OMEGA HOMES PTY LTD and WYRZYNSKI - [2020] WASAT 112

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL
ACT: CONSTRUCTION CONTRACTS ACT 2004 (WA)
CITATION:   OMEGA HOMES PTY LTD and WYRZYNSKI [2020] WASAT 112
MEMBER:   MS L EDDY, SENIOR MEMBER
HEARD:   DETERMINED ON THE DOCUMENTS
DELIVERED          :   17 SEPTEMBER 2020
FILE NO/S:   CC 475 of 2020
BETWEEN:   OMEGA HOMES PTY LTD
Applicant
AND
CHRISTIAN WYRZYNSKI
First Respondent
LEONIE WYRZYNSKI
Second Respondent

Catchwords:

Construction contract - Review of arbitrator's decision - Whether payment claim made under contract - Application for extension of time - Turns on own facts

Legislation:

Construction Contracts Act 2004 (WA), s 3, s 4, s 31(2)(a), s 31(2)(a)(i)(iv), s 46
State Administrative Tribunal Act 2004 (WA), s 60(2)
State Administrative Tribunal Rules 2004 (WA), r 9, r 10

Result:

Application for extension of time to apply to Tribunal dismissed

Category: B

Representation:

Counsel:

Applicant	:	N/A
First Respondent	:	N/A
Second Respondent	:	N/A

Solicitors:

Applicant	:	Creative Legal
First Respondent	:	Jacobson and Associates
Second Respondent	:	Jacobson and Associates

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

Ettridge v Vermin Board of the District of Murat Bay [1928] SASR 124
Field Deployment Solutions Pty Ltd v SC Projects Australia Pty Ltd [2015] WASC 60
Mikhail and Qaqish [2018] WASAT 50
O'Connor and Town of Victoria Park [2005] WASAT 161
SC Projects Australia Pty Ltd v Field Deployment Solutions Pty Ltd [2015] WASC 339
Striker Resources NL v Australian Goldfields NL (In Liq) [2006] WASC 153

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

This is an application under s 46 of the Construction Contracts Act 2004 (WA) (CC Act) seeking review of an adjudicator's decision under s 31(2)(a) of the CC Act to dismiss an application without making a determination on the merits.
On 9 February 2020, the adjudicator, David Trinder, dismissed Omega Home Pty Ltd's (applicant) application for adjudication in relation to what it says is an unpaid valid payment claim for $80,546.42. The adjudicator determined that the payment claim was issued after termination of the contract and therefore there was no payment dispute under a construction contract.
The application was lodged with the Tribunal on 14 April 2020, which by my calculations was 37 days outside of the 28 days within which such an application is allowed to be made: r 9 of the State Administrative Tribunal Rules 2004 (WA) (SAT Rules). TheTribunal may extend the time for making a review application even if the time fixed expired before the application for an extension was made: r 10 of the SAT Rules.
By order of the Tribunal, both the application for an extension of time to make the application, and the substantive application for review of the adjudicator's decision, are to be determined entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA).
The documents before the Tribunal are:
1.application for review and additional material provided with the application;
2.applicant's statement of issues, facts and contentions;
3.applicant's bundle of documents;
4.respondents' statement of issues, facts and contentions in response to the applicant's statement of issues, facts and contentions; and
5.respondents' list of authorities.

Application for leave

The principles applicable to an application for an extension of time to lodge a review application were articulated by the Tribunal in O'Connor and Town of Victoria Park [2005] WASAT 161, [38][40]. The question is whether an extension of time is necessary to provide justice between the parties. There are no rigid or exhaustive guidelines governing the grant of leave, however in determining the question in the context of an application for an extension of time, the Tribunal usually has regard to the length of delay, the reason for the delay, whether there is an arguable case and the extent of any prejudice to Christian and Leonie Wyrzynski (respondents).
The applicant submits that it 'mistook' a statement made by the adjudicator in relation to the time period after which the adjudicator would destroy his copies of all of the documents as indicating the time frame within which an application for review to the Tribunal could be made. It further submits that it only became aware of the 28 day time limit when it lodged the application with the Tribunal.
The application form lodged with the Tribunal states that the applicant was represented at the time of lodging the application by its current solicitor. No information is given as to when the solicitor was instructed, so it is not possible to assess the reasonableness or otherwise of the applicant's mistaken belief having regard to the fact that it was legally represented.
The respondents seek to rely on the fact that no representative from the applicant's company has sworn an affidavit to prove that the mistaken belief was in fact held.
The applicant submits that the delay caused no prejudice to the respondents and there is an arguable issue before the Tribunal that warrants hearing by the Tribunal.
The respondents submit that the delay is a considerable delay given that the delay was greater than the time allowed to make an application, relying on Mikhail and Qaqish [2018] WASAT 50 as authority for that proposition. In addition, the respondents submit the delay is unreasonable and incompatible with the purpose of the CC Act, which is to provide a swift resolution process.

Was this a construction contract?

In exercising the administrative function of reviewing a decision made under s 31(2)(a) of the CC Act, the Tribunal is required to determine that none of the conditions specified in s 31(2)(a)(i)(iv) of the CC Act are satisfied: Field Deployment Solutions Pty Ltd v SC Projects Australia Pty Ltd [2015] WASC 60, at [64].
The adjudicator was satisfied that the 'Fixed Price Home Building Contract' executed by the parties on 2 February 2018 is a construction contract within the meaning of the CC Act, although no explanation was given for this finding: see para 5.5 of the adjudicator'sDetermination.
A construction contract is defined in s 3 of the CC Act to mean:
construction contract means a contract or other agreement, whether in writing or not, under which a person (the contractor) has one or more of these 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);
Section 4 of the CC Act defines 'construction work' as:
Construction work
(1)In this section
civil works includes
(a)a road, railway, tramway, aircraft runway, canal, waterway, harbour, port or marina; and
(b)a line or cable for electricity or telecommunications; and
(c)a pipeline for water, gas, oil, sewage or other material; and
(d)a path, pavement, ramp, tunnel, slipway, dam, well, aqueduct, drain, levee, seawall or retaining wall; and
(e)any works, apparatus, fittings, machinery or plant associated with any works referred to in paragraph (a), (b), (c) or (d);
site in WA means a site in Western Australia, whether on land or offshore.
(2)In this Act
construction work means any of the following work on a site in WA
(a)reclaiming, draining, or preventing the subsidence, movement or erosion of, land;
(b)installing, altering, repairing, restoring, maintaining, extending, dismantling, demolishing, or removing, any works, apparatus, fittings, machinery, or plant, associated with any work referred to in paragraph (a);
(c)constructing the whole or a part of any civil works, or a building or structure, that forms or will form, whether permanently or not and whether in WA or not, part of land or the sea bed whether above or below it;
(d)fixing or installing on or in any thing referred to in paragraph (c) any fittings forming, or to form, whether permanently or not, part of the thing, including
(i)fittings for electricity, gas, water, fuel oil, air, sanitation, irrigation, telecommunications, air conditioning, heating, ventilation, fire protection, cleaning, the security of the thing, and the safety of people; and
(ii)lifts, escalators, insulation, furniture and furnishings;
(e)altering, repairing, restoring, maintaining, extending, dismantling, demolishing or removing any thing referred to in paragraph (c) or any fittings described in paragraph (d) that form part of that thing;
(f)any work that is preparatory to, necessary for, an integral part of, or for the completion of, any work referred to in paragraph (a), (b), (c), (d) or (e), including
(i)site or earth works, excavating, earthmoving, tunnelling or boring; and
(ii)laying foundations; and
(iii)erecting, maintaining or dismantling temporary works, a temporary building, or a temporary structure including a crane or other lifting equipment, and scaffolding; and
(iv)cleaning, painting, decorating or treating any surface; and
(v)site restoration and landscaping;
(g)any work that is prescribed by regulations to be construction work for the purposes of this Act.
(3)Despite subsection (2) construction work does not include any of the following work on a site in WA
(a)drilling for the purposes of discovering or extracting oil or natural gas, whether on land or not;
(b)constructing a shaft, pit or quarry, or drilling, for the purposes of discovering or extracting any mineral bearing or other substance;
(c)fabricating or assembling items of plant used for extracting or processing oil, natural gas or any derivative of natural gas, or any mineral bearing or other substance;
[(d)deleted]
(e)work prescribed by the regulations not to be construction work for the purposes of this Act.
(4)In this Act
construction work does not include constructing the whole or part of any watercraft.
While the Tribunal is not clear what the words 'that form, whether permanently or not and whether in WA or not, part of the land or the sea bed whether above or below it' bring to paragraph (c) of the definition of construction work, it is patent that the definition appears to be very widely cast. The Tribunal does have some concern that there is a separate piece of legislation that covers home building contracts, that contains terms to be incorporated into such contracts that are not on all fours with the terms incorporated into construction contracts by the CC Act. However, as no party has considered this issue or made any submissions on it, the Tribunal does not consider it appropriate to determine the question in this case. For the purposes of this matter, the Tribunal has assumed that a contract may be a home building contract as well as a construction contract to which the CC Act applies.

Whether a payment claim was made under the contract

The applicant submits that the payment claim, although issued after the contract had terminated, arose out of an entitlement which accrued prior to the termination of the contract. In support of its position it relies on the authorities of Ettridge v Vermin Board of the District of Murat Bay [1928] SASR 124, Striker Resources NL v Australian Goldfields NL (In Liq) [2006] WASC 153, at [174] and SC Projects Australia Pty Ltd v Field Deployment Solutions Pty Ltd [2015] WASC 339, at [67].
Factually, the applicant asserts that the respondents' purported termination of the contract dated 17 September 2019 was disputed by the applicant and the contract was not in fact terminated until 7 October 2019. It also asserts the work the subject of the payment claim had been completed on 17 August 2019 and the respondents had been notified of that work having been completed on 18 August 2019. Pursuant to clause 14 of the contract, the applicant submits that the respondents were required to pay the applicant the amount of the claim within five business days of receipt of the claim.
In essence, the respondents submit that the applicant did not mention the payment claim in its letter dated 7 October 2019, and in that letter schedules were provided in relation to the details of work completed, remaining work and applicable costs. The respondents say that nowhere in that letter or in the schedules is a request for payment of an amount in relation to the performance by the applicant of its obligations under the contract and therefore there was no payment claim made.
In addition, the respondents submit that the payment claim did not comply with the contract and therefore it is not a payment claim under the contract. The respondents also contend that the work was not fully completed and therefore could not be the subject of a payment claim under the contract.
The respondents submit that although the applicant may have a claim 'to commence proceedings to vindicate substantive rights that had accrued prior to termination' it cannot do so under the CC Act.
Clause 12 of the contract is headed 'progress payments'. In particular, that clause provides:
… The contractor must notify the owner in writing when a stage of the work has reached completion. A stage of work has reached completion when it has been finished in accordance with the contract documents and any variations agreed to and there are no omissions or defects that prevent that stage of the work from being reasonably capable of being used for its intended purpose.
…
The Contractor may submit to the Owners one claim for a progress payment in each month, on or after the date in each month to be agreed.
1.The claim must set out the Contractor's valuation of: The work completed & the materials & equipment delivered to site for incorporation in the works up to & including the day of the claim.
2.The claim must identify any amount of GST that has been included in the claim.
3.The claim must declare that: all wages and other entitlements including building industry superannuation and long service leave levies due at the date of the declaration have been paid to or on behalf of all employees of the contractor; all monies due to subcontractors at the date of the declaration have been paid; all insurances required to be maintained by the contractor are in force.
Clause 15 of the contract provides for the final payment under the contract. It provides:
When the work is complete in accordance with Clause 8 the owner must pay the amount remaining unpaid under the contract. Payment must be made in the manner specified in Clause 14. If the amount is not paid, interest in accordance with Clause 14 applies.
On receipt of the final payment, the contractor must hand over to the owner all guarantees, instruction manuals and the like unless already provided and all keys relating to the work, together with any certification or approval which may have been provided by any public authority relating to the work.
Clause 8 of the contract provides:
The work will be complete when the contractor has finished the work in accordance with the contract documents and any variations, there are no omissions or defects that prevent the work from being reasonably capable of being used for its intended purpose, any damage of the kind referred to in Clause 19 has been repaired, and all rubbish and surplus material has been removed from the site.
When the contractor believes the work is complete, the contractor must notify the owner in writing certifying that the work has been completed in accordance with this contract. Within 10 business days of receipt of written notice from the contractor, the owner must advise the contractor in writing of any items of work the owner considers to be incomplete or defective. If the owner does not so notify the contractor, the work will be taken to be complete.
The contractor must complete any outstanding work promptly and again notify the owner in writing. Unless the owner notifies the contractor in writing that any item is still incomplete or defective within a further 10 business days from receipt of notification by the contractor, the work will be taken to be complete.
Should there be any dispute between the parties as to whether the work has been completed, it must be dealt with in accordance with the dispute resolution procedure (Clause 27).
The relevant claims are identified as attachments 'C', 'D', 'E' and 'F' to the application for arbitration. The Tribunal has electronic and paper copies of these documents. These documents are in the form of a spreadsheet, utilising an 'excel' spreadsheet. Attachment 'C' has, in column 'A', the heading 'by percentage proportions of work completed by trade' followed by a list of 15 items. In the adjacent column there is listed a dollar figure next to each of the 15 items. In neighbouring columns there are references to five claims; namely Claim #8, Claim #9, Claim #10, Claim #11A and final claim. Each claim reference has a neighbouring column that has a date and dollar figure amounts relating to each of the 15 items listed in the first column of the spreadsheet.
Attachment 'C' also includes the following headings:
•Provisional sum and prime cost sum shortfall from Provisional sum commitments Attachment 'D'
•Variations as detailed Attachment 'F'
•Credit to cost of remaining work to complete on site (excluding PS and PCAS items) - Attachment 'E'
There are dollar amounts next to each of these headings, and some further items with more detail. The Tribunal believes that the documents before the Tribunal that are described as attachments 'D', 'E' and 'F' are the attachments referred to in column A of attachment 'C'.
Under the 'final claim' column in attachment 'C', there is '100%' written in line with each of the 15 items identified under the first heading in column A of attachment 'C'. Yet attachment 'E' describes a list of 'remaining work to complete on site excluding PS & PCS'. Patently, the applicant believed, at the time that it caused the document that is attachment 'E' to be created, that the work was uncompleted. The list of work in attachment 'E' is not insubstantial. For ease of reference, a copy of attachment E is annexed to these reasons.
The contract only allows the builder to claim payment when a stage of work has reached completion. Not all of the work had been completed at the time the contract was terminated, whichever date of termination applies. Further, there is no evidence to support any contention that the applicant provided the respondents with notice in writing certifying that the work had been completed in accordance with the contract as required by clause 8 of the contract.
In addition, the figures in attachment 'C' next to the 15 items do not identify any amount of GST that, presumably, would have been incurred. The GST details have been included on attachments 'D', 'E' and 'F' but these documents do not include the services and goods that were the subject of the original contract price, outside of the provisional sum and prime cost items.
The Tribunal is not persuaded that attachment 'C' is a payment claim made under the contract because the claim does not comply with the requirements of the contract. Under the contract, there was not, at the time the claim was given to the respondents, any entitlement to make either a progress claim or a final payment claim.
This is not to say that the applicant might not be entitled to payment for work it did complete. The respondents concede this point, but say the matter may not be resolved through the mechanism of the CC Act. The Tribunal does not have any power, under this legislation, to make the orders sought by the applicant.

In this context, the Tribunal must return to the question of whether leave to make the application out of time should be allowed. Having regard to the matters identified above, the Tribunal considers that leave should be refused. The delay is a considerable one in the context of the purpose of the CC Act. There is no good reason for the delay in that one of the applicant's directors made assumptions about the time period allowed in which to seek a review but there is no explanation for why the applicant's legal advisers were not consulted, if they were not consulted, in a timely way. There is no prejudice to the respondents, and the Tribunal gives this matter some weight. If there were merit in the application, the Tribunal would have been of the view that the justice of the matter required leave to be granted. However, the Tribunal has concluded that the arbitrator's determination, that there was no payment claim under the contract, was correct and should be affirmed. Thus, even if leave were granted, the applicant would not have been successful in this application.

Orders

The Tribunal orders:
1.The application for an extension of time to apply to the Tribunal is dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS L EDDY, SENIOR MEMBER
17 SEPTEMBER 2020