Watkins Contracting Pty Ltd v Hyatt Ground Engineering Pty Ltd

Link copied
Case Copied 53 min read

SUPREME COURT OF QUEENSLAND

CITATION:

Watkins Contracting Pty Ltd v Hyatt Ground Engineering Pty Ltd [2018] QSC 65

PARTIES:

Watkins Contracting Pty Ltd
ACN 164 122 721

(applicant)

v
Hyatt Ground Engineering Pty Ltd
ACN 063 988 158

(first respondent)

Noel Jensen (Adjudicator J1057076)

(second respondent)

Ruth Hatten (Adjudication Registrar)

(third respondent)

FILE NO/S:

Brisbane No 4668 of 2017

DIVISION:

Trial

PROCEEDING:

Civil Hearing

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

29 March 2018

DELIVERED AT:

Brisbane

HEARING DATE:

20 July 2017

JUDGE:

Brown J

ORDER:

The order of the Court is:

1.    that the application is dismissed;

2.    that the applicant pay the costs of the first respondent;

3.    that the parties should make submissions within 7 days as to any orders required in relation to the security for costs.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS – ADJUDICATION OF PAYMENT CLAIMS – where the applicant (Watkins) and the first respondent (Hyatt) entered into a construction contract – where Watkins alleges it terminated the contract for Hyatt’s breach arising out of an onsite incident – where the terms of the contract are in dispute – where the alleged termination of the contract is in dispute – where Hyatt denies that the alleged termination was effected – where the Hyatt served a payment claim under the Building and Construction Industry Payments Act 2004 – where the adjudicator found in Hyatt’s favour and determined the adjudicated amount – whether the adjudicator refused to consider Watkins’ submission that the construction contract had been terminated – whether jurisdictional error or denial of natural justice – whether the adjudicator denied natural justice in making his decision on a basis not raised by either party – whether the Court could determine jurisdictional fact – whether alternative reference date available.

Building and Construction Industry Payments Act 2004 (Qld)

Queensland Building and Construction Commission Act 1991 (Qld)

Annie Street JV Pty Ltd v MCC Pty Ltd [2016] QSC 268
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20
BRB Modular Pty Ltd v AWX Constructions Pty Ltd [2015] QSC 222
Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393
Chowdhary v Bayne (1999) 29 AAR 100
Craig v State of South Australia (1995) 184 CLR 163
David Hurst Constructions Pty Ltd v Durham [2008] NSWSC 318
FK Gardner & Sons Pty Ltd v Dimin Pty Ltd [2007] 1 Qd R 10
Heavy Plant Leasing Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2013] QCA 386
John Holland Pty Ltd v TAC Pacific Pty Ltd [2010] 1 Qd R 302
Kirk v The Industrial Court of New South Wales (2010) 239 CLR 531
McNab Developments (Qld) Pty Ltd v MAK Construction Services Pty Ltd [2013] QSC 293
McNab NQ Pty Ltd v Walkrete Pty Ltd [2013] QSC 128
Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd [2012] 1 Qd R 525

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Watkins Contracting Pty Ltd v Hyatt Ground Engineering Pty L... and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2018] QSC 65
Decision Date

CaseChat Overview and Summary

The matter of Watkins Contracting Pty Ltd v Hyatt Ground Engineering Pty Ltd involved a dispute between the applicant, Watkins, and the first respondent, Hyatt, over a construction contract. Watkins alleged it terminated the contract for Hyatt’s breach due to an onsite incident. Hyatt denied the termination and served a payment claim under the Building and Construction Industry Payments Act 2004. The adjudicator found in Hyatt's favour, which Watkins contested on the basis that the adjudicator refused to consider its submission that the construction contract had been terminated, and that the adjudicator made his decision on a basis not raised by either party, amounting to a denial of natural justice.

The legal issues before the court were whether the adjudicator made a jurisdictional error or denied natural justice by failing to consider Watkins' submission that the construction contract had been terminated, and by making his decision on a basis not raised by either party. The court considered whether the adjudicator's decision could be invalidated on the grounds of a substantial denial of natural justice. The adjudicator had acknowledged the jurisdictional issues, and had noted that Watkins had raised matters in the adjudication response that were not raised in the payment schedule. The court found that the adjudicator correctly determined that the new reasons could not be raised in the adjudication response and that these reasons would not be taken into account in his decision.

In conclusion, the court held that the adjudicator's decision was not invalidated by a substantial denial of natural justice. The court dismissed Watkins' application, ordered that Watkins pay the costs of the first respondent, and requested submissions within 7 days as to any orders required in relation to the security for costs.

Orders

Orders of the court

The order of the Court is:

1. that the application is dismissed;

2. that the applicant pay the costs of the first respondent;

3. that the parties should make submissions within 7 days as to any orders required in relation to the security for costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

A substantial denial of the natural justice that the Act requires to be given would invalidate an adjudicator’s decision such that it would be declared void. The authorities were helpfully analysed and applied by Applegarth J in John Holland Pty Ltd v TAC Pacific Pty Ltd.[43] His Honour concluded that there is a substantial denial of natural justice where an adjudicator has decided a dispute on a basis for which neither party contended, unless it can be said that no submission could have been made to the adjudicator which might have produced a different result. [43] [2010] 1 Qd R 302. The Adjudication Decision The adjudication decision[44] demonstrates that the adjudicator: [44] Exhibit SAC-5 to the affidavit of S Cohen, CFI 2-5.(a)Correctly acknowledged that Watkins denied that there is jurisdiction to adjudicate the application;[45][45] At [5].(b)Recorded the fact that the payment schedule raised three bases upon which it was said that there was not a valid payment claim and did not enliven the Act. These included, inter alia, that Watkins claimed at the time that Hyatt served the payment claim (1 February 2017) that Watkins had terminated the contract, and that there was therefore no reference date for the purposes of sections 12 and 17 of the Act to make a valid payment claim; and further that the contract was terminated by frustration following an incident onsite on 29 October 2016 (this second reason was an alternative to the first reason);[46] [46] At [16].(c)Set out the response of Hyatt to the submission of Watkins that there was no jurisdiction;[47][47] At [20].(d)Acknowledged that he had to decide whether he had jurisdiction pursuant to s 25(3) of the Act; [48][48] At [29].(e)Addressed jurisdictional issues, noting that before embarking on an assessment of the payment claim, Hyatt had to satisfy him with its material that he had jurisdiction to proceed;[49] [49] At [31].(f)At [33], referred to the payment schedule and stated that Watkins referred to the incident on 29 October 2016 when Hyatt’s drill rig rolled over onsite as the event that gave rise to termination of the contract. Watkins did not advance the specifics of any clauses of the contract that it claims Hyatt breached by the incident; (g)In [34] to [38], referred to Hyatt’s submissions in the adjudication application responding to the payment schedule reasons and stated “when making the adjudication application, Hyatt did not have before it specific clauses of the contract that were allegedly breached or the Watkins’ construction of the contract.”;[50] [50] See [38]-[39].(h)Noted that Hyatt submitted that the adjudication response cannot include any reasons for withholding payment unless those reasons were included in the payment schedule and referred to s 24(4) of the Act and the case of Thiess Pty Ltd and John Holland Pty Ltd v Civil Works Australia Pty Ltd & Ors;[51] [51] [2011] 2 Qd R 276. (i)At [41] to [45], addressed the fact that Watkins had raised matters in the adjudication response which were not raised in the payment schedule and stated as follows: “[41] The respondent, in the adjudication response, introduced specific conditions of the (claimant’s version of the) contract and advanced a certain construction of the contract which was not contained in the payment schedule. The respondent gave extensive submissions and argued that applying its construction of the contract, the claimant breached essential terms of the contract, namely the implied terms, the SWMS express term … and the schedule 9 express terms which are clauses 4 and 16.12 of the MMGSR (the “new reasons”)[42]The respondent did not provide submissions in response to the claimant’s submissions in the adjudication application relating to the Thiess case or the s 24(4) point.[43]In State Water Corporation v Civil Team Engineering Pty Ltd [2013] NSWSC 1979 at [63], Sackar J stated:“… Once a payment claim and payment schedule have been exchanged, the claimant’s decision of whether or not to take the further step of lodging an application will depend on its assessment of the respondent’s reasons for non-payment as disclosed in its payment schedule. There are obvious and powerful policy considerations in ensuring that the respondent discloses all of its reasons for non-payment in its payment schedule. The difficulties a claimant would experience if faced with an adjudication response which raised reasons for non-payment which were not included in the payment schedule, are amplified by the fact that the Act does not grant to the claimant a right to reply to the respondent’s adjudication response.” [44]Nowhere in the payment schedule does the respondent give the new reasons that were advanced in the adjudication response. These new reasons for rejecting the claim were disclosed for the first time in the adjudication response. The claimant therefore had no opportunity to address them with submissions in the adjudication application. Furthermore, the Act does not give the claimant the right of reply to the adjudication response. In my view, if the respondent wanted to rely on these new reasons in the adjudication response, they should have been included in the payment schedule.[45]I therefore agree with the claimant’s submissions regarding 24(4) of the Act and find that these new reasons cannot be raised in the adjudication response and I therefore do not take them into account in my decision. (emphasis added).”

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.