GRD Group (NT) Pty Ltd v K & J Burns Electrical & Anor

[2011] HCATrans 272

[2011] HCATrans 272

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Darwin  No D1 of 2011

B e t w e e n -

GRD GROUP (NT) PTY LTD (ABN 42 009 645 498)

Applicant

and

K & J BURNS ELECTRICAL (ABN 68 009 633 827)

First Respondent

BRIAN GALLAUGHER

Second Respondent

FRENCH CJ
HEYDON J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO DARWIN

ON THURSDAY, 29 SEPTEMBER 2011, AT 11.06 AM

Copyright in the High Court of Australia

MR A.L. TOKLEY:   May it please the Court, I appear for the applicant with my learned friend, MR W. ROPER, who appears in Darwin this morning.  (instructed by Hunt & Hunt)

MR A. WYVILL, SC:   If it pleases the Court, I appear for the respondent.  (instructed by Ward Keller)

FRENCH CJ:   I have no appearance for the second respondent and an advice that the second respondent will abide the decision made by the Court.  Yes, Mr Tokley.

MR TOKLEY:   Your Honours will know this case raises a question of statutory construction in respect of an Act known as the Construction Contracts (Security of Payments) Act (NT) and, in particular, it raises questions as to the definition of the words “payment claim” within the Act. Your Honours, the relevant mistakes that we identify in the decision of the Court of Appeal can be found, first of all, at pages 131 to 132 of the appeal book. That is in the decision of his Honour Justice Olsson, the Acting Justice, and then secondly, in the decision of her Honour Justice Kelly at pages 77 to 78 and 88 to 90 of the application book.

Could I ask your Honours first to turn to page 131 of the application book and to paragraph [249] of the application book.  Your Honours will see paragraph [249] at the very bottom of the page, page 131, that his Honour Justice Olsson poses the question in these terms:

At the end of the day the question to be posed and answered is that expressed by Hodgson JA in Brodyn Pty Ltd v Davenport, namely, whether a requirement being considered was intended by the legislature to be an essential precondition for the existence of an adjudicator’s determination.

Now, the words “essential precondition” come from his Honour Justice Hodgson’s judgment in that case and doubt has been cast upon the correctness of the analysis by Justice Hodgson in that case in a later decision of the Court of Appeal of New South Wales which we referred to on written submissions called Chase Oyster Bar v Hamo Industries and in particular, at paragraph 32 of that judgment. 

Your Honours, that is one possible error in relation to the matter, that is, that the scope of jurisdictional error identified by his Honour Justice Olsson was limited in that way.  But the more important issue is the one identified in the very next paragraph, paragraph [250].  His Honour posed it in terms of:

whether objective non-compliance with the contract stipulations . . . had the practical effect that [there were] no relevant payment claims, within the meaning of the statute –

Your Honours will have before you in a supplementary book of materials a copy of the Construction Act as at the relevant time.  If I could ask your Honours turn to page 6 of that book, your Honours will see that the relevant pages are numbered in the bottom right‑hand corner.  Your Honours will see that 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; or

(b) -

Now, relevantly, we are concerned with subparagraph (a).  In relation to that definition of subparagraph (a), his Honour Justice Olsson dealt with the words under a construction contract and gave to them what I might refer to as a dictionary definition, but does not seem to, in his consideration, have given consideration to subparagraph (a).  If I could ask your Honours to turn to page 128 of the application book and to paragraph [234] at the top of that page, your Honours will see that his Honour Justice Olsson says:

In my opinion such an approach has the practical effect of ignoring the existence and significance of the word “under” in the statutory definition of “payment claim”.

[235]  According to its normal English connotation, that word signifies “in accordance with . . . to list but a few of the many applicable dictionary expressions of meaning.

He then applies that in paragraph [236] and at paragraph [237] he then rejects the approach argued for by the applicant in the court below, or what seems to be the approach argued for by the applicants in the court below.

FRENCH CJ:   We are looking here, are we, at an interaction between the construction of the terms of the contract and the provisions of the Act?

MR TOKLEY:   Yes, your Honour, we are.  The relevant definition that the court is required to consider is that the payment claims differ, subparagraph (a).  For the reasons just given, his Honour does not seem to take into account the impact of subparagraph (a) upon the words “under a construction contract”.  If one looks at subparagraph (a), it is fairly clear that it is a claim by the contractor for payment of an amount in relation to the performance by the contractor of its obligations under the contract.  Now, the relevant claims were considered by the adjudicator.  Your Honours will find the adjudicator’s decision ‑ ‑ ‑

FRENCH CJ:   These are the claims set out in 13 invoices.

MR TOKLEY:   Yes, your Honour, that is correct, yes.

FRENCH CJ:   Then followed by a summary invoice?

MR TOKLEY:   Correct, your Honour, yes.  If your Honours go to iv and v of the application book, your Honours will see at paragraph 19 clause 12.2 of the contract refers to “Payment Claims thus”.  It says:

The subcontractor must give -

and then relevantly subparagraph (d):

which sets out the total value of work completed in accordance with the subcontract to the date of the claim, the amount previously paid to the subcontractor and the amount then claimed -

If your Honour then goes to page v and to the adjudicated consideration of subparagraph (d), the adjudicator considered that all of the invoices were non‑compliant but the reasons he gives for that are essential.  In the first sentence:

None of the invoices listed provides a total value of work completed in accordance with the contract -

requirement, but then the second sentence is equally important: 

Each of the invoices is a stand alone document relating solely to the work as listed or nominated for the relevant period. 

Now, it can be argued that the relevant invoices complied with the definition of “payment claim” within the meaning of the Act because they related solely to the work as lists were nominated for the relevant period of time and in so doing identified a claim made under a construction contract in relation to the performance by the contractor of its obligations under the contract.

FRENCH CJ:   So far we are looking at the point of contractual construction feeding into the term “payment claim” under the Act.  How do you elevate that to a special leave point?

MR TOKLEY:   Your Honour, the legislation in question has similar or analogous legislation throughout Australia.

FRENCH CJ:   I appreciate that.  There are some wrinkles in the Northern Territory though, are there not?

MR TOKLEY:   There are, your Honour.  There is also the question in the particular case of the Northern Territory where, as your Honours will see from our reply, we have listed all the various Court of Appeal decisions and single judge decisions made by judges of the Northern Territory which touch upon this legislation and the different cases give different consideration to this legislation and there are, in effect, conflicting interpretations of the legislation.

So that a decision by this Court on this particular case and on this particular legislation would clarify for the Northern Territory courts the matters that it raised in this particular case, but generally speaking, your Honours would also have to consider the decisions which are mentioned in our reply, decisions of the Northern Territory Court of Appeal which touch upon this legislation and which, at the moment, seem to conflict with each other.

So that although it is true, your Honour, that this legislation does not have exact parallels in other States in Australia, nevertheless, a decision from your Honours would, in my respectful submission, be in the interest of the administration of justice as required by sections 35AA of the Judiciary Act and for that purpose, would warrant a grant of special leave to appeal.

Your Honours, the criticism we make of her Honour Justice Kelly’s decision can be seen perhaps best by turning to first of all page 77 of the application book and starting at paragraph [79].  Your Honours will see in the last sentence of that paragraph, her Honour approached the disposition of the appeal on a different basis from his Honour Justice Olsson.  In paragraph [80], the last half of that paragraph where her Honour said:

In my view, the critical issue in this appeal is that set out in Ground 2.3 . . . that adjudications may only be reviewed where it is shown that the adjudicator’s satisfaction as to the requirements of s 28(1) is either unreasonable or based on an incorrect understanding of the true construction of s 33 and or s 28 -

of the Act.  In our respectful submission, that is not a fact, not correct as a matter of law.  It is not supported by the decisions her Honour refers to in her judgment and it limits the scope for judicial review and the grounds upon which judicial review may apply in these circumstances.  Her Honour clarifies that question in paragraph [81] where she says in the second sentence:

The important question is whether the adjudicator’s decision to proceed to a determination on the merits on the basis of a finding that the application for adjudication had been brought within time was a decision that was amenable to review by the Supreme Court.  In my view, for the reasons which follow, it was not, and it is therefore unnecessary to go on to determine whether the adjudicator was right or wrong in determining that question.

In our respectful submission, the conclusion that her Honour comes to there is incorrect as a matter of law.  As a matter of statutory construction, the adjudicator in this case was to adjudicate upon a dispute.  A dispute relevantly only arises where a payment claim has been made and where that payment claim has not been met and then an application for an adjudication follows within 90 days of the dispute arising.

That was the approach taken by his Honour Justice Southwood.  It was also the approach taken by his Honour Justice Olsson, the Acting Justice.  In my respectful submission, that is the proper starting point and analysis of the matters in this case.  Her Honour overlooked that – not overlooked – her Honour did not consider that matter when she reached the decision that it was a subsequent step only that could be relevantly reviewed for the purposes of the legislation – perhaps as a judicial review. 

Your Honours, the errors that I have identified in a summary form are, of course, covered at some length in the applicant’s summary and the grounds upon which we seek special leave and the reasons for special leave are also covered in the applicant’s summary.  There is not much that can usefully be done further in relation to oral submissions.  There is only the question whether it would be of assistance if I took your Honours to the passages in the Chase Oyster Bar Case, which was the relevant Court of Appeal decision which ‑ ‑ ‑

FRENCH CJ:   What was the process your client followed in this case?  You went off to the Supreme Court, did you not, from the adjudicator?  Was it open to you to seek review under section 48 in the Local Court?

MR TOKLEY:   Arguably not.

FRENCH CJ:   Arguably not.  We are just sort of seeing an inflation of litigation arising out of what is meant to be obviously a quick and easy method of resolving disputes where there is a statutory review process

provided for in the Local Court and instead we are off arguing about jurisdictional errors and privative clauses and goodness knows what else.

MR TOKLEY:   Your Honour, one of the special leave questions raises section 48 – the first special leave question raises section 48 of the Act.  Do your Honours have section 48, page 28?  Your Honours will see that it is only in certain circumstances that a decision or determination of an adjudicator can be considered by the Local Court and the courts below have in almost all cases, it seems, come to the conclusion that section 48(3) acts as a privative clause to exclude review by the Local Court other than on the grounds of jurisdictional error. 

Whether that be right or wrong is one of the questions that we raise in the application for special leave to appeal.  It is put against us that, and with great respect incorrectly so, that this was not an issue that was agitated in the courts below.  It was certainly a matter that his Honour Justice Mildren turned his mind to as to the question of whether non‑jurisdictional error could be the subject of review in such circumstances.

MR ROPER:   Your Honours, if I may assist, Roper in Darwin, the other thing to note is that if one turns to section 33(1) one sees that section 48 is only operative in certain circumstances where the adjudicator dismisses the application without proceeding for determination of the merits.

FRENCH CJ:   Yes, thank you, Mr Roper.

MR ROPER:   Therefore, it is simply not open, where the adjudicator does proceed with the determination of the merits to make application for review under that provision.

FRENCH CJ:   Thank you, Mr Roper.

MR TOKLEY:   That is the second part of the answer, thank you, your Honours.

FRENCH CJ:   Yes, thank you.  We will not need to hear from you, Mr Wyvill.

In our opinion the application raises a question of contractual construction and statutory construction which does not involve an issue of general principle of sufficient importance to warrant the grant of special leave to this Court.  Special leave will be refused with costs.

The Court will adjourn briefly to reconstitute.

AT 11.24 AM THE MATTER WAS CONCLUDED