Evans Built Pty Ltd (ABN 61 120 743 099) (applicant) v United Petroleum Pty Ltd (ACN 085 779 255) (first respondent) and William Timothy Sullivan
[2019] QSC 223
•9 September 2019
SUPREME COURT OF QUEENSLAND
CITATION: Evans Built Pty Ltd v United Petroleum Pty Ltd & Anor [2019] QSC 223 PARTIES: EVANS BUILT PTY LTD (ABN 61 120 743 099) (applicant) v UNITED PETROLEUM PTY LTD (ACN 085 779 255) (first respondent) and WILLIAM TIMOTHY SULLIVAN (ADJUDICATOR NO. J1063816) (second respondent) FILE NO/S: BS No 6974 of 2018 DIVISION: Trial Division PROCEEDING: Originating Application ORIGINATING Supreme Court at Brisbane COURT: DELIVERED ON: 9 September 2019 DELIVERED AT: Brisbane HEARING DATE: 27 September 2018; supplementary submissions on behalf of the first respondent received on 1 April 2019; supplementary submissions on behalf of the applicant received on 2 April 2019; second supplementary submissions on behalf of the applicant received on 3 April 2019; second supplementary submissions on behalf of the first respondent received on 5 April 2019 JUDGE: Burns J ORDER: The order of the court is that: 1. The application is dismissed;
2. The applicant shall pay the first respondent’s costs
of the application to be assessed on the standard
basis.
CATCHWORDS: CONTRACTS – CONSTRUCTION AND
INTERPRETATION OF CONTRACTS – Building,Engineering and Related Contracts – Remuneration – statutory regulation of entitlement to and recovery of progress payments – Building and Construction Industry Payments Act 2004 (Qld) – payment claims – whether the period for serving a payment claim could be “worked out” under a construction contract – whether an adjudicator was wrong to decide that a payment claim was served too late – whether the decision of the adjudicator should be declared void or set aside BRB Modular Pty Ltd v AWX Constructions Pty Ltd & Ors [2015] QSC 218, cited Kembla Coal & Coke Pty Ltd v Select Civil Pty Ltd & Ors [2004] NSWSC 628, cited Lean Field Developments Pty Ltd v E & I Global Solutions (Aust) Pty Ltd [2016] 1 Qd R 30, folowed St Hilliers Property Pty Ltd v ACT Projects Pty Ltd [2017] ACTSC 177, discussed State of Queensland v T & M Buckley Pty Ltd [2012] QSC 265, cited Surfstone Pty Ltd v Morgan Consulting Engineers Pty Ltd [2017] 2 Qd R 66, followed TransGrid v Walter Construction Group [2004] NSWSC 21, cited COUNSEL: K E Downes QC, with S B Whitten, for the applicant M H Hindman QC, with H Clift, for the first respondent SOLICITORS: CDI Lawyers for the applicant Thomson Geer for the first respondent
This application concerns an adjudication decision under the now-repealed Building and
Construction Industry Payments Act 2004 (Qld). On 26 March 2018 the adjudicator and
second respondent, Mr Sullivan, decided that he did not have jurisdiction to determine
the adjudication application. The applicant, Evans Built Pty Ltd, seeks to have that
decision declared void or set aside amongst other relief, but the first respondent, United
Petroleum Pty Ltd, maintains that the adjudicator was correct in his conclusion.
On 30 November 2015, United as principal and Evans as contractor entered into a contract
for the construction of a service station adjacent to the Bruce Highway at Gunalda, north
of Gympie. The contract incorporated general conditions based on AS4000-1997, with
some modifications, and included a provisional sum ($150,000) for external roadworks
that were required to the roadway. In time, it became apparent that the scope of the
roadworks under the contract and the provisional sum allocated for that work were
inadequate.
Following negotiations between the parties, by email dated 11 July 2016, Evans offered
to perform the additional roadworks for the sum of $2,254,150 plus GST. After further
discussion, United issued a Work Order under cover of an email dated 11 August 2016.
The email was in these terms:
“As briefly discussed over the last few days … please find attached United’s
Separate Work Order No. QLD-131095 to Evansbuilt for the Bruce Highway
External Road/Intersection Works at $2,254,150.00 + GST, as per your 11
July 2016 Offer.
These Works are to be performed in conjunction with your current Gunalda
project Works, under the same Contract Conditions.
Invoicing for the Road Works is to be against this Work Order, to me, via the
usual monthly progress Claims, separate for these works.
For other project Variations that Avi has initiated/Approved, I shall also obtain
Separate United Work Orders and issue these to you, to claim against as
opposed to the Original Contract Value.”
The Work Order was comprised of a document titled, “Construction Quote Approved”,
and two sets of terms and conditions, each two pages in length. There are some oddities
with these documents, not the least of which are references to a different principal (SHA
Premier Construction Pty Ltd) in the header to the “Construction Quote Approved”
document and throughout one set of the terms and conditions, but the Work Order number
on the “Construction Quote Approved” document corresponds to the number for the
Separate Work Order specified in the August email and the other set of terms and
conditions appears on its face to apply to works to be performed for United. For the
purposes of this application, I proceed on the basis that the “Construction Quote
Approved” document, the set of terms and conditions applicable to work to be performed
for United as well as the July and August emails were documents that came into existence
for the purpose of the additional roadworks work, and neither party submitted that I
should approach the matter in any other way. Similarly, neither party submitted that it
was necessary (or even possible on the limited material before the court) to determine
whether the additional roadworks were the subject of a separate contract or subsumed
within the main contract entered into by the parties in November 2015. Rather, both
parties proceeded during the adjudication on the basis that the roadworks were the subject
of a separate contract (albeit one incorporating the modified general conditions of the
main contract) and I am invited to do the same because nothing about this application
turns on the validity, one way or the other, of that assumption.
That made clear, among the terms and conditions applicable to work to be performed for
United was this clause:
“8.4 Payment of any Invoices of goods or services to which that invoice
relates to. No invoice will be accepted beyond 60 days.” [Emphasis in
original]
The last day on which any of the additional roadworks was carried out was 20 December
2016. On 16 August 2017, Evans served a payment claim on United. It covered work
under both the main contract and the roadworks contract and, principally for that reason,
objection was taken by United. Eventually, on 24 October 2017, Evans served on United
a payment claim that was solely referable to the roadworks. It was in the sum of
$1,079,855.17. A payment schedule was served on 15 November 2017 in which a nil
amount was scheduled against the payment claim.
The adjudication application was lodged by Evans on 29 November 2017 and accepted a
few days later. On 26 March 2018, the adjudicator determined that he did not have
jurisdiction to decide the application because, he reasoned, the period for service of a
payment claim could not be worked out under the roadworks contract and, in any such
case, s 17A(2)(b) of the Act required a payment claim to be served within six months after
the construction work to which the claim relates was last carried out. Because no work
had been performed in the six-month period prior to service of the payment claim, the
adjudicator concluded that the payment claim was not “valid” and, for that reason, that
he lacked jurisdiction to determine the application on its merits.
Section 17A of the Act relevantly provides as follows:
“17A Time requirements for payment claims
(1) This section applies if a claimant serves a payment claim on a
respondent.
(2) Unless the payment claim relates to a final payment, the claim must be served within the later of –
(a) the period, if any, worked out under the relevant construction contract; or
(b) the period of 6 months after the construction work to which the claim relates was last carried out or the related goods and services
to which the claim relates were last supplied.
(3) …
(4) In this section— …
(a) final payment means a progress payment for construction work carried out, or for related goods and services supplied, under a
construction contract.”
The relevant payment claim did not relate to a “final payment” within the meaning of s
17A(2) of the Act and, as will already be apparent, it was common ground that no work
had been done in the six months prior to service of the payment claim.
Under cover of this application, Evans argued that the adjudicator was wrong to conclude
that the period for service of the payment claim could not be worked out under the
roadworks contract and contended that, when this period was worked out, it would be
seen that the subject claim was served within time. If that is accepted, then the adjudicator
had jurisdiction to determine the application.
Evans’ argument in this regard was not advanced to the adjudicator. It was made for the
first time in this court and relied on the general conditions of the main contract which, by
the second paragraph of the August email, should be taken to have been incorporated in
the roadworks contract[1] (or at least to the extent that those general conditions are not
inconsistent with specific provisions of the roadworks contract). Although I accept that
in an appropriate case a party might be disentitled to discretionary relief where a claim
has been attacked on one basis before the adjudicator and then challenged on a different
basis on review,[2] it is still necessary to consider Evans’ new argument because, unless it
is correct, no occasion for the exercise of the court’s discretion will arise.
[1] See Surfstone Pty Ltd v Morgan Consulting Engineers Pty Ltd [2017] 2 Qd R 66, [47]-[48].
[2] For the reasons discussed by McDougall J in TransGrid v Walter Construction Group [2004] NSWSC 21,
Clause 37.1 of the general conditions is in these terms:
“The Contractor shall claim payment progressively in accordance with Item 28.”
Item 28 in turn provides:
“Progress Claims (subclause 37.1)
(a) Times for making claims: 25th day of each month for [work under the contract] done to the 25th day of that month.”
Evans also referred to clause 37.4. It relevantly provides as follows:
“Within 28 days after the expiry of the last defects liability period, the
Contractor shall give the Superintendent a written final payment claim
endorsed ‘Final Payment Claim’ being a progress claim together with all other
claims whatsoever in connection with the subject matter of the Contract. …The Contractor will not be entitled to submit a final payment claim … unless
the Contractor has executed the Deed of Release in the form set out in
Annexure Part G.”
Evans argued that, when clause 37.1 is read with Item 28, the contract permitted the
making of payment claims on a progressive basis up until the making of a “final payment
claim” and that the making of such a claim brings to an end the “period” during which it
could make regular payment claims. Alternatively, it argued, if the making of a final
payment claim does not of itself extinguish the right to make other payment claims, then
such a right is extinguished on the execution of a Deed of Release in accordance with
Annexure Part G (by which United would be released from any claims on the payment of
the final security and final payment claim), something that is a precondition to the making
of a final payment claim under clause 37.4 and something that had not occurred by the
time the subject payment claim was served. Either way, Evans submitted, the “period” for
the service of a payment claim could be worked out under the roadworks contract, the
claim was “timeously served” and the adjudicator had jurisdiction to determine the
application before him.
What is critical, Evans submitted, was whether at the time when a payment claim is made
it can be worked out under the contract whether the period for making such a claim has
expired. The end date will vary, just as it does under s 17A(2)(b) of the Act, and the
working out can be “through either provisions that explicitly entitle a claimant to bring a
payment claim until a particular point in time, or provisions that extinguish such an
entitlement at a particular point”.[3] Section 17A(2)(a) does not “provide that the contract
[3] Applicant’s Outline of Submission, [23].
must ‘fix’ or ‘state’ the period”[4] or “require an explicit formula; the use of passive tense
[4] Ibid, [22].
suggests the act of ‘working out’ is performed externally”.[5] Lastly, to the extent that the
decision of the ACT Supreme Court in St Hilliers Property Pty Ltd v ACT Projects Pty
Ltd[6] decided in connection with a fairly close analogue of s 17A of the Act that “the words
‘worked out’ where used in [the provision] suggest one is required to see if the contract
contains a mechanism showing a date or some dates for the service of a claim or some
claims” and that a clause that “merely says how often payment claims may be made”[7]
does not do that, Evans submitted that the judge (Walmsley AJ) did not appear to give
“due consideration” to the points summarised above or “sufficient weight to the
relationship between s 17A(2)(a) and (b), and the constantly changing period under the
latter”.[8]
[5] Ibid.
[6] [2017] ACTSC 177.
[7] Ibid, [49].
[8] Ibid, [24].
For United, it was submitted that the general conditions of contract relied on by Evans do not allow for the period within which a progress claim must be served to be worked out.
Alternatively, it was submitted that clause 8.4 of the terms and conditions applicable to
work to be performed for United provided for the working out under the roadworks
contract of the period within which payment claims must be served – within 60 days of
the performance of the relevant works. If clause 8.4 has that effect, and I am by no means
convinced that it does, then the period for the making of a payment claim should be six
months after the construction work to which the claim relates was last carried out because
that is the later of the two periods that would be under consideration (s 17A(2)(b)) but, of
course, clause 8.4 does not allow for that. Its terms make plain that “no invoice will be
accepted beyond 60 days” and therein lies the fundamental problem with this argument;
such a contractual provision is most likely void because it “purports to annul, exclude,
modify, restrict or otherwise change the effect of a provision” of the Act: s 99.[9] In the end
though, it does not matter a great deal because I am not persuaded that the period within
which a payment claim must be served can be worked out under the roadworks contract,
whether by reference to the incorporated general conditions relied on by Evans or
otherwise.
[9] See Lean Field Developments Pty Ltd v E & I Global Solutions (Aust) Pty Ltd [2016] 1 Qd R 30, [75]-[77];
As Applegarth J observed in Lean Field Developments Pty Ltd v E & I Global Solutions
(Aust) Pty Ltd,[10] in a slightly different context under the Act, the expression, “worked
[10] Supra.
out”, “connotes a process of calculation”[11] and “makes no distinction between a fact in
[11] Ibid, [30].
the form of a party's post-formation conduct and other facts”.[12] Even accepting as I
[12] Ibid, [35]. And see State of Queensland v T & M Buckley Pty Ltd [2012] QSC 265, [18]-[19].
respectfully do the correctness of those observations, the difficulty with Evans’ argument
is that clause 37.1 and Item 28 of the general conditions of contract do no more than
stipulate the frequency with which progress claims can be made under the contract. They
say nothing about the period within which progress claims must be served. Nor do clause
37.4 and the contents of the required Deed of Release allow for that period to be worked
out; clause 37.4 is solely concerned with the making of a final payment claim. The feature
that the contract provides a mechanism for determining when the final payment claim can
be made provides no assistance at all, let alone a contractual method or mechanism for
working out the period within which progress claims must be served. To adapt what
Walmsley AJ said in St Hillers Property, clause 37.1 taken with Item 28 merely provide
for how often progress claims can be made and clause 37.4 only provides for when a final
payment claim can be made.
It follows that Evans has not demonstrated that the adjudicator erred in concluding that
he lacked jurisdiction to determine the application. It is therefore unnecessary to go on to
consider whether and, if so how, the court’s discretion might be exercised had Evans made
good its argument.
For these reasons, the application will be dismissed with costs.
[67]. And see Kembla Coal & Coke Pty Ltd v Select Civil Pty Ltd & Ors [2004] NSWSC 628, [110].
BRB Modular Pty Ltd v AWX Constructions Pty Ltd & Ors [2015] QSC 218, [47]-[50].
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