Roberts Construction Group Pty Ltd v Drummond Carpentry Services Pty Ltd
[2024] VSC 246
•16 May 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
TECHNOLOGY, ENGINEERING AND CONSTRUCTION LIST
S ECI 2023 03935
| ROBERTS CONSTRUCTION GROUP PTY LTD (ACN 641 105 580) | Plaintiff |
| v | |
| DRUMMOND CARPENTRY SERVICES PTY LTD (ACN 618 422 549) | First Defendant |
| and | |
| NICK AHERN (in his capacity as adjudicator appointed under section 20(1) of the Building and Construction Industry Security of Payment Act 2002 (Vic)) | Second Defendant |
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JUDGE: | NIALL JA |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 22 March 2024 |
DATE OF JUDGMENT: | 16 May 2024 |
CASE MAY BE CITED AS: | Roberts Construction Group Pty Ltd v Drummond Carpentry Services Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2024] VSC 246 |
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ADMINISTRATIVE LAW – Judicial review – Review of adjudication determination made under the Building and Construction Industry Security of Payment Act 2002 – Whether provision of particular services under relevant contract is jurisdictional fact – Question whether particular services rendered under relevant contract not jurisdictional – Whether plaintiff served valid payment schedule – Plaintiff’s emails not sufficient to constitute payment schedule – Whether valid service of adjudication application – First defendant effected valid service – Adjudication determination upheld.
Building and Construction Industry Security of Payment Act2002, ss 3, 7, 9, 14, 15, 16, 18, 21, 22, 23.
BSC Infrastructure Support v Jones Lang Lasalle [2020] VSC 739; Façade Treatment Engineering Pty Ltd (in liq) v Brookfield Multiplex Constructions Pty Ltd (2016) 337 ALR 452; Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA) Pty Ltd [2007] QSC 333; Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140; Perform (NSW) Pty Ltd v MEV-AUS Pty Ltd [2009] NSWCA 157; Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; Saville v Hallmarc Construction Pty Ltd (2015) 47 VR 177, considered.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr JAF Twigg KC with Ms C Jones | Eidelweisz Lawyers Pty Ltd |
| For the First Defendant | Mr AT Broadfoot KC with Dr K Weston-Scheuber | Merton Lawyers |
| For the Second Defendant | No appearance |
HIS HONOUR:
The plaintiff (‘Roberts’) seeks by way of judicial review to quash an adjudication determination under the Building and Construction Industry Security of Payment Act2002 (‘the Act’) by Nick Ahern, in his capacity as adjudicator appointed under s 20(1) of the Act (the second defendant). The determination was delivered under the Act in respect of a payment claim served on 8 June 2023 by the first defendant (‘Drummond’) on Roberts claiming the sum of $199,905.75 (GST inclusive) for labour provided under an informal labour hire agreement.
The facts
The underlying dispute arises in relation to the provision of labour hire to a construction project in Ormond, Victoria named the Two Birds Project. The project comprises 24 apartments with a concrete carport and ground floor slab. The principal and landowner for the project is Longboat Holdings Group No 4 Pty Ltd (‘Longboat’), which holds itself out as the owner builder of the project. Pursuant to a head contract with Longboat dated 21 September 2021, Roberts is the head contractor for the project. Roberts contends that it contracted with a related entity, Timberworks (Vic) Pty Ltd (‘Timberworks’), as a subcontractor on the project to provide timber framework for the project.
Theodore Kerlidis is the sole director of Roberts, Timberworks and Longboat.
Drummond is in the business of providing labour hire of building and construction staff on hourly rates. David Drummond is the sole director of Drummond.
Mr Drummond deposes that on or about 21 October 2022 he met with Mr Sam Grillo, contracts manager for Roberts, and was shown structural drawings for the proposed timber structure on the project. On 23 October 2022, Mr Drummond sent emails to Mr Kerlidis in which he said that Drummond had completed a diverse range of projects of a similar kind and said that they would take three to four weeks per floor.
On 14 November 2022, Mr Drummond sent another email to Mr Kerlidis advising that Drummond had two workers who were available from the following Wednesday and set out their charge rates with seven-day payment terms. Mr Kerlidis responded by email on the same day in which he thanked Mr Drummond for the updated rates, discussed timing for the payment of invoices and said:
With the work we would like you to do with the concreter that will be an agreement with RCG and for the timber structure that will be with Timberworks.[1]
[1]CB 308.
In response, Mr Drummond sought to negotiate shorter payment terms,[2] which was the subject of further email discussion and subsequent agreement.
[2]Ibid 307.
In his affidavit, Mr Drummond further deposes:
30. On or about 15 November 2022 I had a discussion with Mr Kerlidis at the Project and we agreed Drummond would be engaged to undertake work at the Project on the following terms:
a. Drummond would provide labour hire for the Project and Roberts would pay for such labour hire on the following terms:
i. tax invoice to be issued on the 20th day of each month to be paid by the 1st day of the next month;
ii. tax invoice could be issued on the 1st day of each month to be paid by the 15th day of that month;
b. Drummond’s invoices should be sent to Mr Karama or Ms Ochoa of Roberts and they would tell me if any changes to the invoices were needed or if they needed to be addressed to one of Mr Kerlidis’ other companies;
c. Drummond would invoice Timberworks for work on the timber framing structure and would invoice Roberts for all other work;
d. Roberts, as the head contractor, would provide [me], my employees and my contractors access to the secured Project site as its ‘subcontractor’; and
e. either Mr Kerlidis or another employee of Roberts would provide [me] and my employees with continuing instructions as to what work was to be undertaken at the Project.
31. On 16 November 2022, in reliance on the partly written and partly oral arrangements (also by handshake) agreed with Mr Kerlidis, on behalf of both Roberts and Timberworks, Drummond began supplying labour hire of skilled carpenters, trade assistants, labourers and traffic management for the Two Birds Project (Construction Contracts).[3]
[3]Ibid 643.
I note that Mr Drummond was not cross-examined, and Roberts did not adduce any evidence in response to these paragraphs. In the course of argument, senior counsel for Roberts informed the Court that the oral terms alleged by Mr Drummond were not disputed.[4]
[4]Transcript, 9.
On 16 November 2022, Juliana Ochoa, project manager at Roberts, sent a purchase order for the concrete structure formworks to Drummond. That purchase order described it as being for the provision of labour, plant, equipment and materials as required for concrete structure works in Building A and Building B. In a table in the purchase order it referred to a labourer and apprentice carpenter providing labour for the purposes of concrete works. No further purchase orders were issued.
On the same day, Drummond workers accessed the site to commence work.
Between 1 December 2022 and 17 February 2023, Drummond issued three tax invoices to Roberts, being:
(a) invoice 269 dated 1 December 2022;
(b) invoice 279 dated 1 February 2023; and
(c) invoice 303 dated 17 February 2023.
Each of those invoices identified the hours worked and the applicable hourly rate. Invoice 303 was in the sum of $19,450.75, which Mr Drummond deposes was paid by direct credit on 24 January 2023. Invoice 303 related to labour supplied in December 2022 and January 2023.
On 2 February 2023, Ms Ochoa emailed Mr Drummond in the following terms:
Further to your phone conversation with Adel earlier today, this is to confirm a couple of things in regards to you [sic] invoice(s).
·Invoice 303 (attached) addressed to RCG includes works from 21/12/22 to 20/01/23 (wrote [sic] as 20/12 in your invoice by mistake), however I believe all works after the new year have been for Timber structure which should be invoiced to Timberworks. In order for us to clear this up and fix our records, would you be able to reimburse the amount paid ($19,450.75 Incl. Gst) and provide us with two new invoices as follow: 1. To RCG for works up to 31/12/22 and, 2. To Timberworks for works from 01/01/23. Once you reissue these invoices we will process your payment straight away.
·Invoice 303, can you please clarify who is Paulie registered on the 12/01 and 13/01?
Note that all your incoming invoices have to be addressed to Timberworks not RCG, and that you must provide us with a copy of your signed dockets every time you submit a claim.[5]
[5]CB 339.
Ms Ochoa sent the email from a Roberts email address. The subject of the email was ‘Two Birds – Timberworks invoices’.
Mr Drummond deposes that, after 2 February 2023, his labourers continued to attend the site and undertake work most of which, he said, did not relate to the timber structure. Drummond issued invoices to Timberworks for work undertaken after 1 January 2023. Mr Drummond said some of that work related to work that was in addition to work on the timber framing, giving examples of references in the invoice to formwork/concreting, stripped formwork, general labouring, concreting starter bars, concrete works, and steel installation.[6]
[6]Ibid 645.
Mr Drummond deposes that the category of work performed by his labourers was no different to the work that had been directed and performed before 31 December 2022 and in respect of which Drummond had invoiced Roberts.[7]
[7]Ibid 646.
Between January and May 2023, Drummond issued nine claims to Timberworks: invoice no. 298 dated 8 January 2023, invoice no. 304 dated 22 January 2023, invoice no. 319 dated 19 February 2023, invoice no. 328 dated 27 February 2023, invoice no. 331 dated 17 March 2023, invoice no. 333 dated 27 March 2023, invoice no. 338 dated 10 April 2023, invoice no. 340 dated 1 May 2023, and invoice no. 344 dated 20 May 2023.
On 1 May 2023, Drummond issued a tax invoice in the sum of $70,163.50 (‘invoice 340’) to Timberworks and on 20 May 2023 sent another tax invoice to Timberworks in the sum of $129,742.25 (‘invoice 344’). Invoice 340 related to the supply of labour between 21 April 2023 and 1 May 2023. Invoice 344 sought payment for the provision of labour supplied between 2 May and 19 May 2023.
Those two invoices, which totalled $199,905.75, were not paid.
On 20 May 2023, Mr Drummond emailed Mr Kerlidis saying that due to late payments Drummond would not supply more labour until invoice 340 was paid in full.[8]
[8]Ibid 227.
On 22 May 2023, Mr Kerlidis emailed Mr Drummond saying he was disappointed and that Drummond was holding up the project and was responsible for a number of defects.[9]
[9]Ibid 229.
On 2 June 2023, Adel Karama, Roberts’ contract administrator, emailed Drummond in response to the invoices, seeking an explanation as to why there had been a sudden increase in the number of workers supplied, and complaining that time for cleaning had been invoiced ‘randomly’ and that there was a mismatch between the actual work produced on site and the claimed amount of time spend by carpenters. Mr Karama continued:
As discussed during the meeting, you have to provide valuable evidence proofing the value of work done on site compared to the invoiced amount. We still highly believe that what has been completed on site do[es] not match the amount of money invoiced.[10]
[10]Ibid 382.
On 7 June 2023, Mr Karama sent an email to Mr Drummond in the following terms:
It should be clear that the submitted invoices are not approved as they have no basis. Your invoices do not include any approvals and no supporting evidence has been provided on the completed works. Also, there were no singed [sic] dockets attached.
With reference to below communication, you have not provided any supporting evidence on the mentioned works in your email.
For instance, you stated that you allowed for $543k for building A. Please provide a signed document to support your claim. Also, we have to remind you that you refused to sign a contract despite the constant requested [sic] from RCG. Hence, adding total figure on a daily work rate is not applicable.
Further, we disagree with your statement on the guard rail as the installation methodology and SWMS were explained and signed by you during our meetings on 9 February 2023 and 28 March 2023 respectively. Please refer to Procore for additional information that include the signed SWMS.
If we are to consider your claims, the project has not faced any major events that caused the factors mentioned by yourself to change after 21 April 2023. Explain why the period after 21 April 2023 had less progress and more claimed money since the same site conditions still applies [sic]. Thus, the stated details in your email below are not correct and lack authenticity.
As communicated on several occasions previously, we are here to support you and work together to complete this project. However, you have failed to support your claims of why approximately 30% of the total invoices amount, submitted for your services since you started, occurred in the period between 21 April 2023 to 19 May 2023.
At this point, it is clear that the invoices are incorrect and have to be revised. An accurate realistic figure to be submitted that is based on supporting evidence.[11]
[11]Ibid 380.
The reference to a refusal to sign a contract in the third paragraph of that email needs some explanation. On 25 May 2023, Mr Karama sent a draft subcontract to Mr Drummond which provided that Drummond would no longer merely provide labour hire services but would be responsible for certain fixed works on the project, including timber framing. Drummond did not sign the draft subcontract.
On 8 June 2023, Drummond served a payment claim under the Act for the sum of $199,905.75 (‘the payment claim’). The payment claim comprised two invoices, being invoices 340 and 344. The invoices were identical in form to the earlier invoices issued to Timberworks with the difference being that the amended invoices were directed to Roberts.
On 8 June 2023, Mr Karama responded in the following way:
Hi David,
Those invoices are not acceptable as stated in previous communications.
An accurate realistic figure must be submitted that is based on supporting evidence.[12]
[12]Ibid 97.
On 15 June 2023, Mr Karama sent a further email in which he wrote:
Further to below communication, you have failed to rectify / complete the defective / incomplete works.
Hereby, we attach a draft list of defective works (as [has] been communicated with you previously) that you have to complete. Also, you must complete the works to the engineer and architect’s satisfaction allowing them to issue the required approval reports for the building.
Your continuous delay in completing the defective works and the remaining incomplete works, had major implications on the Practical Completion of the project.
In the light of the above, we provide you with two days’ notice on the issues referred above until Saturday 17 June 2023, after which we may immediately engage or employ additional labour and/or provide additional plant or equipment and procure additional materials or equipment to complete the mentioned works.[13]
[13]Ibid 397.
On 26 June 2023, the solicitors for Drummond wrote to Roberts advising of Drummond’s intention to apply for an adjudication. That letter said, relevantly:
Pursuant to section 15 of the [the Act], Roberts Construction failed to reply to Payment Claim 340 or Payment Claim 344 with any payment schedule.
In accordance with section 15(4) of [the Act], Roberts Construction is now deemed liable by statute to pay the total amount claimed in Payment Claim 340 and Payment Claim 344 in the sum of $199,905.75.
Pursuant to section 12(1)(b) of the of [the Act] the due date for payment, being 23 June 2023, has now passed and interest will accrue on the amount due and payable.
Demand
We are instructed to demand payment of the $199,905.75, Roberts Construction is liable to pay in accordance with [the Act], by 4:00pm on Friday 30 June 2023 (Due Date). Payment can be made to the trust account of Merton Lawyers, the details of which are enclosed.
If payment is not made by the Due Date, notice is hereby given that our client intends to either:
a. apply for adjudication of Payment Claim 340 and Payment Claim 344; or
b. make an application to the Court for summary judgment for the amount due and payable.[14]
[14]Ibid 532–3.
On 30 June 2023, Drummond’s solicitors wrote an email to Roberts in the following terms:
We refer to the attached correspondence sent to your office on 26 June 2023.
We have not yet received any response from you so today we will commence preparing an adjudication application to be filed early next week.
Please contact us urgently if you have any proposal to pay the debt.[15]
[15]Ibid 135.
Roberts did not respond to either notice within two business days.
On 5 July 2023, Drummond lodged an application for adjudication under the Act and Daniel Fitzpatrick was subsequently appointed as adjudicator.
On 17 August 2023, the adjudicator issued an adjudication determination in respect of the application which found that a valid construction contract existed between Roberts and Drummond; the payment claim was properly made; Roberts did not provide a valid payment schedule; the value of the payment claim was consistent with the contract; and Roberts must pay the sum of the $199,905.75 (plus interest and costs) to Drummond.
On 25 August 2023, the adjudicator issued an adjudication certificate in the sum of $207,754.93.
On 4 September 2023, a judge of the County Court ordered that Roberts pay Drummond the sum of $208,795.54 plus costs.
On 5 September 2023, Drummond applied to the County Court for a debt certificate and, on 27 September 2023, a judge of the County Court issued a debt certificate for the judgment amount.
The reasons of the adjudicator
The adjudicator provided written reasons for his determination. He noted that as a threshold issue he was required to consider whether he had jurisdiction to determine the application. In that respect he said it was necessary for him to be satisfied as to whether:
(a) there was a construction contract to which the Act applied;
(b) Drummond was entitled to make a payment claim;
(c) the payment claim complied with the requirements of the Act so as to constitute a valid payment claim;
(d) the payment claim was served on a person who is or may be liable to make the payment; and
(e) the application was made to an authorised nominating authority within the prescribed time and that the application had been accepted by the adjudicator and a copy of the application served on Roberts.[16]
[16]Determination made in respect of Drummond’s payment claim, 17 August 2023, [17] (‘Reasons’).
In its adjudication response, Roberts made three jurisdictional challenges:
(a) that Roberts was not a party to the relevant construction contract on the basis that the payment claim was in relation to timber structure frameworks and labour services in relation to those works were provided under a contract between Drummond and Timberworks;
(b) that the email of 8 June 2023, or alternatively the email of 15 June 2023, constituted a payment schedule with the effect that the adjudication application was made out of time;
(c) alternatively, if a valid payment schedule was served, the claimant had failed to send a valid notice pursuant to s 18(2) of the Act.
On the first question, the adjudicator set out the competing submissions.[17] In support of its challenge to jurisdiction, Roberts submitted that Drummond was engaged by Roberts in relation to concrete structure formworks and by Timberworks in relation to timber structure frameworks for the project. Not only had Drummond not objected to this arrangement, but it had also issued seven tax invoices for timber structure frameworks to Timberworks and Timberworks had paid those invoices.
[17]Ibid [38]–[41].
Roberts submitted that Drummond had previously issued invoices 340 and 344 to Timberworks and that the work was work undertaken under a contract with that entity. For that reason, Roberts submitted that it was not a person who under the contract is or may be liable to make the payment within the meaning of s 14(1) of the Act.
In response, Drummond submitted that Roberts is the head contractor and that Timberworks is a timber framing subcontractor. Drummond noted that Mr Kerlidis is the sole director of Longboat, Roberts and Timberworks. Drummond submitted that it is a labour hire subcontractor that provided skilled labourers to work on various parts of the project and that Mr Kerlidis had not specified which entity he was acting for when agreeing that specific work could commence.
Drummond said that the response from Roberts in its emails of 8 and 15 June 2023 did not object to the identity of the recipient of the payment claim and that all correspondence in relation to the claimant was from Roberts.
The adjudicator found:
(a) there was a construction contract between Drummond and Roberts, at least some of the labour hire claimed under the alleged 8 June payment claim was referrable to that contract and therefore it was not necessary to determine whether there was also a construction contract between Drummond and Timberworks;[18]
[18]Ibid [49].
(b) the 8 June payment schedule was not a valid payment schedule because it did not indicate the amount of the payment that Roberts proposed to make and it did not provide reasons for withholding payment because it did not incorporate previous correspondence by identifying that correspondence with sufficient particularity;[19]
[19]Ibid [60(a)].
(c) the 15 June payment schedule was not a valid payment schedule because it did not identify the payment claim to which it related, did not identify the amount Roberts proposed to pay and did not provide reasons for withholding payment (nor incorporate previous correspondence);[20]
[20]Ibid [60(b)].
(d) both the letter of demand dated 26 June 2023 and the email dated 30 June 2023 were valid notices under s 18(2) of the Act including because:[21]
[21]Ibid [65]–[70].
(i) the Act does not expressly require a notice under s 18(2) to refer to that section;
(ii) section 18(2)(a) sets out the content and timeframe of the notice and s 18(2)(b) sets out the timeframe within which the respondent may provide a payment schedule after receipt of a notice;
(iii) both the letter of demand and the email foreshadowed that Drummond intended to lodge an adjudication application; and
(iv) Roberts had the opportunity to provide a payment schedule within two business days after receipt of both the letter of demand and the email.
In reaching the first conclusion, the adjudicator said that it was common ground before him that there was a construction contract between Drummond and Roberts.[22] The adjudicator found that Drummond was engaged to provide labour rather than complete a specific component of work.[23] The adjudicator noted that the payment claim was not only in relation to timber structure frameworks but also related to various other types of work.[24]
[22]Ibid [42].
[23]Ibid [43].
[24]Ibid [44].
The adjudicator rejected Roberts’ submission that all of the work was referrable to the Timberworks contract, concluding that at least some of the labour was directed to the contract with Roberts, noting that the claim and handwritten annotations in support of it included references to ‘cement’, ‘cleaning’, ‘traffic/cleaned site’, ‘steel installation’, ‘crane lift’, ‘installed steel on ground level’, ‘concreting Start Bars’, ‘fitted non shrink grout under steel’, and ‘drilled slab as required for steel fixers’.[25]
[25]Ibid [45]–[46].
The adjudicator concluded that these tasks do not appear to be directly associated with timber framework. Some of them appeared to the adjudicator to be ancillary tasks such as cleaning, and others appeared to be either part of concrete framework, or not part of timber frameworks, such as ‘concreting’ or ‘drilled slab as required for steel fixers’.[26] The adjudicator found that the claim included various items including drilling into concrete slabs for starter bars, which he inferred was incidental to concrete formwork, and that the relevant work was done for Roberts.[27]
[26]Ibid [47].
[27]Ibid [54].
Statutory Provisions
In broad outline, the Act enables a party to a construction contract to be paid progress payments during construction and provides for a process by which that entitlement is to be realised. So much is revealed by the object of the Act, which includes ensuring that any person who undertakes to carry out construction work or who undertakes to supply related goods and services under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services.[28]
[28]The Act, s 3.
The Act applies to any ‘construction contract’, whether written or oral or partly written and partly oral.[29] A ‘construction contract’ is defined as a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party.[30] The entitlement to a progress payment is provided for in s 9(1) of the Act, which provides that a person who has undertaken to carry out construction work or to supply ‘related goods and services’ under the contract is entitled to a progress payment under the Act, calculated by reference to that date. The requirement that the payment be in respect of work done ‘under’ a construction contract is reinforced by s 14, headed ‘payment claims’, which provides that a person may serve a payment claim on the person who, ‘under the construction contract concerned, is or may be liable to make the payment’.
[29]Ibid s 7(1).
[30]Ibid s 4 (definition of ‘construction contract’).
Once a payment claim is served, the Act addresses how the party on whom the claim is served may respond. As will appear, the response is critical to the process that follows the claim. In summary, the service of a payment claim triggers the respondent’s entitlement to serve a payment schedule within a limited timeframe. If the respondent fails to do so, then:
(a) the respondent will become liable to pay the claimed amount;[31]
(b) the claimant will be entitled to recover the unpaid portion of the claimed amount as a debt due and to issue an application for adjudication;[32] and
(c) the claimant may serve a notice of intention to suspend works under the construction contract.[33]
[31]Ibid s 15(4).
[32]Ibid s 16(2)(a)(i).
[33]Ibid s 16(2)(b).
Section 15 provides for the giving of a ‘payment schedule’ in answer to a claim which serves to identify what, if anything, is in dispute. Section 15 provides:
(1) A person on whom a payment claim is served (the respondent) may reply to the claim by providing a payment schedule to the claimant.
(2) A payment schedule—
(a) must identify the payment claim to which it relates; and
(b) must indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount); and
(c) must identify any amount of the claim that the respondent alleges is an excluded amount; and
(d) must be in the relevant prescribed form (if any); and
(e) must contain the prescribed information (if any).
(3) If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent's reasons for withholding payment.
(4) If—
(a) a claimant serves a payment claim on a respondent; and
(b) the respondent does not provide a payment schedule to the claimant—
(i) within the time required by the relevant construction contract; or
(ii) within 10 business days after the payment claim is served;
whichever time expires earlier—
the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.
Section 18 of the Act deals with adjudication applications, including by allowing an adjudication application to be made if the respondent fails to provide a payment schedule or fails to pay the amount of the claim. For present purposes it is significant that s 18(2) provides:
An adjudication application to which subsection (1)(b) applies cannot be made unless—
(a) the claimant has notified the respondent, within the period of 10 business days immediately following the due date for payment, of the claimant’s intention to apply for adjudication of the payment claim; and
(b) the respondent has been given an opportunity to provide a payment schedule to the claimant within 2 business days after receiving the claimant’s notice.
A respondent to an adjudication application may make an adjudication response provided it is done within time.[34] Where a dispute proceeds to adjudication, the payment claim, payment schedule and adjudication response define the issues in dispute between the parties which the adjudicator is to resolve.[35] By force of s 22(3), an adjudicator may not consider an adjudication response unless it is made within time and, by force of s 23(2), the adjudicator must only consider certain stipulated matters, including the contract, the payment claim and the payment schedule (if any).
[34]Ibid s 21.
[35]Ibid s 23(2).
Ground 1
Ground 1 is in the following terms:
Roberts is not a person who, under a construction contract, is or may be liable to make a payment, and the payment claim served on Roberts on 8 June 2023 was not done so in accordance with s 14 of [the Act].
In particulars appended to the ground, Roberts contends that it was not a person liable or that may be liable to make a payment to Drummond under a construction contract.
Roberts submits that the essential requirements for a valid determination are, relevantly:
(a) the existence of a construction contract between the claimant and the respondent to which the Act applies (ss 7 and 9);
(b) the service by the claimant on the respondent of a payment claim (s 14); and
(c) the making of an adjudication application by the claimant to an authorised nominating authority (s 18).
Roberts submits that service of the payment claim on the person who, under the construction contract concerned, is or may be liable to make payment (the respondent), is a jurisdictional fact. It says that the evidence before the Court establishes that Roberts was not a party to the contract concerned. In that respect it contends:
(a) Mr Kerlidis’ email of 14 November 2022 confirmed that there would be separate contracts between Drummond and Roberts with respect to concrete structure formworks and between Drummond and Timberworks for services related to the timber structure;
(b) invoice 269 (which referred to a purchase order issued by Roberts[36]) and invoice 279 were both issued before January 2023 and were paid by Roberts;
[36]Purchase Order ‘PO-0362.00-110’.
(c) from 1 January 2023 all works performed by Drummond were in connection with the timber structure works;
(d) on 2 February 2023, Ms Ochoa advised Drummond that ‘all incoming invoices’ had to be addressed to Timberworks rather than Roberts;
(e) between January and May 2023, Drummond issued nine tax invoices to Timberworks, all of which were paid by Timberworks save for invoices 340 and 344 which were disputed; and
(f) the payment claim was for the work covered by invoices 340 and 344, which were reissued to Roberts.
Roberts submits that there is no evidence that it was a party to the construction contract which was the subject of the payment claim.
Roberts accepts that there were two construction contracts, being contracts for the provision of related services for the purpose of the definition of ‘construction contract’ in s 4 of the Act. Roberts says that, under the contract, Drummond was entitled to be paid for labour it supplied and says that, after 1 January 2023, labour was supplied to Timberworks and not Roberts. It says that this proposition holds true regardless of the function actually performed by the worker. In other words, what Timberworks did with that labour was irrelevant to the question as to which of the two contracts the labour was supplied under.
So, for example, it says that from 1 January 2023 all labour was supplied to Timberworks and it did not matter that the worker may have performed functions that related to the concrete structure or were incidental to that work. In short, it submits that the entitlement arose on the supply of labour and the obligations fell to the entity to whom the labour was supplied. For that reason, it argued, the adjudicator addressed the wrong question by asking whether any of the claimed amounts related to the concrete structure or solely related to the timber structure.
It says that this approach, which asserts that labour was supplied to Roberts up until the end of 2022 and to Timberworks thereafter, derives from the following:
(a) that the contracts were for the provision of labour, not for the performance of a particular function;
(b) Ms Ochoa’s email of 20 January 2023; and
(c) that, following the 20 January 2023 email, Drummond issued invoices to Timberworks, including invoices 340 and 344.
Decision on Ground 1
A jurisdictional fact is a fact, event or circumstance on which the jurisdiction of a decision-maker depends.[37] In other words, it is a criterion that must be satisfied before a statutory power is enlivened.[38] When a criterion conditioning the exercise of statutory power involves assessment and value judgments on the part of the decision-maker, it is difficult to characterise the criterion as a jurisdictional fact, the existence or non-existence of which may be reviewed by a court.[39]
[37]Saville v Hallmarc Construction Pty Ltd (2015) 47 VR 177, 198 [55] (Warren CJ and Tate JA, Kaye JA agreeing); [2015] VSCA 318 (‘Saville’), citing Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369, 391 (Dixon J); [1938] HCA 7.
[38]City of Enfield v Development Assessment Commission (2000) 199 CLR 135, 148 [28] (Gleeson CJ, Gummow, Kirby and Hayne JJ); [2000] HCA 5.
[39]Australian Heritage Commission v Mount Isa Mines Ltd (1997) 187 CLR 297, 303–4; [1997] HCA 10; Plaintiff M70/2011 v Minister for Immigration and Citizenship (2011) 244 CLR 144, 179 [57] (French CJ); [2011] HCA 32.
Where a matter amounts to a jurisdictional fact, it is reviewable by a superior court by reference to the evidence available to the court to determine whether the precondition to the decision-maker’s jurisdiction was in fact satisfied.[40] The assumption of jurisdiction by a decision-maker despite the non-satisfaction of a jurisdictional fact is a jurisdictional error which will result in the decision being void.[41] By contrast, fact-finding errors by a decision-maker that are not jurisdictional are unreviewable, except if the error amounts to an error of law on the face of the record.[42]
[40]Saville (2015) 47 VR 177, 199 [56] (Warren CJ and Tate JA, Kaye JA agreeing); [2015] VSCA 318.
[41]Ibid 199 [61].
[42]Ibid 199–200 [62].
I accept that the existence of a construction contract between the claimant and the respondent is a jurisdictional fact that must exist before a valid payment claim can be made and, as a result, is necessary to enliven the adjudicator’s jurisdiction to make a determination.[43] The consequence of the absence of a relevant construction contract is that an adjudicator’s determination will be void for jurisdictional error.[44]
[43]Fifty Property Investments Pty Ltd v O’Mara [2006] NSWSC 428, [17] (Brereton J) (‘Fifty Property Investments’); Olbourne v Excell Building Corp Pty Ltd [2009] NSWSC 349, [19]–[21] (Rein J); Brodyn Pty Ltd (t/as Time Cost & Quality) v Davenport (2004) 61 NSWLR 421, 440 [53(1)] (Hodgson JA, with whom Mason P and Giles JA agreed); [2004] NSWCA 394 (‘Brodyn’).
[44]Fifty Property Investments [2006] NSWSC 428, [17]–[20].
However, it is not in dispute that there existed a construction contract between Roberts and Drummond by which the latter agreed to supply ‘related services’, being labour for the purposes of the Two Birds Project. Drummond contends that the amounts recorded in the payment claim are due under that contract.
Rather, the dispute concerns whether the claimed services were rendered under the Roberts contract, and whether that fact goes to the adjudicator’s jurisdiction. As will be appreciated, Roberts contends that the services were not due under the Roberts contract but were provided under a different construction contract to which it was not a party.
In my opinion, having identified a construction contract, the question whether particular services were or were not rendered under that contract is not a jurisdictional fact. Rather, that issue is to be resolved through the statutory processes laid out by the Act.
I reach that conclusion for two reasons.
First, there is no textual basis to conclude that the question whether particular services were provided under the relevant construction contract is a jurisdictional fact. The following aspects of the Act are relevant to the enlivening of the adjudicator’s jurisdiction to determine an application:
(a) Section 9 confers an entitlement to a progress payment on a person who has undertaken to supply related goods and services under a construction contract. The Act then lays out a pathway for the quantification and enforcement of that entitlement with the two principal mechanisms being a payment claim and, in the event of a dispute, an adjudication. A person who is or, importantly, who claims to be entitled to a progress payment may serve a payment claim on the person who, under the construction contract is or may be liable to make the payment.[45] The payment claim must satisfy the stipulated requirements as to form.[46]
[45]The Act, s 14(1).
[46]Ibid s 14(2).
(b) In response, a person on whom the payment claim is served may serve a payment schedule.[47] By doing so, the person will identify the amount they propose to pay and, necessarily, any amount that they dispute.[48] In the event of a dispute, or a failure to pay the whole or any part of the scheduled amount, the claimant may apply for adjudication of the claim. There are consequences for a failure to produce a payment schedule within time: the claimant can sue for the claimed amount or proceed to adjudication.[49] In the event that the claimant proceeds to adjudication, and the respondent has not provided a payment schedule, the respondent must be given an opportunity to provide a payment schedule within two business days.[50]
[47]Ibid s 15(1).
[48]Ibid s 15(2).
[49]Ibid ss 16, 18.
[50]Ibid s 18(2)(b).
(c) Where the respondent has given a payment schedule (either initially in response to the payment claim or in response to the adjudication application) it may give an adjudication response, which may include reasons for withholding payment.[51]
(d) The Act prescribes time limits for the taking of the various steps measured in days.
(e) The Act exhaustively sets out the matters that an adjudicator may take into account.[52] They include the payment claim and all submissions that have been ‘duly made’ and any payment schedule and all submissions in support of it that have been ‘duly made’. In the absence of a payment schedule there can be no adjudication response and, importantly for present purposes, an adjudicator is not to consider an adjudication response if it is not made within time.[53]
[51]Ibid s 21(2)(d).
[52]Ibid s 23(2).
[53]Ibid s 22(3).
Nothing in these provisions suggests that the adjudicator’s jurisdiction hinges on the fact that the particular services the subject of the payment claim were, in fact, provided under the relevant construction contract. On the contrary, it is sufficient for a person to be able to serve a payment claim (being one of the preconditions to the service of an adjudication application) that the person claims to be entitled to a progress payment, where the other statutory conditions for making a payment claim are satisfied. That Drummond claimed to be so entitled is not in dispute.
Indeed, it is self-evident from the scheme that a respondent to a payment claim may dispute that a claimed amount is owing under the contract. Two obvious circumstances in which that issue might arise are where the respondent says that the work falls outside the scope of the contract or where the value of the work or services supplied is less than the amount claimed. In my opinion, those are matters that fall to be decided within the structure of the Act, including the process of adjudication and review. This indicates that the fact of particular services having been provided under the relevant construction contract is not a jurisdictional fact.
Second, treating that fact as jurisdictional would be contrary to the purpose of the Act.
The setting of strict time limits and the confinement of the material that an adjudicator may consider to certain timely materials reflects the underlying statutory purpose: to facilitate the prompt payment of progress payments that are separate from and in addition to the contractor’s entitlement under a construction contract to receive payment for completed work.[54]
[54]Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1, 15–16 [36]–[38] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ) (‘Probuild’).
Here, the respondent asserts that the services (labour) the subject of the payment claim were not performed under the Roberts contract. That dispute is plainly one that the Act contemplates will be decided by the adjudicator, including by using its expertise and experience. As part of that exercise, the adjudicator will be required to form a view about the meaning and operation of the construction contract but only for the purposes of the Act. The fact that Roberts says that the services were provided under a different contract does not take the matter any further; it serves merely to provide an alternative arguable basis under which the particular service might have been provided.
To hold that the question whether a particular service was rendered under the claimed construction contract is a jurisdictional fact would mean that almost every disputed claim could be challenged by way of judicial review.[55] That does not accord with the purpose of the scheme, which is to allow the adjudicator to determine claims arising under a contract but in a way that does not ultimately determine contractual rights. Moreover, in light of the evident purpose of the statutory scheme to promote the expeditious resolution of payment claims, it is an interpretation that would result in considerable inconvenience. That factor, while not determinative,[56] tells against the fact being jurisdictional.[57]
[55]See similarly BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd (2022) 108 NSWLR 350, 357 [25]; [2022] NSWCA 82.
[56]Saville (2015) 47 VR 177, 212 [96] (Warren CJ and Tate JA, Kaye JA agreeing); [2015] VSCA 318.
[57]Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369, 391 (Dixon J); [1938] HCA 7.
An argument as to whether a particular service was rendered under the contract is a far cry from an anterior question as to whether there is a construction contract at all. While I accept that this latter issue is jurisdictional, the former issue is not. Where a claimant has made a claim in respect of a construction contract, the jurisdiction of the adjudicator does not depend on the payment claim accurately or correctly identifying an amount owing under a construction contract.
It follows that ground 1 fails. Roberts was a party to a construction contract with Drummond. Whether the services the subject of the claim were performed under that contract is not a jurisdictional fact. Any error by the adjudicator on that question would not go to jurisdiction and would not entitle Roberts to relief by way of certiorari.
Before leaving this ground, I would add the following. As Roberts ran its case, the question was whether the adjudicator had jurisdiction to conduct the adjudication. Roberts did not make a separate complaint about whether any individual items in the payment claim properly fell within the scope of the Roberts contract. As I have held, such an argument does not relate to a question of jurisdiction. Although there was some reference to the availability of an error of law on the face of the record, that would not avail Roberts on the jurisdictional question of whether there was a payment claim in respect of a construction contract.
Two further points may be made on the issue of non-jurisdictional error of law on the face of the record. First, in looking at whether the conclusion of the adjudicator on whether the payment claim related to the Roberts’ contract, the record is confined by the Act to the matters that the adjudicator could take into account.[58] As will appear under Ground 2, there was no payment schedule and therefore no evidentiary basis to contest individual items. Second, the decision of the High Court in Probuild stands for the proposition that non-jurisdictional error of law on the face of the record is not available in relation to judicial review of a decision of an adjudicator under the Building and Construction Industry Security of Payment Act 1999 (NSW).[59] That decision was based on, among other things, the legislative intent of that Act to create a self-contained and expeditious form of adjudication, subject to detailed time limits, and its preservation of parties’ contractual entitlements.[60] That Act is in relevantly similar form to the Victorian Act. Although it is not necessary to decide, I am unable to discern a basis to distinguish the High Court’s decision in relation to adjudication decisions under the Act.
[58]The Act, s 23(2).
[59](2018) 264 CLR 1, 15 [35] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ); see also Maxcon Constructions Pty Ltd v Vadasz (2018) 264 CLR 46, 52 [5] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ); [2018] HCA 5.
[60]Ibid 15–19 [36]–[48] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ).
Ground 2
By its second ground, Roberts contends that the application for adjudication made by Drummond was not in accordance with s 18(3)(c) of the Act. Specifically, Roberts contends that its response to the payment claim served on 8 June 2023 or alternatively 15 June 2023 constituted a payment schedule within the meaning of s 15 of the Act. If that is right, then Roberts submits that Drummond did not make an application to an adjudication authority for adjudication of the payment claim within 10 business days of either 8 June 2023, or 15 June 2023, as required by s 18(3)(c).
Relying on a decision of Stynes J in BSC Infrastructure Support v Jones Lang Lasalle,[61] Roberts submits that a payment schedule can specify that there will be a nil payment in response to a payment claim and that a nil amount can be inferred and need not be express.[62] Next, it says that the requirement to indicate why the amount the respondent is willing to pay is less than the claimed amount and that the reason for withholding payment does not require a full or complete statement of reasons and may be satisfied by incorporating a document by reference.[63]
[61][2020] VSC 739 (‘BSC’).
[62]Ibid [161]–[162].
[63]Citing Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, [78] (Palmer J) and Perform (NSW) Pty Ltd v MEV-AUS Pty Ltd [2009] NSWCA 157, [50] (Giles J, with whom McColl and Young JJA agreed) (‘Perform’).
As to the 8 June email, Roberts submits:
(a) it is expressly directed to the alleged 8 June payment claim — it comprises an email which was sent by Roberts to Drummond at 1:16 pm in reply to Drummond’s email of 1:11 pm attaching the alleged 8 June payment claim;
(b) it takes issue with both invoices comprising the alleged 8 June payment claim — stating ‘[t]hose invoices are not acceptable as stated in previous communications’ and ‘[a]n accurate figure must be submitted that is based on supporting evidence’;
(c) it implies that Roberts intended to pay a ‘nil’ amount — it being clear that Roberts did not accept the validity of the claim and did not intend to pay Drummond from the words ‘these invoices are not acceptable’ and Roberts’ failure to make any payment;
(d) it indicates the reasons for withholding payment, by specifically referring to ‘previous communications’ setting out the reasons why the 8 June payment claim was not acceptable;
(e) previous communications were sent to Drummond on 22 May, 2 June and 7 June 2023, which set out in detail the various reasons why the claims the subject of the two invoices were disputed and why payment would not be made in respect of those claims; and
(f) Roberts did not make any payment towards the alleged 8 June payment claim.
Decision on Ground 2
In BSC, Stynes J helpfully distilled some of the principles relevant to the service of a payment schedule in the following way:
(a) the fundamental purpose of a payment schedule is for the respondent to sufficiently inform the claimant of the ‘metes and bounds’ of the dispute to enable it to decide whether to engage in adjudication;
(b)a particular degree of precision and particularity is required to appraise the claimant of the case they must meet at adjudication, which is arguably a higher threshold than that required in a payment claim;
(c)at the same time, a practical approach is to be adopted when undertaking this analysis. This extends to accepting some lack of formality in the putative payment schedule and not casting an unduly critical eye over its form. In the words of Palmer J in Multiplex, it is ‘not ... required to be as precise or as particularised as a pleading in the Supreme Court’; […]
(d) the payment schedule is to be examined objectively, though the interpretation of the document is to be informed by the context, background and prior dealings between the parties; [and]
(e)whether or not a document is a payment schedule must be something which is capable of ascertainment readily, and, at least ordinarily, without the assistance of a lawyer.[64]
[64][2020] VSC 739, [154] (citations omitted).
As already mentioned, the adjudicator did not accept that the emails of 8 June or 15 June were valid payment schedules under the Act. I proceed on the basis that whether one or other of the emails constitute valid payment schedules is a matter for the Court to determine because it is necessary to determine whether Drummond complied with the timing requirement in s 18(3)(c).
As did the adjudicator, I am persuaded that the 8 June email identifies the payment schedule to which it relates.
The next question is whether, as required by s 15(2)(b), the 8 June email indicates the amount of payment (if any) that Roberts proposed to make. I accept that it is open to a respondent to say that it will pay nothing in response to a payment claim and that a nil amount may be inferred.
In Façade Treatment Engineering Pty Ltd (in liq) v Brookfield Multiplex Constructions Pty Ltd, the Court of Appeal surveyed a number of the authorities that touch upon this aspect of the Act.[65] On my reading of the cases, the issue is whether the respondent has indicated an amount that it proposes to pay in response to the claim. That may be a different question as to whether it has indicated that it will pay an amount in respect of the work or services rendered under the construction contract. So, for example, a respondent may say (or it may be inferred) that while it accepts that some money may be owing under the contract, it proposes to pay nothing in response to the particular claim.
[65](2016) 337 ALR 452, 516–521 [234]–[253]; [2016] VSCA 247 (‘Façade Treatment’).
In Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA) Pty Ltd,[66] the first respondent subcontractor submitted an invoice to the applicant claiming three amounts as owing. By email, the applicant (the respondent to the claim) confirmed receipt of the invoice, but indicated that it declined to accept the invoice and suggested that the parties meet on site ‘to clarify the situation and to find a solution for both sides’.[67] Justice Chesterman accepted the statement in the email that the applicant did not accept the first respondent’s invoice could ‘only mean that it did not propose to make any payment pursuant to it’.[68]
[66][2007] QSC 333.
[67]Ibid [9].
[68]Ibid [23]–[24].
In Façade Treatment, the respondent indicated, in response to a claim, that it did not intend to pay any amount in relation to the claim as submitted but also stated that it would be in a position to issue a payment schedule once the issues it had identified had been addressed and a new claim issued.[69] In those circumstances, the Court of Appeal regarded the response as being sufficient to indicate that no payment in answer to the claim would be forthcoming.[70]
[69](2016) 337 ALR 452, 455 [14]; [2016] VSCA 247.
[70]Ibid 521–2 [255].
The 8 June email is redolent of a negotiating stance in which the author is inviting Drummond to identify a lower, ‘realistic’ figure. Roberts was certainly not taking the position that no payment would be made for services rendered but, read fairly, it is tolerably clear that its position was that it would not pay anything on the invoices as submitted and that it was inviting fresh invoices to be submitted. The import of the response was to put all of the invoices in issue.
It follows that, contrary to the decision of the adjudicator, the email did indicate the amount that would be paid in response to the claim and s 15(2)(b) was satisfied.
Next, Drummond submits that the 8 June 2023 email did not provide reasons for withholding payment as required by s 15(3) of the Act. Drummond submits that the general complaint that the claim lacked ‘supporting evidence’ does not provide a reason for denying the substance of the claim.[71]
[71]Referring to Façade Treatment (2016) 337 ALR 452, 522 [257]–[258].
The content of the requirement to indicate the reasons for withholding payment must be understood in the context in which it is imposed. The Act places a premium on speed and must be taken to accommodate informality and the practicalities of the situation. The parties will generally be experienced and might reasonably be expected to have an understanding of the work to be performed and contractual requirements of the particular contract. Thus cases have referred to approaching a claim and payments schedule in a ‘commonsense practical manner’ that avoids an ‘unduly critical viewpoint’.[72] That approach is also supported by the text of s 15(3), which uses the verb ‘indicate’ rather than more precise formulations such as ‘state’, ‘specify’ or ‘set out’.[73] It has also been held, and it is not now disputed, that the reasons may be incorporated by reference.[74]
[72]Ibid 462–3 [44] (and the cases cited therein).
[73]Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, [78] (Palmer J).
[74]Perform [2009] NSWCA 157, [50] (Giles J, with whom McColl and Young JJA agreed).
In Façade Treatment, the Court of Appeal said:
We adopt the observations of Palmer J in Luikens that s 15(3) requires reasons to be indicated ‘with sufficient particularity to enable the claimant to understand, at least in broad outline, what is the issue between it and the respondent’. Absolute precision is not required, and cannot be expected given the reasonably short period within which a respondent is required to prepare a payment schedule (being at most 10 days). Previous dealings between the parties form part of the context relevant to deciding whether the reasons have been indicated with sufficient particularity. The concern is to ensure that the claimant has sufficient information to make a decision whether or not to pursue the claim.[75]
[75]Façade Treatment (2016) 337 ALR 452, 522 [256] (citations omitted).
Roberts argued that its response incorporated by reference the emails from Roberts to Drummond of 22 May, 2 June and 7 June 2023, which are referred to above.
It is true that the exchange of correspondence predated the payment claim and related to invoices issued to Timberworks. However, the content of those emails did not depend on the recipient. It is notable that Mr Karama was not suggesting that no services of value had been provided; rather, he was seeking further substantiation from Drummond. The tenor of this earlier correspondence was that the invoices overstated the entitlement under the contract. It was not said that nothing was payable. That theme continued in response to the payment claim.
In considering the adequacy of the reasons given by Roberts, a number of points are important. This was a contract for the provision of labour rather than the completion of tasks for which Drummond would be responsible. I note that the proposed subcontract would have changed that arrangement, giving Drummond responsibility for delivering parts of the project, but this subcontract was not agreed to by Drummond. Drummond had invoiced and been paid by both Roberts and Timberworks using invoices that were materially the same as the invoices that formed the payment claim (invoices 340 and 344).
Even if the email of 8 June incorporated the earlier emails of 22 May, 2 June and 7 June, together they did not provide a substantive reason for withholding payment. Rather, to adopt the language from Façade Treatment, ‘the complaints raised in the [emails] are procedural hurdles rather than concerns about the substance of the payment claim’.[76] The emails amount to little more than a bare assertion that further substantiation is required.
[76](2016) 337 ALR 452, 523 [260].
When a respondent to a payment claim disputes the quantum of a payment claim, and seeks that the claimant submit another ‘accurate realistic figure’, that does not state what it proposes to pay but invites a further, lesser claim to be made. The purpose of ensuring the timely payment of progress payments and narrowing the area of dispute would not be served by treating such a communication as sufficient to constitute the giving of reasons as required by s 15(3).
Further, and in any event, I am not persuaded that the emails should objectively be taken as a payment schedule. The correspondence is part of a chain in which a number of disparate issues which do not respond to any specific items in the payment claim are raised.
Finally, I note that Roberts ran its case on the assumption that it would be a jurisdictional error for an adjudicator to decide an adjudication application where the claimant had made an application but not complied with the timing requirement in s 18(3)(c). Given my conclusion that Drummond complied with s 18(3)(c), it is unnecessary to decide this question.[77]
[77]But see Brodyn (2004) 61 NSWLR 421, 441 [55] (Hodgson JA, Mason P and Giles JA agreeing); [2004] NSWCA 394; cf Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393, 403–6 [41]–[53] (Spigelman CJ), 415 [96] (Basten JA), 438 [218] (McDougall J); [2010] NSWCA 190.
Ground 2 is therefore rejected.
Ground 3
By its third ground, Roberts submits that the application for adjudication was not served in accordance with ss 18(2) and 18(3)(e) of the Act because Drummond did not give notice of its intention to apply for adjudication and Roberts was not given an opportunity to serve a payment schedule within two business days after receiving the notice.
Roberts submits that the 26 June and 30 June emails were not valid notices under s 18. It submits that the word ‘give’ means to offer or provide something to someone, and this means that Drummond had to affirmatively declare or state that Roberts had the opportunity to provide a payment schedule within two business days. To the extent that the notice offered any opportunity it was not to provide a payment schedule but offered a different choice, namely to make payment or comply with the Act by the due date. Roberts complains that the language used in the letter was deliberately evasive, because the ‘opportunity’ required by the Act is not to comply with the Act generally, but specifically to serve a payment schedule within two business days of the date of the service of the notice.
Decision on Ground 3
Where a respondent fails to provide a payment schedule and fails to pay the whole or any part of the claimed amount by the due date, the claimant may make an adjudication application.[78] There are a number of procedural requirements to which time limits attach in relation to the making of an adjudication application:
[78]The Act, s 18(1)(b).
(a) the applicant must ‘notify’ the respondent of its intention to apply for adjudication, which must occur within ten business days immediately following the due date;[79]
(b) the respondent must have ‘been given’ an opportunity to provide a payment schedule within two business days of receipt of the notice;[80] and
(c) the application must be made within five business days after the end of the two-day period.[81]
[79]Ibid s 18(2)(a).
[80]Ibid s 18(2)(b).
[81]Ibid s 18(3)(e).
The initial point of reference is the due date for payment. From that date, the applicant has a window of ten days to notify the respondent of its intention to proceed to adjudication. On receipt by the respondent, the applicant cannot take any step for two business days and on the expiration of that period it has a further five days to make the application.
The substance of the complaint is that the notification given under s 18(2)(a) was invalid because it did not advise Roberts that, as no payment schedule had been provided, Roberts had two days to file a payment schedule from the date of receipt.
In my view, Roberts’ contention should be rejected. First, the section does not in terms state that the claimant must advise the respondent of its rights, including the right to serve a payment schedule. Second, the use of the passive voice ‘has been given’ tells against the imposition of an obligation of the kind contended for. That point is reinforced by the statement of obligation in s 18(2)(a) that the claimant has notified the respondent of the claimant’s intention to make an application. Third, the notification under s 18(2)(a) will not be the first occasion on which the respondent will be on notice that a claim is made under the Act. The respondent will already have had the ability to put in a payment schedule and by not doing so it ought to be aware of the potential consequences and opportunities that might arise in the event the claimant either sues for the amount owing or seeks adjudication. Fourth, the purpose of s 18(2)(a) is to put the respondent on notice of a potential adjudication application and to forestall that process to allow an adjudication response. There is nothing in that purpose or in the scheme more generally with its peremptory time limits and summary nature that would impose an implied obligation on the claimant to advise the respondent of its statutory rights.
In my opinion, as required by s 18(2)(a), Roberts was advised of Drummond’s intention to apply for adjudication. Roberts had an opportunity of at least two business days to serve a payment schedule. There was no statutory obligation for Drummond to advise Roberts that it enjoyed this opportunity. Beyond the express procedural protections (which are in part limited by the overall purpose of speed and summary disposition) the Act did not impose an implied obligation on Drummond to ensure that Roberts was aware of its statutory rights. Further, Drummond had, in its letter of 26 June, expressly stated that Roberts had not provided any payment schedule and said the letter was ‘a further and final opportunity … hereby given to [Roberts] to make payment or comply with the Act’. Roberts could have complied with the Act by serving a payment schedule. It did not do so.
Ground 3 must be rejected.
Conclusion
None of the grounds have been made out.
I propose to order that Roberts’ application be dismissed. I will hear from the parties as to the form of orders and costs.
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