SLIC B&D PTY LTD and DAVID TRINDER
[2023] WASAT 1
•9 JANUARY 2023
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: CONSTRUCTION CONTRACTS ACT 2004 (WA)
CITATION: SLIC B&D PTY LTD and DAVID TRINDER [2023] WASAT 1
MEMBER: MS KY LOH, MEMBER
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 9 JANUARY 2023
FILE NO/S: CC 457 of 2022
BETWEEN: SLIC B&D PTY LTD
Applicant
AND
DAVID TRINDER
First Respondent
SUSAN SIMPSON
Second Respondent
Catchwords:
Construction Contracts Act 2004 (WA) - Review of decision of adjudicator to summarily dismiss adjudication application - Whether tax invoice sufficiently details construction contract and can act as payment claim
Legislation:
Building and Construction Industry (Security of Payment) Act 2021 (WA), s 22,
Construction Contracts (Former Provisions) Act 2004 (WA), s 7
Construction Contracts Act 2004 (WA), s 3, s 4, s 4(2), s 4(2)(d), s 4(2)(f)(iv), s 6(1), s 6(1)(aa), s 6(1)(a), s 6(3), s 7(2)(a), s 25, s 26, s 26(1), s 26(1)(a), s 26(1)(b), s 26(1)(c), s 26(1)(d), s 26(2), s 26(2)(a), s 26(2)(b), s 26(2)(b)(i), s 26(2)(b)(ii), s 26(2)(c), s 27(1), s 27(2), s 28(1)(a), s 30, s 31(2), s 31(2)(a), s 31(2)(a)(i), s 31(2)(a)(ii), s 31(2)(a)(iia), s 31(2)(b), s 32(1)(a), s 32(1)(b), s 32(2), s 32(2)(a), s 32(2)(b), s 32(2)(c), s 46(1), s 46(2), s 46(3), Pt 2, Pt 3, Div 3
Construction Contracts Regulations 2004 (WA), reg 5
State Administrative Tribunal Act 2004 (WA), s 5, s 13(1), s 13(2), s 17, s 27(1), s 27(2), s 29(3)(c)(i), s 29(3)(c)(ii), s 60(2)
Result:
Application allowed
Category: B
Representation:
Counsel:
| Applicant | : | N/A |
| First Respondent | : | N/A |
| Second Respondent | : | N/A |
Solicitors:
| Applicant | : | N/A |
| First Respondent | : | N/A |
| Second Respondent | : | N/A |
Case(s) referred to in decision(s):
Nil
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
The building contractor, SLIC B&D Pty Ltd, agreed to undertake specified works to a residential dwelling being constructed for a homeowner, Ms Simpson.
When the owner refused to pay the final payment claim in full, the contractor applied for adjudication (adjudication application) under the Construction Contracts Act 2004 (WA) (the Act).
Whilst the appointed arbitrator, Mr David Trinder, was satisfied that there was construction work and a construction contract within the meaning of the Act, he dismissed the adjudication application without making a determination of the merits on the basis that the contractor did not serve a copy of the construction contract and the payment claim giving rise to the dispute.
For reasons set out below, I am satisfied that the terms of the construction contract were sufficiently detailed in the tax invoice attached to the adjudication application, which invoice also served as the payment claim, and thus the adjudication application complied with the relevant requirements under the Act.
Issue
The primary issue for determination is whether the adjudicator's decision to dismiss the application under s 31(2)(a) of the Act should be set aside on review.
In determining the primary issue, the following secondary issues arise:
(a)was there a construction contract within the meaning of the Act?
(b)If the answer to (a) is 'yes', whether the adjudication application complies with the requirements under s 26(1) and s 26(2)(b) and (c) of the Act.
In accordance with Tribunal orders made on 11 August 2022, I am to determine this matter entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act).
Background
Facts
On 16 March 2022, the contractor submitted an application form for adjudication to the Master Builders' Association of Western Australia (MBA), which is a prescribed appointor under the Construction Contracts Regulations 2004 (WA) (the Regulations).
The adjudication application form identified, and provided contact details for, the MBA (as prescribed appointor), the contractor and the owner.
The adjudication application form identified the payment claim or invoice number as 'INV2622', and that the amount claimed of $6,322 (plus GST) was made on 14 February 2022.
The adjudication application form indicated that the contractor sought the invoice balance plus specified costs associated with the adjudication application.
The adjudication application also included submissions by the contractor entitled 'Payment Claim - Supporting Documentation', copies of emails and phone text messages between the parties, an electronic funds transfer confirmation of a payment made by the owner on 14 March 2022, and photographs of tiling work.
A copy of tax invoice 1528 issued by the contractor was attached to the adjudication application form which indicated a balance due of $6,955.
The tax invoice 1528 also provides a description of works, including:
•tiling and associated works for the bathroom, powder room, ensuite and laundry;
•gyprock and associated works for the master bedroom, ensuite, main living, laundry, two guest bedrooms;
•rendering of internal and external areas, and brick walls; and
•painting of external and internal areas.
On 17 March 2022, MBA appointed the adjudicator and provided a hard copy of the adjudication application to the adjudicator on 22 March 2022.
On 21 March 2022, the adjudicator notified the contractor and the owner (the parties) of his appointment and requested that the contractor provide a deposit for the cost of the adjudication.
The contractor paid the requested deposit to the adjudicator.
On 31 March 2022, the adjudicator advised the parties that the time in which the owner was to submit her response had passed, and he would proceed to consider and determine the adjudication application.
On 9 April 2022, the owner confirmed, by email to the adjudicator, that she received paperwork relating to the adjudication on or around 16 March 2022.
The owner did not provide any written response to the adjudication application at any time prior to 9 April 2022.
By determination dated 9 April 2022, the adjudicator dismissed the adjudication application under s 31(2) of the Act on the basis that the contractor failed to serve the application in accordance with s 26(2)(b) (that is, it did not include a copy of the construction contract and the payment claim referred to in the adjudication application).
In making that determination, the adjudicator also found that:
(a)there is construction work in accordance with s 4(2) of the Act;
(b)there is a construction contract as defined in the Act, although the exact terms of the construction contract were unknown to him;
(c)the adjudication application satisfies the requirement of s 26(2)(a) of the Act.
The contractor's case
The contractor says it was engaged by the owner in December 2021 to perform some house renovation works including rendering, gyprock, painting and tiling, which it performed in December 2021 to February 2022.
Further additional works were carried out by the contractor at the request of the owner.
A dispute arose between the parties when the contractor sought final payment on 14 February 2022, which the owner refused to pay as she considered the tiling work deficient.
The owner finally made payment on 14 March 2022 of $6,500 by electronic transfer which was described as 'final payment', even though the contractor contends it is only half of what is owed.
In this review application, the contractor submits the following in respect of the adjudicator's finding that there was no construction contract attached to the adjudication application:
(a)the construction contract is partly written and partly oral, and tax invoice 1528 contains a full description of the works, the total amount, and terms;
(b)the tax invoice is used by the contractor as the quote, the contract, and the payment claim 'all rolled into 1 document';
(c)the construction contract was effectively executed when the first payment from the owner was made on 15 December 2021;
(d)to the extent that any essential terms are not reduced to writing, the Act allows provisions to be implied into the construction contract.
In respect of the adjudicator's finding that the payment claim was not attached to the adjudication application, the contractor submits that:
(a)the adjudication application erroneously referred to Invoice 2622 when it should have referred to Invoice 1528;
(b)the adjudicator could have logically arrived at the conclusion that Invoice 1528 is the relevant payment claim, as the amount outstanding under Invoice 1528 ($6,955) equates to the amount claimed in the adjudication application ($6,322.73 plus GST).
The owner's case
The owner has not made any submissions in this application.
Legal framework
Tribunal jurisdiction
Under s 46(1) of the Act, a party aggrieved by an adjudicator's decision to dismiss the adjudication application under s 31(2)(a) of the Act can apply to the Tribunal for a review of that decision.
No other decision or determination by an adjudicator can be reviewed or appealed: s 46(3) of the Act.
If the Tribunal sets aside the adjudicator's decision and reverses the decision pursuant to s 29(3)(c)(i) or (ii) of the SAT Act, the adjudicator is to make a determination under s 31(2)(b) of the Act within 10 business days after the date on which his or her decision was reversed (or any extension of time consented to by the parties): s 46(2) of the Act.
Section 46(1) of the Act is thus the provision in the enabling Act giving the Tribunal jurisdiction to determine this matter: s 13(1) of the SAT Act.
The SAT Act also gives additional jurisdiction to the Tribunal in respect of this matter: s 13(2) of the SAT Act.
However, to the extent that there is any inconsistency between the SAT Act and the enabling Act, the enabling Act prevails: s 5 of the SAT Act.
This application falls within the Tribunal's review jurisdiction as a matter that expressly involves a review of a decision: s 17 of the SAT Act.
Under s 27(2) of the SAT Act, the purpose of the review is to produce the correct and preferable decision at the time of the decision upon the review.
Section 27(1) of the SAT Act provides that the review is not confined to matters that were before the adjudicator and may involve the consideration of new material whether or not it existed at the time the decision was made.
However, in light of the primacy to be given to the Act in the event of any inconsistency with the SAT Act, I accept that, in considering whether the adjudicator had power to summarily dismiss the adjudication application on the basis it did not comply with requirements under the Act, I am necessarily confined to take into account material that was, or could have been, provided to the adjudicator at the time the adjudication application was made.
The Act
Amendments to the Act
The Act is now known as the Construction Contracts (Former Provisions) Act 2004 (WA) since amendments to the Act came into operation on 1 August 2022.
One of the effects of the amendments is to cease the application of the Act to construction contracts which were entered into after 1 August 2022, so as to give effect to the application of the Building and Construction Industry (Security of Payment) Act 2021 (WA) (the BCI Act).
Section 7 of the Construction Contracts (Former Provisions) Act 2004 (WA) confines the application of the Act to a construction contract entered into after the Act comes into operation and before s 22 of the BCI Act comes into operation (that is, 1 August 2022).
Given that the relevant contract is said by the contractor to arise in or about December 2021 (which has not been denied by the owner), this amendment to the Act does not apply to this application.
Application of the Act
The long title to the Act provides that it is an act:
•to prohibit or modify certain provisions in construction contracts;
•to imply provisions in construction contracts about certain matters if there are no written provisions about the matters in the contracts;
•to provide a means for adjudicating payment disputes arising under construction contracts,
and for related purposes.
Part 3 of the Act provides for the adjudication of disputes and allows a party to a construction contract to apply to have a payment dispute which arises under the contract adjudicated: s 25 of the Act.
A 'construction contract' is relevantly defined in s 3 of the Act as a contract or other agreement, whether in writing or not, under which a person has an obligation to carry out construction work (para (a) of the definition).
The acceptance of oral contracts within the meaning of 'construction contract' is confirmed in s 7(2)(a) of the Act, which applies the Act to a construction contract 'irrespective of whether it is written or oral or partly written and partly oral'.
'Construction work' is defined in s 4 of the Act as the following relevant works on a site in Western Australia:
…
(c)constructing the whole or a part of … a building or structure, that forms or will form, whether permanently or not and whether in WA or not, part of land …
(d)fixing or installing on or in any thing referred to in paragraph (c) any fittings forming, or to form, whether permanently or not, part of the thing …
(e)…
(f)any work that is preparatory to, necessary for, an integral part of, or for the completion of, any work referred to in paragraph … (c) [and] (d) …, including –
…
(iv)cleaning, painting, decorating or treating any surface[.]
Under s 6(1) of the Act, a 'payment dispute' arises for the purposes of the Act 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[.]
If a payment dispute arises under both s 6(1)(aa) and s 6(1)(a) of the Act in relation to a payment claim then the dispute is taken for the purposes of the Act as arising on the earlier of the two occurrences: s 6(3) of the Act.
A 'payment claim' is defined under s 3 of the Act as, relevantly, a claim made under a construction contract by the contractor to the 'principal' (which is in turn defined as the party to whom the contractor is bound under the contract) for the payment of an amount in relation to the performance by the contractor of its obligations under the contract.
Adjudication
Section 26 of the Act sets out the requirements of an application for adjudication.
In particular, the applicant must, relevantly, within 90 days after the dispute arises:
(a)prepare a written application for adjudication (s 26(1)(a)); and
(b)serve it on each other party to the contract (s 26(1)(b)); and
(c)serve it on a registered adjudicator or prescribed appointor appointed by the parties, or otherwise on a prescribed appointor chosen by the applicant (s 26(1)(c)); and
(d)provide any deposit or security for costs that the adjudicator or prescribed appointor requires (s 26(1)(d)).
Further, under s 26(2) of the Act, the adjudication application:
(a)must be prepared in accordance with, and contain the information prescribed by, the regulations; and
(b)must set out the details of, or have attached to it –
(i)the construction contract involved or relevant extracts of it; and
(ii)any payment claim that has given rise to the payment dispute;
and
(c)must set out or have attached to it all the information, documentation and submissions on which the party making it relies in the adjudication.
Regulation 5 of the Regulations prescribes that, for the purposes of s 26(2)(a) of the Act, the name and contact details of the prescribed appointor (or appointed adjudicator), the applicant and the respondent, must be contained in an adjudication application.
The prescribed appointor must appoint a registered adjudicator within five business days of being served with an adjudication application: s 28(1)(a) of the Act.
Under s 27(1) of the Act, a party served with an adjudication application must prepare, and serve on the applicant and the appointed adjudicator or prescribed appointor, a written response to the application within 10 business days of being served with the application, which response must comply with the requirements of s 27(2) of the Act.
Division 3 of Pt 3 of the Act sets out the adjudication process, the object of which is to determine the dispute fairly and as quickly, informally and inexpensively as possible (s 30 of the Act).
Section 31(2)(a) of the Act requires an appointed adjudicator to dismiss the application without making a determination of its merits if, relevantly, within 10 business days after the date of service of the response or the last date on which a response is required to be served:
(a)the contract concerned is not a construction contract (s 31(2)(a)(i)); or
(b)the application has not been prepared and served in accordance with s 26(1) and 2(b) and (c) (s 31(2)(a)(ii)); or
(c)the application has not been prepared in accordance with s 26(2)(a), unless the adjudicator is satisfied that the application complies with s 26(2)(a) sufficiently for the adjudicator to commence adjudicating the dispute (s 31(2)(a)(iia)).
Other than in the circumstances set out in s 31(2)(a) of the Act, the appointed adjudicator must, relevantly, within the same timeframe as under s 31(2)(a), determine on the balance of probabilities whether any party to the payment dispute is liable to make a payment, and, if so, determine the amount to be paid and the date on which it is to be paid: s 31(2)(b) of the Act.
In making a determination, an adjudicator must act informally and if possible, make the determination on the basis of the application and its attachments, and any response which has been served: s 32(1)(a) of the Act.
The adjudicator is not bound by the rules of evidence and may inform himself or herself in any way he or she thinks fit: s 32(1)(b) of the Act.
In order to obtain sufficient information to make a determination, an appointed adjudicator has the discretion under s 32(2) of the Act to:
(a)request a party to make (further) submissions or provide information or documentation (s 32(2)(a));
(b)request the parties to attend a conference with the adjudicator (s 32(2)(b));
(c)unless all parties object, inspect any work or thing, or arrange for testing of anything, to which the payment dispute relates, or engage an expert to investigate and report on any matter relevant to the payment dispute (s 32(2)(c)).
Secondary Issue 1 - was there a construction contract?
In the absence of any evidence or response provided by the owner, I accept the evidence of the contractor that the parties agreed sometime in December 2021 for the contractor to carry out rendering, gyprock, painting and tiling works at the owner's property for monetary consideration, which contract was performed by the carrying out of the works during December 2021 to February 2022 and payment of monies by the owner (albeit her last payment is the subject of a payment dispute).
Such works constitute 'construction work' as works which are the fixing or installation on or in a building any fittings forming part of the building (that is, a residential building) (s 4(2)(d) of the Act), or any work preparatory to, necessary for, an integral part of, or for the completion of, the fixing or installation of fittings, such as painting, decorating or treating any surfaces (s 4(2)(f)(iv) of the Act).
In my view, tax invoice 1528 sufficiently sets out the scope of works agreed to between the parties and the monetary consideration to be provided by the owner in exchange for the performance of the works, and I am satisfied that tax invoice 1528 has sufficiently reduced the fundamental terms of the parties' contract into writing.
I accept the contractor's submissions that the construction contract must be taken to be modified, including by the imposition of implied terms, as required under Pt 2 of the Act.
Finally, to the extent that the contract was varied upon the owner's request for further works, I am satisfied that any amendment to the terms of the parties' contract can be done in writing or orally, as an extension of the principle under the Act that a construction contract can be in writing or oral.
The findings of the adjudicator that there is construction work in accordance with s 4(2) of the Act, and that there is a construction contract as defined in the Act, are therefore consistent with my findings.
The point at which we depart is that I consider that tax invoice 1528 sufficiently sets out the terms of the parties' contract, whilst the adjudicator considers that he was unable to determine the exact terms of the construction contract on the papers provided to him.
I also accept the contention by the contractor that tax invoice 1528 is also capable of acting, and in fact acted, as the payment claim for outstanding monies.
Whilst tax invoice 1528 does not appear to be updated to reflect the date when the payment claim was made (it states that it was issued on 13 December 2021 and due on 18 December 2021), it is sufficiently clear from the communications between the parties and the submissions by the contractor that a demand for the outstanding amount was made on 14 February 2022.
I accept the contractor's submission that tax invoice 1528 is the relevant payment claim document, and that the reference to tax invoice 2622 in the adjudication application was an error.
That tax invoice 1528 shows an outstanding amount of $6,955, which matches the amount claimed in the adjudication application of $6,322 (plus GST), is sufficient indication that tax invoice 1528 is the relevant payment claim which the contractor relies in making its application.
Whilst the erroneous reference had clearly caused confusion to the adjudicator, s 32(2) of the Act allows an adjudicator to request further submissions, information or documentation from a party, and perhaps should have been a discretion exercised by the adjudicator before exercising the power to effectively summarily dismiss an application without considering its merits.
Secondary issue 2 - did the application comply with the requirements under s 26(1) and s 26(2)(b) and s 26(2)(c) of the Act?
I am satisfied that there is a payment dispute between the parties, as I accept the evidence of the contractor that the final payment made by the owner was less than that demanded by the contractor, and that an outstanding amount of $6,955 remains payable under the contractor's last demand for payment.
It is not clear on the contractor's evidence when the last demand was payable so as to determine under s 6(1)(a) of the Act whether it could be said that the owner had failed to pay the amount in full by the time the amount claimed is due to be paid.
As such, I will rely on s 6(1)(aa) of the Act to find that the parties' payment dispute arose when the payment claim was partly disputed by the part payment made by the owner on 14 March 2022.
Turning to whether the adjudication application satisfies s 26(1), s 26(2)(b) and s 26(2)(c) of the Act, I make the following findings:
(a)Section 26(1)(a): I find that the contractor prepared his adjudication application, by completing the form for adjudication application and attaching relevant documents including tax invoice 1528, on 16 March 2022, which is within 90 days of the payment dispute arising;
(b)Section 26(1)(b): I find that the owner was served with the adjudication application on or about 16 March 2022, which is within 90 days of the payment dispute arising;
(c)Section 26(1)(c): In the absence of any evidence that the parties appointed an adjudicator or prescribed appointor, I find that the contractor served the adjudication application on the prescribed appointor chosen by the contractor (that is, MBA) on or about 16 March 2022, which is within 90 days of the payment dispute arising;
(d)Section 26(1)(d): I find, as the adjudicator has accepted, that the contractor paid the deposit for the cost of the adjudication requested by the adjudicator;
(e)Section 26(2)(b)(i): in light of my finding at [66], I find that the fundamental terms of the parties' contract are set out in tax invoice 1528 (as attached to the adjudication application) such as to sufficiently provide details of the parties' contract;
(f)Section 26(2)(b)(ii): in light of my finding at [73], I find that tax invoice 1528 (as attached to the adjudication application) is the payment claim that has given rise to the payment dispute;
(g)Section 26(2)(c): I find that the contractor has attached additional submissions and documentation to the adjudication application sufficient to comply with this requirement.
In making my findings at [79(e)] and [79(f)], I note that the obligations under s 26(2)(b) do not require the construction contract or the payment claim to be attached to the adjudication application, as long as the application (and any supporting documentation) sets out the details of the construction contract or payment claim.
In light of my findings at [79], I am satisfied that the adjudication application was prepared and served in accordance with s 26(1), s 26(2)(b) and s 26(2)(c) of the Act.
Conclusion - should the adjudicator's decision be set aside?
Given my findings above that the contract between the parties was a 'construction contract' and that the adjudication application was prepared and served in accordance with s 26(1) and s 26(2)(b) and (c) of the Act, I will set aside the adjudicator's decision to dismiss the application under s 31(2)(a) of the Act and send the matter back to the adjudicator to determine the adjudication application in accordance with s 31(2)(b) of the Act.
Orders
The Tribunal makes the following orders:
1.The application is allowed.
2.The first respondent's decision to dismiss the applicant's adjudication application under s 31(2)(a) of the Construction Contracts Act 2004 (WA) is set aside.
3.The applicant's adjudication application is sent back to the first respondent to make a determination under s 31(2)(b) of the Construction Contracts Act 2004 (WA) within 10 business days of this order (or such further extension of time as consented to by the parties).
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS K Y Loh, MEMBER
9 JANUARY 2023
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