relevant work was done under the relevant construction contract is one to be determined by the adjudicator within the adjudicator’s jurisdiction and not a question which is a jurisdictional fact to be determined in court.
60. At [38], the Court continued:
… s 15(1) allows a payment claim by a person “who claims to be entitled to a progress payment”. In order that there be a valid payment claim it is not necessary to establish the entitlement to payment of a particular amount or any amount. The language of s 15(1) means that all issues in relation to the connection between the work done and the relevant contract may form part of the claim rather than being preconditions to it. The language does not indicate that a distinction is to be drawn between some issues which may be subject of a claim and other issues which give rise to factual preconditions to a claim.
[Emphasis added.]
61. At [40]–[42], the Court observed that it would be inconsistent with the objective of the SOP Act (to provide a “rough and ready” determination) if, on judicial review, the Court was to review mixed questions of fact and law and to determine the proper construction of the contract. The Court observed that s 38 of the SOP Act preserves the parties’ rights under the contract and their ability to commence civil proceedings. The statutory scheme was said to be “a ‘pay now, argue later’ system that was designed to facilitate the prompt resolution of disputes concerning progress payments”: Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2017] NSWCA 151; 95 NSWLR 82 at [102], cited in Canberra Drilling First Instance at [42] and JKC Australia LNG Pty Ltd v Inpex Operations Australia Pty Ltd [2018] NTCA 6; 334 FLR 314 at [37].
Is the Present Case Distinguishable from Canberra Drilling?
62. Empire Global argued that Canberra Drilling Appeal should be distinguished because:
(a)The issue in the present case “is not whether works were in fact carried out under a relevant construction contract, but whether the relevant construction contract existed”.
(b)SA Expert had never “claimed” that the additional works were within the scope of works the subject of the July 2017 subcontract.
(c)It was not arguable that the additional works fell within the scope of works in the subcontract.
(d)The additional works were the subject of separate contractual arrangements, in each case evidenced by a docket and purchase order.
63. The present case is not distinguishable from Canberra Drilling Appeal.
64. Empire Global’s contentions are simply attempts to characterise the issue as something other than “whether the relevant work was done under the relevant construction contract”, which is not a jurisdictional fact, but a matter for an adjudicator: Canberra Drilling Appeal at [34].
65. In this case, the Adjudicator treated the additional works as agreed variations to the subcontract: at [58] of the decision. Whether or not that was the “objective fact”, it was certainly SA Expert’s claim. SA Expert’s payment claim identified the relevant construction contract by reference to the value of the original scope of works plus the claimed value of “variations (0006, 0007, 0008, 0009)”. In the adjudication application, SA Expert identified the relevant construction contract by reference to “date commenced: 25/7/2007” (i.e. by reference to the subcontract) and claimed an amount that comprised the cost of the original scope of works plus the cost of “variations”, less the amount paid.
Should Relief be Granted?
66. In written submissions, SA Expert argued that, if jurisdictional error was established, relief should be withheld, principally because Empire Global had neither paid the adjudicated sum to SA Expert nor paid it into Court. Further, although Empire Global accepted that some sum was payable on one basis or another, no monies were paid until they were belatedly paid into Court on 9 August 2019.
67. As I have found against Empire Global on the substantive argument, I do not need to decide whether relief should be withheld for discretionary reasons. However, as the High Court said in Probuild at [51]:
Where it is contended that an adjudicator has made an error of law within jurisdiction, resulting in a progress payment that is inadequate or excessive, the dispute may be resolved through civil proceedings under the construction contract. If necessary, a restitutionary order can be sought.
68. Proceedings such as the present are therefore inimical to the objective of providing a “rough and ready” determination while preserving the parties’ rights to fully ventilate issues in civil proceedings: Probuild at [39]–[40].
Orders
69. I make the following orders:
(1) Application dismissed.
(2) Applicant to pay the first respondent’s costs.
(3) Order 2 stayed until Wednesday, 4 September 2019.
(4) Liberty to apply for a different costs order, provided that the application is made by Tuesday, 3 September 2019. The application may be made by email forwarded to my associate.
| I certify that the preceding sixty-nine [69] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice Murrell. Associate: Date: |
2
12
3