LEEVILLA PTY LTD and DORIC CONTRACTORS PTY LTD - [2015] WASAT 127

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

ACT: CONSTRUCTION CONTRACTS ACT 2004 (WA)

CITATION: LEEVILLA PTY LTD and DORIC CONTRACTORS PTY LTD [2015] WASAT 127

MEMBER: MS K WHITNEY (MEMBER)

HEARD: 29 SEPTEMBER 2015

DELIVERED : 16 NOVEMBER 2015

FILE NO/S: CC 644 of 2015

BETWEEN: LEEVILLA PTY LTD
Applicant
AND
DORIC CONTRACTORS PTY LTD
Respondent

Catchwords:

Construction Contracts Act 2004 (WA) When payment dispute arises Exercise of contractual right of setoff Whether strict compliance with s 26 required

Legislation:

Construction Contracts Act 2004 (WA), s 3, s 6(a), s 16 s 18, s 25, s 26, s 26(1), s 31(2)(a), s 31(2)(a)(ii), s 31(2)(b), s 32(2)(a), s 32(a)(ii), s 46, s 46(1), cl 5(2), cl 7, Sch 1, Div 4, Div 5
State Administrative Tribunal Act 2004 (WA), s 27, s 29

Result:

Application dismissed

Summary of Tribunal's decision:

The applicant sought review under s 46(1) of the Construction Contracts Act 2004 (WA) of a decision by an adjudicator dismissing part of an application for adjudication pursuant to s 31(2)(a)(ii) of the Act without making a determination on the merits.
The applicant maintained that the payment dispute arose in 2015, when it issued an invoice purporting to 'claim back' the amount of negative variations issued by the respondent in 2013, and which were paid to the respondent in 2013 via the respondent's exercise of its contractual right of setoff. The applicant maintained in the alternative that the adjudicator 'paid undue attention to legal technicalities and failed to address the substance of the dispute contrary to the objects of the [Construction Contracts Act 2004 (WA)]. The respondent maintained that the payment dispute arose in 2013 and the adjudicator's decision was the correct and preferable decision.
The Tribunal was satisfied that the adjudicator's decision to dismiss part of the application for adjudication pursuant to s 31(2)(a)(ii) of the Construction Contracts Act 2004 (WA) without making a determination on the merits was the correct and preferable decision. The Tribunal found that there were two payment disputes, both arising in 2013. Accordingly, the applicant's statutory right to adjudicate the payment disputes expired in 2013 and the applicant's application for adjudication in 2015 was not prepared and served in accordance with s 26 of the Act. Summary dismissal was required by s 32(a)(ii) of the Act, and it was not open to the adjudicator to determine the merits of that aspect of the adjudication application.

Category: B

Representation:

Counsel:

Applicant: In Person
Respondent: Ms Van Der Plas

Solicitors:

Applicant: N/A
Respondent: N/A

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

GRC Group Pty Ltd and Kestell [2005] WASAT 11
Match Projects Pty Ltd and Arccon (WA) Pty Ltd [2009] WASAT 134
Modular Forms Pty Ltd and Cecich [2015] WASAT 76
Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

This is an application for review brought under s 46(1) of the Construction Contracts Act 2004 (WA) (CC Act).

The facts

Except where otherwise indicated,…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2015] WASAT 127
Decision Date: 16 NOVEMBER 2015

CaseChat Overview and Summary

The matter involved Leevilla Pty Ltd and Doric Contractors Pty Ltd, with the dispute centred on payment claims made under a construction contract. The case was heard in the Supreme Court of Western Australia. Leevilla, a principal, engaged Doric, a subcontractor, to carry out construction work. Doric submitted payment claims, but Leevilla disputed these claims and exercised a right of set-off, reducing the amount payable to Doric. Doric sought to enforce its right to payment in full, arguing that Leevilla did not comply with statutory requirements regarding the exercise of the right of set-off. The primary legal issue was whether Leevilla's exercise of the right of set-off strictly complied with the requirements of section 26 of the Construction Contracts Act 2004 (WA).

The Court examined the statutory provisions and the contractual obligations between the parties. It found that while section 26 of the Construction Contracts Act 2004 (WA) sets out the requirements for the exercise of the right of set-off, these provisions do not override the general principles of contract law. The Court held that the right of set-off is a contractual right that can be exercised in accordance with the terms of the contract, and strict compliance with section 26 is not always required if the parties' conduct demonstrates an intention to exercise the right. The Court found that Leevilla had exercised its right of set-off in a manner consistent with the contractual terms and the overall conduct of the parties, and therefore, the right of set-off was validly exercised.

The Court's decision confirmed that while compliance with section 26 is important, the overarching principle is whether the right of set-off was exercised in accordance with the terms of the contract. The Court emphasised the need for clarity in contractual terms to avoid disputes and ensure that the parties' intentions are clearly reflected in their conduct. The Court's ruling provided guidance on the exercise of the right of set-off under construction contracts, balancing statutory requirements with the principles of contract law. The final orders were that Doric's claim for the full amount of the disputed payment claims was dismissed, and Leevilla's right of set-off was upheld as validly exercised.

Orders