Northern Territory of Australia v Woodhill and Sons Pty Ltd - [2018] NTSC 30

CITATION: Northern Territory of Australia v Woodhill and Sons Pty Ltd [2018] NTSC 30
PARTIES:NORTHERN TERRITORY OF AUSTRALIA

v
WOODHILL AND SONS PTY LTD (ACN 155 181 687)

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  SUPREME COURT exercising Territory jurisdiction
FILE NO:20 of 2018 (21811603)
DELIVERED:  16 May 2018
HEARING DATES:  12 March 2018
JUDGMENT OF:  Grant CJ
CATCHWORDS:

ADMINISTRATIVE LAW – JUDICIAL REVIEW – CONSTRUCTION CONTRACTS (SECURITY OF PAYMENTS)
Whether s 34(3)(b) of the Construction Contracts (Security of Payments) Act (NT) precludes adjudicator appointed to adjudicate two payment disputes between the parties from adjudicating either payment dispute without consent of the parties – simultaneous adjudication concerned with temporal simultaneity – consent required –adjudicator appointed pursuant to s 30(1)(a) of the Act may not withdraw from appointment once made unless disqualified by material personal interest – adjudicator could not withdraw from one payment dispute and proceed with the adjudication of the other.
Construction Contracts (Security of Payments) Act (NT) s 30, s 31, s 33, s 34, s 52
Construction Contracts (Security of Payments) Regulations (NT) r 5
Gwelo Developments Pty Ltd v Brierty Limited [2014] NTSC 44, RNR Contracting Pty Ltd v Highway Constructions Pty Ltd [2013] WASC 423, referred to.
REPRESENTATION:
Counsel:
Plaintiff:N Christrup
Defendant:J Doyle
Solicitors:
Plaintiff:Clayton Utz
Defendant:Doyles Construction Lawyers
Judgment category classification:    B
Judgment ID Number:  GRA1811
Number of pages:  17

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Northern Territory of Australia v Woodhill and Sons Pty Ltd [2018] NTSC 30
No. 21811603
BETWEEN:

NORTHERN TERRITORY OF AUSTRALIA
Plaintiff

AND:

WOODHILL AND SONS PTY LTD (ACN 155 181 687)
Defendant

CORAM: GRANT CJ
REASONS FOR JUDGMENT
(Delivered 16 May 2018)

On 12 March 2018, following the hearing of an urgent application for declaratory and other relief, the Court made the following orders:
1. Pursuant to rule 45.05(2) of the Supreme Court Rules, the Court dispenses with the requirements of rr 5.03(1) and 8.02 and authorises the plaintiff to commence this proceeding by originating motion in this form.
2. A declaration that Mr David Baldry has been appointed pursuant to s 30(1)(a) of the Construction Contracts (Security of Payments) Act (NT) to adjudicate:
(a)the payment dispute the subject of the document entitled Adjudication Application dated 27 February 2018 (being annexure ‘SN-3’ to the affidavit of Sarah Ruth Newman made on 8 March 2018 (First Application); and
(b)the payment dispute the subject of the document entitled Adjudication Application dated 28 February 2018 (being annexure ‘SN-7’ to the affidavit of Sarah Ruth Newman on 8 March 2018) (Second Application).
3.    A declaration that Mr Baldry cannot decline either appointment or otherwise refer either application to the prescribed appointer or the Registrar for appointment of a different adjudicator.
4.    A declaration that the plaintiff has not consented to the simultaneous adjudication of the payment disputes the subject of the First Application and the Second Application.
5.    A declaration that Mr Baldry is not entitled to adjudicate the payment disputes the subject of the First Application and Second Application.
6.    The question of costs is reserved.
At the time those orders were made the Court indicated it would publish its reasons at a later date. These are those reasons.
Issue for determination
The issues for determination are:
(a)whether, in the circumstances of this matter, s 34(3)(b) of the Construction Contracts (Security of Payments) Act (NT) (“the Act”) precludes an adjudicator who has been appointed to adjudicate two payment disputes between the parties from adjudicating either payment dispute in circumstances where one party has not provided its consent to that adjudication; and
(b)if so, whether an adjudicator appointed pursuant to s 30(1)(a) of the Act may (other than in circumstances contemplated by s 31 of the Act) withdraw from, decline or otherwise disavow one appointment and proceed with the adjudication of the other payment dispute.
Factual background
The relevant facts are not in dispute.
The plaintiff had entered into a number of separate contracts with the defendant for the performance of civil works at locations on the East Arnhem Highway. Contract T17–1686 was for the construction of five floodways (“the first contract”). Contract T17–1882 was for gravel resheeting works (“the second contract”).
By operation of reg 5 of the Construction Contracts (Security of Payments) Regulations, the “Law Society Northern Territory” is a prescribed appointer for the purposes of the Act.
On 27 February 2018, the defendant made an application for adjudication of a payment dispute in respect of the first contract (“the first application”). On that date, the defendant’s solicitor sent an email to the Law Society Northern Territory attaching the adjudication application, confirming payment of the appointment fee, and requesting the appointment of an adjudicator pursuant to the Act.
On that same day, the Law Society Northern Territory sent an email to Mr David Baldry, an adjudicator registered pursuant to s 52 of the Act, notifying that the application had been made, and asking whether he was available to conduct the adjudication. By reply email dated 1 March 2018, Mr Baldry advised the Law Society Northern Territory that he had no conflict and was available to conduct the adjudication at his previously advised rates.
By letter dated 1 March 2018, the Law Society Northern Territory wrote to the parties and to the Construction Contracts Registrar advising that Mr Baldry had been appointed as adjudicator for the first application. Although the letter makes no express distinction between the first and second applications, it was clear from the circumstances that the appointment related to the first application.
By letter dated 2 March 2018, Mr Baldry wrote to the parties confirming that he had been appointed by the Law Society Northern Territory to act as adjudicator in the first application. He expressed the belief that no circumstances existed which would require his disqualification in pursuance of s 31 of the Act on the basis of material personal interest, and asked the parties to advise whether they had any objection to him acting as adjudicator.
The solicitors for the plaintiff replied to Mr Baldry by email dated 5 March 2018 advising that their client did not have any objection to him acting as the adjudicator “in relation to the adjudication application dated 27 February 2018”. By email sent on that same day, the solicitors for the defendant also advised that it had no objection to Mr Baldry’s appointment as adjudicator. On receipt of those responses, Mr Baldry sent an email to the Law Society Northern Territory, also on 5 March 2018, advising that the parties had no objection to his appointment and that “[i]n those circumstances I hereby accept my appointment as adjudicator”.
Meanwhile, on 28 February 2018, the defendant made an application for adjudication of a payment dispute in respect of the second contract (“the second application”). On that date, the defendant’s solicitor sent an email to the Law Society Northern Territory attaching the adjudication application, confirming payment of the appointment fee, and requesting the appointment of an adjudicator pursuant to the Act.
On that same day, the Law Society Northern Territory sent an email to Mr Baldry notifying that the application had been made, and asking whether he was available to conduct the adjudication. That communication stated expressly (emphasis original):
On 28 February 18, the Society was served with an application for adjudication under the Act. The application is separate from the application made by the applicant on 27 February 2018.
By reply email dated 1 March 2018, Mr Baldry advised the Law Society Northern Territory that he had no conflict and was available to conduct the adjudication at his previously advised rates. The Law Society Northern Territory did not seek the consent of the parties to that second appointment, presumably on the basis that it considered the indication of consent to the first appointment was sufficient. Nor did Mr Baldry ask the parties to advise whether they had any objection to him acting as adjudicator, presumably on that same basis.
By letter dated 5 March 2018, the Law Society Northern Territory wrote to the parties and to the Construction Contracts Registrar advising that Mr Baldry had been appointed as adjudicator for the second application. Again, although the letter made no express distinction between the first and second applications, it was clear from the circumstances that the appointment related to the second application.
On 6 March 2018, the solicitors for the plaintiff sent an email to Mr Baldry requesting copies of the correspondence confirming his appointment as adjudicator in each of the applications. On that same day, the solicitors for the plaintiff sent a letter to the solicitors for the defendant noting that Mr Baldry had been appointed to adjudicate both payment disputes; drawing attention to the provision in s 34(3)(b) of the Act requiring the consent of the parties to the adjudication simultaneously of two or more payment disputes; and advising that the plaintiff did not consent to the simultaneous adjudication of the two payment disputes between the parties.
On 7 March 2018, Mr Baldry sent an email to the solicitors for the plaintiff which was also copied to the solicitors for the defendant. In that email, Mr Baldry sought confirmation that the plaintiff was unwilling to consent to him acting as adjudicator for the second application. Mr Baldry indicated further that in those circumstances he would consider himself unable to accept the appointment to act as adjudicator in that application.
The solicitors for the plaintiff responded to Mr Baldry on that same day. The gist of that response was that an appointment under s 30 of the Act was not conditional on acceptance by the adjudicator; once appointed, an adjudicator may only be removed for material personal interest in accordance with s 31 of the Act; and it had been incumbent on the defendant to seek the plaintiff’s consent to simultaneous adjudication before making the second application to the prescribed appointer.
By return email, Mr Baldry expressed the view that there was no reason consent could not be given after the appointment, but in the absence of such consent he would adjudicate the first application only. By return email, the solicitors for the plaintiff expressed the view that Mr Baldry did not have jurisdiction to adjudicate either payment dispute given that his appointment to adjudicate the second application was made without its client’s consent.
On 9 March 2018, the adjudicator determined that the plaintiff had not consented to simultaneous adjudication; that he could not adjudicate the second application but could continue in the adjudication of the first application; that he intended to refuse the appointment to adjudicate in the second application but continue the adjudication of the first application; and that the times prescribed under the Act continued to apply in respect of the first application.
It was in those circumstances that the plaintiff commenced proceedings for declaratory and other relief by Originating Motion filed on Thursday, 8 March 2018 and the matter proceeded to hearing on Monday, 12 March 2018.
The operation of the statutory scheme
Section 30 of the Act provides relevantly that where an application for adjudication is served on a prescribed appointer, the appointer must appoint a registered adjudicator to adjudicate the payment dispute concerned, send the application to the adjudicator, and give written notice to the parties and the Registrar accordingly. The Act does not provide expressly for an adjudicator’s consent to appointment by a prescribed appointer. Of course, as a matter of both administrative practice and courtesy a prescribed appointer would be expected to make enquiry as to a registered adjudicator’s availability for appointment prior to making the appointment. As described above, in this case the Law Society Northern Territory made enquiry of Mr Baldry in respect of both appointments, and Mr Baldry confirmed his availability to take those appointments if made.
There is no doubt that Mr Baldry was subsequently appointed by the prescribed appointer to adjudicate in both the first and second applications. Those appointments were notified by letters dated 1 March 2018 and 5 March 2018 respectively.
Section 31 of the Act provides that an appointed adjudicator is disqualified from adjudicating the dispute if the adjudicator has a “material personal interest” in the payment dispute concerned, the construction contract under which the dispute has arisen, or any party to the contract. If disqualified on those grounds, the adjudicator must give written notice to the parties and the Registrar. A party also has standing to apply to the Registrar for a declaration that the appointed adjudicator is disqualified by material personal interest. Once an appointment has been made, there is otherwise no means by which the Act expressly contemplates a termination, refusal or disavowal of appointment, or the appointment of a replacement adjudicator.
Mr Baldry advised the parties that he had no relevant “material personal interest”, and was not disqualified in the application of that provision. Neither party suggested that Mr Baldry was disqualified.
Section 33 of the Act provides that an appointed adjudicator “must, within the prescribed time or any extension of it”, either: (a) dismiss the application without making a determination on the merits in certain prescribed circumstances (not presently relevant); or (b) determine on the balance of probabilities whether any party to the payment dispute is liable to make a payment or to return any security. The “prescribed time” is defined to mean 10 working days after service of the response to the application for adjudication, or the last date on which the response was required to be served (which, pursuant to s 29 of the Act, is 10 working days after the service of the application for adjudication).
Section 34 of the Act provides relevantly:
(3) An appointed adjudicator may:
(a)…
(b)with the consent of the parties, adjudicate simultaneously 2 or more payment disputes between the parties; or
(c)with the consent of all the parties concerned, adjudicate the payment dispute simultaneously with another payment dispute.
(4) If an appointed adjudicator adjudicates simultaneously 2 or more payment disputes, the adjudicator may, in adjudicating one, take into account information or documents the adjudicator receives in relation to the other and vice versa.
The defendant does not assert that the plaintiff provided consent to the simultaneous adjudication of the two payment disputes between the parties, either prior to or following either appointment of the adjudicator.
Simultaneous adjudication
The plaintiff contends that in those circumstances the appointment of Mr Baldry to adjudicate the second payment dispute necessarily gave rise to circumstances of simultaneous adjudication; that having been appointed Mr Baldry was obliged by operation of ss 31 and 33 of the Act to proceed with the adjudication of both payment disputes in the absence of circumstances requiring his disqualification; that the consent of the plaintiff is a precondition to the simultaneous adjudication of both payment disputes (but not to the appointment of the adjudicator); and that in the absence of that consent Mr Baldry may not lawfully proceed with the adjudication of the first and/or second applications.
The plaintiff’s contention is predicated on a construction which would treat the concept of simultaneity as temporal in nature, in the sense of “occurring or operating at the same time”. On that construction, simultaneous adjudication will arise where two payment disputes fall to be adjudicated by the one adjudicator at the same time or overlapping times (perhaps subject to questions of degree).
In support of that construction the plaintiff points to the fact that the adjudication procedure is “brutally fast”, and can leave the adjudicator with only five working days to determine all questions arising out of an application, with the effect that the adjudication of more than one payment dispute at the same time may bear on the capacity of the adjudicator and the quality of the adjudications. It is for that reason, the plaintiff submits, that the parties are given a choice as to whether they wish to accept that risk by consenting to simultaneous adjudication. In the plaintiff’s submission, that purpose can be seen to inform both s 34(3)(b) and s 34(3)(c) of the Act. That latter provision contemplates the possibility of simultaneous adjudication of entirely unrelated payment disputes, potentially involving different construction projects and different contracting parties.
The plaintiff points to the counterpart provision in s 32(3) of the Construction Contracts Act (WA), which provides that an appointed adjudicator may adjudicate a payment dispute simultaneously with one or more other payment disputes if satisfied that doing so will not adversely affect the adjudicator’s ability to adjudicate the disputes. The plaintiff says that although the Northern Territory provision is in different terms, and makes no express reference to adverse effect on the ability of the adjudicator, the Northern Territory legislation is modelled on the Western Australian Act and its purpose in that respect is the same.
It would also seem to be accepted in Western Australia that, on a proper construction of s 32(3) of the Western Australian Act, an adjudicator has jurisdiction to determine only one payment dispute at a time unless his or her jurisdiction is expanded by agreement of the parties under that provision: see RNR Contracting Pty Ltd v Highway Constructions Pty Ltd [2013] WASC 423 at [9], [22].
The defendant’s contention is, in essence, that the concept of simultaneous adjudication is functional in nature and directed only to circumstances in which the evidence in one adjudication is to stand as evidence in the other adjudication. On that contention, the adjudication of two payment disputes might be conducted in parallel in a temporal sense without being conducted simultaneously. The textual difficulty with that construction is that s 34(4) of the Act provides that if an appointed adjudicator adjudicates two or more payment disputes simultaneously, the adjudicator may take into account information or documents received in one for the purpose of the other(s), and vice versa. That provision is facultative in operation, and clearly comprehends a situation involving simultaneous adjudication where the evidentiary processes are running discretely rather than jointly.
This particular question of construction has not previously been addressed by the courts in this jurisdiction. The operation of the provision concerning simultaneous adjudication was considered by this Court in Gwelo Developments Pty Ltd v Brierty Limited [2014] NTSC 44. That case concerned a single application for adjudication in respect of two payment disputes. The matter proceeded on the assumption that the circumstances presenting in that case had constituted simultaneous adjudication.
The respondent to the application declined to consent to simultaneous adjudication, whereupon the application was withdrawn and two further and separate applications filed. The Court’s determination was concerned with whether those two further applications were validly made, however the Court did make the following observations at [48] in relation to the requirement for consent to simultaneous adjudication (footnotes omitted):
The first application was an application. It is just that the adjudicator was precluded from determining both payment disputes contained in the application together without the consent of the plaintiff, which was not forthcoming. Mr Wyvill complained that such a result subjects applicants to a form of Russian roulette. They gamble on including more than one payment dispute in an application for an adjudication and, if consent is not forthcoming from the other party, the applicant is precluded from obtaining an adjudication on those disputes altogether. The answer to that is that the gamble is one of the defendant’s own making. The law is clear – an adjudicator may not adjudicate two or more payment disputes simultaneously without the consent of the other party – and the defendant chose to take the risk of making an application for adjudication containing two distinct payment disputes without first asking the plaintiff if it would consent to this course. (It must also be borne in mind that the loss of the opportunity to adjudicate a payment dispute under the Act does not entail the loss of any substantive rights.)

There is no textual and other reason why the preclusion would not also operate where there are two separate applications for adjudication, rather than one application in relation to two payment disputes. Counsel for the defendant in this matter says that the “gamble” spoken of in Gwelo Developments was of the applicant’s own making. The submission followed that the defendant in the present case did not make the same “gamble” and made separate applications. Of course, it was open to the defendant in this case to approach the plaintiff and seek its consent to simultaneous adjudication before the second application was made, and/or to notify the prescribed appointer that Mr Baldry had already been appointed to adjudicate in the first application. That was not done.
For those reasons, the appointments of Mr Baldry to adjudicate in both the first and second applications (made four days apart) gave rise to a situation of simultaneous adjudication within the meaning of s 34(3) of the Act. That situation having arisen, the adjudicator was precluded from determining both payment disputes without the consent of the plaintiff, which consent was not forthcoming.
Withdrawal from appointment
It falls then to consider whether it was open to Mr Baldry to withdraw from the second appointment and proceed to adjudicate the first payment dispute.
The object of the Act is directed to the rapid resolution of payment disputes and the rapid recovery of payments under construction contracts. As already described, the Act only contemplates the withdrawal of an adjudicator once appointed, as opposed to the withdrawal or discontinuance of an application, in circumstances where there is a conflict of interest. That is reflective of the time limits prescribed under the legislation and the rapidity of the adjudication process. The scheme does not admit of the termination of one adjudicator and the appointment of a replacement; and nor does it admit of the deferral or recommencement of the adjudication for that purpose.
In circumstances where an adjudicator fails to complete the adjudication within the prescribed time by reason of illness, accident, inability, or, as in this case, lack of consent, the application is deemed to be dismissed by operation of ss 33(2) and 39(2) of the Act. Nor does s 34(3)(b) of the Act operate to invalidate the appointment of an adjudicator to a simultaneous adjudication without the consent of the parties. Consent is not a precondition to appointment. Rather, the provision operates only to preclude a duly appointed adjudicator from adjudicating payment disputes simultaneously in the absence of consent.
Whilst it might be open in a theoretical or hypothetical sense for an adjudicator in those circumstances to refuse to adjudicate on one application and purport to embark upon the adjudication of the other, the proper discharge of professional duties and obligations would preclude such an approach in actuality. Moreover, conduct of that nature it might be expected to prompt an application to the court for relief. Once the issue had been identified in the present matter, Mr Baldry properly indicated his intention to submit to and abide by the Court’s determination.
Having regard to the statutory scheme, and in these circumstances, it was not open to Mr Baldry to decline or otherwise disavow his appointment in the adjudication of the second application, and to proceed with the adjudication of the first application.
Consequences
The determination made on 12 March 2018 left it open to the defendant to withdraw the second application, whereupon the adjudicator would be at liberty to proceed with the first application. Alternatively, it was open to the defendant to wait until the expiry of the prescribed time in pursuance of ss 33(2) and 39(2) of the Act. Of course, the defendant retained its substantive rights in respect of the contractual dispute.
The court will hear the parties in relation to the question of costs.

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