Laing O'Rourke Australia Construction Pty Ltd v Samsung C&T Corporation

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: LAING O'ROURKE AUSTRALIA CONSTRUCTION PTY LTD -v- SAMSUNG C&T CORPORATION [2016] WASCA 130

CORAM: MARTIN CJ
McLURE P
NEWNES JA

HEARD: 2 & 3 MARCH 2016

DELIVERED : 21 JULY 2016

FILE NO/S: CACV 112 of 2015

BETWEEN: LAING O'ROURKE AUSTRALIA CONSTRUCTION PTY LTD
Appellant
AND
SAMSUNG C&T CORPORATION
First Respondent
GRAHAM IVAN ANSTEE-BROOK
Second Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :MITCHELL J
Citation  :LAING O'ROURKE AUSTRALIA CONSTRUCTION PTY LTD -v- SAMSUNG C & T CORPORATION [2015] WASC 237
File No  :CIV 1644 of 2015, CIV 1645 of 2015, CIV 1733 of 2015, CIV 1793 of 2015

Catchwords:

Statutory interpretation - Proper construction of s 6(a) of the Construction Contracts Act 2004 (WA) - When 'payment dispute' arises

Administrative law - Judicial review of determinations made by adjudicators pursuant to the Construction Contracts Act 2004 (WA) - Whether adjudicator committed jurisdictional error

Building and construction law - Construction Contracts Act 2004 (WA) - Application for leave to enforce adjudicator determination as judgment of the court - Principles governing grant or refusal of leave - Role of court in exercising discretion to grant or refuse leave in light of jurisdiction of adjudicator

Legislation:

Commercial Arbitration Act 1985 (WA), s 33
Commercial Arbitration Act 2012 (WA), s 36
Construction Contracts Act 2004 (WA), sch 1 div 5, s 6, s 10, s 30, s 31, s 32, s 33, s 40, s 43, s 46, s 48, s 54

Result:

Appeal (as consolidated) allowed in part

Category: A

Representation:

Counsel:

Appellant:     Mr D F Jackson QC, Mr S K Dharmananda SC & Mr M R Collins
First Respondent           :     Mr C G Colvin SC & Mr B A Millar
Second Respondent      :     No appearance

Solicitors:

Appellant:     Clyde & Co Australia
First Respondent           :     Herbert Smith Freehills
Second Respondent      :     No appearance

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

Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662
Blackadder Scaffolding Services (Aust) Pty Ltd and Mirvac Homes (WA) Pty Ltd [2009] WASAT 133
Cape Range Electrical Contractors Pty Ltd v Austral Construction Pty Ltd [2012] WASC 304
Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280
Craig v The State of South Australia (1995) 184 CLR 163
Devaynes v Noble (Clayton's Case) (1816) 1 Mer 572; (1816) 35 ER 781
Ferrier and Knight (as Liquidators of Compass Airlines Pty Ltd) v Civil Aviation Authority (1994) 55 FCR 28
Fuel Tank & Pipe Pty Ltd and Decmil Australia Pty Ltd [2010] WASAT 165
Hamersley Iron Pty Ltd v James [2015] WASC 10
Kirk v Industrial Court of New South Wales [2010] HCA 1; (2010) 239 CLR 531
Laing O'Rourke Australia Construction Pty Ltd v Samsung C&T Corporation [2015] WASC 237
Minister for Immigration and Citizenship v Li [2013] HCA 18; (2013) 249 CLR 332
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259
Northern Territory v Urban and Rural Contracting Pty Ltd [2012] NTSC 22; (2012) 31 NTLR 139
O'Donnell Griffin Pty Ltd v John Holland Pty Ltd [2008] WASC 58; (2008) 36 WAR 479
Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217; (2011) 43 WAR 319
Plaintiff M64/2015 v Minister for Immigration and Border Protection [2015] HCA 50
Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22; (2001) 206 CLR 57
Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57; (2000) 204 CLR 82
Re Weiss; Ex parte White v John Vicars & Co Ltd [1970] ALR 654
State of New South Wales (Ambulance Service of NSW) v McKittrick [2009] NSWCA 63
Uelese v Minister for Immigration and Border Protection [2015] HCA 15
Wei v Minister for Immigration and Border Protection [2015] HCA 51
MARTIN CJ:

Summary

The first respondent, Samsung C&T Corporation (Samsung), entered into a contract for the performance of various works associated with the development of an iron ore mine at Roy Hill, near Newman in the Pilbara region of Western Australia. In February 2014 Samsung entered into a subcontract with the appellant, Laing O'Rourke Australia Construction Pty Ltd (LORAC), for construction work generally described as 'port landside work' in respect of the port servicing the mine (Subcontract).
The Subcontract incorporated a provision permitting Samsung to terminate the Subcontract for its own convenience. Samsung exercised that right on 10 February 2015.
On 21 February 2015 LORAC and Samsung executed a deed which they described as an 'Interim Deed' which contained various provisions, including a provision which required Samsung to pay LORAC $45 million in three instalments. Samsung made the payments required by the Interim Deed between 24 February 2015 and 20 March 2015.
In the meantime, LORAC submitted an application for adjudication pursuant to the provisions of the Construction Contracts Act 2004 (WA) (Act). On 1 April 2015 the second respondent, Mr Graham Anstee‑Brook (Adjudicator),[1] issued a determination pursuant to the provisions of the Act in which he determined that Samsung was required to pay LORAC $20,965,076 by 5 pm on 13 April 2015 (First Determination).
[1] Appropriately the Adjudicator has not taken any active part in these proceedings.
On 7 April 2015 LORAC submitted another application for adjudication pursuant to the Act. On 1 and 4 May 2015 the Adjudicator issued his determination in respect of that claim, in which he determined that Samsung was required to pay LORAC a total of $23,175,442.01 by 5 pm on 8 May 2015 (Second Determination). Samsung did not make any further payments to LORAC as a consequence of either the First Determination or the Second Determination. LORAC commenced proceedings seeking leave to enforce the First Determination and the Second Determination as judgments of the court pursuant to s 43 of the Act. Samsung commenced proceedings for judicial review seeking orders quashing each of the First Determination and the Second Determination.
Samsung's applications for judicial review of the Adjudicator's determinations and LORAC's applications for leave to enforce the determinations as judgments of the court were heard together. The judge at first instance determined that Samsung's applications for judicial review should be upheld, and each of the Adjudicator's determinations quashed on the ground that the Adjudicator had exceeded the jurisdiction conferred by the Act. The trial judge refused LORAC's applications for leave to enforce each determination as a judgment of the court not only because he had concluded that each determination should be set aside, but also because he concluded that, on the proper construction of the Interim Deed, the amount of $45 million which Samsung had paid to LORAC could be appropriated against, and extinguished, Samsung's obligation to pay the amounts determined by the Adjudicator.
LORAC appeals to this court against each of the decisions upholding the judicial review applications, and also against each of the decisions refusing leave to enforce the First Determination and Second Determination as judgments of the court. On 17 August 2015, it was ordered that each of these four appeals be consolidated into a single appeal (CACV 112 of 2015).
For the reasons which follow, LORAC's appeal from the decisions to quash each determination made by the Adjudicator should be upheld, the orders quashing those determinations set aside and the applications for judicial review of those determinations dismissed. However, as the trial judge was correct to conclude that the Interim Deed, on its proper construction, permitted Samsung to appropriate the amounts which it had paid pursuant to its terms against the liabilities the subject of the Adjudicator's determinations, LORAC's appeals against the decisions of the trial judge to refuse leave to enforce the Adjudicator's determinations as judgments of the court should be dismissed.

The facts

It is appropriate to set the context for a consideration of the issues which arise in relation to each appeal with a reference to the relevant facts, in approximate chronological order, starting with the Subcontract.

The Subcontract

The Subcontract is dated 21 February 2014. The only parties to the Subcontract are Samsung (described as Contractor), and LORAC (described as Subcontractor). The Subcontract defines the works to be performed pursuant to its terms as the Subcontract Works, and generally describes them as landside works to be undertaken in connection with the construction of the port servicing the mine. Within the text of the Subcontract, works performed pursuant to its terms are denoted by the acronym WUSC.
The Subcontract incorporates various documents including General Conditions of Subcontract adapted from Australian Standard 4902-2000 (General Conditions), various parts of the Annexure to the General Conditions, documents defining the scope of work to be performed, and another document setting out the Contractor's project requirements. Clause 3 of the Subcontract prescribes an order of precedence as between those documents to be used for the resolution of any ambiguity, conflict or inconsistency between them. Pursuant to that clause, the General Conditions take precedence over all documents other than the formal Subcontract (which is very brief).

The General Conditions

Clause 2.1 of the General Conditions provides that the Subcontractor is to 'carry out and complete WUSC', and obliges the Contractor to pay to the Subcontractor the 'Subcontract Sum' as adjusted pursuant to the Subcontract. Item 6A of Part A of the Annexure to the General Conditions specifies the Subcontract Sum to be the amount of $205,398,786. However, by cl 1.1 of the General Conditions, the term 'Subcontract Sum' is defined to mean:
the value of the Subcontract Works actually performed, calculated on the basis of:
(a)Rates and Prices multiplied by actual quantities performed; plus
(b)any lump sum items performed,
as set out in the Bill of Quantities and adjusted by any additions or deductions which may be required to be made under the Subcontract.
In the same clause, the expression 'Rates and Prices' is defined to mean the rates set out in the Bill of Quantities for the execution of the WUSC. The same clause defines the term 'Bill of Quantities' to mean the Bill of Quantities and schedule of rates set out in Schedule 2 of Annexure Part I. That schedule is a lengthy document containing a description of each item of work specifying the quantities to be supplied pursuant to that item, and rates for the provision of the materials and the performance of the construction. The schedule also makes provision for the payment of costs other than direct construction costs, described as indirect costs, and which includes items such as mobilisation, demobilisation, insurance, etc. The total of the various items listed in the Bill of Quantities is equal to the amount specified in item 6A of Part A of the Annexure to the General Conditions - namely, $205,398,786.
The preamble to the Bill of Quantities (Schedule 1 of Annexure Part I) provides that quantities of direct work are to be measured net as fixed in place based on the construction drawings, and also provides that payment for indirect work is to be made by reference to Schedule 4 of Annexure Part I. That schedule provides that indirect costs claimed in each progress claim are to bear the same proportion of the total indirect costs as the proportion that direct works completed bears to the total cost of direct works. That same schedule provides that progress claims may include the value of procurement of items of bulk material prior to installation.

Progress Claims

Clause 37 of the General Conditions entitles the Subcontractor to claim progressive payment of the Subcontract Sum. The clause provides that the Subcontractor is to deliver a Progress Claim not later than the 25th day of each calendar month specifying 'the value of WUSC completed … ascertained by multiplying the relevant Rates and Prices and the corresponding quantities actually performed then adding the value of any items completed for which there is a fixed price or fixed lump sum in the Bill of Quantities, and including details of other moneys then due to the Subcontractor pursuant to the provisions of the Subcontract (which would include the entitlement to payment for indirect costs and for procurement of materials conferred by Schedule 4 of Annexure Part I, to which I have referred).
Clause 37 obliges the Contractor's Representative to issue a Progress Certificate not later than the 10th day of the following month specifying the amounts which he or she considers to be then payable 'on account of the Subcontract Sum'.[2]
[2] Clause 37.1(c).
Clause 37 also provides that within two days after the issue of a Progress Certificate, the Subcontractor shall be entitled to issue a Payment Claim to the Contractor in the amount of the Progress Certificate, which claim must be paid by the Contractor on or before the last day of the month in which the Payment Claim is submitted.[3]
[3] Clause 37.3.
Clause 37.4 provides:
Neither a Progress Certificate nor an invoice nor payment of moneys shall be evidence that the subject WUSC has been carried out satisfactorily. Payment other than Final Payment shall be payment on account only. At any time and from time to time, the Contractor's Representative may by a further certificate correct any error which has been discovered in any previous certificate, other than a Certificate of Practical Completion.
Clause 37.6 contains various provisions relating to the submission of a Final Payment Claim following completion of the Subcontract Works.
Clause 37.8 confers certain rights of set-off on the Contractor, in terms which it is unnecessary to particularise. The clause expressly provides that it 'will survive any termination of the Subcontract', giving rise to the clear inference that the other provisions of cl 37 are not intended to survive termination.

Termination

Clause 39A of the General Conditions is entitled 'Termination for convenience'. It is central to many of the issues raised in the appeals. It provides:
39A Termination for convenience
39A.l Right to terminate
Without prejudice to any of the Contractor's other rights or entitlements or powers under the Subcontract, the Contractor:
(a) may at any time for its sole convenience, including where the Main Contract has been terminated, by written notice to the Subcontractor terminate the Subcontract from the date stated in the notice; and
(b) may thereafter either itself or by third parties complete the uncompleted part of WUSC.
The termination of the Subcontract by the Contractor pursuant to this clause 39A.l shall be without prejudice to the rights of either party to recover damages in respect of any prior breach of contract by the other party.
39A.2 Costs
If the Contractor terminates the Subcontract under clause 39A.l, the Subcontractor:
(a) subject to clause 37.8 and the limitations (if any) set out in clause 6 of the Formal Instrument of Agreement, shall be entitled to payment of the following amounts as reasonably determined by the Contractor's Representative:
(i) for Subcontract Works carried out prior to the date of termination the amount which would have been payable if the Subcontract had not been terminated and the Subcontractor submitted a Payment Claim for Subcontract Works carried out to the date of termination;
(ii) the cost of plant or materials reasonably ordered by the Subcontractor for the Subcontract Works for which the Subcontractor is legally bound to pay provided that:
(A) the value of the plant or materials is not included in the amount payable under clause 39A.2(a)(i); and
(B) title in the plant and materials shall vest in the Contractor upon payment;
(iii) the reasonable cost of removing from the Site all labour, Constructional Plant and other things used in connection with WUSC,
(iv) the cancellation charge for the Sub-subcontracts and Subcontractor's Consultants.
but in no case shall the total amount payable to the Subcontractor under this clause 39A.2(a), when added to other amounts already paid and payable to the Subcontractor, be more than the Subcontract Sum as adjusted in accordance with the Subcontract; and
(b) shall:
(i) take all steps possible to mitigate the costs referred to in clauses 39A.2(a)(ii), (iii) and (iv);
(ii) immediately hand over to the Contractor all copies of any documents provided by the Contractor under this Subcontract; and
(iii) cause to be delivered to the Contractor any plant and materials referred to in clause 39A.2(a)(ii) or any unfixed plant and materials for which the Contractor has paid pursuant to clause 37.2.
The amount to which the Subcontractor is entitled under this clause 39A.2 shall be a limitation upon the Contractor's liability to the Subcontractor arising out of, or in any way in connection with, the termination of the Subcontract and the Subcontractor shall not make any Claim against the Contractor arising out of, or in any way in connection with, the termination of the Subcontract other than for the amount payable under this clause 39A.2 (as may be limited by clause 6 of the Formal Instrument of Agreement).
After the Subcontractor has satisfied its obligations under this clause 39A.2, the Contractor shall release all Securities to the Subcontractor then held by the Contractor.
This clause 39A.2 shall survive termination of the Subcontract by the Contractor under clause 39A.l.
It will be necessary to return to the proper construction and effect of this clause in the context of the issues raised in the appeal.

Progress payments

Following the commencement of the Subcontract Works, Progress Claims and progress payments were made in accordance with cl 37. On one occasion not presently relevant, a dispute with respect to the amount payable on a Progress Claim was referred to adjudication and was the subject of a determination under the Act. By 23 January 2015, Samsung had paid LORAC a total of $78,711,508 (exclusive of GST) in progress payments.[4]

The January Progress Claim

[4] Laing O'Rourke Australia Construction Pty Ltd v Samsung C&T Corporation [2015] WASC 237 [44] (Laing).

On 27 January 2015, LORAC submitted a Progress Claim to Samsung in respect of works performed during the preceding month (January Progress Claim). It seems that Samsung has not raised any issue arising from the fact that the claim was submitted two days after the date specified in cl 37. LORAC claimed an entitlement to a progress payment in the amount of $43,443,517.
On 1 February 2015, Samsung responded to the January Progress Claim by issuing a document described as an 'assessment' of the amount due in the sum of $16,954,744. As it seems to be common ground that Samsung was entitled to deduct an amount of $3,075,000 from the Progress Claim in respect of LORAC's repayment of an advance payment, the 'assessment' issued by Samsung reflected a dispute with respect to LORAC's entitlement to $23,413,773.[5] The 'assessment' was not issued by the person designated as the Contractor's Representative.

Termination for convenience

[5] $43,443,517 minus $16,954,744 minus $3,075,000 equals $23,413,773.

On 10 February 2015 Samsung exercised the right conferred by cl 39A.1 to terminate the Subcontract 'for its sole convenience'. No Progress Certificate relating to the January Progress Claim had been issued at the time Samsung served notice of termination upon LORAC, although, pursuant to cl 37, Samsung was obliged to issue a Progress Certificate in respect of the January Progress Claim on that day. It is common ground that Samsung was not obliged to issue a Progress Certificate following termination, as the portion of cl 37 which would otherwise have obliged Samsung to issue such a certificate is not expressed to survive termination of the Subcontract.

The Interim Deed

On 21 February 2015 Samsung and LORAC entered into a document described as an 'Interim Deed'. As cl 2 of the Interim Deed is of importance to the issues raised by the appeals, it is appropriate to set out its terms in full:
2Payment
2.1The Contractor must, pay to the Subcontractor:
(a)AUD45 million as follows:
(i)AUD30 million upon execution of this Deed, this being a pre-condition to all other obligations under this Deed;
(ii)AUD10 million upon novation of the Critical Novation Agreements;
(iii)AUD5 million upon novation of the Other Novation Agreements.
(b)Costs due to the Subcontractor under clause 39A.2 of the Subcontract including:
(i)for Subcontract Works carried out prior to the date of termination, being the amount which would have been payable if the Subcontract had not been terminated and the Subcontractor submitted a Payment Claim for Subcontract Works carried out to the date of termination;
(ii)the cost of plant or materials reasonably ordered by the Subcontractor for the Subcontract Works for which the Subcontractor is obliged to pay under the Subcontract provided the value of the plant or materials is not included in the amount payable under clause (i);
(iii)the reasonable costs of removing from Site all labour, Constructional Plant and other things used in connection with WUSC (Demobilisation Costs);
(iv)the cancellation charge for the Sub-subcontracts and Subcontractor's Consultants,
(together, the Termination Costs);
(c)the costs for Subcontract Works carried out on or from the date of termination of the Subcontract to the date of novation of the Sub-Subcontracts (including the Critical Novation Agreements and the Other Novation Agreements). The costs will be assessed by reference to the costs which would have been payable to the Subcontractor for the Subcontractor works at the date of novation of the Sub-contract, if the Subcontract had not been terminated. (Pre-Novation Costs);
2.2The payment of moneys referred to in clause 2.1(a) shall be on account only and shall not constitute:
(a)evidence that the Subcontractor has completed any WUSC; or
(b)a release or discharge by either party of any claim.
It will be noticed that the clause makes provision for the payment of costs for Subcontract Works carried out between the date of termination of the Subcontract and the date of novation of the Sub‑subcontracts. Arguably implicit in that provision is the assumption of an obligation by LORAC to continue to perform such works, notwithstanding the termination of the Subcontract. The provision of an entitlement to payment for works performed after termination of the Subcontract constitutes a departure from the rights and obligations of the parties specified in the Subcontract.
Clause 5 of the Interim Deed obliges LORAC to use reasonable endeavours to procure the novation of Sub-subcontracts between LORAC and other subcontractors described as 'Critical Novation Agreements' within seven days of the date of the Interim Deed, and an obligation to use reasonable endeavours to procure the novation of another category of Sub-subcontracts between LORAC and subcontractors described as 'Other Novation Agreements' within 28 days of the date of the Interim Deed. In this respect, the Interim Deed imposes temporal aspects upon the general obligation imposed by cl 9.2 of the Subcontract to novate the rights and obligations in any Sub-subcontract entered into by LORAC in the event of termination of the Subcontract.
Clause 6 of the Interim Deed obliged LORAC to use reasonable endeavours to facilitate the transfer of specified hire agreements and purchase orders to Samsung or its nominee. There is no equivalent obligation under the Subcontract.
Clause 4 of the Interim Deed provides:
4 Cooperation to resolve the final account
4.1In considering the Subcontractors entitlement under 39A.2 the Contractor and Subcontractor agree to negotiate in good faith using best endeavours to resolve all differences, disputes and Claims and achieve a negotiated outcome.
4.2Nothing herein shall prejudice the right of a party to institute proceedings to enforce obligations due under this Deed, to preserve any statutory entitlements or to seek injunctive or urgent declaratory relief.
Clause 10 of the Interim Deed provides:
10No admission
This Deed is entered into solely in connection with the practical handover and transition of WUSC following termination of the Subcontract by the Contractor. It is not, and will not be represented or construed by the parties as, an admission of liability or wrongdoing on the part of either party to this Deed or any other person or entity.
This clause may explain the inclusion of the words 'Without Prejudice' in the heading to the Interim Deed.

The February Claim

On 25 February 2015 LORAC submitted a claim for $54,713,156.41 in respect of works carried out prior to termination of the Subcontract on 10 February 2015 (February Claim). The judge at first instance noted that although Samsung had previously disputed LORAC's entitlement to submit that claim on the ground that it did not claim the whole of LORAC's asserted entitlements under cl 39A.2 of the General Conditions, Samsung did not press that contention in the proceedings before the judge.[6]

The First Adjudication Application

[6] Laing [55].

On 3 March 2015 LORAC applied to have a payment dispute which it contended had arisen in relation to the January Progress Claim adjudicated pursuant to the Act (First Adjudication Application). The Adjudicator was appointed to determine that application. In the application, LORAC sought payment of the amount of $16,954,744, being the amount 'assessed' by Samsung as payable in respect of the January Progress Claim, a further amount of just under $5 million in relation to work the subject of that claim, and approximately $3.8 million in respect of claims for work done as variations to the Subcontract, together with interest. The total amount sought by LORAC in the application was $25,700,429.65 plus interest.

The First Determination

The Adjudicator delivered his determination with respect to the First Adjudication Application on 1 April 2015. As I have noted, he determined that Samsung was required to pay LORAC $20,965,076 not later than 5 pm on 13 April 2015.
In the First Determination, the Adjudicator first addressed the matters specified in s 31(2)(a) of the Act and concluded that none of those matters required him to dismiss the application without making a determination of its merits.
The Adjudicator then referred to the Interim Deed and in that context observed:[7]
Of note is that the [Interim Deed] makes no mention of the payment claim and progress certificate which in my view are the subject of this adjudication. On the contrary at clause 4.2 of the [Interim Deed] the following is found:
Nothing herein shall prejudice the right of a party to institute proceedings to enforce obligations due under this Deed to preserve any statutory entitlements or to seek adjunctive [sic] or urgent declaratory relief.
In my view it was always open to [Samsung] to ensure clarity if [Samsung] wished the payments under the [Interim Deed] to be made in respect of the claims the subject of this adjudication. I infer from the failure of [Samsung] to do so that there was nothing in the [Interim Deed] to preclude LORAC making an application for adjudication or applying for any other relief pursuant to clause 4.2 of the [Interim Deed] and determine that the [Interim Deed] and the payments thereunder do not preclude LORAC from a determination under this Application. Further I determine that any payments made pursuant to the [Interim Deed] were not payments on account of any claims by LORAC the subject of this adjudication. (original emphasis)
[7] First Determination [11.5].
After dealing with a preliminary issue,[8] the Adjudicator then referred to the January Progress Claim and expressed the view that it constituted a 'payment claim' pursuant to the Act, and the further view that the assessment issued by Samsung on 1 February 2015 constituted a rejection of part of the amount claimed, thus giving rise to a 'payment dispute' within the meaning of s 6 of the Act.
[8] Which is not relevant to these proceedings.
The Adjudicator then addressed the specific aspects of LORAC's detailed claim for payment, and made findings with respect to the amount properly payable in respect of each item claimed. The total of those amounts was $23,945,302, from which the advance payment of $3,075,000 was deducted, giving an amount due to LORAC of $20,870,302, to which was added $94,774 in respect of interest between 11 February and 2 April 2015.[9] Although the First Determination refers to Samsung's termination of the Subcontract,[10] and to cl 37 of the General Conditions in the context of the Adjudicator's consideration of whether the January Progress Claim was a 'payment claim' within the meaning of s 6 of the Act, no reference is made in the determination to cl 39A of the General Conditions.

The Second Adjudication Application

[9] It is not clear why the Adjudicator allowed interest with effect from 11 February 2015, given that, if and to the extent that cl 37 of the General Conditions continued to define the obligations of the parties as a result of incorporation within cl 39A of the General Conditions, Samsung was not obliged to pay any amount due in respect of the January Progress Claim until 28 February 2015. The First Determination contains no reasons for allowing interest from that date.

[10] First Determination [13.3].

On 7 April 2015 LORAC applied pursuant to the Act for the adjudication of a payment dispute which it contended had arisen in respect of matters the subject of the February Claim (Second Adjudication Application). In that application, LORAC claimed $30,866,224 in respect of completed Subcontract Works, including direct and indirect costs, and a further amount of just under $24 million in respect of various works said to be variations to the Subcontract Works, giving rise to a total claim of $54,713,156.47 plus interest from 25 March 2015.

The Second Determination

The Adjudicator issued the Second Determination in respect of the Second Adjudication Application in two parts. In the part of the determination issued on 1 May 2015, the Adjudicator referred to the application and to Samsung's termination of the Subcontract pursuant to cl 39A. As with the First Determination, the Adjudicator then addressed the matters specifically identified in s 31(2)(a) of the Act and concluded that none of those matters required him to dismiss the application without making a determination of its merits.
The Adjudicator again referred to the Interim Deed, and on this occasion cl 2 of the Interim Deed is set out in full within the determination. The Adjudicator then observed:[11]
[Samsung argues] that the sum of $45 million has been paid in part satisfaction of the post termination payment obligations contained in clause 39A.2.
LORAC argues that the payment of $45 million was in respect of LORAC's claims for payment which had been submitted prior to Christmas 2014 which were outstanding at the time of executing the Interim Deed and which exceeded the amount payable under the Interim Deed. This is the evidence given by Marcus Alan Carne in his statutory declaration (Carne) which forms part of the Application.
Carne gives evidence that he was involved in the negotiation of the Interim Deed and was involved in the events leading up to the execution of the Interim Deed.
There is no denial by [Samsung] of the allegation made by Carne as to the reasons for paying the $45 million. [Samsung] argue that under the Interim Deed all payments are on account and that the $45 million must be taken as a payment on account which together with all payments to date exceeds the amount claimed by LORAC.
[Samsung] argue that I should not consider the negotiations surrounding and prior to the execution of the Interim Deed. [Samsung] concedes that an adjudicator pursuant to section 32(1)(b) [sic] of the [Act] is not bound by the rules of evidence and may inform himself as thought fit the without prejudice discussions should not have regard to evidence regarding the construction or interpretation of a contract [sic]. In my view it is not necessary to make any findings in this regard given what follows.
I accept the evidence of Carne and note that clause 2.1 of the Interim Deed provides for three discrete payment regimes being payment of $45 million, payment pursuant to clause 39A.2 of the subcontract and payment in respect of Subcontract Works post termination. The Interim Deed whilst stating that payments are on account provides further that nothing in the Deed prejudices a party's right to institute proceedings and preserves any statutory entitlements. That I find includes an entitlement to make this Application.
Given the structure of the Interim Deed in clause 2.1 it was open to [Samsung] at the time of negotiating the Interim Deed to clearly stipulate that the payment of $45 million was to be linked to amounts due to LORAC under clause 39A.2. No such link was made.
I am not persuaded that the payment of $45 million is to be setoff against any amount that may be due under the February Claim. (original emphasis)
[11] Second Determination, 1 May 2015 [11.5] - [11.10].
The Adjudicator next addressed various arguments advanced by Samsung in support of the proposition that the application should be summarily dismissed. In that context, the Adjudicator considered and made determinations with respect to the interaction between cl 39A.2(a)(i) and cl 39A.2(a)(ii), and rejected Samsung's submission that pursuant to cl 39A.2 LORAC was only entitled to make one claim and Samsung only required to carry out one assessment of that claim. As I have noted, Samsung did not pursue that submission before the judge at first instance.
The Adjudicator then addressed an argument by Samsung to the effect that it had already paid LORAC in excess of what has been generally described as 'the cap' imposed by that part of cl 39A.2 which provides that the total amount payable to the Subcontractor under that clause, when added to other amounts already paid and payable to the Subcontractor, shall not be more than the Subcontract Sum as adjusted in accordance with the Subcontract. In that context, the Adjudicator noted Samsung's submission that it had 'provisionally calculated the capped amount at $127,639,635' and that LORAC had already been paid $144,680,448.36. After providing details of Samsung's calculation of the respective amounts, the Adjudicator observed:[12]
I am of the opinion that there are too many vagaries to assess the capped amount given the allegations by [Samsung] of damages claims and any further claims which will be brought by LORAC (as stated in the Application) pursuant to clause 39A.2. Such claims pursuant to the Interim Deed must include any entitlement that LORAC has pursuant to clause 2.1(c) of the Interim Deed.
I am not satisfied as to any quantum of any capped amount and this argument of [Samsung] is rejected. (original emphasis)
[12] Second Determination, 1 May 2015 [14.2] - [14.3].
The Adjudicator then dealt with an argument advanced by Samsung based on an entitlement to set off amounts said to be owing by LORAC (as opposed to appropriating the amount of $45 million paid to LORAC pursuant to the Interim Deed to satisfy the liabilities found). As Samsung no longer advances those contentions, it is unnecessary to deal with this aspect of the determination.
The Adjudicator then turned his attention to the various aspects of LORAC's claim, starting with LORAC's claim for extra costs because of the need to accelerate the works because Samsung was late in providing drawings and models of the works to be performed. In that context, the Adjudicator noted that the Second Adjudication Application provided a lengthy chronology in support of LORAC's contention that the acceleration costs were incurred as a result of Samsung's tardiness, and noted Samsung's denial of that assertion.
The Adjudicator then referred to an email dated 13 November 2014 from an officer of Samsung to LORAC in which Samsung advanced a proposal said to be:
[i]n consideration of the placing of the aforementioned contracts with CIVMEC and to expedite the delivery of fabricated steel and assemblies to site [Samsung] will consider compensating [LORAC] by the following mechanism …
Note: this is a without prejudice offer and [Samsung] reserves its rights under the Subcontract if both parties cannot reach agreement.
The Adjudicator then observed:[13]
Whilst there is a substantial dispute between the parties as to liability I am satisfied that [Samsung] accepted that it has some responsibility for the acceleration measures taken by LORAC. Whilst the offer in the correspondence of 13 November 2015 [sic] is said to be without prejudice in my view the without prejudice aspect related to the quantum of the amounts to be paid as opposed to there being an acknowledgement by [Samsung] that LORAC was entitled to some payment.
The contention that LORAC's claims for acceleration should be dismissed is rejected.
[13] Second Determination, 1 May 2015 [18.5] - [18.6].
The Adjudicator repeated this conclusion later in his determination and expressed the view that after considering the method of calculating the claim articulated by LORAC in the Second Adjudication Application, he was satisfied that the acceleration claim had been made out.[14]
[14] Second Determination, 1 May 2015 [19.13].
After considering specific aspects of the claims made in the Second Adjudication Application, including most particularly the claims for payment for work said to be variations to the Subcontract, the Adjudicator determined that the total amount payable in respect of the acceleration claim and those variations and certain other specific items of work was $8,260,571.36, together with interest accruing from 28 [sic 26] March 2015, being 28 days after the date upon which the February Claim was submitted.[15] Accordingly, the Adjudicator determined that Samsung was obliged to pay LORAC the total amount of $8,287,786.01 not later than 5 pm on 8 May 2015.
[15] Relying upon a term to be implied into the Subcontract pursuant to sch 1 div 5 of the Act.
On 4 May 2015, the Adjudicator published the second part of his determination in respect of the Second Adjudication Application. In the preface to that determination the Adjudicator noted that he had received an email from LORAC following the publication of his initial determination on 1 May 2015 in which it was contended that he had failed to make any determination in respect of LORAC's claim for payment for work done in the amount of $25,916,643. In that context, the Adjudicator observed that he had failed to deal with that claim 'by inadvertent error' and that, as a consequence, there was no legal impediment to him proceeding to determine that aspect of LORAC's claim on its merits.
In the second part of the determination he then addressed the various components of that claim and made findings with respect to the amounts properly payable in respect of each component, concluding that Samsung was obliged to pay LORAC the further sum of $14,887,656 including a component of $52,836 in respect of interest calculated between 26 March 2015 and 4 May 2015, together with ongoing interest calculated from 5 May 2015 until the date of payment.

The proceedings at first instance

As I have noted, after paying the amount of $45 million pursuant to the Interim Deed, Samsung made no further payment to LORAC in consequence of either the First Determination or the Second Determination under the Act. In consequence, as I have also noted, LORAC commenced separate proceedings seeking leave to enforce each of the First Determination and Second Determination as judgments of the court. Also in separate proceedings, Samsung applied for judicial review of each of the First Determination and Second Determination and for orders quashing those determinations.

The reasons of the judge at first instance

In his reasons the judge noted that by the end of the hearing, there were three live issues which required his resolution, namely:[16]
1.Should the First Determination be quashed because there was no payment dispute, or alternatively because the adjudicator did not properly form an opinion that there was a payment dispute?
2.Should the First and Second Determinations be quashed because the adjudicator failed to exercise or understand his adjudicative function, adopted illogical and irrational reasoning or made an unreasonable decision?
3.Should leave to enforce the First and Second Determinations be refused because the determinations are invalid or because the payments on account required by those determinations have already been made under the Interim Deed?
It will be convenient to deal with the issues raised by the appeals by reference to the same structure.

The first issue - payment dispute

[16] Laing [92].

The judge noted that Samsung's proposition that the First Determination was invalid because there was no 'payment dispute' within the meaning of the Act to enliven the jurisdiction of the Adjudicator depended upon the proposition that s 6(a) of the Act, properly construed, had the effect that no payment dispute could arise prior to the time at which the amount claimed in a payment claim was due to be paid pursuant to the provisions of the contract. For reasons to which I will return, the judge concluded that s 6(a) of the Act was not to be construed in that way, but rather on the basis that a payment dispute arose if a payment claim had been rejected or disputed wholly or in part. It followed that the judge rejected Samsung's submission that the First Determination had been made without jurisdiction.
However, the judge accepted all other aspects of Samsung's argument relating to this issue, including the submission that the right to receive progress payments under cl 37 of the General Conditions did not survive termination of the contract; the submission that the terms implied by the Act into the Subcontract had the effect that payment was not due under cl 39A.2 of the Subcontract until 28 days after a claim for payment was made pursuant to that clause; and the submission that the existence of a payment dispute was a condition to the valid invocation of the power of adjudication conferred by the Act. It followed that if the judge had accepted Samsung's submission with respect to the proper construction of s 6(a) of the Act, he would have concluded that there was no 'payment dispute' at the time the First Adjudication Application was made on 3 March 2015. That is because any obligation to pay the January Progress Claim by the end of February 2015 had not survived termination of the Subcontract, and the first claim for payment made pursuant to cl 39A.2 was not made until 25 February, with the result that no payment was due in respect of that latter claim until 26 March 2015.

The second issue - jurisdictional error

The judge at first instance commenced his consideration of the second issue with a review of a number of authorities dealing with the ambit of jurisdictional error, before applying the principles which he distilled from those authorities to an assessment of the ambit of the jurisdiction conferred upon an Adjudicator by s 31(2)(b) of the Act. Noting that the jurisdiction conferred by the Act was limited to disputes arising under construction contracts, and that the Adjudicator's task was to determine, on the balance of probabilities, whether any party to the payment dispute is liable to make a payment, the judge concluded that the Adjudicator was required, by s 31(2)(b) of the Act, to apply the common law of Australia relating to contractual construction[17] to the provisions of the Subcontract.
[17] As modified by any applicable legislation, including the Act.
In that context, the judge expressed the following views:[18]
[18] Laing [215] - [219].
For the provisions of pt 3 of the Act to have practical utility, the adjudicator must be given authority to wrongly determine some questions of law without the resulting determination being necessarily invalid. That proposition is supported by:
1.the purpose of the Act;
2.the adjudication process for which the Act provides, involving an expedited determination by a person who will not ordinarily have legal qualifications; and
3.the provisions enabling the parties to a payment dispute to subsequently litigate the legal merits of the claim.
The proposition that not every error by an adjudicator in the interpretation of a construction contract is a jurisdictional error finds support in decisions of courts construing legislation which is broadly similar to the Act. It has been held that, under similar Queensland legislation:
An adjudicator who misconstrues or misapplies a relevant contractual provision and, as a result, does not correctly decide the amount of the progress payment, if any, to be paid to the claimant does not, for that reason alone, make a jurisdictional error.
In Northbuild Construction Sunshine Coast Pty Ltd v Beyfield Pty Ltd, Philip McMurdo J observed:
To determine an application, an adjudicator must identify the relevant terms of the contract upon which the claim is made and then apply the facts, as he or she finds them to be, to those terms upon their proper interpretation. The identification of the terms and the interpretation of those terms are thereby questions which the adjudicator must answer in the exercise of his jurisdiction. It follows that an error in the identification of the terms or in their interpretation will not be a jurisdictional error.
However, where it appears that an adjudicator is not meaning to apply the contract, as he or she interprets it, but is instead allowing the claim upon some other basis, the position is different, because the adjudicator is thereby misunderstanding the scope of the adjudicator's jurisdiction. (citations omitted)
I do not read the last paragraph quoted above as expressing the view that an adjudicator will not make a jurisdictional error so long as he or she means to apply the contract. Rather, the passage provides one example of how an adjudicator may commit jurisdictional error by misunderstanding the scope of his or her jurisdiction. Nor do I understand these decisions to deny that a misconstruction of a contractual provision might amount to a jurisdictional error in circumstances where the error gives rise to an inference that the adjudicator has misunderstood the nature or scope of his or her statutory function.
I agree with Samsung's submission that s 31(2)(b) requires that the liability to make the relevant payment must be ascertained by reference to the terms of the construction contract which are before the adjudicator. The adjudicator will fail to perform that task, and will misapprehend his or her statutory function, if the adjudicator determines the merits of the payment dispute otherwise than by reference to the terms of the construction contract which are before him or her. To act in that manner is to exceed the authority conferred by s 31(2)(b) of the Act. However, a determination of the merits of a payment dispute by reference to the terms of the construction contract will not be invalid merely because those terms are misconstrued. (footnotes omitted)

Jurisdictional error - the First Determination

The judge then proceeded to apply these views to an assessment of the validity of the First Determination. He noted that although the Adjudicator referred in the First Determination to cl 37 of the General Conditions in the context of deciding whether there was a payment dispute, he made no reference to either that clause or to cl 39A.2 as the source of the provision in the Subcontract which gave rise to Samsung's liability to make a payment.[19]
[19] Laing [228].
The judge then expressed the conclusion that if the Adjudicator had turned his mind to the identification of the contractual source of Samsung's liability to make a payment, he must have concluded that the only source of such a liability was cl 39A.2, as none of the relevant portions of cl 37 of the Subcontract had survived termination. This led the judge to the following conclusions:[20]
Therefore, the only reasonable manner in which the payment dispute concerning the January Progress Claim could have been resolved by reference to the terms of the Subcontract was to determine that Samsung was not liable to pay the January Progress Claim, because the clauses which would otherwise have given rise to Samsung's liability to pay that claim had not survived termination of the Subcontract.
Inferred error
In all the circumstances, the inference to be drawn from:
1.the failure of the adjudicator to refer to cl 39A.2(a) of the General Conditions or explain how relevant parts of cl 37 survived termination; and
2.the adjudicator's conclusion as to liability, which could not have been reached on any reasonable application of the terms of the Subcontract,
was that the adjudicator failed to determine the payment dispute by reference to the terms of the Subcontract. This means that the adjudicator failed to engage in the task which s 31(2)(b) of the Act required him to undertake, and must have misapprehended the nature of the function which he was required to perform. The Act did not authorise the First Determination, which was the product of that exercise.
[20] Laing [233] - [234].
The judge went on to observe that his conclusion was reinforced by the Adjudicator's award of interest from 11 February 2015, as there was no reasonable basis upon which cl 39A.2 could have imposed an obligation upon Samsung to make payment by that date.[21]

Jurisdictional error - the Second Determination

[21] Laing [235] - [236].

The judge at first instance commenced his consideration of the validity of the Second Determination with the observation that the Adjudicator did refer to cl 39A.2(a) of the General Conditions in making that determination. He went on to observe:[22]
The question remains whether he determined the payment dispute concerning the February Claim by reference to that term of the Subcontract, in a manner authorised by s 31(2)(b) of the Act.
[22] Laing [237].
In the view of the judge, before the Adjudicator could be properly satisfied that Samsung was liable to make a payment under cl 39A.2 of the General Conditions, he needed to be satisfied on the balance of probabilities of three matters:[23]
1.The amount would have been payable for the Subcontract Works which were the subject of the February Claim had the Subcontract not been terminated and had LORAC submitted a Payment Claim for those works.
2.The payment of that amount would not, when added to amounts already paid or payable to LORAC, be more than the Subcontract Sum adjusted in accordance with the Subcontract.
3.Samsung was not entitled to deduct money from that amount under cl 37.8 of the General Conditions.
The third of these matters can be excluded from further consideration, as Samsung now concedes that there is no issue with respect to its entitlement to deduct moneys by way of set-off pursuant to cl 37.8 of the General Conditions (other than the appropriation of the money paid in accordance with the Interim Deed).
[23] Laing [238].
The judge expressed the view that the Adjudicator did not address the second issue identified 'by reference to the terms of the Subcontract in the manner required by s 37(2)(b) [sic] of the Act'.[24] The reasons given for that conclusion were:[25]
In relation to the Subcontract Sum, the adjudicator noted, and did not reject, Samsung's submission that the adjusted Subcontract Sum was provisionally calculated at $127,639,635. He concluded that 'there are too many vagaries to assess' that amount and that he was not satisfied as to any quantum of that amount.
However, before he could find that Samsung was liable, the adjudicator had to be satisfied that the payment he was ordering would not result in the total payments exceeding the adjusted Subcontract Sum. Section 31(2)(b) of the Act required that he be satisfied Samsung was liable on the balance of probabilities.
By determining that Samsung was liable to pay without finding that the adjusted Subcontract Sum would not be exceeded, the adjudicator failed to apply the standard of proof mandated by s 31(2)(b) of the Act, and failed to apply the concluding words of cl 39A.2(a) in determining the dispute.
[24] Laing [239].
[25] Laing [240] - [242].
The judge was reinforced in his conclusion that the Adjudicator had not resolved the payment dispute by reference to the terms of the Subcontract by his view of the approach taken by the Adjudicator with respect to LORAC's acceleration claim. He observed:[26]
Further, the adjudicator resolved the dispute about LORAC's acceleration claim by reference to what was said by a representative of Samsung in a letter attempting to resolve a dispute about the matter. That the letter was written on a 'without prejudice' basis does not require a conclusion that the adjudicator committed jurisdictional error. That the adjudicator was clearly mistaken about the fact that Samsung admitted liability in that letter also does not entail jurisdictional error. However, the fact that the adjudicator resolved the dispute about the acceleration claim by reference to what was said in the letter, rather than what was provided for in the Subcontract, is another example of the adjudicator failing to resolve the payment dispute by reference to the terms of the Subcontract.

Jurisdictional error - the judge's conclusion

[26] Laing [247].

The reasons which I have summarised led the judge to the following conclusion:[27]
In both the First Determination and the Second Determination, the adjudicator failed in fundamental respects to determine the relevant payment dispute by reference to the terms of the Subcontract. In doing so, the adjudicator failed to determine the payment disputes in a manner authorised by s 31(2)(b) of the Act, and evidenced a misapprehension of the nature and scope of the function he was required to perform under that subsection. It follows that the purported determinations are invalid, and certiorari should issue to quash them …
[27] Laing [248].
Because of this conclusion, the judge observed that it was unnecessary for him to resolve Samsung's assertions to the effect that the reasoning of the Adjudicator 'manifested illogicality or irrationality', or that the determinations were 'so unreasonable in result that no reasonable adjudicator would have so concluded'.[28] He also observed that it was unnecessary for him to resolve the question of whether the Adjudicator had committed jurisdictional error by fundamentally misunderstanding the rules of contractual construction by taking into account the subjective view of one of the participants in negotiations to the Interim Deed in the proper construction of that deed. In the latter context, the judge expressed the view that the Interim Deed was not itself a construction contract within the meaning of the Act, because it did not 'oblige LORAC to carry out construction work or supply goods or services'.[29]

The third issue - leave to enforce the determinations

[28] Laing [249].

[29] Although no party to the appeal has challenged this conclusion, nor addressed argument in relation to it, as I have noted, it is at least arguable that the Interim Deed, by implication, obliges LORAC to continue to perform the Subcontract Works notwithstanding termination of the Subcontract until the Sub-subcontracts were effectively novated, in return for the entitlement to payment for such work conferred by cl 2 of the Interim Deed. It is also at least arguable that to the extent that the Interim Deed has the effect of varying the rights and obligations conferred by the Subcontract, which is a 'construction contract', the Interim Deed is also a 'construction contract'.

Having concluded that each of the determinations was invalid and should be quashed, obviously the applications for leave to enforce the determinations as judgments of the court had to be dismissed. However, the judge went on to consider the question of whether, on the proper construction of the Interim Deed, leave to enforce should be refused on the ground that the payments required by the determinations had already been made. The judge considered that to be a question for the court to determine, without being bound by the determination purportedly made by the Adjudicator on that question.
The judge concluded that the reference in cl 2.2 of the Interim Deed to the payment of $45 million being 'on account only' must be construed as payment on account of Samsung's liability under cl 39A.2(a). He noted that although cl 4.2 of the Interim Deed recognised that LORAC could make an application for adjudication under the Act, it did not require payments under the Interim Deed to be ignored when an adjudicator determined a payment dispute or when LORAC sought leave to enforce such a determination.[30]
[30] Laing [272].
Although the judge referred to extrinsic evidence with respect to the absence of claims other than those which might be made under cl 39A.2(a) at the time of execution of the Interim Deed, in the result he did not rely upon that evidence in arriving at his conclusions with respect to the proper construction of the Interim Deed.[31]
[31] Laing [273].
Accordingly, as the trial judge had concluded that the payment of $45 million was made 'on account' of Samsung's liability pursuant to cl 39A.2(a), and as each of the determinations were made in respect of that liability, appropriation of the $45 million paid to those liabilities extinguished Samsung's obligations in respect of each determination. The judge concluded that irrespective of the validity of each determination, leave to enforce the judgments as determinations of the court should be refused on the ground that the liabilities the subject of those determinations had been satisfied by payment.

The first issue - was there a payment dispute at the time of the First Adjudication Application?

Samsung has filed a notice of contention in which it asserts that the decision of the judge at first instance to quash the First Determination should be upheld on the ground that there was no 'payment dispute' within the meaning of s 6 of the Act at the time LORAC made the First Adjudication Application on 3 March 2015, with the result that the application conferred no jurisdiction upon the Adjudicator.
This contention is to be evaluated in a context in which neither party has contested the judge's conclusions that:
(a)the existence of a 'payment dispute' within the meaning of s 6 of the Act at the time an application for adjudication is made is a fact upon which the jurisdiction of an adjudicator appointed pursuant to that application depends;
(b)the obligation imposed upon Samsung by cl 37 of the Subcontract General Conditions to make a payment to LORAC in respect of the January Progress Claim on the last day of February 2015 did not survive termination of the contract; and
(c)as at 3 March 2015, Samsung was not obliged to make any payment to LORAC pursuant to the obligations imposed by cl 39A.2 of the General Conditions.
As no argument has been addressed to any of these issues, resolution of the issue raised by Samsung's notice of contention should proceed on the assumption that the judge was correct to arrive at these conclusions. If those assumptions are made, it follows that Samsung was not liable to make any payment to LORAC at the time the First Adjudication Application was made on 3 March 2015. It also follows that resolution of the issue raised by Samsung's notice of contention turns entirely upon the question of whether a present obligation to make payment is a condition of the existence of a 'payment dispute' within the meaning of s 6 of the Act.

Relevantly to the circumstances of this case, s 6 of the Act provides:
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 issue of construction presented by Samsung's notice of contention is essentially whether the reference to the time when the amount claimed in a payment claim is due to be paid qualifies only the circumstance that the amount has not been paid in full, or whether it also qualifies the circumstances in which the claim has been rejected or wholly or partly disputed. If the qualification applies to all the circumstances in which a payment dispute arises under s 6(a) at the time the First Adjudication Application was lodged, there was then no 'payment dispute', because the time at which Samsung was due to make payment in respect of the amount claimed by LORAC had not arrived. It would follow that the application conferred no jurisdiction upon the Adjudicator, and Samsung's notice of contention must be upheld. On the other hand, if that qualification applies only to the circumstance in which the dispute arises as a result of the amount claimed in a payment claim not being paid when due, and not to the other circumstances in which a payment dispute might arise, by 3 March 2015, the payment claim comprised in the January Progress Claim had been partly disputed by Samsung, by the issue of the 'assessment' on 1 February 2015, thus giving rise to a 'payment dispute' within the meaning of s 6(a) (as the Adjudicator held).

The judge's construction of s 6(a) of the Act

The judge at first instance observed that the proper construction of s 6(a) in relation to the issue raised by Samsung's notice of contention was not the subject of binding authority in which the question had been contested, but referred to the decision in Northern Territory v Urban and Rural Contracting Pty Ltd.[32] However, that decision was made with respect to differently worded legislation. The judge noted that there were two decisions of the State Administrative Tribunal in which the construction of s 6(a) for which LORAC contended was adopted by the Tribunal,[33] although, as the judge noted, plainly those decisions did not bind him. I respectfully agree with the judge's review of prior authority.
[32] Northern Territory v Urban and Rural Contracting Pty Ltd [2012] NTSC 22; (2012) 31 NTLR 139 [16] - [20].
[33] Blackadder Scaffolding Services (Aust) Pty Ltd and Mirvac Homes (WA) Pty Ltd [2009] WASAT 133; Fuel Tank & Pipe Pty Ltd and Decmil Australia Pty Ltd [2010] WASAT 165.
The judge gave two reasons for accepting the construction of s 6(a) of the Act for which LORAC contended. First, as he noted, on Samsung's construction, the words 'or the claim has been rejected or wholly or partly disputed' within s 6(a) would be otiose and serve no purpose. While he accepted that those words would have some application in a case in which payment had been made in full notwithstanding that the claim had been rejected or disputed, he considered that to be an unlikely scenario. He also observed that in such a scenario, the adjudication process for which the Act provides would be pointless. The process of adjudication is designed to achieve a payment on account which does not finally determine the rights and liabilities of any party. If payment has been made in full, no purpose would be served by an adjudication. The judge observed that by contrast, the construction for which LORAC contended gave practical content to all the words in s 6(a). On that construction a payment dispute arises if the amount claimed has not been paid in full by the time payment is due, or if the claim has been rejected or disputed prior to the time for payment.
Second, the judge considered that the construction for which LORAC contended better achieved the purpose of the legislation, which was to facilitate the speedy resolution of disputes to ensure that money continues to flow to subcontractors while works are being performed. The judge further noted that the terms to be implied in a construction contract pursuant to sch 1 of the Act, in the absence of express provisions within the contract, require a party receiving a payment claim to give notice of dispute within 14 days after receiving the claim, but do not require payment until 28 days after receipt of the claim. In other words, the regime for which the Act makes provision in default of express contractual provisions allows for disputes to arise before payment is due. The judge also observed that it was inconsistent with the purpose of the Act to require a contractor whose claim has been rejected or disputed to wait until payment is due before commencing the adjudication process. In his view, the construction of the Act for which LORAC contended advanced the purpose of the adjudication regime established by the Act, whereas the construction for which Samsung contended detracted from the achievement of that purpose.[34]
[34] Laing [136].
The judge dealt with the submissions made by Samsung in support of the construction of the Act for which it contended. First, Samsung argued that the construction of s 6(a) for which it contended increased the certainty of operation of the Act, because the time by which payment was due to be made could be readily ascertained by a proper construction of the contract. Samsung submitted that by contrast, there may be factual disputes as to the time at which a payment claim was rejected or disputed. Certainty of the date upon which a payment dispute arises is significant because an adjudication application can only be made within 28 days of that date.
The judge observed that it could not safely be assumed that identifying the date upon which a payment dispute arises by reference to the date upon which payment was due provided greater certainty. As he noted, uncertainty may arise with respect to the construction or application of the terms of the contract relating to the time at which payment was to be made. I digress to observe that the terms of the Subcontract applied to the circumstances of this case illustrate that observation.
Next, the judge rejected Samsung's submission that it was unlikely that Parliament intended parties to be strictly barred from seeking adjudication under the Act by reference to a time period calculated from a date before payment was due under the construction contract. In the view of the judge, it was consistent with the general scheme of the Act that a party to a construction contract be required to act promptly once a payment claim had been rejected or disputed. On the construction for which Samsung contended, if a payment claim was made under a contract which provided for payment up to 50 days[35] after the claim had been made, even if the claim was immediately rejected or disputed, the party making the claim would have to wait up to 50 days before being in a position to apply for adjudication. The judge expressed the view that such a construction of s 6(a) of the Act was inconsistent with its evident objectives.
[35] Section 10 of the Act requires any provision in a construction contract that provides for payment more than 50 days after a claim is made to be read as requiring payment within 50 days.
The judge also rejected Samsung's submission that the construction for which LORAC contended would cause a fundamental interference with the contractual rights of the parties at common law, by enabling a determination to be made by an Adjudicator requiring payment to be made prior to the time at which payment was due under the contract. In the judge's view, the construction of s 6(a) for which LORAC contended did not have that result. While it enabled a determination to be made prior to the time at which payment was due under the contract, s 31(2)(b)(ii) requires an adjudicator to determine the date on or before which the amount the subject of any determination is to be paid. The judge did not see any reason for reading that provision as authorising the Adjudicator to determine that payment was due at a time prior to the date upon which payment was due under the construction contract.
Samsung's submission that the construction of s 6(a) of the Act for which LORAC contended was inconsistent with the provisions of the Act relating to the determination of interest payable was also rejected by the judge, for similar reasons. The judge noted that s 33(1)(a) of the Act authorised a determination with respect to interest payable only 'if the payment is overdue under the construction contract' and noted that those words would be otiose if Samsung's construction of s 6(a) of the Act was accepted, because, on that construction, a determination could only be made if payment was overdue. The judge also observed that while s 33(1)(b) authorised an adjudicator to award interest calculated from the date the payment dispute arose, there was no reason to construe that provision as authorising an adjudicator to interfere with contractual rights by awarding interest calculated from a date prior to the date upon which payment was due under the construction contract.
The judge also rejected Samsung's submission based upon the structure of s 6 of the Act. In that submission, Samsung contended that it was apparent from the structure of s 6 that the draftsperson had used a separate subsection to identify any alternative circumstance in which a payment dispute arose. However, in the view of the judge, the structure of s 6 was to be explained by the fact that each of the subsections deals with a different subject matter. Section 6(a) of the Act deals with payment claims. Section 6(b) deals with the return of retained money and s 6(c) deals with the return of securities.[36] Nor did the judge consider that the construction for which Samsung contended was compelled by the use of a comma after the word 'contract' in s 6(a). In his view any inference to be drawn from the use of punctuation was far from compelling.
[36] Laing [152].
Finally on this issue the judge noted that both parties had referred him to extrinsic parliamentary materials relating to the passage of the Act. He did not consider that those materials shed any light on the proper construction of s 6(a) of the Act, other than to confirm the conclusion which he had drawn as to the purpose of the Act from a consideration of its provisions.
For these various reasons, the judge at first instance accepted the construction of s 6(a) for which LORAC contended, which necessarily led to the rejection of Samsung's submission that there was no 'payment dispute' at the time LORAC submitted the First Adjudication Application on 3 March 2015.

Samsung's submissions in support of the notice of contention

Samsung relied entirely upon its written submissions in support of its contention that the judge at first instance was wrong to conclude that there was a payment dispute at the time the First Adjudication Application was submitted. Those submissions essentially replicate the submissions which Samsung had placed before the judge.

The payment dispute issue - disposition

Samsung's submissions with respect to the proper construction of s 6(a) of the Act should be rejected for the reasons given by the judge. Further, LORAC's submissions with respect to the proper construction of that section should be accepted, again for the reasons given by the judge. As I am unable to fault those reasons, or improve upon them, no purpose would be served by repeating them. In short, the construction of s 6(a) of the Act for which Samsung contends would render words in that section otiose and redundant, and would be inconsistent with the evident objectives of the Act. None of the matters advanced by Samsung in support of its contention, properly analysed, support a contrary conclusion. That aspect of Samsung's notice of contention which asserts that the trial judge was wrong to determine that there was a 'payment dispute' at the time of the First Adjudication Application should be dismissed.

The second issue - did the Adjudicator exceed the jurisdiction conferred by the Act?

As the plurality observed in Kirk v Industrial Court of New South Wales:[37]
It is neither necessary, nor possible, to attempt to mark the metes and bounds of jurisdictional error.
The High Court has referred on a number of occasions to '[t]he difficulty of drawing a bright line between jurisdictional error and error in the exercise of jurisdiction'.[38]
[37] Kirk v Industrial Court of New South Wales [2010] HCA 1; (2010) 239 CLR 531 [71] (Kirk).
[38] Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57; (2000) 204 CLR 82 [162]. See also Craig v The State of South Australia (1995) 184 CLR 163, 177 - 180; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22; (2001) 206 CLR 57 [80] - [81].
Any attempt to define the boundaries between jurisdictional and non‑jurisdictional error by reference to verbal formulations of general application is likely to be bedevilled by an inevitable inexactitude of language and the risk that any particular formulation will be vulnerable to the perception of differing nuances of meaning when any such formulation is applied to the particular circumstances of any individual case. Those difficulties became manifest in this case when, perhaps courageously in light of the observations in the High Court to which I have referred, senior counsel for Samsung promised to identify the jurisdiction of an adjudicator under the Act by identifying a boundary which would be both 'satisfying' and 'very clear'.[39] However, during the course of oral argument, senior counsel utilised differing formulations of that boundary, including:
[39] Appeal ts 58.
·a fundamental failure to apply the construction contract;[40]
[40] Appeal ts 58.
·not actually being controlled by the terms of the contract;[41]
[41] Appeal ts 58.
·putting the contract to one side;[42]
[42] Appeal ts 58.
·a determination bearing no connection to the contract;[43]
[43] Appeal ts 59.
·a determination unconstrained by the contract;[44]
[44] Appeal ts 59.
·not applying the terms of the contract;[45]
[45] Appeal ts 59.
·disregarding the contract;[46]
·making a determination 'beyond the confines of the contract';[47]
·a determination not 'limited by the terms of the construction' contract;[48]
·no engagement with the construction contract;[49]
·not reasoning by reference to the contract;[50]
·reasoning to a conclusion other than by applying the provisions of the contract;[51]
·bypassing the contract;[52]
·'not bringing the contract to bear' in making the determination;[53] and
·not bringing to bear the provisions of the contract,[54]
each of which was said to take an adjudicator beyond the jurisdiction conferred by the Act.
[46] Appeal ts 59.
[47] Appeal ts 59.
[48] Appeal ts 61.
[49] Appeal ts 62.
[50] Appeal ts 65.
[51] Appeal ts 68 - 69.
[52] Appeal ts 72.
[53] Appeal ts 72.
[54] Appeal ts 74 - 75.
Differing terminology was also used at different points in Samsung's written submissions dealing with this issue. That terminology included:
·'failure to discharge the function of adjudication by reference to the terms of the contract';[55]
·acting 'based upon an untenable view of the contract';[56]
·making a decision 'that was not guided by the contract in any real sense';[57] and
·not making an adjudication 'by reference to the terms of the contract',[58]
each of which is also submitted to take an adjudicator beyond the jurisdiction conferred by the Act.
[55] Samsung's submissions [43].
[56] Samsung's submissions [43].
[57] Samsung's submissions [43].
[58] Samsung's submissions [43].
In Craig v The State of South Australia,[59] the High Court held that despite the difficulty of defining the boundary between jurisdictional and non‑jurisdictional error of law with precision, guidance could be derived from the characterisation of the decision‑maker as either akin to an inferior court or an administrative tribunal.[60] Such characterisation is most pertinent in cases in which the decision‑maker is said to have exceeded his or her jurisdiction by making an error of law, because it is well accepted that, generally speaking, inferior courts have jurisdiction to make errors of law, whereas an error of law on the face of the record of an administrative decision‑maker may provide grounds for the issue of the writ of certiorari. It was in that context that Murphy JA[61] observed (in obiter) in Perrinepod Pty Ltd v Georgiou Building Pty Ltd[62] that the jurisdiction of an adjudicator under the Act was more akin to that of an inferior court than that of an administrative tribunal, while noting that it was not necessary to resolve the scope of judicial review of determinations made by an adjudicator for the purposes of that appeal.
[59] Craig v The State of South Australia (1995) 184 CLR 163 (Craig).
[60] Craig (176 - 177).
[61] With whom I agreed.
[62] Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217; (2011) 43 WAR 319 [118] (Perrinepod).
In Kirk, the plurality noted certain difficulties and reservations with respect to the application of the process of characterisation propounded in Craig.[63] As they pointed out, the distinction between a court and an administrative tribunal may not always be drawn easily at State level because the constitutional arrangements of the States do not require the same separation of powers required at a federal level by Ch III of the Constitution.[64] The plurality also noted that because the only decisions of inferior courts which can be described as 'authoritative' are those which are not attended by jurisdictional error, the observation that inferior courts have authority to decide questions of law 'authoritatively' is unhelpful, as it begs the question of whether the particular error identified has taken the inferior court beyond the boundaries of its jurisdiction.[65]
[63] Kirk [67] - [70].
[64] Kirk [69].
[65] Kirk [70].
The reasons of the plurality in Kirk, and other observations in more recent decisions of the High Court on the subject of jurisdictional error,[66] support an approach to the identification of jurisdictional error which does not place undue emphasis upon the application of general verbal formulations or the characterisation of functions. Rather, the current approach focuses upon identification of the boundaries of the jurisdiction conferred upon a decision‑maker by a process of construction of the statute conferring jurisdiction, and then assessing whether the particular acts of the decision‑maker have taken him or her beyond jurisdiction. In other words, the identification of jurisdictional error in any particular case will depend critically upon the proper construction of the particular statute conferring jurisdiction, and the findings made with respect to the particular acts which are said to have taken the decision‑maker beyond jurisdiction.
[66] See, eg, Uelese v Minister for Immigration and Border Protection [2015] HCA 15; Wei v Minister for Immigration and Border Protection [2015] HCA 51.
Applying that approach to this case, s 31(2)(b) confers, relevantly, jurisdiction to 'determine on the balance of probabilities whether any party to the payment dispute is liable to make a payment'.
That terminology compels the conclusion that jurisdiction depends upon the existence of a 'payment dispute' within the meaning of the Act. Other conditions upon which the jurisdiction to make a determination depends can be found within s 31(2)(a), including a condition that the payment dispute arises under a 'construction contract' within the meaning of the Act; the service of an application for adjudication prepared in accordance with the Act; that another decision‑maker has not made an order, judgment or finding in relation to the dispute the subject of the application; and the lack of a determination by the adjudicator that it is not possible to fairly make a determination because of the complexity of the matter or the prescribed time or any extension of that time is not sufficient.

LORAC's reliance upon the portion of cl 2.2 of the Interim Deed which provides that the payment of moneys pursuant to cl 2.1(a) is not to be a discharge of any claim must be rejected for the reasons I have already given. In short, the effect of cl 2.2 is to provide that Samsung's act of paying money to LORAC 'on account' is not, of itself, to be treated as the discharge of any claim. However, the description of those payments as being 'on account' clearly and necessarily connotes that they will be appropriated to the satisfaction of Samsung's liabilities at some point after the payments were made. The question is to what liabilities could they be appropriated, and when.
For the reasons I have already given, there is a clear inference from cl 2 as a whole that the payments to be made pursuant to cl 2.1(a) are on account of, perhaps among other things, but at least on account of, the liabilities to which specific reference is made in cl 2.1(b) and cl 2.1(c).
On the question of when such appropriations could occur, LORAC submits that cl 2, properly construed, provides that no appropriation was to take place until what was described by senior counsel for LORAC as 'the final wash‑up which is contemplated by cl 4.1, and that is a negotiation in good faith to resolve all differences and achieve a negotiated outcome'.[96] That proposition is said to be supported by cl 2.2, which prevents the payments from 'discharging' any claim.
[96] Appeal ts 47, 144.
That submission must be rejected. If cl 2.2 is read in the manner for which Samsung contends, it would prevent the payments made pursuant to cl 2.1(a) from ever being applied to the discharge of any claim by LORAC, irrespective of whether such a claim was ascertained and quantified in the course of a progressive process or in 'the final wash‑up'. As I have noted, Samsung did not renew its submission to the Adjudicator to the effect that the Interim Deed, on its proper construction, contemplated only one claim by LORAC, or only one negotiated outcome. Rather, as I have also noted, because the payments to which express reference is made in cl 2.1(b) and cl 2.1(c) include costs which had not been incurred at the time the Interim Deed was executed, and costs which had not then been quantified, there is nothing in the Interim Deed which excludes the prospect that LORAC's claims might be ascertained and quantified progressively. To the contrary, the reference in cl 4.1 to 'all differences, disputes and Claims' in the plural connotes the parties' contemplation that more than one claim for payment might be made by LORAC.
LORAC also complains of the judge's reference to extrinsic evidence (or the lack thereof) which suggested that at the time the Interim Deed was executed there was no evidence of any claim by LORAC other than under cl 39A.2(a). LORAC submits that there was such evidence, in the form of an acceleration claim which had been made during 2014 and not accepted by Samsung.
There are a number of points to be made in response to this submission. First, and perhaps most significantly, the judge at first instance did not rely upon this evidence in his construction of the Interim Deed.[97] Second, the question which the judge was addressing was not whether there were claims known to the parties other than claims the subject of the January Progress Claim at the time the Interim Deed was executed. Rather, the question which the judge was addressing was whether there were claims known to the parties which arose other than under cl 39A.2(a). It is at least arguable that the acceleration claim which had been foreshadowed by LORAC is a claim which had to be made pursuant to cl 39A.2(a), because it relates to the performance of Subcontract Works prior to termination of the Subcontract. Third and in any event, as I have already noted, the question of whether claims under cl 39A.2(a) were the only claims contemplated by the parties at the time they executed the Interim Deed is, with respect to the judge at first instance, not to the point. Rather, the question is whether claims of that character were amongst the liabilities within the contemplation of the parties at the time they executed the Interim Deed, and of that there can be no doubt.
[97] Laing [264], [273].
I respectfully agree with the judge's observation that extrinsic evidence with respect to the precise state of the claims known to the parties at the time they executed the Interim Deed is irrelevant to its proper construction. As I have noted, the terms of the deed which expressly contemplate the lodgement of further claims by LORAC are

quite sufficient to enable the Interim Deed to be properly construed, without reference to evidence as to the precise state of the claims contemplated at any particular point in time. For the same reason, the application which LORAC made to this court to adduce additional evidence with respect to the current state of those claims should be dismissed.

There is nothing in the written or oral submissions advanced on behalf of Samsung which leads to a different conclusion with respect to the proper construction and effect of the Interim Deed than that which I have set out above.

Conclusion with respect to the third issue and leave to enforce the determinations

The construction of the Interim Deed which I favour leads to the same conclusion as that to which the judge arrived,[98] to the effect that Samsung's obligation to pay the amounts the subject of each determination had been satisfied by the appropriation of moneys standing to its credit in the running account between the parties as a consequence of the payments made pursuant to cl 2.1(a) of the Interim Deed. It follows that each appeal against the judge's refusal to grant leave to enforce the determinations must be dismissed.
[98] Albeit for somewhat different reasons.

Conclusion

For these reasons, the appeals against the judge's decision to quash each determination made by the Adjudicator should be allowed, the judge's decision in that respect set aside and instead Samsung's applications for judicial review of the determinations dismissed. However, LORAC's appeals against the judge's decision to refuse leave to enforce the determinations as judgments of the court should be dismissed, and the judge's dismissal of those applications confirmed.
McLURE P: I agree with the Chief Justice that the appeal should be dismissed. Subject to the particular matters addressed below, I agree with the Chief Justice's reasons.
I propose to address the proper construction of s 6(a) of the Construction Contracts Act 2004 (WA) (the Act) and the related question of whether the existence of a payment dispute is a condition precedent to the validity of a determination under s 31(2)(b) because it is a jurisdictional fact or for any other reason. I also propose to state my own

reasons for dismissing ground of appeal 3 relating to enforcement of the Adjudicator's determinations.

The background is detailed in the reasons of the Chief Justice. I adopt his definitions and abbreviations.

Construction of s 6

Section 6 of the Act defines both what is a 'payment dispute' and when it arises for the purposes of the Act. That is relevant to who and when a person may make an application to have a payment dispute adjudicated under pt 3 div 3 of the Act.
Under s 25, subject to exceptions not presently relevant, if a payment dispute arises under a construction contract, any party to the contract may apply to have the dispute adjudicated under pt 3.
Section 26 specifies the time within which an application must be made and served, the contents of the application and the attachments that must accompany it. The applicant must apply within 28 days after the payment dispute arises.
The object of an adjudication of a payment dispute under the Act is to determine the dispute fairly and as quickly, informally, and inexpensively as possible (s 30). The primary aim is to keep the money flowing in the 'contracting chain', a feature of the construction industry, by enforcing timely payment and sidelining protracted or complex disputes. Consistently with that object, s 31 relevantly provides:
(2)An appointed adjudicator must, within the prescribed time or any extension of it made under section 32(3)(a) ‑
(a)dismiss the application without making a determination of its merits if ‑
(i)the contract concerned is not a construction contract;
(ii)the application has not been prepared and served in accordance with section 26;
(iii)an arbitrator or other person or a court or other body dealing with a matter arising under a construction contract makes an order, judgment or other finding about the dispute that is the subject of the application; or
(iv)satisfied that it is not possible to fairly make a determination because of the complexity of the matter or the prescribed time or any extension of it is not sufficient for any other reason;
(b)otherwise, determine on the balance of probabilities whether any party to the payment dispute is liable to make a payment, or to return any security and, if so, determine ‑
(i)the amount to be paid or returned and any interest payable on it under section 33; and
(ii)the date on or before which the amount is to be paid, or the security is to be returned, as the case requires.
(3)If an application is not dismissed or determined under subsection (2) within the prescribed time, or any extension of it made under section 32(3)(a), the application is to be taken to have been dismissed when the time has elapsed.
In the Act's definition section (s 3), the term 'payment dispute' is said to have the meaning given to that term in s 6. Section 6 provides:
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;
(b)by the time when any money retained by a party under the contract is due to be paid under the contract, the money has not been paid; or
(c)by the time when any security held by a party under the contract is due to be returned under the contract, the security has not been returned.
Thus, in order to have a 'payment dispute' there must first be a 'payment claim'. The term 'payment claim' is defined, relevantly, to mean a claim 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.
In first instance decisions of this court, the meaning of 'payment dispute' has become entangled with the question whether the function of the adjudicator in s 31(2)(b) of the Act is akin to an inferior court with jurisdiction to authoritatively decide questions of law (as discussed in Craig v The State of South Australia (1995) 184 CLR 163) and whether the matters in s 31(2)(a)(i) ‑ (iv) are jurisdictional facts in the narrow sense or broad sense (as discussed in Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217; (2011) 43 WAR 319.
A jurisdictional fact in the narrow sense requires the actual existence of the relevant fact. A jurisdictional fact in the broad sense requires the decision‑maker's opinion, satisfaction or belief as to the relevant matter. See Aronson M and Groves M, Judicial Review of Administrative Action (5^th ed, 2013) [4.470] ‑ [4.490]. A decision‑maker's opinion, satisfaction or belief, it if exists, is open to challenge for jurisdictional error.
In Cape Range Electrical Contractors Pty Ltd v Austral Construction Pty Ltd [2012] WASC 304 [69], [84] Pritchard J held that the matters in s 31(2)(a)(i) ‑ (iv) are jurisdictional facts in the broad sense which the adjudicator is authoritatively entitled to determine, with any review of that determination being confined to whether the adjudicator had reached an opinion on the subject and whether the opinion is legally reasonable (in the enlarged sense used in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 [68]). In reaching that conclusion, Pritchard J referred to the need for a 'payment dispute' as follows:
First, the criterion in s 31(2)(a)(ii) requires the making of a judgment about whether the legal criteria set out in s 26 have not been met. Those legal criteria include the existence of a 'payment dispute' … and that the application for adjudication was brought within 28 days after the payment dispute arose. Determining whether those criteria are met will involve the construction of the contract between the parties in dispute. In some cases, the contract may be very clear as to when, and in what circumstances, a payment dispute arises. In other cases (and the present case is one example, as I discuss below) the answer to the question as to whether and when a payment dispute arises will be far from clear on the face of the contract, and may involve questions of contractual interpretation. Those considerations suggest that the criterion in s 31(2)(a)(ii) is unlikely to have been intended to be a jurisdictional fact in the 'narrow' sense [79].
These observations relating to if and when a payment dispute arises informed Pritchard J's conclusion that the matters in s 31(2)(a)(i) ‑ (iv) are jurisdictional facts in the broad sense. Cape Range has been followed in a number of cases, including Hamersley Iron Pty Ltd v James [2015] WASC 10 [52] ‑ [54]. The primary judge in this case expressed reservations about the correctness of Cape Range [176] ‑ [179].
In Craig, the High Court held that the scope of judicial review for jurisdictional error differs according to whether the decision‑maker was an inferior court, which has jurisdiction to authoritatively decide (some) questions of law, or an administrative tribunal, which does not have such jurisdiction. Craig has now been explained in Kirk v Industrial Court of New South Wales (2010) 239 CLR 531 [66] ‑ [70]. It is unnecessary to decide what is left of Craig. What is clear is that the non‑existence of a jurisdictional fact in either the narrow or broad sense (as a condition precedent to the existence of jurisdiction or power) always results in invalidity, whether the decision‑maker be an inferior court or a body exercising administrative powers: Craig (177). It is also accepted that an adjudicator's decision under s 31(2)(b) of the Act is not reviewable for non‑jurisdictional error of law on the face of the record.
Whether a statutory requirement (positive or negative) is a jurisdictional fact and, if so, in the narrow or broad sense, is a question of statutory construction having regard to the text, context and purpose of the relevant legislation. Section 31(2)(a) is unusual in form. It lists four matters (three in the negative), the existence of any one of which deprives the adjudicator of jurisdiction to make a determination under s 31(2)(b) of the Act. However, the effect of s 31(2)(a) is that the jurisdiction to make a determination under s 31(2)(b) is enlivened only if the contract concerned is a construction contract, the application has been prepared and served in accordance with s 26, there is no relevant order, judgment or finding and the adjudicator is satisfied that it is possible to fairly make a determination. The text, context and purpose of s 31(2)(a) compel the conclusion that the matters in s 31(2)(a)(i), (ii) and (iii) are jurisdictional facts in the narrow sense. The matter in s 31(2)(a)(iv) is a jurisdictional fact in the broad sense, as it is a subjective standard.
Further, the requirement in s 31(2)(a)(ii) is confined to matters relating to the preparation of the application (such as its content and attachments) and its service. It does not extend to whether a payment dispute has arisen and, if so, when. However, prima facie, the condition enlivening the entitlement to make an application under s 25 is also a jurisdictional fact in the narrow sense. In particular, it is only if 'a payment dispute arises under a construction contract' that the entitlement to apply to have it adjudicated arises. That brings me to the proper construction of s 6 of the Act.
The definition in s 6 has two aspects, being the stand alone concept of a 'payment dispute' (used in s 30 and s 31(2)(b)) and a temporal aspect, being when a payment dispute arises. The word 'arises' in the chapeau also has two aspects, the first temporal and the second (when picked up in s 25) informs the necessary 'connection' between the payment dispute and the construction contract in question.
The statutory expression 'payment dispute' in isolation is not ambiguous. First, there must be a 'payment claim' as defined, being a claim made under a construction contract by the contractor to the principal for payment of an amount in relation to the performance by the contractor of its obligations under the construction contract. Second, there must be one of three responses to that payment claim: either the amount of the payment claim has not been paid in full; or the payment claim has been rejected; or the payment claim has been wholly or partly disputed.
The existence of a temporal requirement is evident from the expression 'by the time' in each paragraph of s 6. The temporal requirement in s 6(a) is 'by the time when the amount claimed is due to be paid under the [construction] contract'. The natural and ordinary meaning of the text of s 6(a) is that this temporal requirement applies to each of the three potential responses (non‑payment in full, rejection or wholly or partly disputed).
The answer to the construction conundrum identified by the Chief Justice is in the meaning of the word 'due'. It cannot mean presently due, as in the phrase 'due and payable'. The focus of the statutory scheme in the Act is on progress payments. Progress payments are a feature of standard form construction contracts. Standard form construction contracts invariably contain conditions precedent to a principal's obligation to pay progress payments, including, inter alia, the determination of the amount owing by the contractor's representative. So, for example, if the contractor's representative rejects a progress claim, the principal's obligation to pay the progress claim never arises. Clause 37 of the Subcontract is an example. It provides for (i) LORAC to deliver a Progress Claim to the contractor's representative; (ii) the contractor's representative to issue a Progress Certificate; and (iii) LORAC to deliver a Payment Claim for the amount in the Progress Certificate, which only then triggers the contractor's obligation to make payment.
In my view, the word 'due' in s 6(a) means 'earned', in the sense of having an entitlement under a construction contract to lodge a payment claim as defined in the Act. That is a question of form (the claim as formulated is a 'payment claim' under the Act) rather than the substantive entitlement to be paid the amount of the payment claim. Whether or not a contractor is entitled to payment of a payment claim is the very issue the adjudicator is required to determine if his jurisdiction in s31(2)(b) is enlivened, being whether any party to the payment dispute is liable to make a payment.
As a matter of fact, the date on which the payment dispute arises will vary according to the nature of the response that enlivens the existence of the dispute. A failure to pay the amount in full is an omission. A pure omission will signal a dispute if the time for payment has passed (that is, the amount is presently due). Otherwise, the payment dispute arises on the date of the relevant responsive 'act', being the date on which the payment claim was rejected or was wholly or partly disputed.
This construction of what is a payment dispute and when it arises leaves the determination of the substance of the payment dispute (being the application of the construction contract to the facts) to the adjudicator under s 31(2)(b) of the Act.

The primary judge was correct to conclude that a payment dispute had arisen in relation to both the First Determination and the Second Determination.

Enforcement of First and Second Determinations

Section 43(2) of the Act provides that 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. The parties accept that if, on the proper construction of the Interim Deed, the First and Second Determinations have been discharged, leave should be refused.
Clause 2 of the Interim Deed relevantly provides:
2.1The Contractor must, pay to the Subcontractor:
(a)AUD45 million as follows:
(i)AUD30 million upon execution of this Deed, this being a pre-condition to all other obligations under this Deed;
(ii)AUD10 million upon novation of the Critical Novation Agreements;
(iii)AUD5 million upon novation of the Other Novation Agreements.
(b)Costs due to the Subcontractor under clause 39A.2 of the Subcontract including:
(i)for Subcontract Works carried out prior to the date of termination, being the amount which would have been payable if the Subcontract had not been terminated and the Subcontractor submitted a Payment Claim for Subcontract Works carried out to the date of termination;
(ii)the cost of plant or materials reasonably ordered by the Subcontractor for the Subcontract Works for which the Subcontractor is obliged to pay under the Subcontract provided the value of the plant or materials is not included in the amount payable under clause (i);
(iii)the reasonable costs of removing from Site all labour, Constructional Plant and other things used in connection with WUSC (Demobilisation Costs);
(iv)the cancellation charge for the Sub‑subcontracts and Subcontractor's Consultants,
(together, the Termination Costs);
(c)the costs for Subcontract Works carried out on or from the date of termination of the Subcontract to the date of novation of the Sub‑subcontracts (including the Critical Novation Agreements and the Other Novation Agreements). The costs will be assessed by reference to the costs which would have been payable to the Subcontractor for the Subcontractor works at the date of novation of the Sub‑contract, if the Subcontract had not been terminated. (Pre‑Novation Costs);
2.2The payment of moneys referred to in clause 2.1(a) shall be on account only and shall not constitute:
(a)evidence that the Subcontractor has completed any WUSC; or
(b)a release or discharge by either party of any claim.
Under the heading 'Cooperation to resolve the final account', cl 4 provides:
4.1In considering the Subcontractors entitlement under 39A.2 the Contractor and Subcontractor agree to negotiate in good faith using best endeavours to resolve all differences, disputes and Claims and achieve a negotiated outcome.
4.2Nothing herein shall prejudice the right of a party to institute proceedings to enforce obligations due under this Deed, to preserve any statutory entitlements or to seek injunctive or urgent declaratory relief.
The issues in dispute are 'what' the payment of $45 million under cl 2.1(a) is on account of and 'when' the account is to be undertaken. Clause 2.2 is silent on those issues. The appellant claims the primary judge made errors of law and fact that undermine his decision that leave to enforce the First and Second Determinations should be refused even if they are valid. In particular, the appellant claims the primary judge erred:
(a)in construing the expression 'Termination Costs' in cl 2.1 of the Interim Deed as embracing the payments in cl 2.1(a) and cl 2.1(b);
(b)in asserting that there was no evidence of any claim by LORAC under the Subcontract, other than under cl 39A.2(a), known to both parties at the time of the execution of the Interim Deed to which the requirement to pay $45 million could be referable [273];
(c)in finding that the payment of $45 million under cl 2.1(a) of the Interim Deed could only have been attributable to the respondents' liability under cl 39A.2(a) of the Subcontract to which the determinations related [278]; and
(d)in finding that the First and Second Determinations had been paid through the payment of $45 million pursuant to cl 2.1(a) of the Interim Deed [261].
Clause 39A.2(a) of the Subcontract corresponds with cl 2.1(b)(i) of the Interim Deed. I accept the correctness of the following propositions. First, on the proper construction of the Interim Deed, 'Termination Costs' are confined to the costs detailed in cl 2.1(b). Second, the payment of $45 million by the respondent to the appellant under cl 2.1(a) of the Interim Deed is not, as a matter of construction, confined to the costs specified in cl 2.1(b). The payment is also on account of the Pre‑Novation Costs in cl 2.1(c) of the Interim Deed, as well as the payment obligations for plant and equipment in cl 6.1 of the Interim Deed. The obligations on the appellant in cl 2.1(c), cl 5 and cl 6 go beyond what the appellant was required to do under the Subcontract.
Third, the payments under cl 2.1(a) are intended to cover costs beyond those expressly identified in cl 2.1(b)(i) ‑ (iv), cl 2.1(c), cl 5 and cl 6. That is confirmed by cl 4 of the Interim Deed, which refers to cooperation to resolve the final account, and the obligation in cl 4.1 to use best endeavours to resolve 'all differences, disputes and Claims and achieve a negotiated outcome'. The term 'Claims' is defined to include, inter alia, any claim for payment of money (including damages) or for an EOT (extension of time). Where there is an extension of time, LORAC is entitled to delay costs in accordance with cl 34.9 of the Subcontract. Delay costs are not within s 39A.2 of the Subcontract. However, the Subcontract provides (cl 37.6) that a final payment claim must include 'all other Claims whatsoever in connection with the subject matter of the Subcontract'.
Fourth, there was evidence before the primary judge of claims by LORAC for payments under s 39A.2(a) beyond the First and Second Determinations and for claims outside cl 39A.2 of the Subcontract. In particular, there was evidence of Marcus Alan Carne in an affidavit of 2 June 2015 of, inter alia, outstanding delay costs claims.
Accordingly, I accept the primary judge erred in his conclusions on what the payments under cl 2.1(a) are on account of. I turn now to 'when', on the proper construction of the Interim Deed, the account is to occur. The appellant contends the primary judge erred in holding, in effect, that the First and Second Determinations had been discharged by the payment of $45 million under cl 2.1(a) of the Interim Deed. There is no claim that the payment of the second and third tranches thereunder were contractually allocated to satisfaction of the costs the subject of cl 2.1(c), cl 5 and cl 6 of the Interim Deed. In oral submissions, the appellant contended that the account is to be undertaken in 'the final wash-up of the matter', relying on cl 2.2(a) and (b) and cl 4.1 (ts 47, 144). I am not persuaded that is the contractual intention.
The purposes of cl 2.1(a), cl 2.2 and cl 4.1 are linked. In the absence of agreement as to the amount owing under cl 4.1 or a binding payment determination in proceedings permitted under cl 4.2, the payments under cl 2.1(a) cannot be applied in discharge of any (unquantified) payment obligation under the Interim Deed. There is no challenge to the adjudicator's conclusion that the proceedings before him were permitted by cl 4.2. The First and Second Determinations are binding, notwithstanding their provisional status under s 45 of the Act. There is no evidence of other agreed or otherwise determined amounts payable under the Interim Deed. In those circumstances, the moneys paid under cl 2.1(a) can and have discharged the First and Second Determinations. The primary judge was correct to refuse leave to enforce them under s 43(2) of the Act.

NEWNES JA: I agree with Martin CJ.

[2016] WASCA 130

21 July 2016