Ostwald Bros Pty Ltd v Jaylon Pacific Pty Ltd - [2016] QSC 240

SUPREME COURT OF QUEENSLAND

CITATION:

Ostwald Bros Pty Ltd v Jaylon Pacific Pty Ltd & Ors [2016] QSC 240

PARTIES:

OSTWALD BROS PTY LTD

ACN 099 115 009
(applicant)

v
JAYLON PACIFIC PTY LTD
ACN 099 559 609

(first respondent)
and

MICHAEL HOPE CHESTERMAN (ADJUDICATION REGISTRAR)

(second respondent)
and

JONATHAN HOWARD SIVE (ADJUDICATOR J1099713)

(third respondent)

FILE NO/S:

BS No 2474 of 2016

DIVISION:

Trial

PROCEEDING:

Originating application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

20 October 2016

DELIVERED AT:

Brisbane

HEARING DATE:

24 March 2016, supplementary submissions received on 6 and 8 April 2016, further supplementary submissions received on 4 and 9 May 2016, second further supplementary submissions received on 26 and 31 May 2016

JUDGE:

Burns J

ORDERS:

1. Declare that the adjudication decision of the third respondent dated 24 February 2016 upon adjudication application number QBCC10046 is void.

2.     Direct the parties to confer within seven days of this order with a view to agreeing upon the orders to be made to give effect to paragraph 1 of this order and any consequential orders.

3.     Failing agreement, direct the parties within 14 days of this order to provide written submissions as to the further orders to be made having regard to Order 1 and the reasons published this day, limited to no more than five pages.

4.     Otherwise adjourn the hearing of the application to a date to be fixed.

5.     Costs reserved.

CATCHWORDS:

ADMINISTRATIVE LAW – PREROGATIVE WRITS AND
ORDERS – CERTIORARI – GROUNDS FOR CERTIORARI TO QUASH – EXCESS OR WANT OF JURISDICTION – PARTICULAR INSTANCES OF JURISDICTIONAL ERROR – where the applicant and the first respondent were parties to a construction contract – where the first respondent served a payment claim under the Building and Construction Industry Payments Act 2004 (Qld) for work claimed to have been performed under the contract as well as additional work by way of variations – where the applicant disputed the claim and sought to claim an amount for liquidated damages for late performance by the first respondent – where an adjudication decision was purportedly made under the Act – whether the applicant had been denied procedural fairness because the adjudicator determined the dispute on a basis that was not the subject of submissions from either party – whether the adjudication decision should be declared void

Building and Construction Industry Payments Act 2004 (Qld), s 17, s 18, s 21, s 23, s 24, s 26

BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd[2012] QSC 346, cited
BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd[2013] QCA 394; [2015] 1 Qd R 228, cited
Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421, cited
John Holland Pty Ltd v TAC Pacific Pty Ltd [2009] QSC 205; [2010] 1 Qd R 302, cited
Caltex Refineries (Qld) Pty Ltd v Allstate Access (Australia) Pty Ltd [2014] QSC 223, cited
David Hurst Constructions Pty Ltd v Durham [2008] NSWSC…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2016] QSC 240
Decision Date: 20 October 2016

CaseChat Overview and Summary

Ostwald Bros Pty Ltd (the applicant) and Jaylon Pacific Pty Ltd (the first respondent) were parties to a construction contract. The first respondent served a payment claim under the Building and Construction Industry Payments Act 2004 (Qld) for work claimed to have been performed under the contract as well as additional work by way of variations. The applicant disputed the claim and sought to claim an amount for liquidated damages for late performance by the first respondent. An adjudication decision was purportedly made under the Act. The applicant sought to have the adjudication decision quashed. The applicant contended that the adjudicator had been denied procedural fairness because the adjudicator determined the dispute on a basis that was not the subject of submissions from either party.

The court was required to decide whether the adjudication decision should be declared void because of jurisdictional error. The court considered whether the adjudicator had acted beyond the scope of his or her jurisdiction by deciding the dispute on a basis that was not the subject of submissions from either party. The court considered whether the adjudicator had breached the rules of natural justice by failing to give the parties an opportunity to make submissions on the basis on which the dispute was decided. The court also considered whether the adjudicator had made an error of law by misconstruing the relevant provisions of the construction contract.

The court found that the adjudicator had acted beyond the scope of his or her jurisdiction and had breached the rules of natural justice. The court found that the adjudicator had decided the dispute on a basis that was not the subject of submissions from either party. The court found that the adjudicator had misconstrued the relevant provisions of the construction contract by construing them as requiring the applicant to prove that the first respondent was not entitled to any extensions of time and that, in the absence of such proof, the first respondent must succeed and the applicant must fail. The court found that the adjudicator had not given the parties an opportunity to make submissions on this basis. The court found that the adjudicator had acted beyond the scope of his or her jurisdiction and had made an error of law. The court declared the adjudication decision void.

The court declared that the adjudication decision of the third respondent dated 24 February 2016 upon adjudication application number QBCC10046 is void. The court directed the parties to confer within seven days of this order with a view to agreeing upon the orders to be made to give effect to paragraph 1 of this order and any consequential orders. The court directed the parties within 14 days of this order to provide written submissions as to the further orders to be made having regard to Order 1 and the reasons published this day, limited to no more than five pages. The court otherwise adjourned the hearing of the application to a date to be fixed. The court reserved costs.

Orders

Orders of the court

1. Declare that the adjudication decision of the third respondent dated 24 February 2016 upon adjudication application number QBCC10046 is void.

2. Direct the parties to confer within seven days of this order with a view to agreeing upon the orders to be made to give effect to paragraph 1 of this order and any consequential orders.

3. Failing agreement, direct the parties within 14 days of this order to provide written submissions as to the further orders to be made having regard to Order 1 and the reasons published this day, limited to no more than five pages.

4. Otherwise adjourn the hearing of the application to a date to be fixed.

5. Costs reserved.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The passages extracted immediately above have been reproduced without the footnotes that accompanied them. There were three such footnotes and each was lengthy. For present purposes though, it is sufficient to refer only to the footnote to paragraph 82.[36] It was in these terms:“I am unable to agree with the suggestion advanced by Mr Roffe[37] at paragraph 110 of his statement: “Ostwald’s position is that unless Jaylon, with reference to the clear terms of the Subcontract, prove its entitlements to the EOT and other claims that it seeks, must conclude that the delays to the Subcontract Works were Jaylon’s own doing”. I am satisfied, after carefully considering the evidence before me, that [Ostwald] unreasonably delayed the processing of [Jaylon’s] claim and also delayed payment of benefits permitted by the construction contract. The evidence, as previously discussed throughout this decision, assists in showing that [Jaylon] complied with the requirements of the construction contract. However, the record is full of unexplained delays in communicating and performing on the part of [Ostwald] and directions issued by [Ostwald] for [Jaylon] to perform different and other work under the construction contract with the inescapable outcome for [Jaylon] being the denial of [Jaylon’s] request to extend time being based on unverified information, mere opinions, and isolated facts or events that were never relevant. There is not one scintilla of evidence provided by [Ostwald] to assist in showing that investigation of [Jaylon’s] claim was carried out objectively. The record assists in showing that there was no effort on the part of [Ostwald] to gather or assess facts material to the claim. Rather, the picture presented with the evidence before me is one that shows [Ostwald] focusing only on securing evidence simply to deny benefits due to [Jaylon] under the construction contract. The impression presented in the material provided by Mr Roffe is that he started out having fixed in his mind, and his feet in cement that he was going to deny [Jaylon’s] requests.”[38][36]Footnote 11; Ibid (p 401).[37]The Contracts Manager employed by Ostwald.[38]Affidavit of Eden Tyler Bird; Exhibit EB-7 (p 401).Consideration It may be immediately observed from the adjudicator’s treatment of the competing claims for extensions of time and liquidated damages that he decided each on a basis that was not the subject of submissions from either Ostwald or Jaylon. A principal focus of those submissions was on whether the “prevention principle” operated but that was the very issue the adjudicator found it unnecessary to decide. Instead, the adjudicator focussed, and then decided the adjudication, on a construction of clauses 5.4 and 5.7 that neither party had contended. In doing so, the adjudicator seemed to construe those provisions as requiring Ostwald to prove that Jaylon was not entitled to any extensions of time and that, in the absence of such proof, Jaylon must succeed and Ostwald must fail.

CITATION:	Ostwald Bros Pty Ltd v Jaylon Pacific Pty Ltd & Ors [2016] QSC 240
PARTIES:	OSTWALD BROS PTY LTD ACN 099 115 009 (applicant) v JAYLON PACIFIC PTY LTD ACN 099 559 609 (first respondent) and MICHAEL HOPE CHESTERMAN (ADJUDICATION REGISTRAR) (second respondent) and JONATHAN HOWARD SIVE (ADJUDICATOR J1099713) (third respondent)
FILE NO/S:	BS No 2474 of 2016
DIVISION:	Trial
PROCEEDING:	Originating application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	20 October 2016
DELIVERED AT:	Brisbane
HEARING DATE:	24 March 2016, supplementary submissions received on 6 and 8 April 2016, further supplementary submissions received on 4 and 9 May 2016, second further supplementary submissions received on 26 and 31 May 2016
JUDGE:	Burns J
ORDERS:	1. Declare that the adjudication decision of the third respondent dated 24 February 2016 upon adjudication application number QBCC10046 is void. 2. Direct the parties to confer within seven days of this order with a view to agreeing upon the orders to be made to give effect to paragraph 1 of this order and any consequential orders. 3. Failing agreement, direct the parties within 14 days of this order to provide written submissions as to the further orders to be made having regard to Order 1 and the reasons published this day, limited to no more than five pages. 4. Otherwise adjourn the hearing of the application to a date to be fixed. 5. Costs reserved.
CATCHWORDS:	ADMINISTRATIVE LAW – PREROGATIVE WRITS AND ORDERS – CERTIORARI – GROUNDS FOR CERTIORARI TO QUASH – EXCESS OR WANT OF JURISDICTION – PARTICULAR INSTANCES OF JURISDICTIONAL ERROR – where the applicant and the first respondent were parties to a construction contract – where the first respondent served a payment claim under the Building and Construction Industry Payments Act 2004 (Qld) for work claimed to have been performed under the contract as well as additional work by way of variations – where the applicant disputed the claim and sought to claim an amount for liquidated damages for late performance by the first respondent – where an adjudication decision was purportedly made under the Act – whether the applicant had been denied procedural fairness because the adjudicator determined the dispute on a basis that was not the subject of submissions from either party – whether the adjudication decision should be declared void Building and Construction Industry Payments Act 2004 (Qld), s 17, s 18, s 21, s 23, s 24, s 26 BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd[2012] QSC 346, cited BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd[2013] QCA 394; [2015] 1 Qd R 228, cited Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421, cited John Holland Pty Ltd v TAC Pacific Pty Ltd [2009] QSC 205; [2010] 1 Qd R 302, cited Caltex Refineries (Qld) Pty Ltd v Allstate Access (Australia) Pty Ltd [2014] QSC 223, cited David Hurst Constructions Pty Ltd v Durham [2008] NSWSC…