Sandvik Mining and Construction Australia Pty Ltd v Fisher [No 2]

[2020] WASC 123

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   SANDVIK MINING AND CONSTRUCTION AUSTRALIA PTY LTD -v- FISHER [No 2] [2020] WASC 123

CORAM:   ARCHER J

HEARD:   28 OCTOBER 2019

DELIVERED          :   16 APRIL 2020

FILE NO/S:   CIV 1842 of 2019

BETWEEN:   SANDVIK MINING AND CONSTRUCTION AUSTRALIA PTY LTD

Applicant

AND

JOHN FISHER

Respondent

CIVMEC CONSTRUCTION & ENGINEERING PTY LTD

Other Party

Catchwords:

Judicial review - Construction Contracts Act 2004 (WA) - Payment claim - Payment dispute - Whether permissible to bring two applications involving different items under the same progress claim - Where an assumption was made for the purposes of the total amount to be paid, was the matter assumed 'determined'

Legislation:

Construction Contracts Act 2004 (WA) s 3, s 6(2), s 25(a), s 31(2)(b), s 41(1)(b)

Result:

Application dismissed

Category:    A

Representation:

Counsel:

Applicant	:	M J Feutrill SC
Respondent	:	No appearance
Other Party	:	M N Solomon SC & L S Panotidis

Solicitors:

Applicant	:	Squire Patton Boggs
Respondent	:	No appearance
Other Party	:	Tottle Partners

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

Alliance Contracting Pty Ltd v James [2014] WASC 212

Clough Projects Australia Pty Ltd v Floreani [2018] WASC 101

Cooper & Oxley Builders Pty Ltd v Steensma [2016] WASC 386

Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91

Duro Felguera Australia Pty Ltd v Samsung C&T Corporation [2018] WASCA 28; (2018) 52 WAR 323

Forrest & Forrest Pty Ltd v The Honourable William Richard Marmion, Minister for Mines and Petroleum [2017] WASCA 153; (2017) 51 WAR 425

Hossain v Minister for Immigration and Border Protection [2018] HCA 34; (2018) 254 CLR 123

Mohammadi v Bethune [2018] WASCA 98, 13

O'Donnell Griffin Pty Ltd v John Holland Pty Ltd [2009] WASC 19

Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217

Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57; (2000) 204 CLR 82

Salini-Impregilo SPA v Francis [2020] WASC 72

Sandvik Mining and Construction Australia Pty Ltd v Fisher [2019] WASC 352

Table of Contents

Background

The ground of review

Sandvik's initial argument

The issues

Legal principles

Judicial review

Approach to statutory construction

The construction question

Overview of legislative framework

Object and purpose

The adjudication process under the Act

Time limit for adjudicator's decision

Deemed dismissal

Determinations

Simultaneous adjudications

Multiple applications in relation to the same dispute

Payment disputes and payment claims

Prohibition on repeated adjudications of the same payment dispute

The relevant provisions

The effect of the provisions

Sandvik's contentions

Res judicata, issue estoppel and Anshun estoppel

Reliance on O'Donnell Griffin

Multiplicity of proceedings

Multiple determinations

Simultaneous adjudication

Act intends to exclude complex disputes

Certainty

The Alliance construction

Conclusion

Further issue arising on the facts

The factual issues

What was the payment dispute in the First Application?

What was decided in the First Determination?

Was there a conflict between the First Determination and the Second Application?

Conclusion

ARCHER J:

Background

1. The applicant (Sandvik) seeks judicial review of a decision made by the adjudicator of a dispute between Sandvik and the other party to these proceedings, Civmec Construction & Engineering Pty Ltd (Civmec). The adjudicator was the respondent (Mr Fisher). The decision was Mr Fisher's determination under s 31(2)(b) of the Construction Contracts Act 2004 (WA) (Act) that Sandvik was required to pay money to Civmec.

2. Sandvik contends that Mr Fisher did not have the power to make the decision because a decision had already been made about the same dispute in an earlier adjudication.  I will refer to the earlier decision as the 'First Determination', and the challenged decision as the 'Second Determination'.

3. Section 25(a) of the Act relevantly[1] provides that if an application for adjudication in relation to a payment dispute has already been made, a further application cannot be made. Similarly, s 41(1)(b) provides that if an adjudicator makes a determination in an adjudication of a payment dispute, a further application for an adjudication of the dispute cannot be made.

   [1] A further application can be made if the first one was taken to be dismissed by the elapsing of time - see s 25(a) and s 37(2).

4. Sandvik submits that both determinations involved the same 'payment dispute'. It submits that, by operation of s 25(a) and s 41(1)(b), Civmec was therefore not entitled to make the second application, because an application in relation to that dispute had already been made and the dispute had already been determined. If Sandvik is right, Mr Fisher did not have the power to make the Second Determination.

5. On 16 September 2019, I dismissed Sandvik's application for an injunction pending the determination of the judicial review proceedings.  In my reasons,[2] I set out the relevant facts that the parties had helpfully agreed.[3]  I repeat them here:

   [2] Sandvik Mining and Construction Australia Pty Ltd v Fisher [2019] WASC 352.

   [3] Statement of Agreed Facts for an Application for Judicial Review filed 13 September 2019 (Agreed Facts).

   2On or about 14 March 2016, the Applicant (Sandvik) entered into a contract with [RTA Weipa Pty Ltd, the developer of a bauxite mine] under which Sandvik was engaged to design, fabricate, assemble, deliver, install, and commission three rail‑mounted machines …

   3On or about 24 October 2016, Sandvik entered into a subcontract with the Other Party (Civmec) for the fabrication, off‑site assembly and off‑site commissioning of the Machines …

   …

   6On 25 October 2018, Civmec issued progress claim number 26 under the Subcontract, claiming the amount of $17,045,654.36 (Progress Claim 26). …

   7On 8 November 2018, Sandvik issued a payment notice under the Subcontract in response to Progress Claim 26, certifying a negative amount of $881,380.15 (Payment Notice 26).

   8Payment Notice 26 identified 15 items of deduction resulting in the assessment in Payment Notice 26 of a total amount less than as claimed in Progress Claim 26 …

   9On 15 November 2018, Civmec issued a notice of dispute under the Subcontract in relation to Sandvik's assessment of Progress Claim 26 … By the Notice of Dispute, Civmec disputed Sandvik's assessment of the 15 items of deduction in Payment Notice 26.

   …

   10On 10 December 2018, Sandvik received an application for adjudication from Civmec under the Construction Contracts Act 2004 (WA) (Act) in relation to Progress Certificate 26 (First Application).

   11In the First Application Civmec claimed the amount of $4,938,369.60 (excluding GST), and challenged [five] items of deduction from Payment Notice 26 [one of which was challenged only in part]:

   …

   12In the First Application Civmec said that:

   (a)'this Application only concerns a limited payment dispute relating to particular (not all) items in [Progress Claim 26].  It does not concern:

   (a)the portion of Item 15 LD's which relate to the shiploader;

   (b)the Items other than the five Items covered by this Application; or

   (c)the entirety of the payment dispute arising out of [Payment Notice 26].';

   (b)'The Adjudicator's task is therefore to determine the flow of money as part of calculating whether Sandvik is liable to make a payment to Civmec.  That will involve:

   (a)making the necessary adjustments to reflect the prior cumulative claims which are recorded up to the issue of [Payment Notice 26];

   (b)accepting the values set out in [Payment Notice 26] about which, to ensure this Application is not too complex and for the purposes of this adjudication only, Civmec does not raise dispute in this adjudication (including the majority of the "Disputed Items" (set‑offs) applied by Sandvik in [Payment Notice 26]); and

   (c)making findings about the five "Disputed Items" the subject of this Application,

   to determine what the flow of money should be on the balance of probabilities.

   For the above reason, Civmec does not ask the Adjudicator to find that an amount is payable to Civmec irrespective of the deductions and set‑offs stated in [Payment Notice 26], or to consider the five "Disputed Items" the subject of this Application in isolation.

   Civmec has chosen to adjudicate a limited aspect of the payment dispute arising out of PPC026 so that this Application is not too complex for the Adjudicator to fairly determine in the limited (albeit extended, due to the Christmas period) time available.'; and

   (c)the 'Adjudicator need not determine the correctness of any other item stated in PPC026 for the purposes of making his or her determination; they can all be accepted for that purpose' (Unchallenged Items).

   …

   14On 21 January 2019, the appointed adjudicator for the First Application, Mr Hugh Davis, made a determination under section 31(2)(b) of the Act in which Mr Davis determined that Sandvik was liable to pay Civmec the amount of $4,938,369.60 (excluding GST) (First Determination).

   15On 31 January 2019, Sandvik paid Civmec the amount of the First Adjudication Determination.

   …

   16On 29 March 2019, Sandvik received an application for adjudication from Civmec under the Act in relation to Payment Notice 26 (Second Application).

   17[In] [t]he Second Application Civmec claimed the amount of $3,864,459.56 (excluding GST), and challenged [seven] items of deduction from Progress Certificate 26:

   …

   18Each of the [seven items] above was one of the Unchallenged Items in the First Application.

   …

   20On 6 May 2019, the Respondent issued a document which purported to be a determination under section 31(2)(b) [of] the Act, under which the Respondent determined that Sandvik was liable to pay Civmec the sum of $1,664,650.29 (excluding GST) in relation to the Second Adjudication Application (Second Determination).

6. In these reasons, I will use the same defined terms used by the parties in the above agreed facts.  In addition, I will refer to the negative amount of $881,380.15 in Payment Notice 26[4] as the 'Certified Amount'.

   [4] See Agreed Facts [7].

7. The Certified Amount was calculated as follows:[5]

   1.subtracting the amounts of the 15 items of deduction from what Civmec had claimed in Progress Claim 26, with the result being called the 'Approved Claim';

   2.subtracting from the Approved Claim the amount that had been previously certified.

   [5] Attachment ADG‑9 to the Affidavit of Aaron Di Giacomo sworn 17 June 2019 (Di Giacomo Affidavit) page 529.

8. Some of the 15 items of deduction were based on allegations that Civmec had claimed too much for particular work.  Some were set‑offs, based on allegations that Civmec was required to pay Sandvik in relation to defective work.  There was also a set‑off for liquidated damages.  Some of the alleged set‑offs did not apply to individual items claimed by Civmec, but rather to Progress Claim 26 as a whole.

The ground of review

1. In its application for judicial review, Sandvik alleges that Mr Fisher made a jurisdictional error in finding that he had jurisdiction to make the Second Determination because:[6]

   [6] Amended Application for Judicial Review filed 25 October 2019.

   a)an application for adjudication had already been made by a party; further or alternatively

   b)the payment dispute was the subject of an order, judgment or other finding by a person or body dealing with a matter arising under a construction contract,

   and, thereby:

   c)neither the applicant nor the other party had a right to apply to have the payment dispute adjudicated under section 25 of the Act;

   d)the other party's application for adjudication was not prepared and served in accordance with section 26(1) of the Act;

   e)the respondent was obliged to dismiss the other party's application without making a determination of its merits in accordance with section 31(2)(a)(ii) of the Act, further, or alternatively, section 31(2)(a)(iii) of the Act;

   f)the decision is not a determination made under section 31(2)(b) of the Act; and

   g)the decision (determination) is invalid and of no force or effect.

2. The simple allegation at the core of Sandvik's application is that Mr Fisher did not have jurisdiction to make the Second Determination because the same payment dispute had already been determined in the First Determination.

3. Mr Fisher gave notice that he intended to abide by the decision of the court save as to costs.

Sandvik's initial argument

1. Initially, Sandvik submitted that its allegation was established because both determinations were determinations of disputes of items claimed under the same progress claim, Progress Claim 26. Sandvik submitted that, on a proper construction of the Act, only one 'payment claim' could arise from a single progress claim (and therefore only one 'payment dispute' could arise), even when the progress claim was made up of a number of separate claims for specific amounts.[7] 

   [7] Applicant's Outline of Submissions in Support of Writ of Certiorari and Other Relief filed 18 June 2019 (Sandvik's Written Submissions), in particular at [48], [61].

2. This submission was inconsistent with the Court of Appeal's decision in Duro Felguera Australia Pty Ltd v Samsung C&T Corporation.[8] The court said that, where a progress claim contains a number of itemised amounts, each may itself be a 'payment claim' as defined in the Act and each may be treated as its own separate 'payment claim'. Had Sandvik maintained its original submission, I would have rejected it. However, in its written reply and when making oral submissions, Sandvik modified its position.

   [8] Duro Felguera Australia Pty Ltd v Samsung C&T Corporation [2018] WASCA 28; (2018) 52 WAR 323 [146].

3. In its reply, Sandvik accepted that 'payment claim' could refer to an individual item in a progress claim and, if it did, the 'payment dispute' would be about that individual item.[9] However, Sandvik contended that, once any part of a progress claim was the subject of an adjudication, that defined the 'payment dispute' and 'payment claim' in relation to that progress claim, and the Act did not permit any subsequent adjudication in relation to that progress claim. In other words, Sandvik contended that a progress claim could only give rise to a single payment dispute. Sandvik contended that, as both determinations involved the same progress claim, they both involved the same payment dispute and therefore Mr Fisher did not have jurisdiction to adjudicate the Second Application.[10] 

   [9] See Applicant's Outline of Submissions in Reply on Application for Judicial Review filed 9 September 2019 (Sandvik's Written Reply) [43] ‑ [45].

   [10] See, for example, ts 105 ‑ 106.

4. Sandvik further contended that, factually, each of the items challenged in the Second Application had been determined in the First Determination.[11] 

The issues

[11] See, for example, ts 107.

1. Three questions arise.  The first is a construction issue, while the second and third are factual.

2. The first question is: on a proper construction of the Act, can a progress claim only give rise to a single payment claim and a single payment dispute? That is, once any part of a progress claim is the subject of an adjudication, does that define the 'payment dispute' in relation to that progress claim, with the result that an adjudicator would not have jurisdiction to subsequently adjudicate any of the other disputed items arising from that progress claim?

3. If the answer to the first question is 'yes', Mr Fisher did not have the jurisdiction to make the Second Determination.

4. If the answer to the first question is 'no', the second question is: what was the 'payment dispute' that was determined in the First Determination?  Factually, was it a payment dispute in relation to only those five items Civmec challenged or was it a payment dispute in relation to the whole of Progress Claim 26 and Payment Notice 26?

5. If the answer to the second question is that it was a payment dispute in relation to the whole of Progress Claim 26 and Payment Notice 26, Mr Fisher did not have the jurisdiction to make the Second Determination.

6. If the answer to the second question is that it was a payment dispute in relation to only those items Civmec challenged, the third question is:  on the facts in this case, had each of the items the subject of the Second Adjudication been determined in the First Determination.

7. Finally, if I find jurisdictional error, it will be necessary to determine what should flow from that. 

8. I will set out the relevant legal principles before dealing with the issues.[12]

   [12] What follows is drawn from my decision in Salini-Impregilo SPA v Francis [2020] WASC 72.

Legal principles

Judicial review

1. A determination made by an adjudicator under s 31(2)(b) of the Act is amenable to judicial review for jurisdictional error.[13]

   [13] Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217 [96], [118].

2. In dealing with the application for judicial review, the court's jurisdiction does not extend to engaging in a review of the merits of the decision.  The court's jurisdiction is confined to determining whether Mr Fisher made a jurisdictional error.

3. In Re Refugee Review Tribunal; Ex parte Aala,[14] Hayne J explained:

   There is a jurisdictional error if the decision maker makes a decision outside the limits of the functions and powers conferred on him or her, or does something which he or she lacks power to do.  By contrast, incorrectly deciding something which the decision maker is authorised to decide is an error within jurisdiction.  (This is sometimes described as authority to go wrong, that is, to decide matters within jurisdiction incorrectly.)  The former kind of error concerns departures from limits upon the exercise of power.  The latter does not.

   [14] Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57; (2000) 204 CLR 82 [163]. This statement was applied in Forrest & Forrest Pty Ltd v The Honourable William Richard Marmion, Minister for Mines and Petroleum [2017] WASCA 153; (2017) 51 WAR 425 [86] ‑ [88].

4. As was recently explained by the High Court in Hossain v Minister for Immigration and Border Protection,[15] determining the limits of a decision‑maker's functions and powers is a question of statutory construction.

   [15] Hossain v Minister for Immigration and Border Protection [2018] HCA 34; (2018) 264 CLR 123.

5. First, it is necessary to identify 'the preconditions which the statute requires to exist for the decision‑maker to embark on the decision‑making process'.  It is also necessary to identify the conditions which the statute requires to be observed in order for the decision‑maker to make a decision of that kind.  Identifying the preconditions and conditions is a question of statutory construction.[16]

   [16] Hossain [23], [27] (Kiefel CJ, Gageler & Keane JJ).

6. Second, if the decision‑maker has failed to comply with a precondition or a condition, it is necessary to determine whether the extent of the non‑compliance resulted in the purported decision 'lacking characteristics necessary for it to be given force and effect by the statute pursuant to which the decision‑maker purported to make it'.  If so, the purported decision will involve 'jurisdictional error'; that is, the purported decision will have been made outside jurisdiction.  Determining the extent of non‑compliance which will have this result is also a question of statutory construction.[17]

Approach to statutory construction

[17] Hossain [24], [27].

1. Statutory construction 'requires attention to the text, context and purpose of the Act. While the task of construction begins and ends with the statutory text, throughout the process the text is construed in its context'.[18]

   [18] Mohammadi v Bethune [2018] WASCA 98 [31]. See also [32] ‑ [36].

The construction question

1. The construction question is whether, on a proper construction of the Act, once any part of a progress claim is the subject of an adjudication, that defines the 'payment dispute' in relation to that progress claim, such that an adjudicator would not have jurisdiction to subsequently adjudicate any other parts of that progress claim.  

Overview of legislative framework

1. Part 3 of the Act provides for the adjudication of payment disputes arising under construction contracts.

Object and purpose

1. The object of an adjudication process is to determine payment disputes fairly and as quickly, informally and inexpensively as possible.[19] 

   [19] Act s 30.

2. In Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd,[20] Pullin JA (Newnes and Murphy JJA agreeing) said (citations omitted):

   The broad purpose of the Act, insofar as it relates to payment disputes, is to ensure that, in construction contracts, progress claims are paid on time and that principals obliged to pay do not act as their own judge and jury and hold up payment on their own assertion that they have a defence warranting refusal to pay … It is a 'pay now, argue later' system, with the primary aim of keeping the money flowing by enforcing timely payment … If a payment dispute arises, then the Act provides for a system of rapid and summary adjudication which is conducted without any oral hearing. If the adjudicator, having received written submissions, makes a determination that the payment has to be made, then that determination gives rise to a debt 'presently due' and payable by the principal.

   [20] Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91 [55].

3. In Duro,[21] Buss P and Murphy JA said:

   [I]t is an Act, according to the long title, 'to provide a means for adjudicating payment disputes arising under construction contracts'. In relation to the adjudication of 'payment disputes' the Act is plainly beneficial legislation. Adjudicators may, but need not, be legally qualified and the prospect of jurisdictional error occurring at times is perhaps unavoidable. In this context, and given the relatively short time frames under which the adjudicator must work, and the 'primary aim of keeping the money flowing down the contractual chain',[22] the Parliamentary intention to be inferred is that decisions of adjudicators, to the extent that they deal with the adjudication of a 'payment dispute', within the meaning of s 31(2)(b), are to have the fullest operation.

The adjudication process under the Act

[21] Duro [149].

[22] Perrinepod [87].

1. A party may apply to have a 'payment dispute' adjudicated if it arises under a construction contract.[23] By s 6(1)(aa) of the Act, and subject to s 6(2), a 'payment dispute' arises if, among other things, a payment claim is rejected or wholly or partly disputed. Later, I will say more about the meaning of a 'payment dispute' and a 'payment claim'.[24]

   [23] Act s 25.

   [24] See under the heading 'Payment disputes and payment claims'.

2. An application for adjudication must be prepared and served within 90 business days of the dispute arising.[25]  The party served with the application has 10 business days to serve their response.[26]

   [25] Act s 26.

   [26] Act s 27.

3. An application must set out the details of, or have attached to it, any payment claim that has given rise to the payment dispute and all the information, documentation and submissions on which the party making it relies in the adjudication.[27]  If an application does not contain this information, it must be dismissed.[28]  These provisions ensure that the payment claim the subject of the adjudication is identified in the application.

   [27] Sections 26(2)(b), 26(2)(c) of the Act.

   [28] Section 31(2)(a)(ii) of the Act.

4. Similarly, the response must set out the details of or have attached to it any rejection or dispute of the payment claim that has given rise to the dispute and all the information, documentation and submissions on which the party making it relies in the adjudication.[29]  

   [29] Sections 27(2)(b), 27(2)(c) of the Act.

5. A determination must be made on the basis of the application and its attachments and any response and its attachments.[30]  

Time limit for adjudicator's decision

[30] Section 32(1)(a) of the Act.

1. By s 31(2), an appointed adjudicator must, within the 'prescribed time' or any extension of time under s 32(3)(a), either dismiss the application (without making an assessment of its merits) or determine the matter on the balance of probabilities. A 'determination' means a determination, made on an adjudication under pt 3, of the merits of a payment dispute.[31] 

   [31] Definition in s 3 of the Act.

2. The 'prescribed time' is 10 business days after the receipt of the response or, if no response is received, 10 business days after the last date upon which a response is required to be served.[32] Section 32(3)(a) permits the time limit to be extended by consent.

Deemed dismissal

[32] Act s 31(1).

1. Section 31(3) covers the situation where an adjudicator fails to comply with the statutory requirement in s 31(2).  It provides that, if an application is not dismissed or determined within the prescribed time, or any agreed extension of time, it is taken to have been dismissed. 

2. By s 37(2), if an application is taken to have been dismissed by the elapsing of time, a further application may be made within 20 business days after the previous application is taken to have been dismissed.

Determinations

1. An adjudicator must act informally, and, if possible, make the determination on the basis of the application, any response and any attachments to those documents.[33]  An adjudicator is not bound by the rules of evidence.[34]

   [33] Act s 32(1)(a).

   [34] Act s 32(1)(b).

2. Where an adjudicator makes a determination under s 31(2)(b), the adjudicator is required to produce a 'decision' evidencing or recording the determination.[35]  Section 36 requires the 'decision' to, among other things, be in writing, state the determination and give reasons for the determination. 

Simultaneous adjudications

[35] Duro [110].

1. Section 32(3) relevantly provides:

   An appointed adjudicator may ‑

   …

   (b)with the consent of the parties, adjudicate simultaneously 2 or more payment disputes between the parties;

   (c)adjudicate a payment dispute simultaneously with one or more other payment disputes if satisfied that doing so will not adversely affect the adjudicator's ability to adjudicate the disputes in accordance with section 30.

2. If either s 32(3)(b) or (c) is satisfied, the adjudicator will have the power to adjudicate more than one dispute simultaneously.[36]  I will refer to these subsections as the 'alternative preconditions' to the power to simultaneously adjudicate.

   [36] See Clough Projects Australia Pty Ltd v Floreani [2018] WASC 101 and Salini [123] ‑ [138].

3. Section 32(4) allows an adjudicator simultaneously adjudicating two or more disputes to take into account information received in relation to one dispute in the adjudication of the other(s).

Multiple applications in relation to the same dispute

1. An adjudicator's determination does not finally determine the rights of the parties. A party is not prevented from instituting proceedings before an arbitrator or other person or a court or other body in relation to a dispute arising under the contract, including a dispute that has, or is being, adjudicated under pt 3.[37] 

   [37] Act s 45(1).

2. However, as will be seen,[38] an adjudicator's determination of a payment dispute is a final determination of that dispute for the purposes of the Act. That is, once a payment dispute has been determined, it cannot be the subject of a further adjudication.

Payment disputes and payment claims

[38] See under the heading 'Repeated adjudications of the same payment dispute are prohibited'.

1. Section 6 of the Act relevantly defines when a 'payment dispute' arises as follows:

   (1)For the purposes of this Act, a payment dispute arises if -

   (aa)a payment claim is rejected or wholly or partly disputed; or

   (a)by the time when the amount claimed in a payment claim is due to be paid under the contract, the amount has not been paid in full; or

   …

   (2)Despite sub-section (1), a payment dispute does not arise under sub‑section (1)(aa) or (a) to the extent to which the payment claim includes matters that were the subject of an application for adjudication that has been dismissed or determined under section 31(2).

   (3)If a payment dispute arises under both sub-section (1)(aa) and (a) in relation to a payment claim then, for the purposes of this Act, the dispute arises on the earlier of the 2 occurrences.

2. In short, by s 6(1)(aa), and subject to s 6(2), a 'payment dispute' arises if, among other things, a payment claim is rejected or wholly or partly disputed.

3. Section 6(2), in providing that a payment dispute will not arise to the extent to which the payment claim includes matters that were the subject of an application for adjudication that has been dismissed or determined, expressly acknowledges that payment claims are divisible. In addition, s 6(2) is one of a number of provisions[39] in the Act that demonstrate a legislative intention to prevent repeated adjudications of the same payment dispute.

   [39] Discussed in the next section, 'Prohibition on repeated adjudications of the same payment dispute'.

4. Section 3 defines 'payment claim' to mean:

   (a)… a claim made under a construction contract -

   (i)by the contractor to the principal for payment of an amount in relation to the performance by the contractor of its obligations under the contract; or

   (ii)by the principal to the contractor for payment of an amount in relation to the performance or non-performance by the contractor of its obligations under the contract; and

   (b)includes a payment claim that includes matters covered by a previous payment claim.

5. The phrase 'payment of an amount' in s 3(a) includes a reference to payment of 'amounts'.[40]

   [40] See Duro [146.3] and s 10(c) of the Interpretation Act 1984 (WA). 

6. Section 3(b) means, in effect, that if items in a payment claim are rejected, those items may be repeated in a subsequent payment claim. This is sometimes referred to as 'recycling' claims. By reason of this definition, the time within which an application for adjudication of those items must be made only starts to run when the latest payment claim is disputed.

7. In Duro, Buss P and Murphy JA said that the Act 'recognises that an adjudication of a "payment dispute" may, and perhaps typically will, involve the determination of identifiable, divisible, amounts claimed. In other words, the essential statutory task of the adjudicator will commonly involve the adjudication and determination of divisible amounts'.[41] Their Honours said that, given this, 'where there is one final "amount to be paid" (within the meaning of s 36(c)(i)), it is no more than the mathematical result of the determination of divisible amounts'.[42] 

   [41] Duro [144].

   [42] Duro [145].

8. In referring to s 36(c)(i), their Honours were referring to the requirement in that section to include in the document recording the determination the 'amount to be paid'.[43]

   [43] See also Duro [110].

9. Their Honours rejected the proposition that the Act intended that 'the final, mathematical, result should itself be treated as an organic and indivisible whole'.[44]

   [44] See Duro [143], [145] ‑ [148].

10. In [146], their Honours said (emphasis added and citations omitted):

    1.A 'payment dispute' includes, and will no doubt commonly apply to, a dispute in respect of a 'payment claim'.

    2.The definition of 'payment claim' includes the claim made under a construction contract for 'payment of an amount' in relation to the performance of the contractor's 'obligations'.

    3.The phrase 'payment of an amount' is apt to include a reference to payment of 'amounts', particularly in this context where, it may be inferred, the legislature understood that itemised progress claims are typically submitted for multiple aspects of work done by a contractor.

    4.Each itemised amount in a progress claim by a contractor may itself be a 'payment claim' as defined in the Act. It is, however, doubtful that the Act requires (although it does not forbid) each such itemised amount to be treated as its own separate 'payment claim'. Were it otherwise, the contemporaneous adjudication of each such disputed amount in a progress claim would depend upon the operation of s 32(3)(b) and (c) of the Act. That would appear an unlikely intention to impute to Parliament. Rather, it appears that s 6(a)[45] and pt 3 of the Act as a whole contemplate that a number of divisible amounts claimed for various aspects of work done in a progress claim may be added together and treated as part of the one 'payment claim', and thereby form part of the one 'payment dispute' if the progress claim is rejected by the principal.

    5.The foregoing conclusion does not mean that a 'payment dispute' involving an itemised progress claim is somehow to be determined by an adjudicator as a whole without regard to its divisible components. On the contrary, s 31(2)(b), in its ordinary meaning and context, requires the adjudication of each separate component of a 'payment dispute' involving unpaid amounts pursuant to a progress claim.  The determination of the 'amount to be paid' within the meaning of s 31(2)(b)(i) in its application to a progress claim comprising divisible amounts, is a mathematical exercise involving the totalling of each component amount for which a party is found to be 'liable to make a payment' within the meaning of s 31(2)(b).  It will also involve the mathematical exercise of netting off where divisible amounts are determined as flowing each way.

    [45] Prior to the Act's amendment by s 6 of the Construction Contracts Amendment Act 2016 (WA), s 6(a) contained what is now in s 6(1)(a) and (b) of the Act.

11. Accordingly, where a progress claim contains a number of itemised amounts, each may itself be a 'payment claim' as defined in the Act and each may be treated as such.

12. Further, a number of individual items in a progress claim may be added together and treated as part of the one 'payment claim', and thereby form part of the one 'payment dispute' if the progress claim is rejected by the principal.

13. In such a case, it is the applicant for adjudication who chooses which items will comprise the 'payment claim' that will give rise to the 'payment dispute' to be adjudicated.  Obviously, the applicant need not include every item that was disputed.  For example, the applicant may accept the reason for the rejection of some items or consider that some items would be too complex to dispute in an adjudication process. 

14. Further, if a principal raises any matters by way of set off or counterclaim in response to a progress claim, those matters will not change the characterisation of the 'payment claim' or the 'payment dispute' in the contractor's application.[46]   In Alliance Contracting Pty Ltd v James,[47] Beech J (as his Honour then was) said:

    In my view, where, as here, party B's response to a payment claim by party A is to assert a counterclaim that contends that party A is liable to party B, although the merits of the counterclaim will be considered in determining whether B is liable to make a payment on A's payment claim, that counterclaim is not itself subsumed into the payment dispute constituted by B's rejection of A's payment claim. Rather, B's counterclaim is itself a separate payment claim, the rejection of which will give rise to and constitute another payment dispute. Although factually overlapping, indeed intertwined, there are, in my view, nevertheless two payment disputes and two payment claims for the purposes of pt 3 of the Act.

    [46] Alliance Contracting Pty Ltd v James [2014] WASC 212 [63] ‑ [75]. See also Cooper & Oxley Builders Pty Ltd v Steensma [2016] WASC 386 [21] ‑ [22]. These passages in both cases were endorsed in Duro [36] (Martin CJ, dissenting in the result but with whom Buss P and Murphy JA agreed on this point - [156]).

    [47] Alliance [65].

15. Beech J said it followed that, if a principal made an application for adjudication, this would not prevent the contractor making its own application.  The payment claim by each party would give rise to a separate payment dispute once the claim was disputed.[48] 

    [48] See Alliance [71].

16. In Duro, Martin CJ endorsed what Beech J had said and continued:[49]

    Any such claim to set‑off is to be considered and determined by the adjudicator as a defence to the applicant's claim for payment.  So, the advancement of a counterclaim which is said to satisfy the claim by way of set-off cannot expand the ambit of the payment claim or the payment dispute and convert the respondent's shield into a sword resulting in a determination that money is due and payable to the respondent to the claim.

Prohibition on repeated adjudications of the same payment dispute

The relevant provisions

[49] Duro [36] (Martin CJ, dissenting in the result but with whom Buss P and Murphy JA agreed on this point - [156]).

1. I earlier said that s 6(2) is one of a number of provisions in the Act that demonstrate a legislative intention to prevent repeated adjudications of the same payment dispute. Of the other provisions, the most significant are s 25(a) and s 41(1)(b).

2. By s 6(2), a payment dispute will not arise to the extent to which the payment claim includes matters that were the subject of an application for adjudication that has been dismissed or determined under s 31(2). If, therefore, an application is dismissed or determined[50] within the prescribed time or any extension of time, a party may not apply for another adjudication of the same dispute. 

   [50] If an application is not dismissed or determined within the prescribed time or any extension of time, and is taken to have been dismissed by the elapsing of time under s 32(3), a further application may be made within 20 business days after the previous application is taken to have been dismissed - see s 37(2) of the Act.

3. Section 25 of the Act provides:

   25.Who can apply for adjudication

   If a payment dispute arises under a construction contract, any party to the contract may apply to have the dispute adjudicated under this Part unless -

   (a)an application for adjudication has already been made by a party, whether or not a determination has been made, but subject to section 37(2); or

   (b)the dispute is the subject of an order, judgment or other finding by an arbitrator or other person or a court or other body dealing with a matter arising under a construction contract.

4. It was common ground that s 25(a) prohibits a party from applying for adjudication of a payment dispute where an application for adjudication in relation to that payment dispute has already been made, subject to s 37(2). Section 37(2) allows a further application to be made for the adjudication of a payment dispute if the first application was taken to have been dismissed by the elapsing of time.  Therefore, unless the previous application was taken to be dismissed by the elapsing of time, a further application for adjudication in relation to the same payment dispute may not be made.

5. It is unnecessary to construe s 25(b). However, it appears to prevent an application being made where the dispute is the subject of a final order made by a body other than an adjudicator.

6. Section 41(1)(b) provides:

   41.Determinations are final

   (1)If on the adjudication of a payment dispute the appointed adjudicator makes a determination -

   …

   (b)a party to the dispute may not apply subsequently for an adjudication of the dispute.

7. In short, s 41(1)(b) prohibits a party from applying for an adjudication of a dispute if that dispute has already been determined under a previous adjudication.

The effect of the provisions

1. Although there is considerable overlap in the provisions, they can be characterised as follows:

   1.Section 6(2) is directed to whether a payment dispute even arises;

   2.Section 25(a) is directed to when an application for adjudication can, and cannot, be made; and

   3.Section 41(1)(b) is directed to the finality of a determination which, as I have said, means a determination of the merits.

1. By these provisions, the Act clearly prohibits multiple adjudications of the same payment dispute. However, this does not answer the question of what is the payment dispute that has been adjudicated?  It is therefore critical to identify the 'payment dispute'. 

2. The Act does not prevent multiple adjudications of different payment disputes, even where they arise from the same progress claim.  As has been seen, if a principal's rejection of a progress claim includes a counterclaim which the contractor rejects, each party may make an application for adjudication.  While the adjudication of the contractor's application must take account of the counterclaim, the 'payment dispute' will not be the same 'payment dispute' as the dispute in the principal's application.[51] 

   [51] See the discussion of Alliance and related cases under the heading 'Payment disputes and payment claims'.

3. The critical issue to be determined is whether a contractor, having chosen to challenge particular items in dispute arising from a particular progress claim (including the principal's response to it), can subsequently choose other items arising from the same progress claim to be the subject of a different application for adjudication.  On Civmec's construction, the answer is yes.  On Sandvik's construction, the answer is no.

4. In my view, while Duro supports Civmec's construction, it does not compel it. The language used by the court in [146.4] indicates that the court was not contemplating this issue. The court said, in effect, that if each individual item was treated as its own separate 'payment claim', the contemporaneous adjudication of each such disputed amount in a progress claim would depend upon the operation of s 32(3)(b) and (c) of the Act. That would only follow if the same adjudicator was dealing with all of the payment claims.[52]  This would not inevitably be the case if multiple applications were made.  It appears, therefore, that the court was analysing the situation of a single application being made in relation to multiple items in a progress claim.  This is not surprising, as that is what had occurred in the case it was deciding. 

   [52] I discuss this further under the heading 'Sandvik's contentions' under the subheading 'Simultaneous adjudications'.

5. However, having regard to the analysis in Duro, there is nothing in the words of the Act that is inconsistent with Civmec's construction. Each item in a single progress claim can itself be a 'payment claim', giving rise to its own payment dispute.

6. Nor would it be contrary to the Act's goal of preventing repeated determinations of the merits of the same payment dispute. The 'payment dispute' would be different in each application, as it would be the payment dispute that arose from the rejection of each 'payment claim'. The claims the subject of the second application would not have been determined on the merits in the first adjudication.

7. Accordingly, the issue is whether the limitation inherent in Sandvik's construction should be read into the words of the Act.

Sandvik's contentions

1. Sandvik modified its position in oral argument.  I will not address those parts of the written submissions which were effectively abandoned.

Res judicata, issue estoppel and Anshun estoppel

1. Sandvik referred to the principles of res judicata, issue estoppel and Anshun estoppel in support of its construction. It expressly disavowed the suggestion that it sought to directly rely upon those principles. Rather, it submitted that the principles were merely 'instructive of the final nature of determinations that are made under the Act'.[53] 

   [53] See Sandvik's Written Reply [23]. See also ts 158.5 and 201.5.

2. Sandvik contended that, once any part of a progress claim was the subject of an adjudication, that defined the 'payment dispute' and 'payment claim' in relation to that progress claim.  In other words, Sandvik contended that a progress claim could only give rise to a single payment dispute.  Therefore, Sandvik argued, when a determination was made of the amount payable on a payment dispute, any further application for adjudication in relation to the same progress claim would impermissibly be seeking to re‑agitate the determination that had already been made of the amount payable on that payment dispute. 

3. Civmec did not seek to argue that it was permissible to seek a determination of a payment dispute that had already been determined.  Rather, Civmec contended that, where two applications were made in relation to different items arising from the same progress claim, the payment disputes in each application would be different. 

4. In my view, Sandvik's submissions did not advance its contention. The Act itself expressly prevents multiple determinations of the same payment dispute. The aim of finality reflected in the Act and in the principles to which Sandvik referred has no bearing on the identification of what the payment dispute is.

Reliance on O'Donnell Griffin

1. Sandvik also relied[54] on observations made in O'Donnell Griffin Pty Ltd v John Holland Pty Ltd,[55] in particular the remarks to the effect that there is generally only one payment claim and one payment dispute in relation to a progress claim.[56]  Sandvik noted that O'Donnell Griffin had been footnoted by the Court of Appeal in Duro.[57]  However, the court footnoted O'Donnell Griffin with the letters 'cf' before the case name.  Those letters indicate that the court considered there was value in comparing what had been said in O'Donnell Griffin.  This does not mean that the court endorsed everything that had been said in O'Donnell Griffin, and the context indicates that it did not.[58]

   [54] ts 116 ‑ 118 and ts 198 ‑ 199. 

   [55] O'Donnell Griffin Pty Ltd v John Holland Pty Ltd[2009] WASC 19.

   [56] O'Donnell Griffin [78] and [80].

   [57] ts 116 ‑ 118.  See also ts 198 ‑ 199.

   [58] The footnote referred to [76] ‑ [80] of O'Donnell Griffin.  The footnote was placed after [146.4], extracted earlier.  Also compare [146.3] of Duro to the second and third sentences of [78] of O'Donnell Griffin.

2. In my view, the Court of Appeal was simply noting that what was said in O'Donnell Griffin was not inconsistent with its conclusion that individual claims in a progress claim could be aggregated and treated as a single payment claim.  Its footnoting of O'Donnell Griffin does not advance Sandvik's contention.

Multiplicity of proceedings

1. Sandvik contends that Civmec's construction would permit multiplicity of proceedings. It submits that this would be contrary to the purpose and objects of the Act, to determine disputes fairly and as quickly, informally and inexpensively as possible.[59]

   [59] Sandvik's Written Submissions [49].

2. This submission requires acceptance of Sandvik's construction that a progress claim can only give rise to a single payment dispute. If, on the other hand, the Act is construed such that a progress claim can give rise to multiple payment disputes, the purpose of pt 3 of the Act would not be infringed, and would indeed be promoted, by permitting each such payment dispute to be adjudicated.

3. Further, as I will explain, if a progress claim can, as a matter of construction, give rise to multiple payment disputes, it is likely that more disputes would be able to be adjudicated under the Act.

4. Under s 31(2)(a)(iv), an adjudicator is required to dismiss an application if he or she is satisfied that it is not possible to fairly make a determination because of the complexity of the matter or the prescribed time or any extension of it is not sufficient for any other reason. If different items in a progress claim could be dealt with under different applications, it is likely that each application will be less complex than if all the items were contained in a single application. This would make it less likely that an adjudicator would be required to dismiss an application.

5. In my view, this would promote the purpose of pt 3 of the Act. The Act seeks to set up a 'pay now, argue later' system, with the primary aim of keeping the money flowing by enforcing timely payment. This construction would allow more disputes to be determined under the Act.

6. This construction would also promote the quick and efficient resolution of disputes, consistently with the object of an adjudication as set out in s 30.  It would allow an applicant to use no more time than it needed in deciding whether to make an application for adjudication.  It may be that an applicant could determine very swiftly that it wished to have some items adjudicated, but needed more time to decide if others should be. 

7. Further, I note that, if Sandvik's construction is correct, a contractor could achieve the same outcome by submitting a separate progress claim in relation to each item (subject to the terms of the contract, which may forbid this).

Multiple determinations

1. Sandvik contends that Civmec's construction would require multiple determinations, each of which would be required to satisfy the formal requirements, and would require the filing of a certified copy and affidavit in a court of competent jurisdiction before it could be enforced as an order of the court under s 43 of the Act. Sandvik submits that it is unlikely that Parliament would have intended such inconvenient outcomes.[60] 

   [60] Sandvik's Written Submissions [50].

2. Again, this submission requires acceptance of Sandvik's construction that a progress claim can only give rise to a single payment dispute.  If that construction is wrong, it is entirely appropriate that the determination of each payment dispute be subject to the statutory regime.

3. Sandvik contends that, on Civmec's construction, where a single progress claim contained thousands of individual items, there would be nothing to prevent a contractor making thousands of separate adjudication applications in relation to each individual item.[61]  In my view, this contention does not advance Sandvik's case.

   [61] See, for example, Sandvik's Written Reply [51].

4. First, while it is theoretically possible that this could be done, in practice it is highly unlikely.  The contractor would incur the costs of each separate adjudication.  Ordinarily, each party bears its own costs of an adjudication, including half of the adjudicator's fees.[62]

   [62] See s 34(1) and s 44.

5. Second, if it was done vexatiously, the contractor could be required to pay all of the principal's costs. 

6. Under s 34(2) of the Act, if an appointed adjudicator is satisfied that a party incurred costs of the adjudication because of frivolous or vexatious conduct on the part of, or unfounded submissions by, another party, the adjudicator may decide that the other party must pay some or all of those costs.

7. Sandvik contends that this power would be practically inoperative in this situation, as the adjudicator could only have regard to the contractor's conduct in relation to that particular adjudication, and could therefore never conclude the conduct was vexatious.  I do not accept this.

8. If a contractor was engaging in this conduct, and assuming that conduct was increasing the principal's total costs in relation to all of the adjudications, the principal would no doubt seek costs under s 34(2) of the Act in each response, and include evidence of the other applications. It would be open to the adjudicator in each adjudication to reach the view that the principal had incurred costs of that adjudication by virtue of the contractor's vexatious conduct, precisely because the principal's costs would have been less if individual matters had been grouped.

Simultaneous adjudication

1. Sandvik also contends that the provisions which limit the simultaneous adjudication of payment disputes support its construction.

2. Under s 32(3), an appointed adjudicator may only adjudicate payment disputes simultaneously with the consent of the parties or if the adjudicator is satisfied that doing so will not adversely affect his or her ability to adjudicate the disputes fairly, quickly, informally and inexpensively (I refer to these as the 'alternative preconditions').

3. Sandvik submits 'it would be absurd if the simultaneous determination of all such disputes was dependant [sic] on the operation of [s 32(3)] whereas, no such requirements would be necessary if the aggregate payment dispute were the subject of the application'.[63]  I do not accept this submission.

   [63] Sandvik's Written Reply [52]. See also Sandvik's Written Submissions [51].

4. First, Civmec's construction is not that each individual item must be an individual payment claim each of which gives rise to a payment dispute in relation to that single item, and each of which must be the subject of its own application for adjudication.  Rather, Civmec submits, consistently with Duro, that a number of individual items arising from a single progress claim may be aggregated and the aggregated items are the payment claim which gives rise to the payment dispute.  On this construction, there is only one payment dispute to adjudicate, so there is no occasion to consider the alternative preconditions to simultaneous adjudication of two or more payment disputes.  It is only if and when a further application is made in relation to different items arising from the same progress claim that the question of simultaneous adjudication could arise.

5. Second, assuming such a further application is made, and there are therefore two payment disputes to be adjudicated in relation to the same progress claim, it does not necessarily follow that one of the alternative preconditions to simultaneous adjudication must be met before they can be adjudicated.  This is for two reasons.

   1.First, the alternative preconditions only apply when the same adjudicator is appointed to adjudicate each of the disputes.  This will only inevitably be so where the parties have appointed a registered adjudicator and that person consents to adjudicate the applications.[64]  Notably, in this case, Sandvik and Civmec had not appointed a registered adjudicator, and a different adjudicator was appointed in relation to the two applications.

   2.Second, even where the same adjudicator has been appointed, the alternative preconditions only apply when the adjudicator seeks to adjudicate the two disputes simultaneously.  An applicant for adjudication has 90 days after a dispute arises to apply to have the dispute adjudicated.  Once an application is brought, a determination (or a decision to dismiss) must be made within a maximum of 20 days, unless the parties consent to an extension of time.[65]  Accordingly, even if the period of 'adjudication' is assumed to be the entire period from the filing of the application until the determination is made,[66] up to five applications could be made with no overlap in those periods.  It is again notable that, in this case, the First Determination was made before the Second Application was lodged, so the applications were not adjudicated simultaneously.

   [64] See s 26 and s 28 of the Act and the definition of 'appointed adjudicator' in s 3.

   [65] By the combined effect of s 27(1) and s 31(1).

   [66] Which I do not accept - see Salini [80] ‑ [112]. 

6. Accordingly, the requirement to meet one of the alternative preconditions will only apply where:

   1.two separate applications are made; and

   2.the same adjudicator is appointed to each application; and

   3.there is, or will be, an overlap in the period of adjudication of the two applications.

7. This is not an absurd result.  It would be entirely consistent with the legislative framework that permits an adjudicator to simultaneously adjudicate more than one dispute only if one of the alternative preconditions have been met.

8. Finally, I note that, even on Sandvik's construction, an applicant could not avoid the risk that one of the alternative preconditions would need to be met before a dispute could be adjudicated.  For example, if an adjudicator was appointed to adjudicate a contractor's application for adjudication of the payment dispute arising from a progress claim, and the same adjudicator was appointed in relation to a principal's application for adjudication of the merits of its counterclaim to the progress claim, the same risk would arise.  In addition, the risk would arise even if the same adjudicator was appointed to adjudicate another application in relation to an entirely different progress claim, or even another application brought by a different party.[67]

Act intends to exclude complex disputes

[67] Sandvik did not suggest that 'adjudicate simultaneously' meant other than temporally, namely, at the same time. Nor do the words, or the context and purpose of the Act, suggest it has any other meaning.

1. During the hearing, Sandvik contended that its construction was supported by what it said was a purpose of the Act, being to 'sideline complex disputes'.[68]  It appeared this contention may have been based on a misunderstanding of what was said in Perrinepod at [87].[69]  In that paragraph, Murphy JA said (emphasis added):

   Fourthly, the object of the scheme is to determine payment disputes arising out of construction contracts 'fairly and as quickly, informally and inexpensively as possible' (s 30), with the primary aim of keeping the money flowing down the contractual chain.  That purpose is confirmed by the following passage taken from the Minister's Second Reading Speech (WA Hansard, 3 March 2004, 275):

   'When a party to a construction contract believes it has not been paid in accordance with the contract, the Bill provides a rapid adjudication process that operates in parallel to any other legal or contractual remedy.  The rapid adjudication process allows an experienced and independent adjudicator to review the claim and, when satisfied that some payment is due, make a binding determination for money to be paid.  The rapid adjudication process is a trade‑off between speed and efficiency on the one hand, and contractual and legal precision on the other.  Its primary aim is to keep the money flowing in the contracting chain by enforcing timely payment and sidelining protracted or complex disputes.  The process is kept simple, and therefore cheap and accessible, even for small claims.  In most cases the parties will be satisfied by an independent determination and will get on with the job.  If a party is not satisfied, it retains its full rights to go to court or use any other dispute resolution mechanism available under the contract.  In the meantime, the determination stands, and any payments ordered must be made on account pending an award under the more formal and precise process.'

   [68] ts 129.

   [69] ts 129 ‑ 133.

2. In my view, the expressed desire to sideline protracted or complex disputes was an explanation for why the Act established a process that was faster and less precise than the existing processes. That is, the Minister was not saying that the Act would not apply to complex disputes. The Minister was saying that the Act would provide a simple process that would keep the money flowing, while not interfering with the parties' right to engage in protracted and complex litigation or arbitration if they wished.

3. Sandvik next relied on s 31(2)(a)(iv) of the Act in support of its proposition.[70] Under that subsection, an adjudicator is required to dismiss an application if he or she is satisfied that it is not possible to fairly make a determination because of the complexity of the matter or the prescribed time or any extension of it is not sufficient for any other reason. 

   [70] ts 133 ‑ 134 and 157 (in which counsel clarified Sandvik's Written Submissions [53]). 

4. Sandvik submitted that s 31(2)(a)(iv) indicates 'that the nature of the disputes that the Act has in its frame are those that are of a degree of complexity that can be dealt with fairly in the timeframe the Act prescribes. You can obviously consent to a longer period of time if the parties choose to. But that is a starting position'.[71]

   [71] ts 134.

5. I do not accept this. In my view, the purpose of s 31(2)(a)(iv) is not to exclude complex disputes from the Act. Rather, its purpose is to ensure that the tight timeframes do not impose unrealistic burdens on adjudicators, and to ensure that what is determined is determined fairly. In my view, this is supported by s 32(3) of the Act which permits the parties to consent to an extension of the time within which a determination must be made.

1. Further, as noted earlier, I consider that construing the Act in this way, such that the complexity of the issues can be reduced by making multiple applications, promotes the purpose of pt 3 of the Act. It would also promote the quick and efficient resolution of disputes, again promoting the purpose of pt 3.

Certainty

1. Sandvik submits that the parties should not be in any doubt as to what the payment dispute is in any given factual circumstance.[72]  I agree.  However, the payment dispute will be the same on both constructions.  On both constructions, the application for adjudication will identify which item(s) arising from the progress claim are sought to be the subject of the adjudication.  The 'payment dispute' will be the dispute in relation to those items.

The Alliance construction

[72] ts 108.

1. I have referred in my reasons to Alliance, and the cases that followed it, in support of the construction I have reached.  Alliance establishes that, if a principal raises any matters by way of set off or counterclaim in response to a progress claim, those matters will not change the characterisation of the 'payment claim' or the 'payment dispute' in the contractor's application.  It establishes that both parties could make an application for adjudication, and the payment claim by each party would give rise to a separate payment dispute once the claim was disputed.  I will refer to this as the Alliance construction.

2. It is fair to say that neither party devoted a great deal of attention to the Alliance construction.[73]  Civmec briefly explained why it supported its construction.  Civmec pointed out that it demonstrated that, simply because the merits of the counterclaim had been assessed in the contractor's application and that assessment had impacted on the amount determined to be payable to the contractor, that did not mean the principal could not bring its own adjudication application.  Sandvik acknowledged that the Alliance construction was 'a fly in the ointment' of its construction, because it demonstrated that it was possible to have inconsistent (and separate) findings, on the same subject matter, in different disputes about that subject matter. 

   [73] See ts 174 and 199 ‑ 200.

3. Neither party addressed whether the Alliance construction created any difficulty in terms of the applications Civmec made in this case.  In each of its applications, Civmec sought to have adjudicated items in Progress Claim 26 that had been rejected by Sandvik along with items in Payment Notice 26 that had been asserted by way of counterclaim. 

4. I considered whether I ought to raise this issue with the parties and invite further submissions.  However, it seems to me that the parties are highly unlikely to have overlooked this issue, particularly given that each was represented by senior counsel.  It is likely that, like me, they did not perceive it to create any complexity or nuance in the construction issue before me. 

Conclusion

1. The Act prevents multiple determinations of the same payment dispute.  It does not prevent multiple determinations of different payment disputes in relation to different progress claims.  Nor does it prevent multiple determinations of different payment disputes arising from the same progress claim, where the principal seeks an adjudication of the merits of a counterclaim to that claim.[74] 

   [74] See the discussion of Alliance and related cases under the heading 'Payment disputes and payment claims'.

2. Further, regardless of whether the disputes arise under the same progress claim or different progress claims, the limitations on simultaneous adjudications must be met before the same adjudicator can adjudicate payment disputes simultaneously. 

3. Where a single progress claim includes multiple items, and multiple items are disputed, each item can, in theory, be the subject of an adjudication application.  In such a case, each item will be the 'payment claim', giving rise to its own 'payment dispute'.  In addition, a group of items from a single progress claim can be aggregated in a single application.  In such a case, the group of items will be the 'payment claim', giving rise to the 'payment dispute'. 

4. In my view, there is no reason to construe the Act as meaning that, once one or more items of dispute arising from a progress claim have been made the subject of an adjudication, no other items arising from the same progress claim can be the subject of an adjudication. In my view, different groups of non‑overlapping items can each be the subject of an adjudication application. The application in respect of each group will involve a different payment claim and a different payment dispute, being in relation to only those items in that group.

5. Other provisions in the Act will regulate the extent to which each claim may be adjudicated and the limitations on such adjudications. For example, each application must be made within the time limit provided. In addition, if multiple applications are to be adjudicated simultaneously by the same adjudicator, one of the alternative preconditions to simultaneous adjudication will need to be met.

6. In my view, this construction flows from the plain meaning of the text, supported by the context of pt 3 of the Act, and is consistent with the purpose of the Act. The Act seeks to keep the money flowing, on a pay now, argue later basis. If individual items or groups of items can be dealt with in this way, subject to meeting time limitations and preconditions to power, the purpose of the Act will be promoted. This construction does not involve, in any way, repeated determinations of the merits of a dispute in relation to an individual item.

Further issue arising on the facts

1. Before turning to the factual issues, there is one final submission of Sandvik's that I should mention.  It arises as a result of the way in which Civmec sought to have the adjudicators reach a final payment figure.

2. Later in these reasons I will discuss in detail the items that Civmec sought to have adjudicated in the two applications.  For present purposes, it is sufficient to note the following:

   1.Civmec's first application sought the adjudication of five of the 15 items on Payment Notice 26.  However, in order to calculate the total amount that Sandvik should pay, Civmec said that the adjudicator could accept the correctness of each of the other 10 items of deduction, and asked the adjudicator to deduct the whole of the Certified Amount from the aggregated amount the adjudicator determined was payable after determining the merits of the five items.

   2.Civmec's second application sought the adjudication of seven items.  Again, Civmec said that the adjudicator could accept the correctness of each of the other items of deduction, and asked the adjudicator to deduct the whole of the Certified Amount from the aggregated amount the adjudicator determined was payable after determining the merits of the seven items, in order to calculate the total amount that Sandvik should pay.

   3.The effect of this was that the total amount Civmec received after the two adjudications was less than it would have received if all 12 items had been determined in a single adjudication. 

3. Sandvik submits that this is a reason to prefer its construction to Civmec's.  Sandvik submits that what occurred demonstrated that the division of the items arising from the same progress claim into multiple adjudications has the potential to result in awards of amounts that are evidently incorrect.[75]  Sandvik submits that Civmec's construction therefore has the potential to result in absurd outcomes.[76]

   [75] Sandvik's Written Reply [53].

   [76] This appears to be its submission from the overall context - see Sandvik's Written Reply [49] ‑ [50], [53] ‑ [58].

4. This issue arises squarely on the facts.  However, in my view it does not impact on the broader construction question.  The construction I favour would have operation in cases that would not require adjustments to be made to calculate the total amount to be paid.  No adjustments would be required, for example, where a contractor made claims for two separate items of work, both of which were disputed, but where the principal did not make any counterclaim or raise any offset. 

5. In my view, the issue goes to the characterisation of the 'payment dispute', not whether multiple payment disputes may arise in relation to the same progress claim.  It seems to me that the question is whether, by asking the adjudicator to accept the correctness of the items not under challenge in the application and to deduct the whole of the Certified Amount from the aggregated amount, the 'payment dispute' should be construed as extending to all of those other items.  Viewed in that light, Sandvik's submission can be interpreted as saying that the answer should be 'yes' because otherwise there is a potential for absurd outcomes.

6. In view of my characterisation of the relevant question, I will deal with this submission when dealing with the first factual issue.

The factual issues

1. The two factual issues are:

   1.What in fact was the 'payment dispute' that was determined in the First Determination?  Factually, was it a payment dispute in relation to only those five items Civmec challenged or was it a payment dispute in relation to the whole of Progress Claim 26 and Payment Notice 26?  If the answer is the latter, it was not open to Civmec to make the Second Application.

   2.If the answer is that it was a payment dispute in relation to only those items Civmec challenged, the next question is whether, on the facts in this case, each of the items the subject of the Second Adjudication had been determined in the First Determination.

What was the payment dispute in the First Application?

1. As set out in the Background section of these reasons, the parties were in dispute about 15 items of deduction in Payment Notice 26. 

2. In the First Application,[77] Civmec challenged five items from Payment Notice 26.  These were items 2, 9, 12, 13 and part of 15.

   [77] Attachments ADG‑12 and ADG‑13 to the Di Giacomo Affidavit.

3. In the Background section, I set out a number of statements Civmec made in the First Application.  However, in view of the parties' submissions, it is necessary to set out much more.

4. The First Application was headed 'Application for Adjudication … Payment Dispute in respect of Progress Certificate PPC026'.[78]  It began by stating that it sought the adjudication of the payment dispute referred to in par 2.  It continued (italics added for emphasis):

   [78] 'PPC026' referred to Payment Notice 26 and a payment certificate dated 9 November 2018 (see [2.2]).  Presumably, 'Progress Certificate PPC026' was intended to refer to the latter, or both.

   2.Payment Dispute

   2.1On 25 October 2018 Civmec submitted a payment claim to Sandvik (the Payment Claim).  The Payment Claim is made as a cumulative claim for payment, as explained further in the Submissions in Attachment A.

   2.2On 9 November 2018, in response, Sandvik issued a payment certificate dated 9 November 2018 and payment notice letter dated 8 November 2018 (collectively PPC026) certifying for payment a negative amount of $881,380.15.

   2.3The Adjudicator will see that PPC026 sets out the total cumulative amount:

   (a)of 'Amounts Claimed' by Civmec in the Payment Claim for all work done to that date, being $50,438,181.34;

   (b)of negative 'Disputed Items (as detailed [in] the payment notice letter 726‑L‑S0352) (PPC026 Letter)', being $13,926,156.13;

   (c)of 'Approved Claims' by Sandvik for all work done to date, being $36,512,025.21;

   (d)'Previously Certified' by Sandvik for all work done to date, being $37,393,405.35; and

   (e)'Nett Certified' in favour of Sandvik of $881,380.15 (Certified Amount).

   2.4Civmec disputed PPC026 by notice of dispute dated 15 November 2015 (Dispute Notice).

   2.5In this Application Civmec only applies for adjudication of the payment dispute regarding the following five 'Disputed Items' in PPC026:

   (a)Item 2 'Construction Verification Certificate'

   (b)Item 9 'Punchlisting, carry‑over works & NCRs'

   (c)Item 12 'Workshop Drawings not provided by Supplier'

   (d)Item 13 'TQ's'

   (e)Item 15 'LD's for late delivery' (stacker and reclaimer LD's only)

   2.6Civmec does that notwithstanding that the Dispute Notice covers the entirety of the items in PPC026. Civmec is entitled to do that under the Act and has done so for the reasons explained in Attachment A below.

   …

   4.Civmec is not liable to pay Sandvik

   4.1Civmec is not liable to pay the Certified Amount.  In fact, Sandvik is liable to make a payment to Civmec in respect of PPC026 because Sandvik has (among other things) wrongly certified the following deductions regarding five 'Disputed Items' in PPC026:

   (a)Item 2 'Construction Verification Certificate':  - $2,100,000;

   (b)Item 9 'Punchlisting, carry‑over works & NCRs': - $102,500;

   (c)Item 12 'Workshop Drawings not provided by Supplier': -$2,161,068.75;

   (d)Item 13 'TQ's':  -$143,681; and

   (e)Item 15 'LD's for late delivery':  -$1,312,500.

   Total:-$5,819,749.75

   4.2The Adjudicator should note that, as to Item 15, in this Application Civmec only claims the liquidated damages deducted in respect of the stacker and the reclaimer, not the shiploader (ie $1,312,500, not $1,921,685.54), for the reasons explained in paragraphs 2.61 and 2.62 below.

   5.Determination Sought on Civmec's Payment Claim

   5.1The determination sought by Civmec is that:

   (a)Sandvik pay Civmec $4,938,369.60 (plus GST) calculated as follows:

   (i)Item 2 'Construction Verification Certificate':  $2,100,000;

   (ii)Item 9 'Punchlisting, carry‑over works & NCRs':  $102,500;

   (iii)Item 12 'Workshop Drawings not provided by Supplier':  $2,161,068.75;

   (iv)Item 13 'TQ's':  $143,681; and

   (v)Item 15 'LD's for late delivery':  $1,312,500.

   Sub‑total:$5,819,749.75

   Less:Certified amount PPC026:  ($881,380.15)

   TOTAL:$4,938,369.60

   This calculation is explained further in Attachment A.

   (b)Sandvik pay Civmec the determined amount within 7 days of the date of the Adjudicator's determination, or by such other date as determined by the Adjudicator.

   …

5. In Attachment A,[79] Civmec wrote (italics added for emphasis):

   [79] Attachment ADG‑13 to the Di Giacomo Affidavit.

   The Payment Claim

   1.8The Payment Claim is Attachment C3.

   1.9As explained in the Goldsmith Declaration it was submitted in hard copy by hand to Sandvik, with some parts being emailed, as part of an iterative review process undertaken between representatives of Sandvik and Civmec.  The Payment Claim records the amounts claimed on a fully cumulative basis - ie. the amount claimed for payment is for all works to the date of the Payment Claim and must have deducted from it the previous amounts paid.

   …

   2.15The Payment Claim (including re-submitted amounts) is therefore a 'payment claim' for the purposes of the Act.

   …

   A 'payment dispute' arose by no later than 15 November 2018 and no earlier than 9 November 2015

   1.40The 'payment dispute' arose either when PPC026 was issued or when the Dispute Notice was issued.  The fact that aspects of PPC026 were the subject of a prior PPC in which payment claim items were rejected or reduced does not matter because they are repeated in the Payment Claim as fresh items.

   …

   This Application properly concerns a limited payment dispute

   2.54As stated above in paragraphs 2.42 to 2.45, this Application only concerns a limited payment dispute relating to particular (not all) items in PPC26.  It does not concern:

   (a)the portion of Item 15 LD's which relate to the shiploader;

   (b)the items other than the five items covered by this Application; or

   (c)the entirety of the payment dispute arising out of PPC026.

   2.55Similarly, previous adjudication 53‑18‑03 only concerned two items in PPC023 rather than the entirety of the payment dispute arising out of that PPC.

   2.56Somewhat strangely, Sandvik argued in adjudication 53‑18‑03 that the adjudicator did not have jurisdiction because the payment dispute arising out of PPC023 was not 'divisible', in the sense that the items which made up PPC023 could not be dealt with individually.  The adjudicator rightly rejected that argument.

   2.57Regardless, Civmec anticipates that Sandvik may repeat that argument in this adjudication.  If so, the Adjudicator should similarly reject it because it would have the effect that:

   (a)every line item in a payment certificate which differs from a payment claim must be reopened and the merits reconsidered; and

   (b)a claimant could not (as Civmec did in adjudication 53‑18‑03 and has again done in this Application) determine to accept, solely for the purposes of an adjudication, the payment amounts set out in a payment certificate other than the particular line items that it wishes to dispute.

   2.58That is plainly wrong and is contrary to the requirements of the Act, which are explained in detail by the Court of Appeal in the case of Duro Felguera Australia Pty Ltd v Samsung C&T Corporation [2018] WASCA 28.

   …

   2.59The Adjudicator's task is therefore to determine the flow of money as part of calculating whether Sandvik is liable to make a payment to Civmec.  That will involve:

   (a)making the necessary adjustments to reflect the prior cumulative claims which are recorded up to the issue of PPC026;

   (b)accepting the values set out in PPC026 about which, to ensure this Application is not too complex and for the purposes of this adjudication only, Civmec does not raise dispute in this adjudication (including the majority of the 'Disputed Items' (set‑offs) applied by Sandvik in PPC026); and

   (c)making findings about the five 'Disputed Items' the subject of this Application,

   to determine what the flow of money should be on the balance of probabilities.

   2.60For the above reason, Civmec does not ask the Adjudicator to find that an amount is payable to Civmec irrespective of the deductions and set‑offs stated in PCC026, or to consider the five 'Disputed Items' the subject of this Application in isolation.

   2.61Civmec has chosen to adjudicate a limited aspect of the payment dispute arising out of PPC026 so that this Application is not too complex for the Adjudicator to fairly determine in the limited (albeit extended, due to the Christmas period) time available.

   2.62In particular, Civmec has limited this Application regarding Item 15 to the reclaimer and stacker only, because the date of Delivery of both of those Machines was clearly delayed by Sandvik's late delivery of critical IFC drawings, so the simpler extension of time (EOT) provisions in V006 apply and the assessment of Civmec's EOT entitlements in respect of those items is less complex than it would [be] for the shiploader.

   This Application is not too complex

   2.63Sandvik argued in the third of the previous adjudications (53‑18‑03) that Civmec's application was too complex for the adjudicator to fairly determine within the limited time available and should therefore be dismissed summarily.  Unfortunately, the adjudicator accepted that was the case and did not determine that application on the merits.

   2.64Civmec anticipates that Sandvik will repeat that argument in this adjudication, which is why Civmec has only made this Application in respect of a portion of the payment dispute resulting from PPC026.

   …

   3.The Relevant Disputed Items in PPC026

   3.1In this Application Civmec claims that Sandvik has wrongly assessed and certified the following [five] negative 'Disputed Items' in PPC026:

   (a)Item 2 'Construction Verification Certificate':  - $2,100,000;

   (b)Item 9 'Punchlisting, carry‑over works & NCRs': - $102,500;

   (c)Item 12 'Workshop Drawings not provided by Supplier': -$2,161,068.75;

   (d)Item 13 'TQ's':  -$143,681; and

   (e)Item 15 'LD's for late delivery' (stacker and reclaimer only):  -$1,312,500.

   Total:-$5,819,749.75

   3.2In other words, in this Application Civmec claims the amount of each of the above Items but otherwise does not dispute any of the remaining items or amounts in PPC026 (all of which the Adjudicator can accept for the purposes of making his or [her] determination).

   3.3In its response in each of the previous adjudications Sandvik referred to the adjudicator's obligation to determine whether there are any applicable set‑offs at the time he made his determination because that was part of his duty under the Act to determine whether Sandvik was liable to make a payment to Civmec.

   3.4Firstly, it is correct that under the Act the Adjudicator must determine what the flow of money should properly have been in relation to the matters the subject of the 'payment dispute'. For that purpose, the Adjudicator must have regard to the amounts claimed, the amounts certified and matters of set‑off relied on by Sandvik at the time the Adjudicator makes a determination.

   3.5Secondly, the only valuations or set‑offs ('Disputed Items') in PPC026 that Civmec disputes in this Application are those listed in paragraph 3.1 above.  The Adjudicator need not determine the correctness of any of the other items stated in PPC026 for the purposes of making his or her determination; they can all be accepted for that purpose.

   4.Amount to be determined by Adjudicator

   4.1For the above reasons, the Adjudicator should determine under section 31(2)(b) of the Act that Sandvik is liable to pay Civmec the total amount of $4,938,369.60 (plus GST) for Disputed Items 2, 9, 12, 13 and 15 of PPC026, as follows:

   (a)Item 2:  $2,100,000.00

   (b)Item 9:  $102,500.00

   (c)Item 12:  $2,161,068.75

   (d)Item 13:   $143,681

   (e)Item 15 (part only):  $1,312,500.00

   Sub‑total:  $5,819,749.75

   (f)Less:  'Nett Certified' PPC026:      ($881,380.15)

   TOTAL:             $4,938,369.60

1. In short, in the First Application, Civmec contended that Sandvik was liable to pay Civmec $4,938,369.60 on the basis that it was entitled to be paid $5,819,749.75 for the five items contested in that application minus Sandvik's Certified Amount of $881,380.15.

2. Civmec says, in effect, that its acceptance of the other items of deduction for the purposes of the application was simply a recognition that, unless or until the dispute as to those matters had been adjudicated, Sandvik should not have to pay those amounts to satisfy the Act's purpose of keeping the money flowing. In other words, the correctness of the other items of deduction were to be assumed simply for mathematical purposes.

3. I will deal first with the question I posed in the previous section - whether, by asking the adjudicator to deduct the whole of the Certified Amount from the aggregated amount, and to accept the correctness of each of the other items not under challenge, the 'payment dispute' should be construed as extending to all of those other items.  As I have said, Sandvik's submission can be interpreted as saying that the answer should be 'yes' because otherwise there is a potential for absurd outcomes.

4. At first blush, it does seem odd that, as a result of Civmec's approach, Civmec obtained less than it would have obtained if the 12 items had been adjudicated in a single adjudication.  However, on reflection, I am not persuaded it should cause the 'payment dispute' in the First Determination to be construed as extending to the items not under challenge. 

5. While the total amount received did not reflect what would have been received on a single adjudication, the approach was consistent with the Act's policy to keep the money flowing. It would have been inconsistent with the Act's purpose to deny Sandvik the full effect of any deductions that Civmec elected not to dispute in the First Application. Civmec was only entitled to have the benefit of the flow of money in relation to those disputed matters in relation to which a determination was made in its favour.

6. As a result of Civmec's approach, Sandvik was not required to pay more than had been determined it should pay at any given time.  Civmec obtained less than it would have obtained if the 12 items had been adjudicated in a single adjudication.  This impact followed directly from the choice Civmec had made in order to avoid the risk that a single application would not be adjudicated at all on the ground it was too complex to be completed within the prescribed time. 

7. This is not inconsistent with the purposes of the Act and causes no unfairness. Civmec's choice increased the chances that the disputed items would be adjudicated. Any financial detriment[80] would fall on Civmec, the party making the choice. 

   [80] In the sense of the flow of money at that time.  The adjudications had no impact on Civmec's common law rights.

8. In my view, the outcome was not absurd.  It does not cause me to conclude that the 'payment dispute' should be construed so as to include matters that were not in dispute and were not determined on the merits.

9. Next, Sandvik refers to the fact that the First Application identified the 'payment claim' as the aggregated claim comprised in Progress Claim 26.  It also refers to the fact that the First Application said the 'payment dispute' arose when Progress Claim 26 or the Payment Notice was issued.[81]

   [81] ts 143, 146.

10. I accept that the First Application identified the 'payment claim' as the aggregated claim comprised in Progress Claim 26.  However, from the context of the application as a whole, it is plain that Civmec was seeking to challenge only five items in Payment Notice 26.  The fact that it labelled the whole of Progress Claim 26 as the 'payment claim' does not detract from the fact that it clearly identified which individual items it actually sought to challenge in the First Application. 

11. I also accept that the First Application referred to a singular payment dispute arising from Progress Claim 26.  However, Civmec also clearly identified that it sought the adjudication 'of the payment dispute regarding the following five items only … [n]otwithstanding that the Dispute Notice covers the entirety of the items in PPC026'.[82] 

    [82] See the First Application [2.5] and [2.6].  See also [2.40], [2.54] ‑ [2.58].  'PPC026' referred to Payment Notice 26 and a payment certificate dated 9 November 2018 (see [2.2]).

12. Further, Civmec's labels could not have the effect that each item in Progress Claim 26 was included in the payment claim giving rise to the payment dispute the subject of the First Application.  Progress Claim 26 included items that were not in dispute.

13. In my view, the First Application made clear that:

    1.In order to ensure the application was not too complex to be adjudicated, Civmec was not seeking a determination of the merits of all of the items in dispute;

    2.Civmec sought a determination of the merits of only items 2, 9, 12, 13 and part of 15;

    3.However, given that the adjudicator was required to determine what the 'flow of money' should be, the adjudicator was required to have regard to the amounts claimed, the amounts certified and matters of set off raised by Sandvik;[83]

    4.So as to allow the adjudicator to determine what the 'flow of money' should be, without risking that the application would be considered to be too complex to be adjudicated, Civmec said that, for the purposes of that adjudication only, it did not dispute any of the other items of deduction and the adjudicator should accept the correctness of those other items.  It asked the adjudicator to simply deduct the Certified Amount from the total determined to be payable in relation to the five items in dispute.

    [83] See First Application [3.4].

14. Given my conclusion as to the proper construction of the Act, I find that the 'payment claim' the subject of the First Application was the five items identified by Civmec and 'the payment dispute' was the dispute about those five items.

What was decided in the First Determination?

1. In the First Determination,[84] the adjudicator (Mr Davis) determined that Sandvik was liable to pay Civmec $4,938,369.60 plus GST.  That sum was arrived at by determining each of the five challenged items in Civmec's favour and then deducting the Certified Amount.

   [84] Attachment ADG‑15 to the Di Giacomo Affidavit.

2. In his reasons for the First Determination, Mr Davis wrote:

   18.On 8 November 2018, Sandvik issued progress certificate PPC026 (Payment Certificate) assessing the Payment Claim in the sum of -$881,380.15, which comprised $36,512,025.20 (the sum Sandvik approved for payment) less $37,393,405.35 (the sum Sandvik previously certified). As part of its assessment, Sandvik rejected some items in the Payment Claim and asserted various items of set off (15 items in total). It is not in dispute that, for the purposes of the Act, a payment dispute arose on or around that time.

   19.As noted, on 10 December 2018 Civmec served its application on Sandvik, comfortably within the 90 business days required by section 26 of the Act. In the application, Civmec confined the scope of the payment dispute to the following five (out of 15) items in the Payment Certificate:

   19.1Item 2, which relates to Sandvik's rejection of Civmec's claim for complying with the requirements of clause 17.a.(b) of Variation 006, in the sum of $2,100,000;

   19.2Item 9, which relates to costs Sandvik has set off for alleged punchlist items (namely incomplete or defective work), carry‑over works and non‑comformance reports (NCRs), in the sum of $102,500;

   19.3Item 12, which relates to costs Sandvik has allegedly incurred for providing design drawings in Civmec's preferred electronic format, in the sum of $2,161,068.75;

   19.4Item 13, which relates to costs Sandvik has set off to address Civmec technical queries (TQs), in the sum of $143,681; and

   19.5Item 15, which relates to liquidated damages Sandvik has levied for late delivery of the stacker and reclaimer, in the sum of $1,312,500.

   20.Accordingly, in the application Civmec seeks a determination in the sum of $4,938,369.60.

3. Mr Davis footnoted par 20, as follows:

   $2,100,000 (Item 2) + $102,500 (Item 9) + $2,161,068.75 (Item 12) + $143,681 (Item 13) + $1,312,500 (Item 15) - $881,380.15 (Sandvik's assessment in PPC026) = $4,938,369.60.

4. In his reasons, Mr Davis then explained why he found in favour of Civmec in relation to each of the five items.[85]  He then explained why he rejected a submission by Sandvik in relation to a clause of the contract, not relevant here.[86]  He then concluded he would therefore make a determination that Sandvik was liable to pay Civmec the amount Civmec claimed.[87] 

   [85] First Determination [24] ‑ [102].

   [86] First Determination [103] ‑ [105].

   [87] First Determination [106].

5. It can be seen, therefore, that apart from referring to the Certified Amount in par 18 and the footnote to par 20, Mr Davis did not otherwise refer to the items that were not challenged in the First Application. 

6. Sandvik submitted that, as Mr Davis determined that the amount payable was the amount calculated after deducting the Certified Amount, Mr Davis necessarily determined that Sandvik was entitled to make the deductions in each of the items which were not challenged in the First Application (referred to as the 'Unchallenged Items').[88]  Sandvik submits that it was not just a mathematical calculation.  It submits that Mr Davis necessarily accepted a value ascribed to all the Unchallenged Items to arrive at the final amount.[89]  Sandvik submits that Mr Davis had 'made a determination not expressly and not necessarily of the merits but an assumption of the correctness of those matters'.[90] 

   [88] Sandvik's Written Submissions [84] ‑ [86] and [90].

   [89] ts 145. 

   [90] ts 150.

7. When reminded of the definition of 'determination' in the Act, as being a determination of the merits, Sandvik appeared to submit that the total sum found to be payable was, by definition, a determination of the merits.  While not entirely clear, it seems that Sandvik was submitting as follows:[91] 

   1.Each of the five items were determined on their merits, including the amount payable for each item.

   2.To arrive at the total sum payable by Sandvik, Mr Davis assumed the correctness of the Unchallenged Items and deducted the total of the Certified Amount from the aggregation of the determination of the amounts payable in relation to each of the five items.

   3.This final figure was the 'determination' under s 31(2)(b). That is, the final figure was the determination of the merits of what Sandvik had to pay in relation to the payment dispute.

   4.There was therefore a determination of the merits of the Unchallenged Items.[92]

   [91] ts 150 ‑ 151, 158.

   [92] See also ts 158.4.

8. In Duro, Buss P and Murphy JA said that, where an adjudicator is required to adjudicate and determine divisible amounts in a progress claim, the final amount to be paid (within the meaning of s 36(c)(i)[93] and s 31(2)(b)) is no more than the mathematical result of the determination of divisible amounts.[94]  Clearly, their Honours did not consider that the total sum to be paid itself involved any additional determination of the merits.  Rather, it was simply the result of adding up the amounts found to be payable in the determinations of the merits of the individual items.

   [93] As noted earlier, s 36(c)(i) of the Act requires that the document recording the determination must state the amount to be paid.

   [94] Duro [145] and [146.5].

9. The First Determination did not determine the merits of the Unchallenged Items. The values of those items was merely assumed to calculate the total Sandvik was required to pay to 'keep the money flowing'. In my view, this does not mean that the Unchallenged Items should be treated as having been determined such that they could not be the subject of a subsequent application. The words of the Act do not require this and it would be inconsistent with the significance given in the Act to the concept of determinations of merits. Nor would this promote the object of the Act.

10. Further, I consider that this conclusion is supported by the analysis of Beech J in Alliance and the cases that followed.[95] 

    [95] See the discussion of Alliance and other cases under the heading 'Payment disputes and payment claims'.

11. Under his Honour's analysis, where a counterclaim has been made, it must be taken into account in the assessment of the total payable to the contractor in the adjudication of the contractor's application.  The assessment of the merits of the counterclaim may reduce what would otherwise be payable to the contractor, but would not result in a determination that the contractor was liable to pay the principal, even if the assessment of the counterclaim was that it exceeded the amount due to the contractor under its claim.  Further, the principal would be entitled to bring its own application for adjudication on its counterclaim.  In the determination of the principal's application, the merits of the counterclaim would again need to be assessed. 

12. It appears, therefore, that the fact that the same matters may be assessed in two adjudications was insufficient to cause Beech J to reach a different construction. In this scenario, the 'payment claim' in the contractor's application were those items in the progress claim that the principal had disputed and that the contractor sought to have determined on their merits. However, to determine whether the principal was liable to pay the contractor in relation to the payment dispute that arose from that payment claim, the adjudicator had to assess the counterclaim. This did not change the characterisation of the payment claim or the payment dispute. It did not mean that the counterclaim had been 'determined' within the meaning of the Act such that the merits of the counterclaim could not be determined in a subsequent adjudication.

13. In this case, Mr Davis made a determination of the merits of the dispute in relation to each of the five items.  Having found in Civmec's favour, he determined the total amount payable to be the amount sought by Civmec.  The amount Civmec sought was the total of those five items less the Certified Amount. 

14. While s 31(2)(b) refers to a determination in the singular, Duro establishes that the singular total is no more than the mathematical result of the determination of individual components.  Alliance, and the cases following it, establishes that simply because something is a component in the mathematical calculation of the total amount to be paid, this does not mean that it was part of the 'payment dispute' or that it was 'determined' so as to prevent it being determined in a subsequent adjudication.

15. Sandvik further submits that it would be absurd if a principal's right to the same set‑off was the subject of multiple adjudications before multiple adjudicators with the potential for multiple different outcomes.  However, unless the set‑off was the subject of a determination on the merits, I do not agree it would be absurd.  Civmec's construction does not involve, in any way, repeated determinations of the merits of an issue.

16. I also note that the potential for different outcomes did not deter Beech J in Alliance from concluding that both a contractor and principal may make an application for adjudication stemming from the same progress claim.  Further, in such a case, it appears that both applications would involve an assessment of the merits of the principal's counterclaim.  Sandvik surmised that, in such a case, a form of estoppel may arise.[96] I agree that a limited form of estoppel may arise under the Act to prevent the re‑agitation of an issue determined in a previous adjudication and which was fundamental to the assessment of the liability to pay and the quantum of the amount found to be payable.[97]  However, such a form of estoppel would have no application to the facts in this case, where the Unchallenged Items were not determined on their merits.

    [96] ts 199 ‑ 200.

    [97] See Salini [376] ‑ [389].

17. Mr Davis did not determine in the First Determination any of the issues that were agitated in the Second Determination.  The issues agitated in the First Application were the merits of five items.  The issues agitated in the Second Application were the merits of different items.  While Mr Davis took into account the Certified Amount in order to calculate the total amount payable in the First Determination, he did not determine the merits of the Unchallenged Items.  Their values were taken into account arithmetically, but their merits were not determined.

18. The concern of the Act and of estoppel, to the extent it applies, is to prevent multiple determinations of the merits of particular issues. That concern did not arise in this case.

19. For these reasons, I do not accept that the Unchallenged Items were determined in the First Determination.  I do not accept they could not be the subject of a subsequent application for adjudication.

Was there a conflict between the First Determination and the Second Application?

1. In the Second Application, Civmec challenged items 1, 4b, 5, 6, 8, 11 and the balance of 15.[98]  Civmec wrote:

   [98] Attachments ADG‑17 and ADG‑18 to the Di Giacomo Affidavit.

   3.5In the fourth adjudication [which was a reference to the First Application] Civmec claimed some (not all) of the amounts which Sandvik had wrongly rejected and deducted in PPC 026.  Again, the adjudicator Mr Hugh Davis (who had not determined any of the previous three adjudication applications) awarded Civmec the full amount claimed.  Civmec did not adjudicate all of the items arising out of PPC 026 because it wished to avoid any risk of that application being dismissed for complexity and Sandvik again avoiding its payment obligations on a technicality.

   …

   4.2The Adjudicator should note that in this Application:

   (a)as to Item 4b, Civmec only claims $365,504.40 rather than the full amount of $437,331.60 deducted by Sandvik, for the reasons explained in paragraphs 7.26 to 7.28 below;

   (b)as to Item 6, Civmec only claims $515,984.18 rather than the full amount of $523,713.93 deducted by Sandvik, for the reasons explained in paragraphs 9.11 to 9.13 below;

   (c)as to Item 8, Civmec therefore only claims $51,598.41 (10% of the above amount) rather than the full amount of $54,030.59 deducted by Sandvik; and

   (d)as to Item 15, Civmec only claims the liquidated damages deducted in respect of the ship loader less the $196,814.46 'added back' by Sandvik (ie $806,000 - $196,814.46 = $609,185.54 for the reasons explained in paragraphs 12.1 and 12.2 below.

   5.Determination Sought on Civmec's Payment Claim

   5.1The determination sought by Civmec is that:

   (a)Sandvik pay Civmec $3,864,459.56 (plus GST) calculated as follows:

   (i)Item 1:                 $750,000.00

   (ii)Item 4b:               $365,504.40

   (iii)Item 5:              $2,269,916.82

   (iv)Item 6:                 $515,984.18

   (v)Item 8:                   $51,598.41

   (vi)Item 11:               $183,650.36

   (vii)Item 15:               $609,185.54

   Sub-total$4,745,839.71

   Less: Certified PPC 026:    ($881,380.15)

   TOTAL:$3,864,459.56

   This calculation is explained further in Attachment A.

2. In Attachment A,[99] Civmec wrote:

   [99] Attachment ADG‑18 to the Di Giacomo Affidavit.

   2.61The Adjudicator's task is therefore to determine the flow of money as part of calculating whether Sandvik is liable to make a payment to Civmec.  That will involve:

   (a)making the necessary adjustments to reflect the prior cumulative claims which are recorded up to the issue of PPC 026;

   (b)accepting the values set out in PPC 026 about which, to ensure this Application is not too complex and for the purposes of this adjudication only, Civmec does not raise dispute in this adjudication (including the majority of the Items' (set‑offs) applied by Sandvik in PPC 026); and

   (c)making findings about the seven Items the subject of this Application,

   to determine what the flow of money should be on the balance of probabilities.

   2.62For the above reason, Civmec does not ask the Adjudicator to find that an amount is payable to Civmec irrespective of the deductions and set-offs stated in PPC 026, or to consider the seven items the subject of this application in isolation.

   …

   3.The Relevant Items in PPC 026

   3.1In this Application Civmec claims that Sandvik has wrongly assessed and certified the following seven items in PPC 026:

   (a)Item 1:  $750,000.00

   (b)Item 4b:  $365,504.40

   (c)Item 5:  $2,269,916.82

   (d)Item 6:             $515,984.18 (part only)

   (e)Item 8:               $51,598.41 (part only)

   (f)Item 11:  $183,650.36

   (g)Item 15:            $609,185.54 (part only)

   Total:-$4,745,839.71

   3.2As explained above:

   (a)as to Item 4b, in PPC 026 Sandvik deducted $437,331.60 but in this Application Civmec only claims the lesser amount of $365,504.40;

   (b)as to Item 6, in PPC 026 Sandvik deducted $523,713.93 but in this Adjudication Civmec only claims the lesser amount of $515,984.18;

   (c)as to Item 8, Civmec therefore only claims $51,598.41 (being 10% of the above amount) rather than the full amount of $54,030.59 deducted by Sandvik; and

   (d)as to Item 15, Civmec only claims the LDs deducted by Sandvik in respect of the ship loader less the $196,814.46 'added back' by Sandvik (ie $806,000 - $196,814.46 = $609,185.54.

   3.3In other words, in this Application Civmec claims the amount of each of the above Items but otherwise does not dispute any of the remaining items or amounts in PPC 026 (all of which the Adjudicator can accept for the purposes of making his or her determination).

   3.4In its response in each of the previous adjudications Sandvik referred to the adjudicator's obligation to determine whether there are any applicable set‑offs at the time he made his determination because that was part of his duty under the Act to determine whether Sandvik was liable to make a payment to Civmec.

   3.5Firstly, it is correct that under the Act the Adjudicator must determine what the flow of money should properly have been in relation to the matters the subject of the 'payment dispute'.  For that purpose, the Adjudicator must have regard to the amounts claimed, the amounts certified and matters of set‑off relied on by Sandvik at the time the Adjudicator makes a determination.

   3.6Secondly, the only valuations or set‑offs ('Disputed Items') in PPC 026 that Civmec disputes in this Application are those listed in paragraph 31 above.  The Adjudicator need not determine the correctness of any of the other Items stated in PPC 026 for the purposes of making his or her determination; they can all be accepted for that purpose.

   4.Amount to be determined by Adjudicator

   4.1For the above reasons, the Adjudicator should determine under section 31(2)(b) of the Act that Sandvik is liable to pay Civmec the total amount of $3,864,459.56 (plus GST) for Items 1, 4b, 5, 6, 8, 11 and 15 of the PPC 026, as follows:

   (a)Item 1:  $750,000.00

   (b)Item 4b:  $365,504.40

   (c)Item 5:  $2,269,916.82

   (d)Item 6:  $515,984.18

   (e)Item 8:  $51,598.41

   (f)Item 11:  $183,650.36

   (g)Item 15:  $609,185.54

   Sub‑total:$4,745,839.71

   Less:Certified PPC 026:             ($881,380.15)

   TOTAL:$3,864,459.56

1. In short, Civmec contended that Sandvik was liable to pay Civmec $3,864,459.56 on the basis that it was entitled to be paid $4,745,839.71 for those seven items minus Sandvik's Certified Amount of $881,380.15.

2. The seven items were among the items that were not challenged in the First Determination (referred to as the 'Unchallenged Items').

3. Sandvik submits that the Second Application conflicted and was inconsistent with the First Determination.  In essence, this was said to be because Civmec did not seek in the Second Application to assert an entitlement to the items determined in its favour by Mr Davis in the First Determination, but instead asked Mr Fisher to deduct the whole of Sandvik's assessment of the Certified Amount.  That is, Sandvik submits, by asking Mr Fisher to deduct the whole of the Certified Amount, 'Civmec was accepting that Sandvik was entitled to the deductions in Payment Notice 26 for all other items, including the five items that were contested in the first determination'.  Sandvik submits, therefore, that the Second Application was predicated on an assumption that the First Determination was either wrong or had not taken place.[100]

   [100] Applicant's Written Submissions [91] ‑ [92].

4. This contention was not a ground of review.  In any event, I do not accept it.

5. Civmec acted so as to ensure that Sandvik did not have to pay more than it should have to pay to 'keep the money flowing' as intended by the Act.

6. To achieve this in the First Application, Civmec asked Mr Davis to deduct all of the Certified Amount from the amount Sandvik had to pay.  This ensured that, unless and until the merits of a particular item was determined adversely to Sandvik, Sandvik would not have to pay the amount of that item.

7. At the time of making the Second Application, Mr Davis had already determined the five items in Civmec's favour.  The Second Application did not ask Mr Fisher to assume the First Determination was wrong.  Civmec explained why it was asking Mr Fisher to deduct all of the Certified Amount from the amount Sandvik had to pay in the Second Determination.  This had nothing to do with the correctness of Mr Davis' determinations of the five items.  It was purely to allow Mr Fisher to calculate the amount which Civmec contended ought to be paid to achieve the proper flow of money.  The Second Application was not predicated on an assumption that the First Determination was either wrong or had not taken place, either in form or in substance.

Conclusion

1. I would therefore dismiss Sandvik's application.  I will hear from the parties as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

SW
Associate to the Honourable Justice Archer

16 APRIL 2020