MODULAR FORMS PTY LTD and CECICH
[2015] WASAT 76
•6 JULY 2015
MODULAR FORMS PTY LTD and CECICH [2015] WASAT 76
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2015] WASAT 76 | |
| CONSTRUCTION CONTRACTS ACT 2004 (WA) | |||
| Case No: | CC:240/2015 | 28 APRIL 2015 | |
| Coram: | MS K WHITNEY (MEMBER) | 6/07/15 | |
| 34 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | MODULAR FORMS PTY LTD MIRO CECICH HELEN CECICH |
Catchwords: | Construction Contracts Act 2004 (WA) Whether adjudicator empowered to dismiss part of application for adjudication and determine part Whether adjudicator dismissed or determined application for adjudication Meaning of express dismissal Extent of the parties' obligations under the contract Whether provisions of Sch 1 Div 4 to be implied Whether invoice described the claim in sufficient detail to enable consideration as to whether it should be paid, partly paid or disputed Whether Tribunal empowered to vary a determination Whether respondent entitled to adduce further evidence |
Legislation: | Construction Contracts Act 2004 (WA), s 3, s 6(a), s 16, s 25, s 26, s 26(1), s 31, s 32(3)(a), s 46, s 46(1), s 46(2), Pt 3, Sch 1 Div 4 State Administrative Tribunal Act 2004 (WA), s 27, s 29, s 29(3) |
Case References: | Field Deployment Solutions Pty Ltd -v- SC Projects Australia Pty Ltd [2015] WASC 60 GRC Group Pty Ltd and Kestell [2015] WASAT 11 Marine & Civil Pty Ltd and WQUBE Port of Dampier Pty Ltd [2014] WASAT 167 Match Projects Pty Ltd and Arccon (WA) Pty Ltd [2009] WASAT 134 MRCN Pty Ltd t/as Westforce Constructions and ABB Australia Pty Ltd [2014] WASAT 59 Perrinepod Pty Ltd and Georgiou Building Pty Ltd [2010] WASAT 136 Perrinepod Pty Ltd v- Georgiou Building Pty Ltd [2011] WASCA 217 Searle and Kelso [2009] WASAT 255 Silent Vector Pty Ltd T/As Sizer Builders and Squarcini [2008] WASAT 39 Tormaz Pty Ltd and High Rise Painting Contractors Pty Ltd [2012] WASAT 166 |
Orders | On the application heard on 28 April 2015 before Member Karen Whitney, it is on 6 July 2015 ordered that:,1. The adjudicator's decision to dismiss aspects of adjudication no 07 15 01 pursuant to s 32(2)(a) of the Construction Contracts Act 2004 (WA) is affirmed.,2. The application for review pursuant to s 46(1) of the Construction Contracts Act 2004 (WA) is dismissed. |
Summary | The applicant sought review under s 46(1) of the Construction Contracts Act 2004 (WA) of a decision by the adjudicator dismissing part of an application for adjudication pursuant to s 31(2)(a)(ii) of the Act without making a determination of its merits. ,The applicant maintained that the relevant part of the application concerned a payment claim within the meaning of the Construction Contracts Act 2004 and that the adjudicator erred in finding that the applicant was not obligated to the respondents under the contracts with respect to the part of the claim in question. The applicant also contended that the invoice the subject of the claim was issued pursuant to a written provision about how a party is to make a claim within the meaning of s 16 of the Act and accordingly the implied provisions of Sch 1 Div 4 did not apply. The applicant argued in any event that the invoice complied with Sch 1 Div 4 of the Act as it identified and described the obligations the applicant claimed to have performed, and to which the claim related, in enough detail for the respondents to assess whether the claim should be paid, partly paid or disputed. The applicant maintained that the Tribunal should therefore vary the determination to make the respondents pay to the applicant the entire amount claimed.,The respondents raised as a preliminary issue whether the Tribunal had jurisdiction to review the determination, on the basis that the adjudicator did not dismiss any part of the adjudication claim under s 31(2)(a) of the Construction Contracts Act 2004 but rather determined the whole of the adjudication claim on its merits under s 31(2)(b) of the Act. The respondents contended, in the alternative, that the correct and preferable decision was that the claim should be dismissed by the Tribunal, pursuant to s 31(2)(a)(i) of the Act, on the basis that there was no contract between the applicant and the respondent, and sought to adduce fresh evidence on this issue. The respondents maintained that the Tribunal had no jurisdiction to vary the adjudicator's determination because the merits of the determination could not be considered by the Tribunal.,The Tribunal did not accept the respondents' contention that the adjudicator could not, and did not, dismiss any part of the adjudication claim under s 31(2)(a) of the Act. The Tribunal found, consistent with the views previously adopted by the Tribunal, that an adjudicator is empowered to dismiss part and determine part of an application for adjudication, and that, on the facts before the Tribunal in this matter, the adjudicator had done precisely this. ,As for whether 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 without making a determination of its merits was the correct and preferable decision, the Tribunal found that it was. The Tribunal did not accept the applicant's contention that the applicant was obligated to the respondents under the contracts with respect to the obligations forming the basis for the part claim in question, or that that the invoice the subject of the claim was issued pursuant to a written provision about how a party is to make a claim within the meaning of s 16 of the Act. To the contrary, the Tribunal found that the implied provisions of Sch 1 Div 4 applied and that the invoice did not contain enough detail for the respondents to assess whether the claim should be paid, partly paid or disputed. ,In the circumstances, the Tribunal was satisfied that the correct and preferable decision was to dismiss the relevant claim pursuant to s 31(2)(a)(ii) of the Construction Contracts Act 2004 because there was no valid payment claim, and in the absence of such, there could be no payment dispute to be adjudicated and no valid application for adjudication prepared and served in accordance with s 26 of the Act. ,In light of those findings, the Tribunal was satisfied that it was unnecessary to consider the respondents' subsequent allegation that there was no contract between the applicant and the respondents, or whether the respondents should be permitted to adduce fresh evidence on this issue. The Tribunal also confirmed that it appeared to be a well settled point that there was no basis for the Tribunal to make a decision as an original decisionmaker pursuant to s 46(2) of the Construction Contracts Act 2004 as maintained by the applicant. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL ACT : CONSTRUCTION CONTRACTS ACT 2004 (WA) CITATION : MODULAR FORMS PTY LTD and CECICH [2015] WASAT 76 MEMBER : MS K WHITNEY (MEMBER) HEARD : 28 APRIL 2015 DELIVERED : 6 JULY 2015 FILE NO/S : CC 240 of 2015 BETWEEN : MODULAR FORMS PTY LTD
- Applicant
AND
MIRO CECICH
HELEN CECICH
Respondent
Catchwords:
Construction Contracts Act 2004 (WA) Whether adjudicator empowered to dismiss part of application for adjudication and determine part Whether adjudicator dismissed or determined application for adjudication Meaning of express dismissal Extent of the parties' obligations under the contract Whether provisions of Sch 1 Div 4 to be implied Whether invoice described the claim in sufficient detail to enable consideration as to whether it should be paid, partly paid or disputed Whether Tribunal empowered to vary a determination Whether respondent entitled to adduce further evidence
Legislation:
Construction Contracts Act 2004 (WA), s 3, s 6(a), s 16, s 25, s 26, s 26(1), s 31, s 32(3)(a), s 46, s 46(1), s 46(2), Pt 3, Sch 1 Div 4
State Administrative Tribunal Act 2004 (WA), s 27, s 29, s 29(3)
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 the adjudicator dismissing part of an application for adjudication pursuant to s 31(2)(a)(ii) of the Act without making a determination of its merits.
The applicant maintained that the relevant part of the application concerned a payment claim within the meaning of the Construction Contracts Act 2004 and that the adjudicator erred in finding that the applicant was not obligated to the respondents under the contracts with respect to the part of the claim in question. The applicant also contended that the invoice the subject of the claim was issued pursuant to a written provision about how a party is to make a claim within the meaning of s 16 of the Actand accordingly the implied provisions of Sch 1 Div 4 did not apply. The applicant argued in any event that the invoice complied with Sch 1 Div 4 of the Act as it identified and described the obligations the applicant claimed to have performed, and to which the claim related, in enough detail for the respondents to assess whether the claim should be paid, partly paid or disputed. The applicant maintained that the Tribunal should therefore vary the determination to make the respondents pay to the applicant the entire amount claimed.
The respondents raised as a preliminary issue whether the Tribunal had jurisdiction to review the determination, on the basis that the adjudicator did not dismiss any part of the adjudication claim under s 31(2)(a) of the Construction Contracts Act 2004 but rather determined the whole of the adjudication claim on its merits under s 31(2)(b) of the Act. The respondents contended, in the alternative, that the correct and preferable decision was that the claim should be dismissed by the Tribunal, pursuant to s 31(2)(a)(i) of the Act, on the basis that there was no contract between the applicant and the respondent, and sought to adduce fresh evidence on this issue. The respondents maintained that the Tribunal had no jurisdiction to vary the adjudicator's determination because the merits of the determination could not be considered by the Tribunal.
The Tribunal did not accept the respondents' contention that the adjudicator could not, and did not, dismiss any part of the adjudication claim under s 31(2)(a) of the Act. The Tribunal found, consistent with the views previously adopted by the Tribunal, that an adjudicator is empowered to dismiss part and determine part of an application for adjudication, and that, on the facts before the Tribunal in this matter, the adjudicator had done precisely this.
As for whether 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 without making a determination of its merits was the correct and preferable decision, the Tribunal found that it was. The Tribunal did not accept the applicant's contention that the applicant was obligated to the respondents under the contracts with respect to the obligations forming the basis for the part claim in question, or that that the invoice the subject of the claim was issued pursuant to a written provision about how a party is to make a claim within the meaning of s 16 of the Act. To the contrary, the Tribunal found that the implied provisions of Sch 1 Div 4 applied and that the invoice did not contain enough detail for the respondents to assess whether the claim should be paid, partly paid or disputed.
In the circumstances, the Tribunal was satisfied that the correct and preferable decision was to dismiss the relevant claim pursuant to s 31(2)(a)(ii) of the Construction Contracts Act 2004 because there was no valid payment claim, and in the absence of such, there could be no payment dispute to be adjudicated and no valid application for adjudication prepared and served in accordance with s 26 of the Act.
In light of those findings, the Tribunal was satisfied that it was unnecessary to consider the respondents' subsequent allegation that there was no contract between the applicant and the respondents, or whether the respondents should be permitted to adduce fresh evidence on this issue. The Tribunal also confirmed that it appeared to be a well settled point that there was no basis for the Tribunal to make a decision as an original decisionmaker pursuant to s 46(2) of the Construction Contracts Act 2004 as maintained by the applicant.
Category: B
Representation:
Counsel:
Applicant : Mr L Hager
Respondent : Mr G Abbott
Solicitors:
Applicant : Metaxas & Hager
Respondent : Tottle Partners
Case(s) referred to in decision(s):
Field Deployment Solutions Pty Ltd -v- SC Projects Australia Pty Ltd [2015] WASC 60
GRC Group Pty Ltd and Kestell [2015] WASAT 11
Marine & Civil Pty Ltd and WQUBE Port of Dampier Pty Ltd [2014] WASAT 167
Match Projects Pty Ltd and Arccon (WA) Pty Ltd [2009] WASAT 134
MRCN Pty Ltd t/as Westforce Constructions and ABB Australia Pty Ltd [2014] WASAT 59
Perrinepod Pty Ltd and Georgiou Building Pty Ltd [2010] WASAT 136
Perrinepod Pty Ltd v- Georgiou Building Pty Ltd [2011] WASCA 217
Searle and Kelso [2009] WASAT 255
Silent Vector Pty Ltd T/As Sizer Builders and Squarcini [2008] WASAT 39
Tormaz Pty Ltd and High Rise Painting Contractors Pty Ltd [2012] WASAT 166
Introduction
1 This is an application for review brought under s 46(1) of the Construction Contracts Act 2004 (WA) (CC Act).
2 On 5 January 2015, Modular Forms Pty Ltd (applicant) made an application for adjudication (adjudication claim) pursuant to s 25 of the CC Act (applicant's bundle of documents (ABD) 1 - 4). The respondents to the adjudication claim were Mr Miro Cecich and Ms Helen Cecich as trustees for the Savannah Property Trust (respondents). The appointor was the Master Builders Association (Union of Employers), which appointed Mr DS Ellis (adjudicator) as the adjudicator in the matter.
3 By the adjudication claim, the applicant sought a determination that it was entitled to payment of $612,200.38, being $556,545.80 plus $55,654.58 GST, pursuant to construction contracts dated 14 May and 30 October 2012 (contracts) for construction of stage 1 and stage 2 of a development at No 53 Morgan Street, Port Hedland (ABD 43 - 63 and 64 - 95). The adjudication claim was based on a tax invoice dated 2 December 2014 (invoice) in respect of both stages of the development (ABD 221). The invoice claimed the amount of $556,545.80 plus GST for '53 Morgan Street, Port Hedland – Stage 1 and 2 Contract Progress Claim to 30 November 2014'. The invoice was accompanied by a payment drawdown schedule dated 1 December 2014 (ABD 222 and 223) and a variation schedule dated 1 December 2014 (ABD 219 and 220).
4 On 9 February 2015, the adjudicator issued a determination (ABD 428 - 458) in adjudication identification no 07-15-01 (determination) in respect of the adjudication claim which, at ABD 428, states as follows:
In respect of the applicants' [sic] adjudication claim dated 5 January 2015, I make the following determination:
1 The respondents must pay the applicant:
(a) $77,625;
(b) $7,762.50 GST; and
(c) $523.17 interest on $77,625.00.
2 The amounts identified in the previous paragraph must be paid by the respondents to the applicant within 14 days.
The reasons for my determination are annexed as Schedule 1.
5 The adjudicator's reasons at Schedule 1 of the determination (adjudicator's reasons) conclude at para 86 as follows:
I consider that:
(a) the Invoice was a 'payment claim', within the meaning of that expression in the [CC] Act in respect of the $67,500 item in the Variation Schedule relating to Perrine Architects and the applicant's margin of 15% on that sum; and
(b) the balance of the Invoice was not a 'payment claim' within the meaning of that expression in the [CC] Act because it either related to the performance of obligations other than obligations of the applicant or because it did not identify and describe the obligations the contractor claims to have performed and to which the Invoice relates in sufficient detail for the recipient to consider if the payment claim should be paid, partly paid or disputed.
- The adjudicator then considered the effect of s 31(2)(a) of the CC Act:
87 Section 31(2)(a)(ii) of the [CC] Act requires that I dismiss an application if it is not made in accordance with s 26 of the [CC] Act. One of the requirements of s 26 is that the application must be made within 28 days after the payment dispute arises. Section 25 provides that an application for adjudication can be made in respect of a payment dispute.
88 Section 6(a) provides that a payment dispute arises if, by the time when an amount claimed in a payment claim is due to be paid, the amount has not been paid [in] full or the claim has been rejected or wholly or partly disputed. It follows from the reference to 'payment claim' in s 6(a) that no 'payment dispute' arises in respect of a demand for payment which is not a 'payment claim' or to the extent that a demand for payment is not a 'payment claim'. For the reasons given above, the Invoice was only a 'payment claim' in so far [sic] as it related to the claim for payment of $67,500 in connection with Perrine Architects and the applicant's margin. The 'payment dispute' the subject of this adjudication is, therefore, confined by the extent to which the Invoice was a 'payment claim' within the meaning of that expression in the [CC] Act.
89 For the purpose of determining when [a] 'payment dispute' arose in respect of the Invoice, it is important to bear in mind that a claim may be rejected or disputed for the purposes of s 6(a) of the [CC] Act, even though the recipient of the claim has not complied with the contractual requirements for disputing the claim (Blackadder Scaffolding Services (Aust) Pty Ltd and Mirvac Homes (WA) Pty Ltd [2009] WASAT 133 at [58]. On 19 December 2014, the respondents, by their agent, a Mr Lawrence, indicated that they would not pay the payment claim. For the purposes of s 6(a), a payment dispute arose on 19 December 2014, when the respondents indicated, by means of an email of 19 December 2014 from Mr Lawrence, that the Invoice would not be paid. The application was made within 28 days after 19 December 2014, within the time limit required by the [CC] Act.
90 It was not suggested by the parties that the application did not comply with the formal requirements of s 26 of the [CC] Act, that the claim had been the subject of a determination in accordance with s 31(2)(a)(iii) or that the matter was too complex to determine within s 31(2)(a)(iv) of the [CC] Act.
91 Accordingly, I conclude that the application in so far [sic] as it is based on the claim for payment of $67,500 in connection with Perrine Architects should not be dismissed under s 31(2)(a) of the [CC] Act. The balance of the Invoice is not a 'payment claim' within the meaning of that expression in the [CC] Act.
92 I turn now to consider the balance merits of the application, in so far [sic] as [they relate] to the Perrine Architects claim.
The adjudicator concluded that, on the merits of the adjudication claim as it pertained to the claim for $67,500 in connection with 'Perrine Architects' (being Perrine Architecture Pty Ltd (Perrine Architecture)), the respondents were liable to pay the applicant $77,675 plus GST, plus interest (adjudicator's reasons at para 97).
The application
6 Pursuant to s 46(1) of the CC Act, the applicant applied to the Tribunal for a review of the adjudicator's decision under s 31(2)(a) of the CC Act (application). The applicant seeks the following orders:
Pursuant to Section 46 of the [CC Act] and Sections 29 and 29(3)(b) of the State Administrative Tribunal Act 2004 (WA) the determination of [Mr DS] Ellis dated 9 February 2015 be varied as follows:
'In respect of the applicant's adjudication claim dated 5 January 2015, I make the following determination:
1. The respondents must pay the applicant:
(a) $556,545.80 plus GST;
(b) $55,654.58 plus GST; and
(c) interest pursuant to Section 33(1) of the [CC Act].
2. The amounts identified in the previous paragraph must be paid immediately by the respondents to the applicant.' (application at 5)
7 The grounds for review identified in the application are:
The adjudicator erred in the determination to dismiss part of the applicant's application under Section 31(2)(a) of the Construction Contracts Act 2004 (WA) ([CC Act]) on the basis that the Invoice, apart from the $67,500 item in the Variation Schedule relating to Perrine Architecture and the applicant's margin of 15%, was not a 'payment claim' within the meaning of that expression in the [CC Act] because it related to the performance of obligations other than obligations of the applicant or because it did not identify and describe the obligations the contractor claims to have performed and to which the Invoice relates in sufficient detail for the recipient to consider if the payment claim should be paid, partly pai[d] or disputed. (application at 6)
8 For ease of reference, the Tribunal will refer to the aspect of the invoice in respect of the $67,500 item in the variation schedule relating to Perrine Architecture, and the applicant's margin of 15% on that amount, as the 'Perrine Architecture claim'. The Tribunal will refer to the balance of the invoice as the 'balance claim'.
9 In its statement of issues, facts and contentions/submissions dated 30 March 2015 (applicant's submissions), the applicant identifies two issues for determination:
4.1 whether the Invoice was a 'payment claim' as it related to various sums totalling $478,920 plus GST [the balance claim]; and
4.2 whether the Invoice was issued pursuant to Clause 2 [of the Standard Conditions to the Contracts], and if not, whether the Invoice describes the contractor's claims in sufficient detail for the respondents to consider if the payment claim should be paid, partly paid or dispute[d]. (applicant's submissions at 2)
10 The respondents maintain, as a preliminary issue, that the Tribunal lacks jurisdiction to review the determination. The respondents maintain that there is no reviewable decision for the purposes of s 46 of the CC Act because the adjudicator did not dismiss any part of the adjudication claim under s 31(2)(a) of the CC Act. Rather, in their statement of issues, facts and contentions dated 16 April 2015 (respondents' contentions), the respondents maintain that the adjudicator determined the whole of the adjudication claim on its merits under s 31(2)(b) of the CC Act (respondents' contentions at paras 2 and 3, and detailed at paras 15 to 48).
11 In the alternative, if the Tribunal does not accept the respondents' submission that the adjudicator determined the whole of the adjudication claim on its merits under s 31(2)(b) of the CC Act, the respondents maintain that the Tribunal must determine, by way of a hearing de novo, whether the aspects of the adjudication claim pertaining to the balance claim should have been dismissed or should be remitted to the adjudicator for determination (respondents' contentions at para 18, and detailed at paras 49 to 57). The respondents further maintain that the correct and preferable decision in this regard is that the balance claim should be dismissed under s 31(2)(a) of the CC Act (respondents' contentions at paras 54 to 81).
12 The respondents maintain that the Tribunal has no jurisdiction to 'vary' the adjudicator's determination and if the Tribunal considers that the adjudication claim should have been determined under s 31(2)(b) of the CC Act, it must remit the matter to the adjudicator for determination, as the merits of the determination cannot be addressed by the Tribunal (respondents' contentions at para 82).
The relevant legislation
13 Section 46 of the CC Act provides for a right of review to the Tribunal in limited circumstances.
(1) A person who is aggrieved by a decision made under section 31(2)(a) may apply to the State Administrative Tribunal for a review of the decision.
(2) If, on a review, a decision made under section 31(2)(a) is set aside and, under the State Administrative Tribunal Act 2004 section 29(3)(c)(i) or (ii), is reversed the adjudicator is to make a determination under section 31(2)(b) within 14 days after the date on which the decision under section 31(2)(a) was reversed or any extension of that time consented to by the parties.
(3) Except as provided by subsection (1) a decision or determination of an adjudicator on an adjudication cannot be appealed or reviewed.
14 Section 31(2)(a) of the CC Act 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[.]
(1) The review of a reviewable decision is to be by way of a hearing de novo, and it is not confined to matters that were before the decision-maker but may involve the consideration of new material whether or not it existed at the time the decision was made.
(2) The purpose of the review is to produce the correct and preferable decision at the time of the decision upon the review.
(3) The reasons for decision provided by the decision-maker, or any grounds for review set out in the application, do not limit the Tribunal in conducting a proceeding for the review of a decision.
- Section 29 of the SAT Act provides, relevantly:
(1) The Tribunal has, when dealing with a matter in the exercise of its review jurisdiction, functions and discretions corresponding to those exercisable by the decision-maker in making the reviewable decision.
(2) Subsection (1) does not limit the powers given by this Act or the enabling Act to the Tribunal.
(3) The Tribunal may
a) affirm the decision that is being reviewed; or
b) vary the decision that is being reviewed; or
c) set aside the decision that is being reviewed and
(i) substitute its own decision; or
(ii) send the matter back to the decision-maker for reconsideration in accordance with any directions or recommendations that the Tribunal considers appropriate,
and, in any case, may make any order the Tribunal considers appropriate.
…
(9) To avoid doubt it is declared that this section and section 27 do not extend to requiring or enabling the Tribunal to deal with a matter that is different in essence from the matter that was before the decision-maker.
16 The issues for determination are:
• Whether any aspect of the determination is a reviewable decision under s 46(1) of the CC Act and if so, which aspect.
• Whether dismissing any aspect of the claim pursuant to s 31(2)(a) of the CC Act is the correct and preferable decision.
17 The parties agreed at the hearing that the determination was made 'within the prescribed time or any extension of it made under s 32(3)(a)' and the Tribunal therefore need not consider s 32(3)(a) of the CC Act.
Whether any aspect of the determination is a reviewable decision under s 46(1) of the CC Act, and if so, what aspect
18 The applicant's position is that it is aggrieved by the decision of the adjudicator to dismiss the balance claim pursuant to s 31(2)(a) of the CC Act without making a determination of its merits. The respondents maintain that the adjudicator was not empowered to dismiss part of the adjudication claim and determine part of the adjudication claim, and as a matter of fact, did not dismiss any part of the adjudication claim pursuant to s 31(2)(a) of the CC Act.
Was the adjudicator empowered to dismiss part of the adjudication claim and determine part of the adjudication claim?
19 The respondents maintain (at para 2(3) of the respondents' contentions) that under the CC Act, the adjudicator was not empowered to dismiss part of the adjudication claim and determine part of the adjudication claim. Rather, the adjudicator:
(a) must either dismiss the whole of the adjudication application before them (based on s.31(2)(a)) or determine the merits of the whole of the adjudication application before them ([based on] s.31(2)(b));
(b) cannot dismiss part of the adjudication application and determine part of the adjudication application before them;
(c) will determine the whole of the adjudication application even if the sum that is determined to be payable is less than the total amount claimed in the adjudication application; and
(d) has not dismissed part of an adjudication application just because the adjudicator determines that a sum claimed in the adjudication application is not payable (or lesser sum than claimed is payable) irrespective of the basis for rejecting that part of the claim on its merits. (footnotes omitted)
20 The respondents maintain that the adjudicator:
considered that the jurisdictional facts in s.31(2)(a) existed to enliven his powers under s.[31](2)(b) and determined in respect of the Applicant's adjudication claim, that, on its merit, the Respondents must pay the Applicant the sum of $85,910.67 within 14 days. This also determined on its merits that $478,920.80 of the amount claimed in the Invoice was not payable on an adjudication under the [CC Act]. (respondents' contentions at para 2(2)).
21 The respondents' position is set out in considerable detail at paras 25 to 39 of the respondents' contentions and was addressed at length during the hearing. The respondents' argument begins with the premise that it requires the consent of the parties for an adjudicator to:
• adjudicate simultaneously two or more payment disputes between the parties (s 32(3)(b) of the CC Act); or
• adjudicate the payment dispute simultaneously with another payment dispute (s 32(3)(c) of the CC Act).
22 In this case, there was only one adjudication claim relating to one invoice, and there was no consent by the parties to permit the adjudicator to simultaneously adjudicate any other dispute. Accordingly, the respondents say the invoice was a single claim containing multiple line items. The adjudicator allowed the line items comprising the Perrine Architecture claim, but did not allow the line items comprising the balance claim.
23 The respondents then turn to the reasoning in Perrinepod Pty Ltd v- Georgiou Building Pty Ltd [2011] WASCA 217 (Perrinepod). In Perrinepod, Murphy JA (with whom Martin CJ agreed), indicated:
[71] [Section] 31(2) provides what an appointed adjudicator 'must' do. He or she must do one of two things. One is, in effect, to summarily dismiss the application under s 31(2)(a). The other is, in effect, to determine it on its merits under s 31(2)(b). A determination on the merits must be undertaken by the appointed adjudicator if he or she has not summarily dismissed the application under s 31(2)(a) …
[80] Section 31(2) provides for two alternatives, relevantly, that '[a]n appointed adjudicator ... (a) dismiss the application ... (b) otherwise, determine [the application]'. The use of the conjunctive 'otherwise', which is defined in the Macquarie Australian Dictionary (4th ed) to mean 'or else', confirms that the two subpars are dealing with alternatives. Further support for the proposition that subpars (a) and (b) are alternatives is found in s 31(3) which commences with the words '[i]f an application is not dismissed or determined under subsection (2)' (emphasis added). Accordingly, the subject of subpar (a) is the dismissal of applications, and the subject of subpar (b) is the determination of applications, and an adjudicator is required by s 31(2) to do one or the other.
[81] Section 46(1) refers, in terms, to a 'decision made under s 31(2)(a)', meaning a decision made 'pursuant to' or 'in accordance with' s 31(2)(a). See R v Tkacz [2001] WASCA 391; (2001) 25 WAR 77 [23] - [25]. It seems to me that the only decision that can be made pursuant to, or in accordance with, s 31(2)(a) is a decision to dismiss an application. That is what the express words in subpar (a) provide for, and that is the subject of the subpar. There is, in my view, no scope for the making of a decision 'not to dismiss' under s 31(2)(a) because subpars (a) and (b) are alternatives; there is either a decision to dismiss under s 31(2)(a) or, failing that, there is a determination under s 31(2)(b). In the latter case, there is, necessarily, no decision made under s 31(2)(a). To speak of a decision 'not to dismiss' is to recast the consequence of an adjudicator proceeding to make a determination under s 31(2)(b) in terms of a decision under s 31(2)(a), where the making of such a decision is not provided for expressly nor, in my view, by necessary implication.
24 Relying on Perrinepod, and given that there was only one payment dispute before the adjudicator, the respondents contend that the fact that the adjudicator proceeded to permit the line items comprising the Perrine Architecture claim, necessarily means that the arbitrator found that the s 31(2)(a) jurisdictional facts enlivened the adjudicator's jurisdiction in respect of the whole claim. As such, his disallowance of the line items comprising the balance claim is necessarily a decision on the merits under s 31(2)(b) of the CC Act. A decision on the merits under s 31(2)(b) of the CC Act is not a reviewable decision under s 46(1) of the Act.
25 The applicant does not accept that the effect of Perrinepod is to prevent the adjudicator from dismissing part of the adjudication claim pursuant to s 31(2)(a) of the CC Act and determining part of the adjudication claim pursuant to s 31(2)(b) of the Act. The applicant refers the Tribunal to [27] and [28] of Tormaz Pty Ltd and High Rise Painting Contractors Pty Ltd [2012] WASAT 166 (Tormaz), which provide as follows:
High Rise made the following submissions, as summarised by the Tribunal:
1) The application for adjudication may involve and seek adjudication of a number of disputed payment claims (Silent Vector Pty Ltd T/As Sizer Builders and Squarcini [2008] WASAT 39 (Silent Vector); Perrinepod Pty Ltd and Georgiou Building Pty Ltd [2010] WASAT 136 (Perrinepod WASAT)).
2) An adjudicator may dismiss part of an application for adjudication where that part of the application concerns a disputed payment claim, with respect to which the adjudicator has no jurisdiction and must dismiss that part of the application pursuant to s 31(2)(a) of the CC Act (Silent Vector and Perrinepod WASAT).
3) After an adjudicator concludes that an application for adjudication (or part thereof) is within the adjudicator's jurisdiction, the adjudicator must proceed to make a determination of the same on the merits (s 31(2)(b) of the CC Act).
4) Section 46(1) of the CC Act confers jurisdiction on the Tribunal to review a decision to dismiss an application for adjudication, but does not confer on the Tribunal any jurisdiction to review an adjudicator's determination ([Perrinepod] and s 31(2)(b) of the CC Act).
5) Section 46(1) of the CC Act does not confer any jurisdiction on the Tribunal to review a decision not to dismiss an application for adjudication ([Perrinepod]).
The Tribunal agrees with these submissions. (emphasis added)
26 Tormaz is the latest of several decisions in which the Tribunal has considered, in various guises, the issue of whether the whole of an adjudication application must be dismissed where only one aspect of the claim was outside the adjudicator's jurisdiction. In Perrinepod Pty Ltd and Georgiou Building Pty Ltd[2010] WASAT 136 (Perrinepod WASAT), the Tribunal indicated, at [25] and [26], as follows:
The applicant argues that there are circumstances in which an adjudication claim might comprise a number of components and that this was somehow inconsistent with the interpretation of s 46 adopted in [MatchProjects Pty Ltd and Arccon (WA) Pty Ltd [2009] WASAT 134 (Match)].
There will clearly be circumstances where a single application involves a number of components which must be dealt with differently. For example, the claimant may seek to raise a number of claims in an adjudication, some of which give rise to payment disputes more than 28 days before the application was made, and some of which gave rise to disputes less than 28 days prior to the application. This was the case in Silent Vector Pty Ltd T/As Sizer Builders and Squarcini [2008] WASAT 39[.] In such cases, a decision dismissing part of the application under s 31(2)(a) is required, together with a determination on the merits under [s] 31(2)(b) of the balance of the application. This is entirely consistent with the operation of s 46(2) as provided in Match. Section 46(1) and s 46(2) apply to the extent that the application was disposed of by a decision under s 31(2)(a). To the extent that the application was disposed of by determination under s 31(2)(b), the matter could not be sent back to the adjudicator to remake the determination and neither s 46(1) nor s 46(2) apply. (headings omitted)
- There is nothing in the Court of Appeal's decision in Perrinepod to suggest that it disagreed with the Tribunal on this point, or disagreed with the Tribunal's decision in Silent Vector Pty Ltd T/As Sizer Builders and Squarcini [2008] WASAT 39 at [61] - [65]:
On our reading of the adjudicator's reasons for decision, it is the whole of the application which he has dismissed because part of it includes claims which give rise to payment disputes more than 28 days before the application was served. In our view, it was not open to the adjudicator to do this.
…
It would not advance the purposes of the CC Act to preclude an adjudication of a payment dispute made in good time, because other payment disputes are wrongly included in the same proceeding.
It follows that the adjudicator was wrong to have dismissed the entire application on the basis of earlier payment disputes being wrongly included.
Did the adjudicator dismiss part of the adjudication claim pursuant to s 31(2)(a) of the CC Act?
28 The respondents maintain at paras 40 to 48 of the respondents' contentions that, as a matter of fact, the adjudicator determined the whole of the adjudication claim rather than dismissed it.
29 The respondents maintain that the decision of the Court of Appeal in Perrinepod at [81] (reproduced at [23]above) requires that a dismissal pursuant to s 31(2)(a) of the CC Act be 'express' and not 'by implication'. The respondents contended at the hearing that this view is supported by Mitchell J in Field Deployment Solutions Pty Ltd -v- SC Projects Australia Pty Ltd [2015] WASC 60 (Field Deployment) at [65] and [66]:
The second question of law identified by the appellant is:
'Does the Tribunal have jurisdiction to determine whether the adjudicator was right not to dismiss the application under section 31(2)(a)(i)?'
Behind this question lies an assumption that the adjudicator in this case did decide not to dismiss the appellant's adjudication contract under s 31(2)(a)(i) of the Act. I am not satisfied that the adjudicator did make such a decision in this case. He did not do so expressly. The appellant postulates that the adjudicator must have implicitly not been satisfied that the Agreement was not a construction contract. However, there is nothing to exclude the possibility that the adjudicator did not consider the issue because he did not have to do so in order to determine that the appellant's adjudication application must be dismissed. (emphasis added)
30 In the present case, the determination is silent as to whether the amount of $85,910.67 payable to the applicant constitutes a determination as to the whole of the adjudication claim on its merits pursuant to s 31(2)(b) of the CC Act. However, the adjudicator's reasons (which comprise part of the determination) add clarity. After determining at para 86 that:
• the Perrine Architecture claim was a payment claim within the meaning of the CC Act; and
• the balance claim was not a payment claim within the meaning of the CC Act,
- the adjudicator proceeded, at paras 87 to 91 of the adjudicator's reasons, to consider whether the adjudication claim must be dismissed pursuant to s 31(2)(a) of the CC Act. The adjudicator concluded at paras 91 and 92 that:
… the application in so far [sic] as it is based on the claim for payment of $67,500 in connection with Perrine Architects should not be dismissed under s 31(2)(a) of the [CC] Act. The balance of the [claim] is not a 'payment claim' within the meaning of that expression in the [CC] Act. (emphasis added)
I turn now to consider the balance merits of the application, in so far [sic] as it relates to the Perrine Architects claim.
The respondents' position is to the effect that this does not amount to an express dismissal of the balance claim pursuant to s 31(2)(a) of the CC Act as required by Perrinepod and Field Deployment because there is no express statement at the end of the emphasised sentence above that the balance claim is 'dismissed pursuant to s 31(2)(a) of the CC Act'.
31 The Tribunal does not accept that these authorities, when read in their entirety and in the context of their relevant facts, require such a rigid view of what constitutes an 'express dismissal'. The discussion of 'express dismissal' versus 'implied dismissal' in Perrinepod arose in the context of an argument that a determination on its merits under s 31(2)(b) of the CC Act ought to be reviewable under s 46(1) of the Act because it was, in effect, a decision 'not to dismiss an application' under s 31(2)(a) of the Act. That is entirely different from the present matter.
32 Likewise, the discussion of 'express dismissal' versus 'implied dismissal' in Field Deployment was in the context of considering whether an adjudicator implicitly dismissed a claim on the basis that there was no construction contract in circumstances where the adjudicator had not considered that question. In this context, the Tribunal is not satisfied that Mitchell J's comment necessarily supports the respondents' position that a dismissal under s 31(2)(a) of the CC Act requires nothing less than a verbatim statement that a claim is dismissed pursuant to s 31(2)(a) of the Act, or similar words.
33 Rather, the Tribunal considers that the correct and preferable view is that if it is evident, on the face of the determination, that the adjudicator necessarily dismissed aspects pursuant to s 31(2)(a) of the CC Act, the form of the words used is not determinative.
34 The respondents maintain that in the present matter, the adjudicator expressly considered each of the factors in s 31(2)(a) of the CC Act, and then proceeded to determine the entire adjudication claim on its merits under s 31(2)(b) of the Act by considering all of the merits factors identified in s 31(2)(b) of the Act (namely, whether the respondents were liable to the applicant to make a payment, the amount to be paid, and any interest payable).
35 The Tribunal disagrees. The adjudicator clearly states at para 91 of his reasons that the balance claim is not a 'payment claim' within the meaning of the CC Act. He proceeds to 'consider the balance merits of the application, [insofar] as [they relate] to the Perrine Architects claim'. Having determined that the balance claim was not a payment claim, the balance claim could not form the basis of a payment dispute within the meaning of s 6(a) of the CC Act. 'Adjudication', as defined in s 3 of the CC Act, means 'the adjudication of a payment dispute'. It follows from the adjudicator's finding that the balance claim was not a payment claim that the balance claim could not be adjudicated pursuant to s 25 of the CC Act or form the basis for an application for adjudication of a payment dispute pursuant to s 26(1) of the Act. The Tribunal is therefore satisfied in all the circumstances that it is evident, on the face of the determination, that the adjudicator necessarily dismissed the balance claim pursuant to s 31(2)(a) of the CC Act.
What aspect of the adjudicator's determination is reviewable?
36 The respondents' contentions, at para 57(1)(a), submit that there was no construction contract between the applicant and the respondents, and for this reason, the adjudication claim (in its entirety) ought to have been dismissed under s 31(2)(b) of the CC Act. However, the respondents conceded at the hearing that if the Tribunal determines that the adjudicator:
• was empowered to dismiss part of the adjudication claim and determine part of the adjudication claim; and
• dismissed part of the adjudication claim pursuant to s 31(2)(a) of the CC Act,
- the effect of Perrinepod is that the only aspect of the determination which is a reviewable decision is the adjudicator's decision to dismiss the balance claim pursuant to s 31(2)(a) of the CC Act. The applicant agrees that this is the correct position. Accordingly, the Tribunal finds that the reviewable decision is limited to the adjudicator's decision to dismiss the balance claim pursuant to s 31(2)(a) of the CC Act.
37 The Tribunal is satisfied that the applicant is aggrieved by the adjudicator's decision to dismiss the balance claim, as the applicant has been denied the benefit of a decision on the merits in respect of the balance claim by a decision of the adjudicator made under s 31(2)(a) of the CC Act. Accordingly, the applicant may apply to the Tribunal for a review of the adjudicator's decision to dismiss the balance claim pursuant to s 31(2)(a) of the CC Act.
Whether dismissing the balance claim pursuant to s 31(2)(a) of the CC Act is the correct and preferable decision
38 The adjudicator concluded at para 86(b) of the adjudicator's reasons that the balance claim was not a 'payment claim' within the meaning of the CC Act because:
• some aspects of the balance claim related to the performance of obligations other than obligations of the applicant; and
• the remaining aspects of the balance claim did not identify and describe the obligations the applicant claimed to have performed and to which the claim related in sufficient detail for the respondent to assess whether the claim should be paid, partly paid or disputed, as required by cl 5(2)(f) of Sch 1 of the CC Act.
39 The applicant's position is that the adjudicator erred in finding that the invoice, to the extent that it pertained to the balance claim, was not a 'payment claim' within the meaning of the CC Act because:
• the applicant was obligated under the contracts to the respondents with respect to all of the builder's obligations under the contracts (applicant's submissions at paras 14 to 19); and
• the invoice (which was issued pursuant to clause 2 of the standard conditions to the contracts and to which cl 5(2)(f) of Sch 1 of the CC Act did not apply) identified and described the obligations the applicant claimed to have performed and to which the claim related in enough detail for the respondent to assess whether the claim should be paid, partly paid or disputed (applicant's submissions at paras 20 and 21).
- The applicant says that the Tribunal should therefore 'vary' the determination to require the respondents to pay the applicant the sum of $556,545.80 plus GST, plus interest.
40 The Tribunal's review is by way of a hearing de novo, and the Tribunal must determine whether dismissing the balance claim pursuant to s 31(2)(a) of the CC Act is the correct and preferable decision. In Searle and Kelso [2009] WASAT 255 (Searle), the Tribunal noted at [27] that the de novo nature of the Tribunal's review:
render[ed] otiose Mr Searle's numerous references, in the grounds of the application and elsewhere, to alleged errors of the adjudicator in arriving at his decision, except, perhaps, to the extent that he can show that it is incumbent on the Tribunal to avoid the same errors in arriving at the correct and preferable decision, being the purpose of the review: s 27(2) of the SAT Act.
- Nevertheless, the applicant's contentions of error form a convenient starting point for analysis.
What were the applicant's obligations under the contracts?
41 The applicant maintains that the adjudicator erred in finding that aspects of the balance claim were not a 'payment claim' within the meaning of the CC Act because they related to the performance of obligations which were obligations other than obligations of the applicant (namely, the builder's obligations under the contracts). The applicant says that it was obligated to the respondents under the contracts with respect to all of the builder's obligations under the contracts.
42 Part 3 of the CC Act concerns the adjudication of disputes. It is the existence of a 'payment dispute' within the meaning of the Act which may give rise to an adjudication under the Act: GRC Group Pty Ltd and Kestell [2015] WASAT 11 at [55]. Section 25 of the CC Act provides that if a payment dispute arises under a construction contract, 'any party to the contract may apply to have the dispute adjudicated under this Part'. Section 26 of the CC Act provides that to apply to have a payment dispute adjudicated, a party to the contract must prepare a written application for adjudication as provided for in that section. Preparing and serving an application for adjudication in accordance with s 26 of the CC Act is a jurisdictional fact which is a precondition to the exercise of power under s 31(2)(b) of the Act. Failure to do so requires summary dismissal under s 31(2)(a)(ii) of the CC Act. The CC Act requires strict compliance with s 26: Match Projects Pty Ltd and Arccon (WA) Pty Ltd [2009] WASAT 134 (Match Projects) at [64] and [65].
43 A 'payment dispute' arises under the CC Act if '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': s 6(a) of the CC Act.
44 A 'payment claim' is defined in s 3 of the CC Act as '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 contract'. 'Obligations' (as defined in s 3 of the CC Act) means 'the obligations described in the definition of "construction contract" that the contractor has under the construction contract' (emphasis added), and includes one or more of the following obligations -
(a) to carry out construction work;
(b) to supply to the site where construction work is being carried out any goods that are related to construction work by virtue of section 5(1);
(c) to provide, on or off the site where construction work is being carried out, professional services that are related to the construction work by virtue of section 5(2);
(d) to provide, on the site where construction work is being carried out, on-site services that are related to the construction work by virtue of section 5(3)(b)[.] (s 3 of the CC Act)
45 A payment claim is therefore, by definition, limited to the obligations which the applicant has to the respondents pursuant to the contracts. A payment claim is a necessary precondition to the existence of a 'payment dispute'.
46 The contracts purported to be tripartite contracts between the applicant, the respondents, and a builder. The applicant's obligations to the respondents under the contracts are set out at clause 1.1 of the standard conditions to the contracts:
• preparation of the working drawings and specifications;
• supplying components to the builder; and
• acting as the respondents' agent in superintending the building works.
- It is not in dispute that these obligations fall within subparts (b), (c) and (d) of the definition of 'construction contract' under s 3 of the CC Act.
47 The builder's obligations to the respondents under the contracts are set out at clause 1.2 of the standard conditions to the contracts to 'obtain a building licence and carry out the building works in a proper and workmanlike manner in accordance with the working drawings and specification'.
48 The contracts were not executed by a builder. Rather, Perrine Architecture, a company related to the applicant, entered into a separate contract with BMT Corporation Pty Ltd (BMT) to undertake building work for the development at No 53 Morgan Street, Port Hedland (Perrine Architecture/BMT contract) (ABD at 292 - 399). The Perrine Architecture/BMT contract contains a confidentiality and nondisclosure clause prohibiting BMT from disclosing its contents or nature to the respondents. The respondents were unaware of the existence of the Perrine Architecture/BMT contract until 29 January 2015, during the adjudication process (ABD at 420). Until that time, the respondents appear to have believed that BMT's involvement was as a signatory to the tripartite contracts: see, for example, ABD at 270.
49 The applicant's submissions contend that the applicant was obliged to 'carry out construction work' under the contracts within the meaning of subpart (a) of the definition of 'construction contract'. This was because:
a) the prefatory words to the contracts that '[t]he [respondents have] requested [the applicant] to supply the development described in the Contract Schedule' imposed obligations on the applicant under the contracts to 'cause' the construction works to be 'carried out' (applicant's submissions at paras 15 to 17); and
b) the applicant provided the covenants to the respondents under clauses 4.1, 4.2, 7.1, 8.1, 12.1, 12.2 and 17.1 of the standard conditions to the contracts and, in consideration of the respondents making payments under the contracts (as varied), the applicant was obliged under the contracts to 'carry out' construction works, which it achieved by engaging subcontractors and using 'a related entity to engage the builder' (applicant's submissions at paras 18 and 19).
50 The Tribunal does not accept the applicant’s contention that the prefatory words to the Contract Schedule impose obligations on the applicant. Such words are in the nature of a recital, and the applicant's contention ignores the operative clauses of the contracts, by which the builder and the applicant have clearly articulated separate obligations. The contracts clearly anticipated the involvement of a builder to assume the obligations identified in clause 1.2 of the standard conditions to the contracts. Had the parties intended that the applicant bear responsibility for the obligations identified in clause 1.2 of the standard conditions to the contracts, there would have been no need to distinguish between the obligations provided for separately in clauses 1.1 and 1.2, or to provide for a builder as a party to the contracts. The Tribunal does not accept the applicant's contention in this regard.
51 In respect of the submission at b) above, the applicant ignores that the contracts were intended to be tripartite. It is clear from the language of the contracts that the parties intended that a builder would be a party to the contracts. The respondents did not intend that the applicant (or a third party) would 'carry out' construction works by contracting or subcontracting such works to a builder. The respondents' submissions were to the effect that they were unaware, until the adjudication process, that BMT had not signed the contracts. The respondents were not aware that Perrine Architecture had entered into a separate contract with BMT to provide building services for the development. There was no contractual relationship between:
• the applicant and BMT;
• BMT and the respondents; or
• the applicant and Perrine Architecture.
52 The applicant provided evidence to the adjudicator and the Tribunal that Perrine Architecture and the applicant share identical directors and officers, and encouraged the Tribunal to consider the applicant to be, in fact, the same entity. The Tribunal is not prepared to pierce the 'corporate veil' for the convenience of the applicant's legal argument.
53 Finally, the Tribunal is not satisfied that the evidence supports the applicant's contention that it 'caused' Perrine Architecture to contract with BMT. To the contrary, the evidence of Mr Louis Jean-Mic Du Buisson Perrine, a director in common to the applicant and Perrine Architecture, was that '[the applicant] nominated [BMT] as the registered builder under the [contracts]' (statutory declaration of Mr Perrine declared on 5 January 2015 (Mr Perrine's declaration) at para 12). The applicant's outline of submissions to the adjudicator dated 21 January 2015 characterised BMT's role as a 'subcontractor' engaged by the applicant to perform building work.
54 Having carefully considered the evidence and submissions of the parties, the Tribunal is not satisfied, in all the circumstances, that the applicant was obliged to 'carry out' construction works or to 'cause' construction works to be carried out within the meaning of subpart (a) of the definition of 'construction contract' as alleged by the applicant. The correct and preferable decision is that the aspects of the balance claim which arise from construction works were not obligations that the applicant had to the respondents under the construction contract, and cannot constitute a payment claim within the meaning of the CC Act. There is no obligation by the applicant in respect of such work under the contracts.
Did the invoice identify and describe the obligations performed by the applicant in sufficient detail for the respondents to assess the claim?
55 The adjudicator concluded that some aspects of the balance claim (those which related to the performance of the applicant's obligations to supply components to the builder and act as the respondents' agent in superintending the building works) would have included work performed pursuant to the applicant's obligations to the respondents under the contracts. These claims included:
• part of the component of the invoice for $269,160 (being for part completion of the final stage of the work); and
• part of the component of the invoice arising from items under 5.3 of the variation schedule (being costs arising from delays).
- The adjudicator considered that these claims were not a 'payment claim' within the meaning of the CC Act because the invoice did not identify and describe these obligations in sufficient detail for the respondent to assess whether the claim should be paid, partly paid or disputed, as required by cl 5(2)(f) of Sch 1 of the CC Act.
56 The applicant submits that the implied provisions in cl 5(2)(f) of Sch 1 of the CC Act do not form part of the contracts because the contracts have a 'written provision about how a party is to make a claim to another party for payment' (applicant's submissions at para 20). The applicant further submits that, in any event, the invoice and accompanying schedules describe the claims in sufficient detail for the respondents to assess whether they should be paid, partly paid or disputed (applicant's submissions at para 21).
57 The first issue is whether the implied provisions formed part of the contracts. Section 16 of the CC Act provides as follows:
The provisions in Schedule 1 Division 4 are implied in a construction contract that does not have a written provision about how a party is to make a claim to another party for payment.
Claim for payment, content
(1) In this clause -
payment claim means a claim -
(a) by the contractor to the principal for payment of an amount in relation to the performance by the contractor of its obligations under this contract; or
(b) by the principal to the contractor for payment of an amount in relation to the performance or non-performance by the contractor of its obligations under this contract.
(2) A payment claim must -
(a) be in writing;
(b) be addressed to the party to which the claim is made;
(c) state the name of the claimant;
(d) state the date of the claim;
(e) state the amount claimed;
(f) in the case of a claim by the contractor - itemise and describe the obligations that the contractor has performed and to which the claim relates in sufficient detail for the principal to assess the claim;
(g) in the case of a claim by the principal - describe the basis for the claim in sufficient detail for the contractor to assess the claim;
(h) be signed by the claimant; and
(i) be given to the party to which the claim is made.
60 Item 9 of the schedule to the contracts provides for the contract sum and a schedule of instalments. The contract sum in respect of the May 2012 contract is $2,368,000 plus GST, payable by an initial retainer, a deposit and five instalments. Item 9 of the schedule to the May 2012 contract provides that '[a]ll accounts [are] payable upon production of Tax Invoice'. The contract sum in respect of the October 2012 contract is $2,118,000 plus GST, payable by a deposit and five instalments. Item 9 of the schedule to the October 2012 contract also provides '[a]ll accounts [are] payable upon production of Tax Invoice'.
61 Clause 2 of the standard conditions to the contracts provides:
Payment
2.1 The Owner must progressively pay the contract sum to Modular Forms by way of the instalments and at the times provided in the Contract Schedule.
2.2 Upon payment of the amount provided in the Contract Schedule as relates to either the prefabricated components or the internal components, the property in that part of the respective components to which the progress claim relates will pass absolutely to the Owner.
2.3 All payments are to be made to Modular Forms. Modular Forms will, as agent for the Owner, progressively pay the Builder that part of the contract sum as it relates to the building works.
2.4 Modular Forms will give the Owner a tax invoice when each payment instalment is due. The Owner must pay on the tax invoice within 5 business days of issue.
2.5 If the Owner fails to make a payment to Modular Forms by the due date all work may be suspended until payment is received in full together with interest at the rate of 12% per annum calculated on a daily basis.
2.6 Each instalment of the Purchase Price is on account only and the Owner has no right of set off.
62 The applicant's director, Mr Perrine, gave evidence that subsequent negotiations were required in 2014 because 'the impact of certain exclusions were not fully understood' when the contracts were entered into in May and October 2012 and 'significant changes and additional scope of works changes were required to allow development' (Mr Perrine's declaration at paras 15 and 16). Mr Perrine's declaration at paras 19 to 22 provides:
On or about 17 October 2013, [the applicant] provided a detailed report to the [respondents] setting out the then identified impact of the necessary changes ….
A further report on the effect of the changes was provided to the [respondents] on or about 31 January 2014. … The effect of those changes, which included the identification of direct costs to [the applicant] that were yet to be calculated, was the parties agreed to treat them as variations.
The manner of dealing with payments and project drawdowns was also altered (after the 2 initial contract payments) by mutual agreement, from those specified in the contracts, to a combination of ongoing payments to allow simultaneous carrying out of variations and original contract scope, which became interwoven by the amended scope.
The parties have proceeded on the basis of regular claims and payments in respect of the overall contract sum, including variations.
63 Mr Perrine's declaration provides at paras 23 and 24 that the 'negotiations crystalized' with the signing of certain variation documents on 7 March 2014 (variation documents).
64 The variation documents were comprised of two documents, being:
• a document called 'Payment Drawdown Schedule' dated 7 March 2014, which sets out the cost of the development, total drawdowns and payments made to February 2014, and a schedule of monthly payments to be made between March and June 2014; and
• a document called 'Variation Schedule' dated 7 March 2014, which sets out a list of variations to the contracts within the following categories:
1.0 Exclusions (including 1.1 Council & sundry expenses and 1.2 Building Variations);
2.0 Exclusions - Special Conditions (issues associated with amendment 22 of TPS 5 Dust mitigation to 30 May 2013);
3.0 Exclusions – Clause 6.2;
4.0 Civil Related Works (including 4.1 Services not fit for purpose; 4.2 Changes to the design of the buildings from Contract to approved building licence; 4.3 Additional costs to pre-cast variations; and 4.4 Additional services);
5.0 Additional Works – Clause 4.2 (including 5.1 Manufacturing variations; 5.2 Builder's additional preliminaries; 5.3 Direct delay costs to Modular Forms; and 5.4 Consulting variations due to all above from 1 June 2013).
updated schedules were issued on or about 31 March 2014, 24 April 2014, 20 August 2014, 10 November 2014 and 1 December 2014. … The [respondents] paid [the applicant] regularly and in the manner generally required by [the applicant].
66 The applicant's submissions were to the effect that by the variation documents, the parties revised the contract sum identified in item 9 of the schedule to the contracts and continued to rely on the procedures provided for in clauses 2.1 to 2.6 of the standard conditions to the contracts.
67 The Tribunal is not satisfied that the applicant's position is the correct and preferable interpretation of the evidence before the Tribunal. To the contrary, the Tribunal is satisfied, on the evidence before it, that by March 2014, the parties had agreed to amend the system for payments provided for in the contracts (including the procedures provided for in clauses 2.1 to 2.6 of the standard conditions to the contracts).
68 Mr Perrine's evidence is clear that the parties agreed to alter the manner of dealing with payments and project drawdowns, to allow for variations as well as the work within the original scope to be conducted simultaneously. He says that the agreement 'crystalized' with the signing of variation documents on 7 March 2014 which were updated regularly and paid in compliance with the applicant's requirements.
69 The variation documents do not, however, provide for a written provision about how a party is to make a claim to another party for payment. Neither the 'Payment Drawdown Schedule' nor the 'Variation Schedule' addresses how the applicant would make payment claims. Although the further provision (and payment) of invoices in accordance with the variation documents provides some evidence of a course of conduct from which agreement might be inferred, a course of conduct is not a 'written provision about how a party is to make a claim to another party for payment' within the meaning of s 16 of the CC Act. Furthermore, the Tribunal is not satisfied that the email correspondence between Mr Perrine and the respondents' accountant provided sufficient evidence of an agreement to support the applicant's contention.
70 Having carefully considered the evidence and submissions of the parties, the Tribunal is satisfied, in all the circumstances, that the correct and preferable decision is that the provisions of cl 5(2)(f) of Sch 1 of the CC Act applied to both the contracts and the variations after about March 2014.
71 Following from this conclusion, the remaining issue is whether the invoice identified and described the applicant's obligations in sufficient detail for the respondents to assess whether the claim should be paid, partly paid or disputed, as required by cl 5(2)(f) of Sch 1 of the CC Act. The Tribunal notes that these claims included:
• a lump sum claim for part of $269,160 (being for part completion of the final stage of the work); and
• items under part 5.3 of the Variation Schedule (being costs arising from delays).
72 The applicant's argument (set out at para 21 of the applicant's submissions) is that '[o]n any basis, the Invoice and accompanying schedules describe the contractor's claims in sufficient detail for the respondents to consider if the payment claim should be paid, partly paid or dispute[d]'.
73 The Tribunal disagrees. In respect of the lump sum claim for part of $269,160 (for part completion of the final stage of the work), it is impossible to identify what aspects of this claim arise from the applicant's obligations under the contracts. Likewise, the items under part 5.3 of the Variation Schedule (costs arising from delays) are lump sum amounts which do not specify sufficient detail (such as hourly rates or number of hours worked) to enable the respondents to determine the reasonableness of each claim. In the absence of such detail, the respondents would be unable to consider if the payment claim should be paid, partly paid or disputed.
74 Having carefully considered the evidence and submissions of the parties, the Tribunal is satisfied, in all the circumstances, that the correct and preferable decision is that the invoice did not identify and describe the obligations performed by the applicant in sufficient detail for the respondents to assess the claim.
75 The Tribunal is also satisfied that as a consequence, in the absence of a valid payment claim, there can be no payment dispute to be adjudicated, pursuant to s 26(1) of the CC Act, and no valid application for adjudication 'prepared and served in accordance with section 26', as required by s 31(2)(a)(ii) of the CC Act. In such circumstances, the correct and preferable decision is to dismiss the balance claim pursuant to s 31(2)(a)(ii) of the CC Act.
Is the Tribunal empowered to 'vary' the determination as sought by the applicant?
76 The applicant argued that if it succeeded in its application, the Tribunal should order that the determination be 'varied' to require the respondents to pay the applicant the sum of $556,545.80 plus GST, plus interest. The respondents submitted that, on a proper reading of s 29(3) of the SAT Act and s 46(2) of the CC Act, the Tribunal does not have the power to vary the determination as requested by the applicant, as that would involve the Tribunal substituting its own decision for the adjudicator's decision. Rather, the only remedy available to the applicant on the application would be for the Tribunal to remit the matter to the adjudicator for determination, as the merits of the determination cannot be addressed by the Tribunal.
77 In light of the Tribunal's conclusions above, this point is not required to be determined. The Tribunal notes, however, this appears to be a well settled point. In Match Projects at [59], the Tribunal reviewed the relationship between s 29(3) of the SAT Act and s 46(2) of the CC Act:We consider that the proper construction of s 46(2) read with s 29(3) of the SAT Act is that the Tribunal has power to affirm or vary a decision being reviewed. But if the Tribunal sets aside a decision under review, and effectively reverses it, then s 46(2) is intended to require the adjudicator to make a determination on the merits, which is consistent with the interpretation we have placed on s 46(1).
78 In Searle, the Tribunal noted at [27]:
[W]hen dealing with a matter by way of review, the Tribunal has the functions and discretions corresponding to those exercisable by the decisionmaker in making the reviewable decision: s 29(1) of the SAT Act. The Tribunal may affirm the decision being reviewed; vary the decision; or set aside the decision and substitute its own decision or send the matter back to the decision-maker for reconsideration: s 27(3) of the SAT Act. In the event that the decision under s 31(2)(a) of the CC Act is set aside, the adjudicator is to determine the adjudication application on the merits: s 46(2) of the CC Act.
- The Tribunal agrees. There is no basis for the Tribunal to make a decision as an original decision-maker pursuant to s 46(2) of the CC Act. If the Tribunal considered that the adjudicator's decision to dismiss the balance claim pursuant to s 31(2)(a) of the CC Act was not the correct and preferable decision, the Tribunal would have been required to remit the matter to the adjudicator to make a decision pursuant to s 31(2)(b) of the Act.
Should the Tribunal exercise its discretion to permit the respondents to adduce further evidence?
79 Finally, the Tribunal notes that the respondents sought leave to adduce further evidence which was not before the adjudicator to assist the Tribunal in determining this application. The evidence included an affidavit sworn by Mr Miro Cecich on 26 March 2015 in a related action before the Supreme Court. The respondents maintained that this new evidence was necessary for the Tribunal to achieve the correct and preferable decision because it raised a factual basis for new arguments about whether there was any contract between the applicant and the respondents.
80 As recently noted by the Tribunal in Marine & Civil Pty Ltd and WQUBE Port of Dampier Pty Ltd [2014] WASAT 167 at [11] - [13] (Marine & Civil), in reviews arising under the CC Act, the Tribunal has traditionally 'read down' s 27 of the SAT Act to ensure there is no inconsistency with the provisions of the CC Act:
11 One of the first decisions of the Tribunal since its inception on a review under s 46 of the CC Act was Marine & Civil Bauer Joint Venture and Leighton Kumagai Joint Venture [2005] WASAT 269 (Bauer). In Bauer, after considering the scheme of the CC Act and the provisions of the SAT Act dealing with reviews, Senior Member Raymond made the following observations:
66 The adjudication process is clearly designed to be a rapid process which determines, if necessary, on an interim basis, whether the contractor is entitled to a disputed payment. As stated in the second reading speech, to which recourse may be had pursuant to s 19 of the Interpretation Act 1984 (WA), its primary aim is to keep the money flowing in the contracting chain by enforcing timely payment and sidelining protracted or complex disputes. The object of the adjudication process is expressly stated in s 30 of the CC Act, that is, to determine the dispute fairly and as quickly, informally and inexpensively as possible.
67 For the purposes of making a determination, an adjudicator must act informally and, if possible, make the determination on the basis of the application and its attachments, and, if a response has been prepared and served, the response and its attachments. Only if it is not possible to make a determination on those documents may the adjudicator require further information (s 32).
69 In my view, the whole scheme of the CC Act, and the particular provisions to which reference has been made above, is inconsistent with the concept of a hearing de novo within the ordinary meaning of s 27(1) of the SAT Act. It is necessary to read s 27(1) down to the extent necessary to remove that inconsistency.
70 Section 27 provides that the hearing may involve the consideration of new material, whether or not it existed at the time the decision was made. In my view, no new material should be permitted because, if the decision under review is reversed, and the matter referred back to the adjudicator, I consider that the adjudicator must remain bound to decide the matter on the material which was originally before the adjudicator in accordance with s 32 of the CC Act.
12 More recently, in MRCN Pty Ltd t/as Westforce Constructions and ABB Australia Pty Ltd[2014] WASAT 59 (MRCN), Member De Villiers had cause to consider the Tribunal's review function [under the CC Act], and, in particular, whether there are ever any circumstances in which the Tribunal might allow the introduction of evidence not before the adjudicator. Member De Villiers found in the circumstances of the case before him, concerning the date upon which any payment dispute arose, that he should admit additional material under s 27 of the SAT Act. Having acknowledged, earlier in his reasons for decision, that adjudications generally occur simply on the basis of the adjudication application and the response, that applicants do not have a right to be provided with nor reply to the contents of responses, and adjudicators are required to act under severe time pressure, Member De Villiers held that assertions made by an officer of the respondent in a statutory declaration as to what was said at a meeting, which were inconsistent with other evidence of the respondent and not capable of anticipation by the applicant when preparing the adjudication application, meant that neither the adjudicator nor the Tribunal had before them sufficient material upon which to make a finding on a critical issue.
13 In my view, it is clear that the Tribunal must keep firmly in mind the limitations placed by Parliament upon adjudicators, such that the content of any duty of procedural fairness must be significantly constrained. The scheme of the CC Act militates against a party having a second opportunity to perfect its case, even on the basis of an adverse matter subsequently raised by its opponent that it may not have anticipated.
81 The Tribunal's decisions in Marine & Civil and MRCN Pty Ltd t/as Westforce Constructions and ABB Australia Pty Ltd [2014] WASAT 59 (MRCN) both support the view that the Tribunal's discretion to admit fresh evidence in CC Act reviews will normally be allowed only where necessary to prevent injustice. In MRCN, the Tribunal indicated at [45]:
The question whether additional material is allowed obviously depends on each case, and given the unique nature of the CC Act, it may be rare to allow additional evidence to be allowed during the review process.
- Such evidence was not permitted in Marine & Civil because the Tribunal considered it was 'not a case akin to MRCN, where, without the ability to furnish fresh evidence, the applicant would [be] at a distinct disadvantage by reason of the process adopted by the adjudicator': see Marine & Civil at [46].
82 The Tribunal is not satisfied that the new evidence is necessary for the Tribunal to achieve the correct and preferable decision in its review of the adjudicator's decision to dismiss the balance claim pursuant to s 31(2)(a) of the CC Act. There are two reasons.
83 Firstly, the materials deposed to in the affidavit concern the contractual relationship (or absence of any contractual relationship) between the applicant, the respondents and the builder. These are issues that the parties addressed in submissions and reply submissions to the adjudicator dated 4 and 5 February 2015 during the course of the adjudication claim. Further evidence on this point is unnecessary and does not assist.
84 Secondly, as the Tribunal has determined that the adjudicator's decision to dismiss the balance claim pursuant to s 31(2)(a)(ii) of the CC Act is the correct and preferable decision, the respondents have been successful on this point and there is no need to consider whether the contracts were construction contracts pursuant to s 31(2)(a)(i) of the CC Act.
85 In light of the authorities discussed above, the Tribunal is not satisfied that there is any basis to conclude that the respondent would be at a distinct disadvantage if the further materials were not permitted. Accordingly, the Tribunal has not had regard to those materials in reviewing the adjudicator's decision.
Conclusion
86 For the above reasons, the Tribunal is satisfied that the adjudicator's decision to dismiss the balance claim pursuant to s 31(2)(a) of the CC Act was the correct and preferable decision.
Order
87 The Tribunal makes the following orders:
1. The adjudicator's decision to dismiss aspects of adjudication no 07-15-01 pursuant to s 32(2)(a) of the Construction Contracts Act 2004 (WA) is affirmed.
2. The application for review pursuant to s 46(1) of the Construction Contracts Act 2004 (WA) is dismissed.
- I certify that this and the preceding [87] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MS K WHITNEY, MEMBER
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