KDV Sport Pty Ltd v Muggeridge Constructions Pty Ltd - [2019] QSC 178

SUPREME COURT OF QUEENSLAND

CITATION:

KDV Sport Pty Ltd v Muggeridge Constructions Pty Ltd & Ors [2019] QSC 178

PARTIES:

KDV-SPORT PTY LTD ABN 85 149 913 333

(Applicant)

v
MUGGERIDGE CONSTRUCTIONS PTY LTD ABN 63 130 842 572

(First Respondent)

AND

JENNY PHILLIPS (ADJUDICATION REGISTRAR)
(Second Respondent)

AND

JOHN TUHTAN (ADJUDICATOR J1190798)
(Third Respondent)

FILE NO/S:

BS No 13748 of 2018

DIVISION:

Trial Division

PROCEEDING:

Originating Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

23 July 2019

DELIVERED AT:

Brisbane

HEARING DATE:

12 February 2019

JUDGE:

Brown J

ORDER:

1. Pursuant to s 10 of the Civil Proceedings Act 2011 (Qld), it is declared that the adjudication decision dated 3 December 2018 and issued 4 December 2018 of the third respondent (Registered Adjudicator number J1190798) in adjudication application number QBCC 433299 (Adjudication Decision), purportedly made pursuant to the Building and Construction Industry Payments Act2004 (Qld), is void for want of jurisdiction.

2. The Adjudication Decision be set aside.

CATCHWORDS:

ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – JURISDICTIONAL MATTERS – where the applicant and first respondent entered into a contract in relation to the construction of student accommodation – where the first respondent served a payment claim under the Building and Construction Industry Payments Act 2004 (Qld) on the applicant for construction work done by the first respondent – where the applicant contended the payment claim was invalid but otherwise proposed in response to the payment claim to pay nil – where the first respondent applied for adjudication pursuant to s 21 of the Payments Act – whether the adjudicator’s decision was void for jurisdictional error because the first respondent did not provide a valid payment claim within the meaning of the Payments Act – whether the payment claim identified the construction work to which the claim related in order to satisfy the requirements in s 17(2) of the Payments Act

Building and Construction Industry Payments Act 2004 (Qld), s 17, s 26

Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391, considered

Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd (2005) 21 BCL 364, cited
Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248, distinguished

Leighton v Arogen [2012] NSWSC 1323, applied

Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) (2005) 64 NSWLR 462, cited

Neumann Contractors Pty Ltd v Peet Beachton Syndicate Ltd [2011] 1 Qd R 17, applied

Northbuild Constructions Pty Ltd v Central Interior Linings Pty Ltd [2012] 1 Qd R 525, applied

Peter’s of Kensington v Seersucker Pty Ltd [2008] NSWSC 897, distinguished

T & M Buckley P/L v 57 Moss Road P/L [2010] QCA 381, applied

Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2007] NSWSC 941, applied

Watkins Contracting Pty Ltd v Hyatt Ground Engineering Pty Ltd [2018] QSC 65, applied

COUNSEL:

M H Hindman QC with M Steele for the applicant

G D Beacham QC with M C…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2019] QSC 178
Decision Date: 23 July 2019

CaseChat Overview and Summary

KDV Sport Pty Ltd and Muggeridge Constructions Pty Ltd were parties to a construction contract for the building of student accommodation. The dispute arose when Muggeridge submitted a payment claim under the Building and Construction Industry Payments Act 2004 (Qld) for work completed, which KDV argued was invalid. KDV proposed to pay nothing in response to the claim. Muggeridge then applied for adjudication of the claim, which was conducted and found in Muggeridge's favour. KDV sought judicial review of the adjudicator's decision, arguing that the payment claim was invalid and therefore the adjudicator's decision was void for jurisdictional error.

The court had to determine whether Muggeridge's payment claim was valid under s 17(2) of the Payments Act, which requires that a payment claim identify the construction work to which the claim relates. The court found that the payment claim did not adequately identify the work done, particularly for variations that had not been received and for certain variations that had no description at all. The court also found that the mathematical errors and uncertainties in the claim further complicated the identification of the work done. The court held that the payment claim failed to be reasonably comprehensible, which is necessary for the principal to respond within the timeframe provided under the Act.

The court concluded that the payment claim was not valid under the Payments Act, and therefore the adjudicator's decision was void for want of jurisdiction. The court set aside the adjudicator's decision and declared it void. The court's decision was based on the requirement that a payment claim must identify the construction work in a reasonable way, and the claim in this case had failed to do so.

Orders

Orders of the court

1. Pursuant to s 10 of the Civil Proceedings Act 2011 (Qld), it is declared that the adjudication decision dated 3 December 2018 and issued 4 December 2018 of the third respondent (Registered Adjudicator number J1190798) in adjudication application number QBCC 433299 (Adjudication Decision), purportedly made pursuant to the Building and Construction Industry Payments Act 2004 (Qld), is void for want of jurisdiction.

2. The Adjudication Decision be set aside.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

As to the payment claim in respect of variations, while no description of work is provided, a number of the variations referenced by numbers have supporting paperwork which can be used as a reference point and is relevant to background knowledge. However, according to the Superintendent, no variations had been received for variations 12-16 and 19 at the time the payment claim was made.[51] The payment claim fails to identify the construction work at least in relation to the variations which had not been received by 20 August 2018 and in relation to variations 28-30. Further, in the case of three variations there is simply no description at all. [51]Affidavit of Ho, CFI 2, Exh DCH-04, p 245.Conclusion The matters identified by KDV do not simply relate to the interpretation of the payment claim and its scope and nature, as contended by Muggeridge, but rather its comprehensibility. There is no description of the work which is the subject of the claim. References to the total percentages of work claimed to date and the amount the subject of the claim does not sufficiently identify the work done. It is possible that KDV may have been able to determine what part of the work is being claimed out of the percentage by engaging in a process of reconstruction based on previous claims and amounts paid. However, as White J stated in Neumann Contractors, a payment claim which requires such an exercise would be contrary to the Payments Act, in circumstances where the payment schedule is required to be provided within 10 days of receipt of the payment claim under s 18. In that case, her Honour found a payment claim which referred to “Add previously claimed & unpaid” was not a valid payment claim, because it required the principal to engage in a careful analysis of the schedule exhibited to the summary setting out the work which was undertaken and marry that work with the amounts payable on the progress certificates to arrive at the outstanding items.[52][52]At [29]. The mathematical errors create further uncertainty as to the identification of the work done, given the figures cannot be reconciled in the case of more than half of the items and the bases for the percentages claimed are uncertain. Further, if Muggeridge’s approach was to claim for all the work done represented on a percentage basis and to credit the amounts paid, that approach was not reasonably comprehensible to a reasonable principal by the terms of this payment claim. The payment claim failed to identify all of the work for which it was claiming and only claimed the amount in “This Claim”, which is a different basis from that contended for by Muggeridge. Whatever form of claim a claimant chooses to adopt, it must identify in a reasonable way the construction work to which the claim relates. While the purpose of the scheme is to permit the quick resolution of payment claims, the claimant must at least be reasonably comprehensible, to permit the respondent to respond within the time frame provided under the Act. The payment claim in this case has failed to do so.

Ratio Decidendi

Legal Principle Established

Counsel for both KDV and Muggeridge made well-argued submissions which assisted the Court.Consideration As stated above, the factual background to the dispute is uncontentious. The contract was a lump sum contract for approximately $10.6 million. The work the subject of the contract related to student accommodation, consisting of the construction of a three storey accommodation complex and outdoor facilities. 50 trade packages had been the subject of the tender and formed part of the contract, as did the breakdown of the lump sum contained in the tender submission.[21] The contract price did not, however, contain separate sums for the different trade packages. The contract was for a single lump sum. Notwithstanding that, the different categories of the trade packages were used by the Superintendent when providing a certificate of its response to the progress claim in question.[22] That certificate was adopted by KDV as its payment schedule, save it modified its response in relation to some matters, if its primary position that the payment claim was invalid was unsuccessful.[23] [21]Affidavit of Ho, CFI 2, DCH-02 clause 1(e) and 1(d).[22]Affidavit of Ho, CFI 2, DCH-04, p 242.[23]Affidavit of Ho, CFI 2, DCH-04, from p223, particularly 227-228. The Superintendent of the contract at the relevant time was WT Partners. Under clause 37.2 of the contract, the Superintendent was to independently assess progress claims submitted under clause 37.1. It did not do so as agent of KDV. KDV’s primary submission to the adjudicator was that the payment claim was invalid and therefore there was no jurisdiction to adjudicate the claim under the Payments Act. It is uncontentious that if the payment claim did not satisfy s 17(2)(a) of the Payments Act, the claimant would not have satisfied a basic and essential requirement of the Payments Act and there would be no payment claim to enliven the adjudicator’s jurisdiction under the scheme. Even though the adjudicator had to consider the question of jurisdiction and did so in the present case, finding that there was jurisdiction, the Court must decide for itself whether the payment claim was compliant with s 17(2)(a) of the Payments Act.[24] [24]The adjudicator determining the payment claim did identify the construction work and was valid in accordance with the requirements of s 24(3)(a) of the Payments Act: Affidavit of Ho, CFI 2, DCH-01, p 14-16. The payment claim submitted by Muggeridge consisted of a one page document.[25] It contained 6 columns. The first was headed “trade breakdown”, the second “Total Amount”, the third “Total Paid to Date”, the fourth “Total Claim % to Date”, the fifth “Total Claimed Trade to Date” and the sixth “Progress Claim”. An extract of the payment claim submitted, highlighting particular items which have been the subject of submissions, is as follows: [25]Affidavit of Ho, CFI 2, DCH-03, p 222. Ms Hindman QC submits that each item under the heading “trade breakdown” does not provide anything more than a description of the category of work in the Trade Breakdown Schedule, rather identifying the actual construction work done to which the claim relates. That is evident on the face of the payment claim. Mr Beacham QC, however, states that no individual description of the work done is required and the Trade Breakdown Schedule is part of the contract and a matter which KDV has background knowledge of, which assists it to be able to identify the completed construction work the subject of the payment claim. While it may be accepted, as Muggeridge contends, that KDV is aware of the content of the Trade Breakdown Schedule, where there are some 51 categories of work in a sizeable contract with a number of components in the work to be undertaken, merely referring to the category of work does not identify the construction work itself to which the claim relates. The Court was not directed to anything contained in the trade breakdown from which the parties with background knowledge of the Trade Breakdown Schedule could identify the actual construction work which is the subject of the claim, save that it was submitted that common sense would indicate the order in which work occurred. However, many factors other than common sense can affect the order in which work is undertaken, such as the availability of materials, particular tradesmen or the weather. I am unpersuaded by that submission.

CITATION:	KDV Sport Pty Ltd v Muggeridge Constructions Pty Ltd & Ors [2019] QSC 178
PARTIES:	KDV-SPORT PTY LTD ABN 85 149 913 333 (Applicant) v MUGGERIDGE CONSTRUCTIONS PTY LTD ABN 63 130 842 572 (First Respondent) AND JENNY PHILLIPS (ADJUDICATION REGISTRAR) (Second Respondent) AND JOHN TUHTAN (ADJUDICATOR J1190798) (Third Respondent)
FILE NO/S:	BS No 13748 of 2018
DIVISION:	Trial Division
PROCEEDING:	Originating Application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	23 July 2019
DELIVERED AT:	Brisbane
HEARING DATE:	12 February 2019
JUDGE:	Brown J
ORDER:	1. Pursuant to s 10 of the *Civil Proceedings Act 2011* (Qld), it is declared that the adjudication decision dated 3 December 2018 and issued 4 December 2018 of the third respondent (Registered Adjudicator number J1190798) in adjudication application number QBCC 433299 (Adjudication Decision), purportedly made pursuant to the *Building and Construction Industry Payments Act2004* (Qld), is void for want of jurisdiction. 2. The Adjudication Decision be set aside.**
CATCHWORDS:	ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – JURISDICTIONAL MATTERS – where the applicant and first respondent entered into a contract in relation to the construction of student accommodation – where the first respondent served a payment claim under the Building and Construction Industry Payments Act 2004 (Qld) on the applicant for construction work done by the first respondent – where the applicant contended the payment claim was invalid but otherwise proposed in response to the payment claim to pay nil – where the first respondent applied for adjudication pursuant to s 21 of the Payments Act – whether the adjudicator’s decision was void for jurisdictional error because the first respondent did not provide a valid payment claim within the meaning of the Payments Act – whether the payment claim identified the construction work to which the claim related in order to satisfy the requirements in s 17(2) of the Payments Act Building and Construction Industry Payments Act 2004 (Qld), s 17, s 26 Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391, considered Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd (2005) 21 BCL 364, cited Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248, distinguished Leighton v Arogen [2012] NSWSC 1323, applied Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) (2005) 64 NSWLR 462, cited Neumann Contractors Pty Ltd v Peet Beachton Syndicate Ltd [2011] 1 Qd R 17, applied Northbuild Constructions Pty Ltd v Central Interior Linings Pty Ltd [2012] 1 Qd R 525, applied Peter’s of Kensington v Seersucker Pty Ltd [2008] NSWSC 897, distinguished T & M Buckley P/L v 57 Moss Road P/L [2010] QCA 381, applied Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2007] NSWSC 941, applied Watkins Contracting Pty Ltd v Hyatt Ground Engineering Pty Ltd [2018] QSC 65, applied
COUNSEL:	M H Hindman QC with M Steele for the applicant G D Beacham QC with M C…